SCHOOL OF AGRICULTURAL ECONOMICS AND AGRIBUSINESS

COLLABORATIVE MASTERS OF AGRICULTURAL AND APPLIED ECONOMICS

PROGRAM (CMAAE)

Research Proposal on:

Technical efficiency of wheat growing farmers of Abichu Gnea District

By: Beifa Fana ID No: PGP/534/14

E-mail: [email protected]

Submitted To: Dr.Kedir Jemal

June, 2022

Haramaya University, Ethiopia

Table of Contents
1. INTRODUCTION......................................................................................................................................... 1
1.1. Background of the Study...................................................................................................................................1
1.2. Statement of the Problem..................................................................................................................................2

2. REVIEW OF LITERATURE........................................................................................................................ 4
2.1. Theoretical Review...........................................................................................................................................4
2.1.1. Concept of Productivity and Technical Efficiency....................................................................................4
2.1.2. Models of Efficiency Measurement..........................................................................................................4
2.2. Empirical Studies on Technical Efficiency in Ethiopia.....................................................................................5
2.3. Conceptual Framework....................................................................................................................................6

3. RESEARCH METHODOLOGY................................................................................................................... 7
3.1. Description of the Study Area...........................................................................................................................7
3.2. Data Sources and Type.....................................................................................................................................7
3.3. Sampling and Sample Size Determination........................................................................................................8
3.4. Method of Data Collection...............................................................................................................................8
3.5. Method of Data Analysis..................................................................................................................................8

4. ACTIVITY PLAN AND BUDGETING......................................................................................................... 9

4.1. Activity Plan.....................................................................................................................................................9
4.2. Budgeting.......................................................................................................................................................10

REFERENCES................................................................................................................................................ 11

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 1. INTRODUCTION

1.1. Background of the Study

Agriculture is still a very pivotal sector in the developing country context as it provides a source
of livelihood to the majority of the populace and is a major contributor towards growth domestic
product (GDP). The agricultural sector plays a strategic role in improving the availability of food
and achieving food security. Ethiopia’s economy is dependent on agriculture, which accounts for
40 percent of the GDP, 80 % of exports, and an estimated 75 % of the country's workforce
(USAID, 2020). Cereals are the most important food crop which provides daily food calories to
people. Wheat is one of the major cereal crops grown in Ethiopia. Despite wheat’s economic
potential for food security, the actual yield under smallholder farmers’ conditions is low due to
various production constraints (Mulu et al., 2022).

Ethiopia’s annual production is about 5.8 million tons with mean productivity of 3 tons per
hectare (CSA, 2021), which is relatively lower than the attainable yield of the crop, reaching up
to 5 tons per hectare (Zegeye et al.,2020). Wheat accounts for about 17% of total grain
production in Ethiopia making it the third most important cereal crop after teff and maize (CSA,
2021). Study by Assefa et al. (2019) showed that, despite the importance of wheat as a food and
industrial crop and the efforts made so far to generate and disseminate improved production
technologies, its productivity remains far below its potential. Wheat production systems in
Ethiopia are suffered from several problems leading to inefficiencies in wheat production.
Among the major problems, significant imperfections in wheat input and output markets,
traditional technologies, low labor and land productivity and limited management capability of
producers, are particularly recognize (Gebreselassie et al., 2017).

Oromia is one of the largest regions in Ethiopia that shares largest area coverage of the country
and also known for high production of cereal crops in the country. The report of Central
Statistical Agency (CSA) 2018 showed Oromia region accounts for 53% of the total area and
58% of production from the national level wheat production. From the total area of cereal crops
in the North Shewa zone, wheat accounts for 21% and in terms of production, it accounts for
24%. Abichu Gnea district farmer which is located in the North Shewa zone of Oromia regional
state produces wheat.

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 According to the Abichu Gnea district agricultural office annual crop assessment year of
2019/20, from the total area crops cultivated, wheat accounts for 39 % and the productivity was
27 qt per ha. This is a low yield compared to regional mean yield level and zonal level which are
31.87 qt per ha and 29.74 qt per ha. However, how much farmers are efficient or not in the
district is not known. Thus, there is no evidence in the study area as to level of technical
efficiency. This study will try to measure gap between actual and the potential output and
identifies main factors of this gap.

