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ISSN 2229-5518
2041

Technical, Allocative and Economic Efficiencies and Sources of Inefficiencies a mong

Large-scale Sesame Producers in Kafta Humera District, Western Zone of Tigray,
Ethiopia: Non-parametric approach
Desale Gebretsadik

Socio economics researcher at Tigray Agricultural Research Institute (TARI)

ABSTRACT
This study analyzed production efficiency and sources of inefficiency differentials of sesame in Kafta
Humera district of Tigray region, Ethiopia. It was specifically aimed to address the research gaps by
measuring technical, allocative and economic efficiencies and their sources of inefficiency differentials
of sesame in Kafta Humera District. For addressing these objectives this study used primary and
secondary data obtained from field survey and desk review. Multistage random sampling technique was
used to draw 126 large-scale sesame producers. Applying the Cobb-Douglas functional form the
average technical, allocative and economic efficiencies found were 71%, 90% and 64% for large-scale
producers. Regarding these producers; education level, frequency of farm visit, experience in sesame

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production, type of road and credited amount obtained were significant sources of technical, allocative
and economic inefficiencies. Distance of farm from residence, ownership of living home and livestock
and cooperative membership were also significant sources of technical and economic inefficiencies.
Depending on the results found, this study recommend strengthening the introduction of improved seed,
mechanized labor substituting technologies and fertility enhancing inputs for improving production
level. For improving sesame production efficiency this study recommend; capacitating large-scale
producers through strengthening education, strengthening the credit access at affordable interest rate,
nearby sesame farm follow up and frequently visiting of their farm with effective farm management will
be better. For improving the farm level efficiency of large-scale producers, it is also important to initiate
producers to hire certified experts, strengthening the productive utilization of their livestock and their
house to earn cash.

Key words: Efficiency, inefficiency sources, Kafta Humera, Large-Scale and Sesame

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INTRODUCTION
Background of the Study

Agriculture is the most important sector of Ethiopia’s economy where about 95% of total arable area is
cultivated by small-scale that produce more than 95% of total output obtained from the sector (CSA,
2015; Mahelet, 2007; Seyoum et al., 2007; MoARD, 2010). It has contributed to livelihoods of about
85%, employing about 85% labor force, accounts about 45% of GDP and for foreign exchange currency
of about 86% (FDRE, 2016). Accordingly, the government of Ethiopia has taken initiatives that meant to
support successful achievement which can assure by improving efficiency through reducing losses and
improving market performance.

Sesame is one of the important oilseed crops adapted to semi-arid tropical regions that best performs on
well drained, moderately fertile soils with temperature between 20-35°C (Wijnands et al., 2007). Sesame

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is one of the six priority crops in the AGP of Ethiopia (SBN, 2013b). In Ethiopia, sesame is being
produced as cash crop by small-scale who cultivate 0.42 million ha and produce 0.29 million tone and by
large-scale who cultivate 0.28 million ha and produced more than 0.22 million tones (CAS, 2015).
Nationally, sesame accounts for 3.35% of total area and 1.1% of total grain production (CSA, 2015). It is
produced in North Gondar and Western Tigray lowlands, Welega, Benishangul Gumuz and South-Omo;
which North Gondar and Western Tigray contributed more than 68% of the national product (CSA,
2015).
Over the past years, sesame production has shown greater increase in area and production but decreasing
in yield. Looking at its trend, nationally sesame covered 0.14 million ha area where 0.12 million tons was
produced in 2004/5 (Kindie, 2007) increased to 0.29 million tone production on 0.42 million ha in
2014/15 (CSA, 2015). But, its productivity declined from 8.47 Qt/ha in 2004/5 (Kindie, 2007) to 7.35
Qt/ha in 2013/14 (CSA, 2014) and to 6.87 Qt/ha in 2014/15 (CSA, 2015).

