Beyene Tadesse Ferenji, Franz Heidhues:
Deterioration in Total Factor Productivity in Food Production in the Post Reform Period -- The case in TEF in Ethiopia

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BEYENE TADESSE FERENJI, FRANZ HEIDHUES
University of Hohenheim, Agricultural Economics and Social Sciences in the Tropics and Sub-tropics, Germany

Production and consumption of Tef as human food is peculiar to Ethiopia. It is one of the largest sources of food in urban and in most rural Ethiopia. Consequently, the largest share of resources is allotted to the production of this crop. A growth change in this food crop can greatly affect the food sector in the country. The main purpose of this paper is, therefore, to demonstrate the trend of Total Factor Productivity of Tef after economic reform and to evaluate the potential of this important crop in reducing food deficit in the sector. A Stochastic Frontier Model was applied to explicitly identify the magnitude of changes in the efficiency and technological progress, which together form Total Factor Productivity (TFP). A cross sectional-time series data from rural farm households was used for the period of 1994 to 2001.

The result of the study shows that the changes in policy and institutions significantly improved the production efficiency of the crop by about 20% in the study period. On the other hand, technological progress was severely deteriorated (36%) in the same period. Disappointingly, the decline in the technological progress surpassed the improvement in production efficiency and ultimately resulted in TFP to fall by 25%. In addition, it has been found that sample farmers were producing at increasingly inefficient scale of operation implying over utilisation of resource in Tef production indicating failure of markets to guide efficient resources allocation.

These findings have shown that economic reform alone is not a panacea for increasing food production and growth in general. Technological advancement is the other important component of growth missing in the production of Tef in this country. Thus, improving techniques of production of Tef by generating better performing varieties and agronomic practices would be imperative. Furthermore, encouraging more competition in product and factor markets for better resource use would be advisable.



Keywords: Efficiency change, Ethiopia, food production, policy reform, technological deterioration, Tef


Footnotes

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Contact Address: Beyene Tadesse Ferenji, University of Hohenheim, Agricultural Economics and Social Sciences in the Tropics and Sub-tropics70593 Stuttgart, Germany, e-mail: tadesse@uni-hohenheim.de
Andreas Deininger, September 2004