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Citation: Sunday Brownson Akpan., Inimfon Vincent Patrick and Samuel James Udoka (2012)
“Stochastic Profit Efficiency of Homestead based Cassava Farmers in Southern Nigeria”, Asian
Journal of Agriculture and Rural Development, Vol. 2, No. 3, pp. 498 - 505.
Asian Journal of Agriculture and Rural Development, 2(3), pp. 498-505.
Abstract
498
Stochastic Profit Efficiency of Homestead based.....
2003). Thus, with these, cassava production maximization given scare farm resources
capacity needs to be increased such that rising available to farmers in the region. What are
demand will be met. One of the ways by which these factors and the magnitude of their effect
this could be achieved is to improve the profits on farm level profit constitute the fundamental
accruing to the producers (Awoyinka, 2009). questions this study sought to answer.
Empirical analysis of the profit efficiency
Cassava production in the Southern region of among homestead based cassava farmers is
Nigeria is characterized by the use of less imperative owing to the issue of food security
productive tools and is affected by uncertainties and land use efficiency. Therefore, the study
of rain as well as other endogenous constraints specifically estimates the normalized Cobb-
inherent in arable crop production. Many Douglas stochastic profit function and
aspects of cassava production activities like economic efficiency function of homestead
clearing, planting, weeding and harvesting are based cassava farmers in the southern Nigeria.
not mechanized thus labour intensive (Akpan
and Essien, 2011). With the increasing rural – Stochastic Profit Function
urban migration among young Nigerians (Wosu The study is based on the analysis of economic
and Anele, 2010 and Afolabi, 2007), the efficiency of farms derived from production
relative scarcity of rural labour posed a serious frontier proposed by Farrel (1957). Economic
restraint to cassava production in the area or profit efficiency shows success of a given
(Afolabi, 2007). The extent an individual farm enterprise, as it indicates the ability of a
farmer is able to cope with economic farm to obtain a maximum profit given a level
constraints in production in addition to the level of input and output prices including the level of
of resource endowment and technology fixed factors of production in the farm. From
determined the level of investment in cassava Farrel analysis, a farm is economically efficient
production (Udoh and Sunday, 2007). in resource use when it operates on the
economic efficiency frontier. On the other hand,
Homestead based cassava production arose as a economic inefficient farms operate below the
complementary farming system especially for efficiency frontier.
the urban and Peri-urban dwellers and involves
planting cassava around residential homes. The The profit function model for the economic
advantage of the farming system lies on easy efficiency analysis was described as follows
accessed to farm products at convenience as (Nwachukwu and Onyenweaku, 2007):
well as complementing family food supply and
income. This practiced has been going on for 𝜋 = 𝜋 𝜌 = ƒ 𝑞𝑖 , 𝑍 𝑒𝑥𝑝 𝑉𝑖 − 𝑈𝐼 … … … (1)
ages among dwellers in the southern region of
Nigeria. Since production is basically the Where
process of allocating scare farm resources 𝜋 = normalized profit of ith farmer
subject to production constraints to achieve 𝑞𝑖 = vector of variable inputs
economic goal like profit maximization; then it Z = vector of fixed inputs
is right to assume that homestead based cassava 𝜌 = output price
farmers in the Southern Nigeria are constantly 𝑒𝑥𝑝 𝑉𝑖 − 𝑈𝐼 = composite error term
faced with the problem of farm resource
allocation and usage. This implies that The stochastic error term consist of two
homestead based cassava farmers have being independent elements “V” and “U”. The
achieving various levels of economic element V account for random variations in
efficiencies, which is presumed to be one of the profit attributed to factors outside the farmer’s
major reasons for continuous cultivation of control. A one sided component U ≤ 0 reflects
cassava around homes in the region. In an economic efficiency relatives to the frontier.
