Heterogeneity, Transient and Persistent Production Efficiencies of Major Crops in Southern Ethiopia

Endogeneity, Heterogeneity and Determinants of Inefficiencies in Crop-producing Farmers: Empirical Evidence from Central Highlands of Ethiopia

“…However, the state of agriculture in Ethiopia including the grain crop sub-sector is progressively declining; and its productivity remains low as a result of numerous challenges -limited private investment, fragmented markets, environmental degradation and recurrent shocks (Neglo et al 2021). Moreover, the sector is characterized by inefficiencies and low productivity in which cereals have shown a steady low-growth rate in the last two decades (Geffersa 2023;Meja et al 2022). Hence, being an agriculture dependent country with limited capacity for developing and adopting new technologies, increasing production and enhancing farming efficiencies with the existing technologies is not a matter of choice but is instead a must for Ethiopia.…”

“…One of the potential drawbacks of these papers is that they are almost exclusively based on overall technical efficiency measures that do not distinguish between transient and persistent inefficiency. More importantly, though few studies have been emerging differentiating between transient and persistent efficiency components in Ethiopian farming context (Geffersa 2023;Meja et al 2022;Oumer et al 2022) none of them have applied to account for endogeneity and heterogeneity among Therefore, it is vital to perform a comprehensive analysis with recent efficiency models that account for unobserved farm-heterogeneity and endogeneity problems while estimating transient and persistent efficiency components distinctively, and identifying sources of inefficiency differentials. This paper aimed to bridge these gaps in literature by considering the most recent model the Generalized true random effects -Four error component stochastic frontier, panel data model; hereafter (GTRE-4eCSF panel data model) that disentangles farm-heterogeneity and endogeneity from inefficiency while estimating persistent and transient with their determinants for Ethiopia's major grain crop-producing farmers using a household-level panel dataset.…”