This study examined the productivity of the smallholders' farms in bread wheat based farming system of Hetosa plain in Arsi Zone of Oromiya regional state in southeastern part of Ethiopia. The study was based on the cross sectional data collected from 26 farmers selected using simple random sampling method in 2017. The wheat production efficiencies were estimated using stochastic frontier production function in which inefficiency is assumed as a function of different productivity factors. The general low level of efficiency of farmers is an indication of high potential that exists to improve the productivity of farmers through improving the efficiency level of those less efficient farmers. More farmers operate at lower efficiency level for wheat relative to barley. Whereas the opposite is true for higher efficiency level indicating that more farmers' approached the frontier for barley production relative to wheat production; possibly due to the traditional nature of the barley technologies. In the analysis of causes of inefficiencies, it has been found that average education level and proximity to development center are important factors that affect the production inefficiency.
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