The Effect of Technical Efficiency on Smallholder Taff Producers’ Welfare: Evidence from Northern Ethiopia

Abstract

This research examines the link between technical efficiency (TE) and household welfare of small-scale Taff-producing farmers in Laelay Maichew District, Northern Ethiopia. A total of 392 farmers were surveyed using a multistage sampling technique, which was subsequently analyzed using stochastic frontier and structural equation model. The mean Technical Efficiency (TE) was 2.459 with a standard deviation of 1.241. The key results are that total income is positively affected by TE. Technical efficiency also has a significant positive effect on total asset value. These findings identify the key roles played by technical efficiency in improving the welfare of the household. Therefore, focused interventions such as increasing access to quality inputs, enhancing agricultural extension services, providing technical training, and providing cheap credit must be targeted towards the low-performing farmers in efficient allocation of resources. Such focused aid would bridge efficiency gap, reduce income disparity, and increase inclusive welfare growth among the teff-growing farmers of Northern Ethiopia.