Journal of Natural Sciences Research www.iiste.org ISSN 2224-3186 (Paper) ISSN 2225-0921 (Online) DOI: 10.7176/JNSR Vol.9, No.8, 2019 9 Analysis of Price Efficiency of Smallholder Farmers in Maize Production in Gudeya Bila District, Oromia National Regional State, Ethiopia: Stochastic, Dual Cost approach By Tolesa Tesema Edosa 3 Temesgen Kebede 2 Zekarias Shumeta 3 1.Department of Agricultural Economics, Wollega University, Shambu, Ethiopia 2.Department of Economics, Haramaya University, Dire Dawa, Ethiopia 3.Holeta Research Center, Holeta, Ethiopia Abstract Even if Ethiopia had adopted different strategy and policies the productivity of agricultural production is not as meet the demand of the peoples. The aim of this study was to analyze productivity and price efficiency of smallholder farmers in maize production in the study area. To meet the stated objectives primary data were collected using structured questionnaires from 154 randomly selected sample households during the 2017/18 production year. Copdoglous production function was applied to analysis productivity where as dual cost is used to estimate price efficiency. Tobit model was used to identify factors affecting price efficiency level. Price efficiency were 70.06%. Thus the results reveal exists considerable levels of price inefficiencies in maize production in study area. The Tobit model results revealed that livestock holding and participation in off/non-farm activities had positive effect and distance of maize plot from home were found to had negative effect on price efficiency The result indicated that there exists a room to increase the price efficiency of maize producers in the study area. For realizing significant price efficiency gains policies and strategies of the government should be directed towards increasing farmer’s livestock holding and promoting off/non-farm activities. Keywords: Dual cost, Cobb-Douglas, Tobit DOI: 10.7176/JNSR/9-8-02 Publication date: April 30 th 2019 1. INTRODUCTION Agricultural sector in Ethiopia it remains rain-fed and majority of smallholder farming engaging on less than a hectare of land (1). More recently the second Growth and Transformation Plan (GTP –II) also made agricultural growth as its core growth program at the national level and to maintain it as a source of economic growth. Besides this fact, agriculture remains the main economic growth and development option in Ethiopia which is estimated to increase at annual average growth rate of 8% during GTP II period (NPC, 2015).Despite such strategies and policies, the sector is characterized by its low productivity, which is attributed to limited access to agricultural inputs such as fertilizer and improved seeds ,inefficiency resource use , limited access to finance, agricultural markets and poor land management [3 , 1). Maize is important for poor households as they mix maize flour with teff to make the national staple injera, and the cost of maize is half that of wheat and teff[4].In Ethiopia, maize grows under a wide range of environmental conditions between 500 to 2400 meters above sea level. Maize is cultivated in different parts of Ethiopia, mainly Oromia, Amhara, Southern Nations and Nationalities Peoples and Tigray regions and it is the first most important cereal crop in East Wollega Zone [5]. Maize is produced by 5.36 million smallholders in Oromia region and occupies 1.14 million hectare of land with an output and productivity of 43.62 million quintal and 38.26 quintal/hectare respectively [6].maize yield levels in Ethiopia are still very low caused by institutional, social and economic factor, risk issue and suboptimal crop management [7]. In addition, maize yields are inevitably affected by weather condition, limited input, limited a favorable policy, quality of seed varieties and limited techniques of production [6].Although, the analysis of technical efficiency of maize farming is important, there was limited empirical research done so far particularly on the estimation price efficiencies. Therefore, this study intended to fill this information and knowledge gaps in Gudeya Bila district where such type of work has not been conducted for efficiency of maize production. 1.4. Objectives of the Study 1.4.1. General objectives The general objective of the study was to analyze price and cost efficiency of smallholder farmers in maize production in Gudeya Bila district of East Wollega Zone. 1.4.2. Specific objective The specific objectives of the study were the following: 1. To measure the levels of price efficiency of smallholder maize producers in the study area. 2. To identify the factors that affect price efficiency of smallholder maize producers in the study area.