In Tigray region, about 176,030 small-scale (CSA, 2015) and about 1130 large-scale (KHLAdO, 2015)
were engaged in sesame production that supplied 88.7% of their production (CSA, 2014). According to
CSA (2014), Tigray region ranked second in area and production. Western zone took the lion share in
the region’s sesame area (76.33%) and total production (76%) for the average productivity of 7 Qt/ha
(CSA, 2015).
Given agriculture as backbone of the nation’s food security and as sesame is the second agricultural
product that earns foreign exchange; it is imperative to conduct study on measuring production

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efficiency and inefficiency; so, large-scale producers in the study area were fail to earn profit. Similarly,
sesame suffers lower productivity than the FAO estimated potential (Wijnands et al., 2007). Also,
through farmer’s practice productivity ranges from 2 to 13.75 Qt/ha (WTZAO, 2014; HuARC, 2014)
which shows wider gap. So, this study was aimed to measure production efficiency and inefficiency
sources. Achievements of these objectives have significance contributions on making an informed
decision for optimum input allocation and providing scientific information for decision makers, planners,
policy makers, input suppliers, supporting institutions, and other actors. This study would also help as
reference for other studies.

METHODOLOGY
Description of the Study Area: The study was conducted in Kafta-Humera district, Ethiopia; bordered
by Eritrea, Sudan, Tsegedie district, Welkayt district and North western zone in the north, west, South,

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East and north east, respectively. The study area has 24 kebeles with total population of 103,692 having
26,352 households covering 4,542.33Km2 with 396,852ha cultivable land (KHARDO, 2013). There are
also 1,130 large-scale producers who cultivate sesame (KHLAdO, 2015). The study area is known for
cultivation of sesame and sorghum (KHARDO, 2013; HuARC, 2014).

Data Types, Sources and Methods of Data Collection: Both primary and secondary data types were
collected for this study where primary data sources were collected using semi-structured questionnaires
of formal survey procedures from large-scale producers in four kebeles. Secondary data sources are also
collected from office of agriculture and rural development, HuARC, different books and published and
unpublished reports.
Sampling Procedure and Sample Size: This study used multi-stage sampling technique for selecting
sample producers. First, large-scale producers in the district were selected purposively. Secondly, four
kebeles (Mai Cadra, Baeker, Adebay and Rawyian) were selected randomly. Then depending on
probability proportional to size of large-scale producers from each sample kebeles, specified numbers of
respondents were obtained based on the formula developed by Yamane (1967) considering confidence
level of 90% and accepting the error (e) of 9%,

n
N (3. 1)
1  N (e2 )

Where n = sample size, N= total large-scale household equal to 1,130. Based on the calculation, 126
large-scale sesame producers were sampled using random sampling technique (Table 1).

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Table 1. Number of sampled producers from each kebele

Kebele Total pop. Sample
Adebay 98 16
Baeker 149 25
Mai Cadra 409 68
Rawyian 107 17
Total 763 126
Source: KHLAdO, 2015

Methods of Data Analysis

Production Efficiency and Sources of Inefficiency Differentials
In estimating technical, allocative and economic efficiencies and inefficiencies, SFA of Cobb-Douglas
function was applied; because, it allows segregating of external effects from inefficiency. From Aigner et
al. (1968) and Meeusen and Broeck (1977), SPF in Cobb-Douglas form is defined as:

lnY i    ln  
k

x  (3. 2)

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0 j ij i
j 1

 u
i i i
th th
(3. 3)
Where j= 1… k inputs; i= i producer; Yi= sesame yield, Xij= j input used, βi= vector of unknown
parameters, εi= disturbance term composed of vi (error) and ui (inefficiency).

Production function could be either Cobb-Douglas or translog that requires specification by likelihood
ratio test. As it was developed by Battese and Coelli (1995) Cobb-Douglass production function of dual
cost used to specify cost function with its inefficiency where cost function represents dual approach
(Chambers, 1988). The stochastic nature of cost frontier would still imply the theoretically minimum
cost frontier; stochastic in nature, given as:


C  C P, Y * ,   (3. 4)
Or,
 k 
ln ci   0    p , i , j Yi* (3. 5)
 j 1 
ij

Where i = ith household; Ci = minimum cost; j= 1…k, inputs used; Pij= input price; Yi* = farm revenue
adjusted for noise vi, and α's= parameters to be estimated.

