The Empirical Analysis of Technical Efficiency on Large Scale Grain Production in North West Ethiopia: A Stochastic Frontier Approach

This study is intended to scrutinize the technical efficiency of large scale grain crop producers in North West Ethiopia. Moreover, the study endeavored to determine socioeconomic characteristics, and farm management practices which influence the technical inefficiency in large scale grain production. Multiple stages random sampling technique was used to select 200 producers. The empirical results revealed that capital, labor, land, and seed input affect the output positively. The responsiveness of yield shows that a one-percent increase in utilization of capital, labor and land inputs will increase the grain production by 0.18%, 0.23% and 0.56% respectively, while, the agrochemical input influences the output negatively. Evidences from the technical inefficiency model shows that gender and levels of education variables increase technical efficiency. Age, occupation, district, and subsidies variables increase technical inefficiency. Producers’ technical efficiencies range from 23 to 100% and the mean technical efficiency is 71.7%. More effort should be made for adult and continuing education. Female producers should be given an opportunity in the management place in the large scale grain farming segment. In addition, the government is compelled to give strategies about proper input appliance and set up the pilot research institution in the study area.