Technical inefficiency (TI) indicates that output gains may be possible in the short term. A study on the main determinate of technical efficiency (TE) provides valuable information to policy makers and indicates ways of formulating appropriate strategies of agricultural development. This paper measures the degree of technical efficiency of farmers growing cereals in five of the sites (Adaa, Daramalo, Kersa,Shashemene and Yetmen) covered by the Ethiopian Rural Household Survey. Using the approach developed by Aigner, Lovell and Schmidt (1977), we estimated a stochastic frontier production function using MLE (Maximum Likelihood Estimation) and COLS (CORERECTD Ordinary Least Squares). Due to its popularity in applied work on agriculture, we chose the Cobb-Douglas (C-D) technology. Our results show that land quality and the average age of household members engaged in agriculture are important variables in explaining output variation among farmers. In addition, regional differences are large and highly significant. With regard to causes of TE, we note that sharecroppers are, on average, more efficient. Since, within the group of sharecroppers there is much variation a more detailed study JIS required to shed light on this finding.


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