1.2. Statement of the Problem

Wheat is one of staple food crop for most households in rural and urban areas of Ethiopia.
However, yet yield of wheat is low and unstable due to several technical and socioeconomic
constraints in different part of the country (Assefa, 2016, Asfaw et al., 2019). In Abichu Gnea
district which is located at the northern part of the country, despite the importance of wheat as
one of staple food its production is owned by small holder farmers which produce only to survive
their hand to mouth livelihood. Therefore, it is crucial to increase their volume of production and
efficiency at least to secure their food needs at family level. In order to improve wheat
production and productivity, an efficient use of production inputs has to be adopted by
smallholder farmers. In this district no study has been conducted on assessing the determinant of
technical efficiency contributing to low/high wheat productivity and also there is no any reliable
data or information on the level of productivity and/or efficiency per unit of the limiting factors.
Even though, According to the Abichu Gnea district agricultural office(2019/20) Wheat annual
average productivity is low comparing to regional which is only 27 qt. per ha, which is below the
average of productivity in the region 31.87qt per ha.

Many researchers, in different sectors, have done many efficiency estimation studies in Ethiopia.
However, the majority of farm efficiency studies are limited to technical efficiency in the
country (Assefa, 2016; Tiruneh and Geta, 2016). Measuring efficiency level of farmers benefit
economies by determining the extent to which it is possible to raise productivity by improving
the neglected source of growth (efficiency) with the existing resource base and available
technology (Ahmed et al., 2014). Moreover, Production with efficient way is the basis for
achieving overall food security and poverty reduction for the country (Asfaw et al., 2019). When

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there is inefficiency; attempts to commence new knowledge may not result in the expected
impact since the existing knowledge is not efficiently utilized.

Therefore, by estimating the magnitude of technical efficiencies and assessing the factors that
influence resultant inefficiency levels, this study aims to provide the way forward to increasing
wheat farm productivity. Thus, this research will address the following research questions: How
much opportunity is being waste due to the variation in the level of efficiency among the
farmers? What are the determinants of technical inefficiency among wheat producing farmers in
the study area?

1.3. Objectives of the study

The overall of this study is to analyze the level of technical efficiency of wheat growing farmers
in Abichu Gnea district.

The specific objectives are:

 To provide baseline information about the level of farming efficiency in the study area by
estimating technical efficiency score in wheat production.

 To identify the determinants of technical efficiency in wheat production

1.4. Significance of the Study

This study will expected to provide information on level of technical efficiency of members in
wheat production in study area. Based on the efficiency level of each farmer, the determinant of
efficiency will be identified. Identification of factors affecting efficiency is important for various
planning and policy purposes. In addition, empirical findings on analysis of technical efficiency
of wheat are also useful for other grain crops that have similar production processes.

1.5. Scope and Limitation of the Study

The study is limited only to the analysis of technical efficiency in the production of wheat crop.
Analysis of economic and allocative efficiency will not be included due to time and budget
shortage. In addition, other crop will not be included in the estimation of efficiency scores.
However, the result drawn from wheat production could be used for other crops that have similar
processes.

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 2. REVIEW OF LITERATURE

2.1. Theoretical Review

2.1.1. Concept of Productivity and Technical Efficiency

Efficiency and productivity are two cooperating concepts. Many scholars used productivity and
efficiency interchangeably and consider both as the measure of performance of a given firm.
However, these two interrelated terms are not precisely the same things (Coelli, 1995).
Productivity is the quantity of a given output of a firm or a farmer per unit of input (it may not be
maximum possible output) whereas, technical efficiency (that part of efficiency which explains
the physical performance of a firm) measures the relative ability of a farmer to get the maximum
possible output at a given input or set of input.

Farrell (1957) identified at least two types of efficiency. These are Technical and allocative
efficiency (price efficiency) in production, which together comprises the economic efficiency are
through the use of frontier production function. While technical efficiency relates the physical
input with the optimum level of output that can be produced at a given level of technology,
Allocative efficiency reflects the ability of a firm to use the inputs in optimal proportions, given
their respective prices and the production technology. Economic efficiency is the multiplicative
product of technical and allocative efficiencies.

