Multiple Agricultural Production Efficiency in Horro District of Horro Guduru Wollega Zone, Western Ethiopia, Using Hierarchical-Based Cluster Data Envelopment Analysis

Abstract

Multiple agricultural productions were a way of life for Ethiopian farmers. However, it was known for low productivity due to improper resource allocation. Hence, the farm household is under food insecurity and earned a low annual income. To overcome these challenges, the present study used hierarchical-based cluster data envelopment analysis by collecting data from 152 sample households through structured questionnaires. The finding suggested that the farm households in the study area were characterized by the low level of technical efficiency in multiple agricultural productions, implying that most farmers were unable to keep up with the current production frontier and technologies. The study’s key result is that hierarchical-based cluster data envelopment analysis is more efficient than traditional data envelopment analysis. Furthermore, farmers in the study area are technically inefficient. From the determinants of technical efficiency in multiple agriculture, access to credit and the fertility of farmland have a positive impact on technical efficiency, whereas the age of the household and distance from infrastructures have a negative impact. Based on the significant determinants of efficiency, the present work recommends government agencies and agricultural development planners must improve farmers’ knowledge towards soil fertility management practices through the construction of soil bunds, tree planting, grass planting, fencing, and the use of natural fertilizer; expansion of microfinance to rural area; and construction of the road for the market facility in the study area. Additionally, changing farmers’ knowledge towards the uses of integration of manure products from livestock as fertilizer inputs for crop production and residues of crops as livestock consumption were paramount important.