Diversification Economies and Specialization Efficiencies in a Mixed Food and Coffee Smallholder Farming System in Benchmaji Zone, SNNPR

Abstract

The main purpose of this study is to analyze diversification economies and specialization efficiencies of smallholder farming system characterized by a combination of cash cropping (of coffee and food), and subsistence food crop production in three woredas of Benchi-Maji zone based on their importance (their contribution) in coffee production to the zone, besides food crop. For the purpose of this study, both secondary and primary data were used. The secondary data was collected from zones’ agriculture and rural development whereas; surveys of 393 small holder farmers were taken as a primary data source. An input distance function approach is used to establish whether diversification economies exist and whether specialization in coffee, subsistence food or cash food production exists or not and factors influences technical inefficiency on the sampled smallholdings. The result showed that diversification economies are strongly evident between coffee and subsistence food production, but weakly evident between subsistence food and cash sale output. Moreover, socioeconomic factors such as social and family obligations, access to market and off farm activities were significantly causing inefficiency.