2.1.2. Models of Efficiency Measurement

Technical efficiency measurements are carried out using frontier methodologies, which shift the
average response functions to the maximum output or the efficient firm (Farrell, 1957). These
frontier methodologies are broadly categorized under two frontier methodologies; parametric and
non-parametric frontier models. The parametric frontier model may further be classified into
deterministic and stochastic frontier models. The parametric models are basically estimated
based on econometric methods and the non-parametric technical efficiency model, often referred
to as Data Envelopment Analysis (DEA), involves the use of linear programming method to
construct a non- parametric' piece-wise' surface (or frontier) over the data (Coelli et al., 1998).

In summary, most empirical studies on TE analysis in agriculture used stochastic frontier model
due to the very nature of the agricultural output, which is affected by the natural hazard, climatic
condition and measurement errors that could attribute to the presence of noise in the data.

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2.2. Empirical Studies on Technical Efficiency in Ethiopia
In Ethiopia, a number of researches had been conducted on efficiency of farmers in different
regions using different models and different variables in order to measure and identify the
level and sources of technical efficiency (TE).

A study undertaken in Southern Ethiopia by Assefa et al. (2019) to determine technical

efficiency of smallholder farmers and factors causing TE differential by using cross sectional
data. Their result depicted that technical efficiency of wheat was positively and significantly
influenced by age, education level, land ownership, fertility status of the plots and extension
contact Whereas, land fragmentation positively and significantly affected technical inefficiency.
In their study they were used Cobb-Douglas Production Function and the parametric method
Stochastic Frontier approach.

Belete A. (2020) study conducted on Analysis of efficiency in maize production in Guji Zone,
Ethiopia and used stochastic frontier normal/truncated-normal model to measure the magnitudes
and determinants of the inefficiency in maize. His result revealed that Age of the head of
household, Education level of the household head, Land tenure security, Farm income, Row
planting, Access to credit, Number of active labor, Land size owned in hectare, Seed types used
and Number of livestock are important factors that affected technic efficiency.

Hassen (2016) employed SPF to measure the level of TE and identify its determinants in wheat
crop for smallholder farmers in south Wollo Zone, Ethiopia. His result showed that the average
technical efficiency of wheat production in the study area was 79 % indicating a good potential
for increasing wheat output by 21% with the existing technology and levels of inputs. His
econometric results of SPF indicated area, seed, fertilizer; man days and oxen days positively
affecting the TE while off farm income was negatively affect technical efficiency.

A stochastic production frontier and two-limit Tobit estimator was utilized in the study by Bezu
et al.(2021) to assess the efficiency of wheat production in Debra Libanos district, Ethiopia. The
yield gap was 5.13 quintal/ hectare showing a room to increase efficiencies. Their study showed
that, to improve wheat production efficiencies strengthen extension services, improved
technology utilization, and proper land ploughing. Besides, natural resource conservations that
improve soil fertility should be the focus of the policymakers.

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In general, different studies used different models to analyze the efficiency of farmers and the
influence of different agro-climatic and socio-economic conditions on farmers’ efficiency. It also
indicated that a number of factors can affect the efficiency level of farmers, but these factors are
not equally important and similar in all places at all time. Thus, policy implications drawn from
some of the above empirical works may not allow in designing area specific policies to be
compatible with its socio-economic as well as agro ecologic conditions.

In case of Abichu Gnea district such type of research work has not been conducted and there is a
need to know the level of technical efficiency of small scale farmers particularly with respect to
wheat production. Since, wheat is one of the important crops to the study areas as well as the
nation. Therefore, what can be suggested from the literature is that at the current level of
technology and factor endowment, there is a potential to increase agricultural production by
improving the demographic, institutional, and environmental factors. Therefore, this study
intends to fill this information and knowledge gaps.

2.3. Conceptual Framework

According to Jema (2008) socio-economic and institutional factors determined the efficiency of
production. These factors directly or indirectly affect the quality of management of the farm’s
operator and, therefore, are believed to have effect on the level of technical, allocative and
economic inefficiencies of farms.