Variables of sesame production efficiency: These variables are inputs in sesame production efficiency
which could be production or cost inputs that combined to determine the overall production efficiency.
Production function: This uses the Cobb-Douglas form that shows the relation of dependent variable
with its inputs. The dependent variable is given by the following equation.

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ln Y     ln ld
i 0 i i

i ln sd   ln lb   ln pw   ln fq  ( u )
i i i i i i i i i
(3. 6)
Where ld= land, sd = seed, lb= Labor, pw = Oxen/tractor power, fq = fertilizer

Estimation of cost functions for sesame production

This refers to production cost incurred by producer’s calculated taking price of inputs give as follows:

ln c    ln cld   ln csd   ln clb   ln cft  ln cpw   ln cmt   ln cop  (  u )

j 0j 1j j1 2j j2 3j 3j 4j 4j 5j 5j 6j 6j 7j 7j j j
(3. 7)

Where j= jth producer; cj = actual cost; i= 1…7, ith input cost; βj= coefficients to be determined; v-u =
error; cld= land cost; csd= seed cost; clb= wage; cft= fertilizer cost; cpw= plough cost; cmt= material
cost and cop= operation cost.
The minimum cost input equation can be expressed as:
ci / pi  xie  pi , Y i ,  
*
(3. 8)
So, optimization profit principle is to minimize cost subject to optimum output. Minimum cost is derived

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using the methodology used in Arega and Rashid (2006), Ogundari et al. (2006), Zalkuwi et al. (2010)
and Ermiyas et al. (2015). Given input oriented function, the efficient cost function is written as:
k
Min C   ( x , p) (3. 9)
j j
j i

Subject to
j
^

Y *    Xj (3. 10)
i

  Exp 
^

0 (3. 11)
By substituting the expenditure function and the adjusted yield for stochastic error in to the above
minimization function to derive the following:

C  Y * , Y
  *u j
H Y i i P i (3. 12)
 i i
According to (Sharma et al., 1999), the explained cost measures enable to estimate AE and further EE.
Generally from the above explained concepts TE can be defined in the ratio of observed outputs (Y i) to
the corresponding frontier output (Yi*).

TE i  Y i / Y i  i xit, P i / i xi, P ip
*
(3. 13)
Also economic efficiency (EE) is the ratio of the minimum costs adjusted or expenditure (C*) to the
actual total production cost or expenditure (C).

EE  c / c   x P /  x P
*
i ie i i i
(3. 14)
From these two equations the AE can be derived as the ratio of EE to TE.

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AE  EE / TE   x P /  x P ie i it i
(3. 15)

Sources of sesame production inefficiency

After measuring TE, AE, and EE, it is important to identify the major sources of inefficiency derived
from different variables. Following the adoption of Battese and Coelli (1995) for analysis inefficiency
using Cobb Douglas functional form, estimation of inefficiency is specified as:

U i   0   1i w1i   2i w2i   3i w3i  ...   15i w15i (3. 16)

th
Where Ui= inefficiency of i producer; w1-w15= inefficiency variables.

Estimation of best production function

Selecting the best function relative to other functions is based on tests of fitness to the data generated. In
specifying the best production function this study conducted hypothesis tests for the parameters of SFA

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using likelihood ratio statistic defined by eq.3.17, that H0 is for Cobb-Douglas and H1 is for translog.

Likelihood ratio test: This is used to compare the goodness of fit of two hypotheses given as in eq. 3.17.

LR    2 lnLH 0  / LH 1   2ln LH 0   ln LH 1  (3. 17)

Where, L[Ho] is value of H0, L[H1] is value of H1. This also enables to detect either there is error or not;
through comparison of χ2 by obtaining λ, γ and δ2.

  u2 / 2...or....u /  , (3. 18)

  u /
2 2
(3. 19)

 2   u  
2 2
(3. 20)
Given the specification of SFA, inefficiency is present is defined by Ha: . In selecting the best
fitting model; so further the level of TE, AE and EE and inefficiencies, the studies conducted by Chimai
(2011), Abu et al. (2012), Hidayah et al. (2013), Asad et al. (2014), Getahun (2014), Berhan (2015),
Chakwera (2015) and Ermiyas et al. (2015), similarly used likelihood ratio test.

