Stochastic frontier production function analysis was performed to examine relative crop and milk production efficiency among peasants in Ada and Selale districts of the Central highlands of Ethiopia. The results indicate that Ada farmers exhibit relatively higher efficiency scores in cereal production compared to Selale producers. Farmers who adopted cross-bred cows attained higher efficiency scores than farmers who did not adopted. Production efficiency scores are higher in enterprises that enjoys experience and location specific comparative advantages. The magnitude of the impacts of knowledge-related variables (i.e., production knowledge and schooling) on production efficiency are higher relative to other variables. Adoption of one or two innovations show a consistently large, positive and significant effect on all measures of production efficiency in the Selale region. Higher production efficiency is attained in Ada region if producers adopt two or more technologies. Development strategies should examine the mixes of production technologies that may contribute to increases in agricultural production compared to the conventional package approach.
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