Production inputs such as amount of seed, fertilizers, area, oxen power and labor are used as
input into wheat production. The availability and distribution of these inputs may be influenced
by policy framework in place which in turn determines wheat productivity. In addition, wheat
productivity is also affected by technical efficiency because for a production to be effective, the
way in which available inputs are utilized is crucial. However, technical efficiency of farmers is
also influenced by farmer’s characteristics, cultivated land characteristics, crop specific factors,
institutional and socio-economic characteristics of farmers. A farmer that is technically efficient
is therefore expected to realize higher wheat productivity compared to that of less efficient in
wheat production. Therefore, this has a positive spillover effect on the welfare of wheat producer
farmers. Improved welfare of farmers then provides a feedback effect in form of increased access
to production inputs and relevant lessons to policy makers.

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 3. RESEARCH METHODOLOGY

3.1. Description of the Study Area

Abichu Gnea is one Woreda (District) of North Shewa Zone of Oromia National Regional state,
Ethiopia. The geographical location of the study area is 9028'00ʺN - 9048'00ʺN latitude and
39005'00ʺE - 39023'00ʺE longitude. The woreda is found by the sidebr wayu woreda to the
north, Kimbibit woreda to the south and wichale and Jida east. Woreda’s town, Mendida is
situated at about 157 km away from Addis Ababa. The woreda has 20 kebeles of which 18 are
rural and 2 urban the boundaries of the district from different directions are adjoin Amhara
National Regional state in the Northern direction, kimbibit Woreda in the south, Amhara
National Regional state in the east and Jida and Wachale Woreda in the west (Abichu District
Agricultural and natural source development Office, 2018).

According to CSA (2007) population and housing census result, the population of Abichu Gnea
Woreda was 74, 376 of whom 37,284 are men and women 37,092; 5,061 0r 6.80% of its
population is urban dwellers. Agriculture, mainly composed of crop production and animal
husbandry, is the main source of livelihood of the population in the Woreda. They are mostly
dependent on cereal crops such as wheat, teff, barely; bean and pea are the most common
agriculture products.

3.2. Data Sources and Type

This study will be used both primary and secondary sources of data. A primary data source will
be smallholder farmers randomly selected from different rural kebeles, through key informant
interviews, household surveys, and field observation. The source of Secondary data will be
zonal and Woreda Agricultural Office. Furthermore, list of different and relevant published and
unpublished reports from Central statistical agency (CSA) will be used as a source of secondary
data.

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3.3. Sampling and Sample Size Determination
A Two-stage sampling technique will be used to select sample producers. In first stage, high
potential wheat production kebeles will be selected by using purposive sampling technique. In
the second stage, sample size of farmers will be selected using simple random sampling
technique based on probability proportional to the size of wheat producers in the selected kebeles
in the first stage. The sample size will be determined based on Yamane (1967) formula.

N
n= Where: n = sample size; N = total number of wheat producing farmers in kebeles
1+ N ¿ ¿
and e = level of significance (level of precision).

3.4. Method of Data Collection

Primary data will be collected using semi-structured questionnaires from wheat producers and
interview from key informative. In case of this study it will be used both self and other
enumeration methods to employ semi-structured questionnaire because, most of the people in
rural area are illiterate and they couldn’t read and write. Thus, supports from other enumerator
will be needed in order to collect the questionnaire on proposed time schedule. The enumerators
are selected based on their educational background. Before formal survey held there will be Pre-
test of questionnaires applicability to survey population and enumerator training. The key
informant will be done by interviewing in-personal the people like leaders of each of the kebele
and other informative people on wheat.

3.5. Method of Data Analysis

Various data analysis methods such as descriptive statistics and econometric model will be used
to analyze the data. Descriptive statistics such as means, frequencies, and percentages will be
used to characterize the socio-economic, institutional and demographic characteristics of
sampled producers. In addition, the most common production functional model such as Cobb-
Douglas function will be used to measure the physical relationship between production inputs
and wheat output. Parametric Stochastic Frontier Production (SFP) econometric model will be
used to analyze production efficiency.

