This study analyzed the levels of allocative efficiency using a cross-sectional data collected from randomly selected 288 irrigated and non-irrigated potato producers in east Gojjam zone of Ethiopia..The stochastic frontier analysis results revealed the existence of potato production allocative inefficiencies among sample farm households. Tobit model was used to identify factors affecting allocative efficiency. The tobit model results indicated that access to irrigation, livestock holding, sex of household head and agro-ecologywere significant factors that affected allocative efficiency of potato production. Thus, to increase potato production allocative efficiency, agricultural activities need to target irrigation and the socio-economic factors that determine allocative efficiency of potato production.

Keywords: Allocative efficiency, irrigation, smallholders, stochastic frontier, East Gojjam