COMPARISON OF PROFITABILITY AND PRODUCTION EFFICIENCY OF MAJOR CEREAL CROPS IN ADAMA WOREDA, CENTRAL ETHIOPIA

Increasing technical efficiency in production of major cereal crops could play an important role towards food security while escaping poverty requires rural households have to graduate from purely subsistence farming to a semi-commercial status and increase their farm income. This study was undertaken to compare profitability of teff, wheat, and maize and assess technical efficiency involved in their production by smallholder farmers and identify determinant factors. Cross-sectional data from 122 farm households who were producing teff, wheat, and maize in common were collected with relevant secondary data from different sources during 2013/14 production season. Gross margin analysis, data envelopment analysis, and tobit regression model were used respectively in assessment of profit, determination of technical efficiency, and determine the factors of technical efficiency. Maize was found to be most profitable followed by teff and wheat with an average gross margin of 21134 birr/ha, 17650 birr/ha, and 15137 birr/ha respectively. Maize also took the first rank in returns to labor and capital followed by teff and wheat. The results showed that, the mean technical efficiencies in the production of teff, wheat, and maize were respectively 0.73, 0.58, and 0.627 which indicated inefficiency existed in production of these crops. The tobit regression results indicated that proximity to farm, use of high yielding variety, extension contact frequency, training, age of the farm household head, and oxen holding for teff production while age of the farm household head, oxen holding, literacy status, and farm size for production of wheat while proximity to maize farm, use of high yielding variety, frequency of extension contact, literacy status, and farm size for production of maize were found to be significant factors determining technical efficiency. The results also showed, if all the farm households achieve full technically efficient level, wheat had the highest potential to improve the average current farm income followed by maize and teff. Accordingly farm households are advised to properly utilize the scarce production resources which increase yields and farm incomes.