ANALYSIS OF ECONOMIC EFFICIENCY OF CUMIN(CUMINUMCYMINUM)IN NORTH ACHEFER DISTRICT, AMHARA NATIONAL REGIONAL STATE, ETHIOPIA

Abstract

This study aimed at determining the level of technical, allocative and economic efficiencies of cumin producer farmers in north Achefer district. It also identified the factors affecting the efficiency of producers in the study area. Data were generated by adopting a cross-sectional survey design during the 2016/17 production year from 122 randomly selected cumin producing farm households. Data were analyzed using the Stochastic Frontier Production Function (SFPF) to estimate the level of technical, allocative and economic efficiencies of the producers. Further, the Tobit model was used to identify the factors affecting the efficiencies cumin producers. The results indicated that the level of technical, allocative and economic efficiency of cumin producers were 89%, 43% and 38%, respectively. The mean of technical and allocative efficiencies imply that there is a possibility of increasing productivity by 11% without using extra inputs and by 57% without increasing the cost of production, respectively. The Tobit model results revealed that age, slope of plots, and perception of farmers on agricultural policy had a significant positive effect, and sex of household head had negative significant effect on technical efficiency. Education, frequency of extension visit, perception on agricultural policy and livestock holding had positive significant effect on allocative efficiency of cumin producers, while age of household head, credit utilized and perception on agricultural policy were found to have positive significant effect on economic efficiency of the producers. The results showed that there is an opportunity to increase the efficiency of cumin producers in the study area. Therefore, the policies and strategies in development and research may act on these variables to increase the efficiency level of cumin producing farmers.