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Technical efficiency analysis of coffee production

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Apr 15, 2026 version files 63.44 KB

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Abstract

In the international economy, coffee is one of the most important cash crops. But, because of socioeconomic and technical restrictions, it is defined by poor productivity. Modern technology integration with more efficiency is becoming increasingly vital in resolving this challenge. To fill the gap, this study was conducted to measure the level of technical inefficiency and identify its determinants. We develop one dependent variable and two independent variables. The technical efficiency of coffee production in the study area was measured by considering the output obtained per household head as the dependent variable, as well as two independent variable sets. Those are:
1. The set of variables to measure the elasticity of coffee production in the study area.
2. The set of variables identifies factors that may contribute to the technical inefficiency of coffee producers in the study area. Cross-sectional data were acquired from 285 randomly chosen households as part of the study's basic random sample approach. The Cobb-Douglas production function with a stochastic frontier was used to estimate the coefficients.

The Cobb-Douglas functional form is highly efficient in terms of degrees of freedom and is suitable for interpreting the elasticity of production. Therefore, in this investigation, the Cobb-Douglas functional form was favored. As a result, the output elasticity of the explanatory variable coefficients used in this study to measure the elasticity of coffee production in the research region was greater than 1. This indicates that doubling the inputs more than doubles the output, demonstrating that returns to scale are boosted because it is greater than one.