Efficiency Of Small Scale Food Crop Producers In Abia State, Nigeria: A Stochastic Frontier Approach

ABSTRACT

The technical, allocative and economic efficiency of food crop producers was evaluated. A multi-stage random sampling technique was adopted in selecting one hundred and twenty food crop producers from the three agricultural zones of the State. A cost route approach was used to obtain information on the socio-economic characteristics of the farmers output, inputs and their prices. Descriptive statistics such as means, frequencies and percentages were used in presenting the data on the socio-economic variables. The Cob-Douglas and cost function were estimated using the Maximum Likelihood estimation technique and to obtain the technical, allocative and economic efficiencies of the farmers. The generalized likelihood ratio estimation was used in testing hypothesis of full technical, allocative and economic efficiencies, while t-test statistics was employed in testing their determinants. Socio-economic determinants of efficiencies were also studied. The results showed that most of the farmers 43.33 percent have farm size that is less than one hectare. Most of the respondents were women 58.67 percent. About 70 percent of the farmers were within the age bracket of 31 and 40 years. Cob-Douglas Stochastic Frontier functional form were adjudged the best fit for technical and economic efficiency based on the high values of log-likelihood function, number of significant variables and appropriateness of a priori expectations. Significant factors influencing Stochastic Frontier production function were farm size, labour, fertilizer and capital. Factors influencing Stochastic cost function were price of planting materials, wage rate, price of fertilizer and interest on capital. The positive determinants for technical, allocative and economic efficiency were age, gender, farming experience and extension contact, while the negative determinants were membership of farm associations, educational level, farm size, household size and access to credit. The results showed that food crop producers were not efficient and required a cost savings of about 14 percent to be technically efficient, 17 percent to be allocatively efficient and 18 percent to be economically efficient. The null hypothesis of full technical, allocative and economic efficiency were rejected which implied that there is room for efficiency growth.