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RESULTS AND DISCUSSION

Demographic Features and Availability of Production Resources

On average there were six persons in each family with the composition of three by three for male and
female members (Table 2).

Table 2. Household characteristics of large-scale sesame producers

Variables Mean
Age (years) 48.4
Experience (years) 19.8
Family size (No) 6.50
Male members (No) 3.30
Female members (No) 3.20
Active family (No) 3.90
Non-active family (No) 2.50
Dependency ratio 0.38

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Education level (years of school) 4.88
Extension contact (No) 1.34
Training obtained (No) 0.91
TLU 12.73
Off-sesame income (Birr) 61,361.27
Borrowed money (Birr) 347,960.30
Own income (Birr) 192,245.10
Labor hired /ha 23.17
Total land 159.86
Sesame land 128.60
Source: Survey result, 2016

The sampled sesame producers used hired labor at different production activities that were 23 man-
days/year per-ha owning the average land holding size of 159.86 ha (Table 2). 98.67% of the sesame
produced in 2015/16 production year was sold (Table 3).

Table 3. Amount of sesame allocated for different purposes

Purpose Mean (Qt.) %
Sold 295.91 98.67
Seed 3.6 1.2
Consumption 0.38 0.13
Source: Survey result, 2016

Summary Statistics of Sesame Production Inputs and Costs

The average sesame produced by the sampled producers was 299.43 Qt/household with cost of birr
854469.84 (Table 4).

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Table 4. Summary of total production inputs and costs

Variable Unit Mean
Sesame produced Qt 299.43
Production cost Birr 854469.84
Labor used No 2979.44
Labor cost Birr 445387.67
Land size Ha 128.59
Land cost Birr 178981.01
Plough power hour Hr 64.30
Plough cost Birr 63530.04
Operating cost Birr 53458.69
Material cost Birr 7657.32
Seed amount Kg 436.98
Seed cost Birr 12681.64
Fertilizer cost Birr 92773.63
Fertilizer used Qt 72.24
Average sesame yield Qt/ha 2.46
Average production cost/ha Birr/ha 6644.43
Source: Survey result, 2016

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Estimation of Production Function parameters
Specification tests: Different types of tests were applied for model validity checking such as multi-
collinearity, heteroskedasticity, and adjusted R-square. Multicollinearity test using VIF for all variables
was less than ten (i.e., 5.21), indicating no severe problem (Table 5). Heteroskedasticity test using the
Breusch-Pagan test also show that there is no heteroskedasticity problem (Table 5). Adjusted R-squared
also was 0.92 indicating the variables explain 92% of the variability in sesame output (Table 5).
Table 5. SFA parameter coefficient for sesame production by large-scale producers
Ln sesame production unit Coefficients P>|t|
Ln land Ha -1.15*** 0.007
Ln fertilizer Qt 0.024 0.276
Ln labor Man day 0.021 0.352
Ln plow power Tractor hr 2.31*** 0.00
Ln seed Kg -0.279** 0.025
Total (elasticity) 0.926
Constant 3.60*** 0.00
Wald chi2 (5 ) 2746.57 P= 0.00
Sigma_U 0.482 P= 0.00
Sigma_V 0.117 P= 0.00
gamma(γ) 0.944
2
sigma 0.246
MLR -24.32
Adj. R-squared 0.9156
hettest. Prob. > chi2 0.217
VIF 5.21
*, **, ***, significant at 10%, 5% and 1%, significance level respectively

