Production efficiency in Peasant Agriculture: The Case of Mixed Farming System in the Ethiopian Highlands

An aggregate measure of production efficiency involving crop and livestock enterprises is examined in the Selale and Ada regions of Ethiopia using Data Envelopment Analysis (DEA). In general, farmers in regions more suitable to crop production (Ada) tend to attain higher production efficiency compared to farmers in regions suitable to livestock production (Selale). This implies that Ada farmers produce agricultural outputs with a minimal outlay of inputs. DEA results also reveal that farmers who adopted cross-bred cows (refrred as test farmers) are more efficient than those who have not adopted ( referred as control farmers) in both study sites. Analysis of the contribution of socioeconomic variables to measures of production efficiency indicated that the magnitude of knowledge-related variables (i.e. production knowledge and schooling) are relatively higher compared to physical or other non-physical variables. This finding implies that sustainable increases in production efficiency and attainment of food self-sufficiency could be attained if development strategies design methods of incorporating indigenous production knowledge of peasants in the planning process.