Journal of Agricultural Economics and Development Vol. 3(3), pp. 035-046, May 2014 ISSN 2327-3151 ©2014 Academe Research Journals

Full Length Research Paper

Technical efficiency in irrigated small-scale agriculture: Empirical evidence from onion farming in Kobo District of Northeast Ethiopia

Berhan Tegegne¹*, Getaw Tadesse² and Lemma Zemedu³

¹Sirinka Agricultural Research Center, P.O.Box 74, Woldiya, Ethiopia.

²International Food Policy Research Institute, P.O.Box 5689, Addis Ababa.

³Haramaya University, School of Agricultural Economics and Agribusiness, P.O.Box 138, Dire Dawa, Ethiopia.

*Corresponding author. E-mail: hberhantegegne@yahoo.com.

Accepted 26 May, 2014

Abstract

The purpose of this study is to understand the extent and determinants of smallholders’ technical efficiency under drip and furrow irrigation in dry land agriculture. Stochastic production frontier model with Cobb-Douglas functional form was fitted to a random sample of drip and furrow irrigated plots to understand farmers’ technical efficiencies in onion production. The study was based on cross-sectional data collected from 200 farm households during the 2012 production year; 100 households from each type of irrigation schemes. The test result indicated that there was technical inefficiency in both irrigation schemes and the relative deviation from the frontier due to inefficiency which was about 26.31%. The estimated mean level of technical efficiency of the traditional diversion furrow and modern drip irrigation scheme users were about 78.60 and 82.59%, respectively. The overall mean technical efficiency of the irrigation schemes was 73.69% which indicated that the improvement in technical efficiency was still possible with the current available technology and without increasing the input level. The result also revealed that land related factors such as land size, land ownership, and land fragmentation explain much of the technical inefficiencies in addition to other socio-economic characteristics of farm households. Total land size is inversely related to the technical efficiency. Moreover, it was also observed that land size had negative effect on onion yield, which signified the theory of inverse relationship between farm size and productivity in onion production. All these imply that labor market was still imperfect that caused households to rely on family labor. Farmers were more efficient on owned plots than leased (in the form of sharecropping and fixed rent) plots. Tenure insecurity played significant role for farmers to adopt the available technologies and maximize production on irrigated farms. Likewise, land fragmentation has showed positive effect on technical inefficiency, calling for the need to think about land consolidation at least within farms. Hence, it can be concluded that onion production could further be increased by introducing improved water application technologies like drip and sprinkler suitable for small farmers with appropriate policies aimed at creating tenure security, perfecting labor market and consolidating fragmented plots.

Key words: Technical efficiency, stochastic frontier analysis, inefficiency, irrigation, drip, furrow, Kobo, Northeast Ethiopia.