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The study indicated that variables such as land size and plough power were significant at 1%; while
improved seed at 5% for determining large-scale sesame production; however, variables such as fertilizer
and labor become insignificant (Table 5). The studies conducted by Baten et al. (2009), Ibrahim et al.
(2014), Wassie (2014), Chakwera (2015) and Ermiyas et al. (2015) found farm size was significant in
determining production. Moreover, Rahman and Umar (2009), Zalkuwi et al. (2010), Abu et al. (2012),
Abba (2012), Getachew and Beneberu (2014), Ibrahim et al. (2014), Wassie (2014), Berhan (2015) and
Ermiyas et al. (2015) found seed as significant variable. So, it is observable that the result found by this
study is similar with the results obtained by the listed former studies. The inverse relationship between
farm size and yield was similar with the results of Chand et al. (2011), Maqbool et al. (2012), Wutyi et
al. (2013) and Berhan (2015). The coefficients in Table 5 could be interpreted that, one percent
increment in sesame land size leads to 1.15% decline in yield. Similarly one percent increment in seed
results to 0.28% reduction of total production. However, one percent increase in plough power hour

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leads to 2.31% increment of production.

Elasticity of sesame production: The summation of production inputs’ coefficients was 0.93 (Table 5),
indicating the one percent increase in inputs simultaneously leads to 0.93% increment of production.
This has consistency with the result of Ogundari and Ojo (2005), Ibrahim et al. (2014) and Ermiyas et al.
(2015); found the scale ranging from 0.84 to 1.2105%.

Cost efficiency: This study found that both error terms (u and v) for sesame producers were statistically
significant at 1% (Table 7). Further, value of gamma (γ=δ u2 / (δ u2 + δ v2)); is γ = 0.9257 that implies
92.57% variability is contributed by differences in decision maker’s inefficiencies (Table 6). Regarding
the cost function inputs, all variables have statistically significant with positive sign; except operation
and material costs that were insignificant (Table 7).

Table 6. Tests of cost function model validity

Null hypothesis LR value calculated Critical value (5%) decision
H0: γ=0 92.57 11.07 Reject H0
H0: δ1 = ... δ10=0 77.27 9.39 Reject H0
Source: STATA.13, output
Material cost includes cost of: agricultural materials, sack, harvesting and threshing materials and tractor
material and tools. Whereas operating cost includes cost of; fuel and lubricants, tractor repairing, medical
service and feed expense for draft animals, transportation and loan. This study shares similarities on cost
parameters with the formerly conducted studies by Ogundari and Ojo (2007), Berhan (2015) and Ermiyas

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et al. (2015), in which cost efficiency inputs were wage, seed cost, agro-chemical costs, and amount
produced. But also, cost of farm tools by Ogundari and Ojo (2007) and land rental cost by Berhan (2015)
in addition to the above explained once.
Table 7. Sesame production cost parameters
Total sesame Production cost Coefficient P>|z|
Ln Operation cost 0.006 0.44
Ln seed cost 0.033** 0.023
Ln fertilizer cost 0.007*** 0.001
Ln material cost -0.009 0.471
Ln plough cost 0.039*** 0.006
Ln labor cost 0.242*** 0.00
Ln land cost 0.083*** 0.004
Ln production 0.62*** 0.00
Elasticity 1.0155
Constant 5.22*** 0.00
MLR 127.98

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Sigma_v 0.0395*** 0.00
Sigma_u 0.1393*** 0.00
Sigma2 0.021*** 0.00
gamma (γ) 0.9257
*, **, *** significance at 10%, 5%, and 1%, respectively

Estimation of technical, allocative and economic efficiencies of large-scale sesame producers

Technical efficiency: The mean TE level found in this study was 71.46% (25.6 - 96.03) (Table 8). This
implies that if the average producer wants to achieve the TE of his/her most efficient counterpart, he/she
could realize 25.59% input saving [i.e., 1-(71.46/96.03) x100]. Similar the most inefficient farmer
reveals cost saving of about 73.34% [i.e., 1-(25.6/96.03) x100]. The mean level of TE shows that there is
an opportunity to increase efficiency on average by 28.64% if inputs allocated properly.

