Evaluating the Efficiency of Farmers in Ethiopia

Abstract

This article is primarily concerned with applying Data Envelopment Analysis (DEA) for measuring the efficiency of smallholders in Ethiopia. Two variants of DEA models, Constant-returns-to-scale (CRS) and Variable-returns-to-scale (VRS), are applied on individual farm level cross-sectional data from three villages in Ethiopia.  The empirical results of both measures show that the farmers in the sample are more technically inefficient than scale inefficient. This implies that policy should largely focus on means of raising technical efficiency. Moreover, the results also indicate that there is regional variation in the level of efficiency suggesting selective policy intervention based on the specific environment.