Effect Of Credit Constraint On Production Efficiency Of Farm Households In Southeastern Ethiopia

Credit constraint in agriculture affects not only the purchasing power of producers to procure farm inputs and to cover operating costs in the short run, but also their capacity to make farm-related investments as well as risk behavior in technology choice and adoption. These, in turn, influence technical efficiencies of the farmers. Although credit constraint problem has been recognized in economics literature, especially in those dealing with developing countries, little emphasis has been given to its effect on productive efficiency of farmers. In light of this, explicitly considering credit constraint, this paper estimated technical efficiency of credit-constrained (CCFHs) and unconstrained farm households (CUFHs) by employing a stochastic frontier technique on farm household survey data from Southeastern Ethiopia. The CCFHs had mean technical efficiency score of 12% less than that of the CUFHs. Given the largest proportion of CCFHs in Ethiopian farming population, this gap implies considerable potential loss in output due to inefficient production. Improving technical efficiency of all farm households in general but more of particularly the CCFHs is desirable. Additional sources of inefficiency differential between the two groups were also identified, and education level of household heads, land fragmentation and loan size significantly affected technical efficiencies of both groups. Besides, wealth and experience affected the CCFHs, and household size affected the CUFHs. In general, the results have important implications for credit, education and land policies in developing countries.Keywords: Credit market, stochastic frontier, technical efficiency, smallholders Ethiopian Journal of Economics Vol. 15 (1) 2006: pp. 1-3

Sense making of (Social) sustainability: A behavioral and knowledge approach

Although sustainability is often discussed solely in ecological terms, it cannot be disconnected from the way humans behave in their social environment. This article presents a theoretical approach toward sustainability that takes a human behavior and knowledge view on sustainability as a starting point. This approach requires that human behavior should change, individually and collectively, in order to achieve sustainability. Knowledge is identified as the driving force behind human behavior and its effect on the ecological and social environment. In connecting knowledge with sustainability, two concepts are introduced: knowledge of sustainability (KoS), which refers to the sustainability content of knowledge, and sustainability of knowledge (SoK), which denotes the dynamics of the continuing process of knowledge creation and application. To apply SoK and KoS, we argue that a cognitive interpretation of human behavior should be formulated within a knowledge management approach that incorporates the stages of knowledge creation, integration, and application and that ensures the critical evaluation of created knowledge. In order to show that our new approach is practical, we use existing research from the Dutch starch potato industry to reformulate possibilities for the enhancement of sustainability in terms of KoS and SoK. In addition, the research led to the development of a mechanism for evaluating knowledge. Group interaction, information technology, and decision support systems are used to realize knowledge integration. The combination of conceptual design and domain of application is common in the engineering sciences, where a design methodology is used to make the steps from conceptual design to functional design and technical implementation. A conceptual design may show ways to improve existing practices, which in turn might result in superior practices. Of course, it is necessary to empirically test the interventions in reality. For AGROBIOKON that has not been done, yet. © 2010 M.E. Sharpe, Inc. All rights reserved