ECONOMIC EFFICIENCY OF SMALLHOLDER FARMERS IN POTATO PRODUCTION: THE CASE OF MIERAB AZERNET BARBARE DISTRICT, SILTE ZONE, CENTRAL ETHIOPIA REGION.

ABSTRACT In Ethiopia, increasing population pressure and low levels of agricultural productivity have contributed a lot to the food security problems by widening the gap between demand for and supply of food. Increasing productivity in crop production, which among others could be possible by enhancing the level of economic efficiency, is an important step towards enlightening food security. This study examined the level of economic efficiency of Potato farmers and assesses the link between the estimated efficiency level to farmer’s socio economic and other characteristics. To seek this objective, threestage sampling techniques were used to select 149 Potato producers in Mierab Azernet Barbare District and cross-sectional data were collected by using interview through structured questioners for 2023/24 production year. Cobb Douglas stochastic frontier analysis was used to estimate efficiency scores. The mean technical, allocative, and economic efficiencies of the sample households were roughly 87, 91, and 89%, respectively. This implies that output of potato can be increased by 21% given the existing inputs and technological level and potato farmers has the possibility of reducing their production cost by 14% to produce the existing output level. Furthermore, the study assessed factors affecting efficiency levels of potato producers by using Tobit model. A two-limit Tobit model result revealed that age of the household head, education level, land fragmentation, extension service, membership of farm association, livestock ownership were the variables that affect economic efficiency level of smallholder potato farmers. Thus, the researcher recommended policies targeting institutional improvements (supporting by extension service, improving their livestock condition; membership of farmer associations and focus on experience of farmers would reduce potato farmer’s inefficiency or improve farmer’s efficiency in potato production.