Technical efficiency of teff farms in Ethiopia: Do neighborhood effects matter? A copula stochastic frontier and spatial Durbin regression.

ABSTRACT

Teff is essential to most Ethiopians, but its production is hampered by farmers' characteristics and spatially related neighborhood variables. This study analyzes the neighborhood effect on the technical efficiency of teff farms in Ethiopia using panel data from the Ethiopian socioeconomic survey. The spatial Durbin regression models (SDM) and Copula stochastic frontier were used with 858 teff-growing farmers. The mean value of teff's technical efficiency was found to be 53 %, meaning that farmers had a 47 % likelihood of improving teff farm efficiency. The results from the SDM indicate a significant contribution of neighborhood effects for improving technical efficiency in teff farms. Thus, policymakers could explore implementing localized interventions and knowledge-sharing initiatives to disseminate best practices, innovative technologies, and agronomic knowledge within specific spatial clusters. By doing so, they can leverage the observed influence of neighborhood dynamics on teff farm efficiency.