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 4. ACTIVITY PLAN AND BUDGETING

4.1. Activity Plan

Table1: summary of Activity plan

Research Activities Required Tasks Time

1. Preparing questioner  reviewing a different  December25, 2022
publication, website
 Writing first Draft
 Writing final questioner
2. Preparing material for  Select a trainees  Dec31, 2022
training a selected  Preparing materials
enumerator  Training a trainee based on
a prepared material
3. Preliminary survey  Printing questioner  Janury15, 2023
 field trip in to study area
 collecting data
 revising the questioner
based on preliminary
survey
4. formal survey  Distributing questioner  Janury17, 2023
 Collecting formal survey  February 17-28

5. Data coding and entry  Scan the fully entry and  April, 2023
6. Data analysis correctness of filled
7. Writing result questioner
 Regressing on software
 Discussion the result
implication
8. Writing the first draft  Writing result with support of  May, June, july-25,
9. Revising previous studies finding 2023
10. Writing final research  Well organizing and
documenting result of study

11. Research submission  Communicate and summit the  July31, 2023

study

Source: own processing

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4.2. Budgeting

Table 2: budget plan

Perdiem for researchers
No. Items No. of No. Perdiem Perdiem
Days People per day per day
For field reconnaissance survey 8 12 120 11,520
For field data collection 14 12 120 20,160
For trainers 3 3 120 1,080
Training for enumerators 2 12 100 2,400
Subtotal 35,160
Data encoder (salary and daily wages)
No Item No. of No. Rate Total
Days People per day Cost
For data encoder 10 3 17 3,600
Subtotal 3,600
Budget Summery
No Item Sub Total
For stationary 5000
Perdiem for researchers (survey) 35,160
Transportation Cost 6000
Data encoder (salary and daily wages) 3,600
Grand total 49,760
Source: own processing

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 REFERENCES
Asfaw M., Geta E. and Mitiku F. (2019), Economic efficiency of smallholder farmers in wheat
production in the case of Abuna Gindeberet district, Western Ethiopia. Review of
Agricultural and Applied Economics (RAAE). Doi:10.15414/raae.2019.22.01.65-75
Assefa Ayele, Jema Haji, and Bosena Tegegne (2019).Technical Efficiency of Wheat Production
by Smallholder Farmers in Soro District of Hadiya Zone, Southern Ethiopia. East African
Journal of Science, Vol. 13 (2) 113-120
Belete A. (2020). Analysis of technical efficiency in maize production in Guji Zone: stochastic
frontier model. Open research Agriculture &Food Security. https:doi/10.1186/s40066-
020-00270-w
Bezu k., Chala B. and Wakjira M. (2021) Economic Efficiency of Wheat Producers: The Case of
Debra Libanos District, Oromia, Ethiopia. Turkish Journal of Agriculture - Food Science
and Technology, 9(6): 953-960, 2021
CSA (2021), Agricultural sample survey: Report on area and production of major crops (Private
peasant holdings, Meher Season): Vol. I Statistical Bulletins 590, Addis Ababa,Ethiopia.
Gebreselassie, S., Haile, M. and Kalkuhl, M. (2017), “The Wheat Sector in Ethiopia: Current
Status and Key Challenges for Future Value Chain Development”, ZEF Working Paper
Series, Center for Development Research, University of Bonn, Bonn, Germany.
Hassen Beshir. 2016. Technical efficiency measurement and their differential in wheat
production: the case of smallholder farmers in South Wollo Zone, Ethiopia. International
Journal of Economics, Business and Finance, 4(1): 1-16.
Mulu Nigus, Hussein Shimelis, Isac K. Mathew & Seltene Abady (2022) Wheat production in
the highlands of Eastern Ethiopia: opportunities, challenges and coping strategies of rust
diseases, Open Access article Act Agriculture Scandinavia, Section B -Soil & Plant
Science, 72:1, 563-575,
Tiruneh, W. And Geta, E. (2016), Technical Efficiency of Smallholder Wheat Farmers: The
Case of Welmera District, Ethiopia. Journal of Development and Agricultural
Economics, Vol. 8(2), pp.39-51, DOI: 10.5897/JDAE2015.0660
USAID.Gov/Ethiopia (2020) Fact Sheet – Agriculture & Food Security – October 2020.
Zegeye F, Alamirew B, Tolossa D. (2020). Analysis of wheat yield gap and variability in
Ethiopia. Int J Agric Econon: 5(4):89–98.

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