Table 8. Category of sampled sesame producers based on their TE

Category Number of respondents Percent
TE<20 0 0.00
20<TE<30 2 1.59
30<TE<40 5 3.97
40<TE<50 9 7.143
50<TE<60 15 11.9
60<TE<70 20 15.87
70<TE<80 24 19.05
80<TE<90 37 29.37
TE>90 14 11.11
Mean TE 71.46
Source: Survey results, 2016

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The average and range of TE in this study is consistent with the result of Ibrahim (2007), Amaza et al.
(2010), Chimai (2011), Abba (2012), Dawit et al (2013), Endrias et al. (2013), Getahun (2014), Evaline
et al. (2014), Getachew and Bamlak (2014), Hussain, et al. (2014), Wassie (2014), Chakwera (2015) and
Ermiyas et al. (2015); ranging in 34-77%.
To give a better picture about TE distributions, a frequency distribution is categorized by 10% interval;
here, 40.48% of the producers were operating blow mean (Table 8). This imply that in the long run there
is a room for improving the existing TE level of sesame producers providing a special attention to
introduce best alternative farming practices and improved technologies.

Allocative efficiency: The average AE of large-scale sesame producers was 89.88% (56.94 - 98.16)
(Table 9). With this deviation, if the average producer wants to operate his/her AE to the most efficient,
he/she could obtain cost saving of 8.44% [i.e., 1-(89.88/98.16) x100], however the most allocatively
inefficient could save 42% [i.e., 1-(56.94/98.16) x100]. About 38% of the sampled producers were

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operating below mean AE (Table 9). The result obtained in this study is complementary with the results
of Ogundari and Ojo (2005, 2007), Alboghdady (2014), Mburu (2014) and Chakwera (2015) who found
AE from 57 to 96%. Generally, AE of large-scale sesame producers in Kafta Humera district show that
most of the producers have relatively similar allocation of resources with the unit prices attached to each
input, so leads higher AE.

Table 9. Distribution of AE of sesame producer categories

Category Number of respondents Percent
AE< 20 0 0.00
20< AE<30 0 0.00
30<AE<40 0 0.00
40<AE<50 0 0.00
50<AE<60 1 0.79
60<AE<70 0 0.00
70<AE<80 8 6.35
80<AE<90 43 34.13
AE>90 74 58.73
Mean 89.88
Source: Survey result, 2016

Economic efficiency (EE): Following the relative ratio of actual cost to the hypothetical minimum cost,
EE could be obtained which is the multiplication of TE and AE. Applying this procedure this study
found mean EE of 64.58 percent (22.37 - 92.76) (Table 10). Taking this range, if the average producer
wants to reach his/her EE to the most efficient counterpart, he/she could experience the cost saving of

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30.38% ([i.e., 1-(64.58/92.76) x100]. Similarly, the most inefficient producer could save his/her cost by
75.88% [i.e., 1-(22.37/92.76) x100]. The mean EE found in this study is similar with the results of
Endrias et al. (2013), Abu et al. (2012), Myo et al. (2012) Hidayah et al. (2013), Abba (2012), Dawit et
al. (2013), Asad et al. (2014), Evaline et al. (2014), Getachew and Bamlak (2014), Berhan (2015),
Chakwera (2015) and Ermiyas et al. (2015).

Table 10. Distribution of EE by large-scale sesame producers

Category Frequency Percent
EE<20 -- --
20<EE<30 6 7.14
30<EE<40 6 7.14
40<EE<50 13 15.88
50<EE<60 21 16.67
60<EE<70 27 28.57
70<EE<80 26 19.84
80<EE<90 25 3.17

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EE>90 2 1.59
Mean 64.58
Source: Survey data, 2016
As presented in Table 10, about 45% of the sampled producers’ EE was below mean which is an
indication that producers were unfairly efficient; meaning there was greater variability in their
achievement.

Sources of technical, allocative and economic inefficiency of large-scale sesame producers

Having information about TE, AE and EE, identifying the major sources of inefficiency is the next
important part of this study. Before using all the proposed socio-economic and institutional variables into
the model a test for multi-collinearity using VIF is important. Accordingly, the VIF result of each
variable is below ten (i.e., 2.73) (Table 11), indicating no severe multicollinearity problem. Based on the
Breusch-Pagan test result of heteroskedasticity also, the null hypothesis could not be rejected (Table 11).
The test for cost inefficiency model validity also indicated the result of VIF for each variable in the
model and the mean value of all variables is below 10 (i.e., VIF= 3.59) (Table 11). Based on the
Breusch-Pagan test result of heteroskedasticity also, the null hypothesis could not be rejected (Table 11).
The adjusted R-squared in both production and cost inefficiency also show the variables explained 69%
and 91.46%, respectively (Table 11). As a result all the variables hypothesized are entered in to their
respective models. The significant sources of technical, allocative and economic inefficiencies (Table
11) are discussed as follows.

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Education level of household head (eduhhd): The result of this study shows that education level of
household head significantly and negatively affect to technical, allocative and economic inefficiency at
1%. If education level in years of schooling becomes one year higher relative to others, one’s technical,
allocative and economic inefficiency decreases by 1.4%, 0.6% and 1.6%, respectively. This may be,
education enables producers to have greater ability to understand, adopt and correlate inputs with lower
cost and misuse.
According to Huffman (1980) and Lockheed, et al. (1980), the relationship between education level and
efficiency is theoretically justified as education increases performing capacity and so best match of
resources; because education is proxy for managerial ability. The result of this study is similar with the
results found by Shumet (2011), Rahman et al. (2012), Abba (2012), Getachew and Bamlak (2014),
Hussain et al. (2014), Shalma (2014) and Wassie (2014); but, in conducted to Abu et al. (2012). The
result of allocative and economic inefficiencies obtained in this study is in line with results of Arega and

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Reshid (2006), Aye and Mungatana (2010), Otitoju and Arene (2010), Shehu et al (2010), Shumet
(2011), Myo et al. (2012), Chakwera (2015) and Sisay et al. (2015).

Experience in sesame production (exp): It is found that experience of sesame producers is significantly
and negatively affected to technical, allocative and economic inefficiency of sesame production at 5%,
10% and 5%, respectively. This could be; because experience is a proxy for managerial aspects and
improves the skill and technical capacity that enables to best match inputs and in cost saving aspect so
attain higher productivity at minimum cost. The relationship implied that, there is a reduction in
technical, allocative and economic inefficiencies by 0.6%, 0.37% and 0.5%, respectively as one’s
experience increases by one year. The technical inefficiency result is consistent with the results of
Abdukadir (2010), Myo et al. (2012), Hidayah et al. (2013), Berhan (2015) and Ermiyas et al. (2015);
but contradicts with result found by Adeyemo et al. (2010). Taking allocative and economic inefficiency
the result found is similar with results of Zalkuwi et al. (2010), Abu et al. (2012, 2011), Myo et al.
(2012), Hidayah et al. (2013) and Biam et al. (2016). However, it is in contrast to the result of Dawit et
al. (2013) and Ermiyas et al. (2015).
Membership in cooperatives (memb): The technical and economic inefficiency of large-scale
producers were significantly and positively determined by being a membership in cooperative at 1%.
Theoretically, membership in social organizations helps producers in achieving efficiency; but, this
unexpected result could be that members might not discuss related to sesame production while meeting
and they may spend more time while discussing other issues which compute time of sesame farm

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operation. Besides, while producers want to take loan from their cooperative it takes more time; so, they
did not get their credit on its time, spending of time until getting loan which computed sesame farm
operating time. Depending on the result of this study, as sesame producer’s become members of
cooperative one’s technical and economic inefficiencies raises by ten and 10.3%, respectively.
Distance of sesame farm from residence (distfh): It is found that farm distance is significant and
negatively related to technical and economic inefficiencies at 1% and 5%. Accordingly, as farm distance
increases by 01Km, their technical and economic inefficiencies decreases by 0.3% and 0.2%,
respectively. This relation may be because there is high probability of family members or manager to
live in production site; so, whole day follow up is observed that enables to better manage farms which
lead to better efficiency achievement.
Frequency of sesame farm visit (freqgo): It is found that this variable significantly and negatively
determines technical, allocative and economic inefficiencies at 1%, 10% and 1%, respectively. So,

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according to the study result as large-scale sesame producer increases his/her farm visit by one time,
his/her technical, allocative and economic inefficiencies decrease by 0.4%, 0.6% and 0.4%, respectively.
Theoretically, the relation could be interlinked, as there is nearby farm follow up that enables
understanding of real happening so solutions could be emanated.
Ownership of standardized home (ownhom): It is found that this variable significantly and negatively
determined technical and economic inefficiencies of large-scale sesame producers at 1%. According to
the result found, as large-scale producer owns standard home that could hold as collateral their technical
and economic inefficiencies decreases by 23% and 22% relative to the one who did not own. This may
be as producers had their own house, they do not pay house rent rather they may allocate the money for
sesame production. Also it can be used as collateral for obtaining loan. Thus, improves their efficiency.
This result matches with the result of Jema (2008).
Ownership of livestock (ownliv): This study found that TLU significantly and negatively affected to
technical and economic inefficiencies of the sampled producers at 10%. This relationship implies that as
large-scale producer’s TLU increases by one, one’s technical and economic inefficiencies decreases by
5.1% and 0.56%, respectively. This could be as livestock enables to obtain off-sesame farm income.
Regarding, the relationship of TLU and TE, the result in this study is similar with the result of Wassie
(2012), but in contradiction with the result revealed by Wondimu and Hassen (2014). In relation of TLU
and EE the result found is similar with the reports of Amos et al. (2007), Idiong et al. (2009), Otitoju and
Arene (2010), Shehu et al. (2010), Chakwera (2015) and Sisay et al. (2015).

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Amount of credit obtained for sesame production (loan): It is significantly and positively related to
technical, allocative and economic inefficiencies of large-scale producers at 10%, 10% and 5%,
respectively. According to this result, as one obtains one percent of the amount he/she expected and
invested at sesame production one’s technical, allocative and economic inefficiencies increases by 0.011,
0.003 and 0.01%, respectively. This may be that they spent the loan obtained in payment of laborers and
fertilizer purchase which did not have significance contribution in TE achievement. It may also due to as
loan is obtained from informal money lenders, who were most familiar in the area that requires higher
interest rate.
Availability of road facility from farm to home (road): It is also found that road facility is
significantly and negatively related to technical, allocative and economic inefficiencies of large-scale
producers at 1%, 5% and 1%, respectively. This is implying that as large-scale producer obtained access
to normal road, one’s technical, allocative and economic inefficiencies decreases by 0.033%, 0.008%

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and 0.033%, respectively. It is because accessible road enables to timely reach so manage farm activities
timely and reduced amount of grain loss while transporting.
Table 11. Sources of technical, allocative and economic inefficiencies
Technical Allocative Economic VIF production VIF cost
Variables function function
inefficiency inefficiency inefficiency
Age household head (years) 0.001 -0.001 0.001 1.99 2.40
Education level (schooling years) -0.014*** -0.006*** -0.016*** 1.69 1.92
Experience (years) -0.006** -0.0037* -0.005** 1.67 2.08
Dependency ratio (No) 0.004 0.004 0.006 1.9 2.06
Distance of farm (Km) -0.003*** 0.0002 -0.002** 1.88 2.03
No of extension contact (No) -0.01 0.005 -0.007 2.09 2.84
Frequency farm visit (No) -0.004*** -0.006* -0.004*** 1.93 2.21
Home ownership (Dummy) -0.23*** -0.022 -0.22*** 1.68 2.44
Livestock ownership (TLU) -0.051* -0.017 -0.056* 1.90 2.29
Number of training obtained (No) -0.003 0.001 -0.001 1.76 1.75
cooperative member (Dummy) 0.10*** 0.0204 0.103*** 1.92 2.07
Road type (Dummy) -0.033*** -0.008** -0.033*** 1.48 1.95
Ln Off sesame income (Birr) 0.003 0.0027 0.004 2.48 2.48
Ln loan obtained (Birr) 0.011* 0.003* 0.01** 1.53 2.25
Constant -0.6*** -0.87*** -0.54***
Mean 2.73 3.59
Adjusted R2 0.91 0.69
P(X2 = P(X2 =
Chi2 0.19)=0.12 0.78)=0.38
*, **, *** significance at 10%, 5%, and 1% respectively

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