environment of highly unstable factors and Thus, when U = 0, it implies that farm profit
output price of staple crops, couple with price lies on the efficiency frontier (i.e. 100%
elasticity of demand of crop outputs; some economic efficiency) and when U < 0, it
factors might influence homestead based implies that the farm profit lies below the
cassava farm level objective of profit
499
Asian Journal of Agriculture and Rural Development, 2(3), pp. 498-505.
efficiency frontier. Both V and U are assumed (2007) applied translog stochastic profit
to be independently and normally distributed function to measure efficiency of Fadama
with zero means and constant variances. Thus Telfairia production in Imo State, Nigeria.
economic efficiency of an individual farmer is Their empirical results reveal that age, farming
derived in terms of the ratio of the observed experience, farm size, membership of
profit to the corresponding frontier profit given cooperative society and house hold size are
the price of variable inputs and the level of significant determinants of economic efficiency
fixed factors of production of farmers. of the farmers. An average economic efficiency
of 0.57 was discovered for the sample farmers.
Ogunniyi, (2008) used translog stochastic profit
𝐸𝐸 function to examine profit efficiency of
𝑜𝑏𝑠𝑒𝑟𝑣𝑒𝑑 𝑓𝑎𝑟𝑚 𝑝𝑟𝑜𝑓𝑖𝑡 𝑓𝑜𝑟 𝑖𝑡ℎ 𝑓𝑎𝑟𝑚𝑒𝑟 cocoyam production in Osun State, western
= =
𝑓𝑟𝑜𝑛𝑡𝑖𝑒𝑟 𝑓𝑎𝑟𝑚 𝑝𝑟𝑜𝑓𝑖𝑡 𝑓𝑜𝑟 𝑖𝑡ℎ 𝑓𝑎𝑟𝑚𝑒𝑟 Nigeria. He used 120 cocoyam farmers for data
ƒ 𝑞𝑖 ; 𝑍 exp 𝑉𝑖 − 𝑈𝑖 collection, and the result of the analysis
… … … … … … … … . (2) revealed an average profit efficiency of 12%.
ƒ 𝑞𝑖 ; 𝑍 expVi
The results further reveal accessibility to credit,
family size, farm size and mulching as
exp 𝑉𝑖 − 𝑈𝑖 significant determinants of profit efficiency of
𝐸𝐸 = = 𝑒𝑥𝑝 −𝑈𝑖 … … … . (3) cocoyam farmers in the region. Awoyinka,
expVi (2009) examined the effect of Presidential
Initiatives on Cassava (PIC) on productivity of
Pius and Inoni, (2006) used Cobb-Douglas cassava and technical efficiency in Oyo State,
stochastic revenue function to estimate Nigeria. A stratified random sampling was used
economic efficiency of yam farmers in south to collect primary data from 290 farmers under
eastern Nigeria. An average economic PIC (RTEP and ADP) and non-PIC farmers;
efficiency of 41% was discovered. The study and analyzed with stochastic frontier function
also shows that farmer’s experience and model. Farmers under PIC are more technically
accessed to credit are factors significantly efficient than non-PIC farmers, which confirm
affecting economic inefficiency of yam farmers. that PIC programme positively enhances
Ogundari, (2006) estimated Cobb-Douglas cassava productivity and technical efficiency.
stochastic profit function for small scale rice Oladeebo and Oluwaranti, (2012) examined the
farmers in Nigeria. His results reveal that farm profit efficiency in cassava production in
size, price of labour, fertilizer price, price of Southwestern Nigeria. Results showed the mean
agrochemical and farm tools are production level of profit efficiency of 79% which
inputs that is significantly affecting farm level suggested that an estimated 21% loss in profit
profit. An average economic efficiency of was due to a combination of both technical and
0.601 was discovered in the study. Also, allocative inefficiencies. The study further
Farmer’s experience was identified as a major showed that household size and farm size were
determinant of profit inefficiency of farmers. the major significant factors which influenced
Awoniyi and Bolarin, 2007) study production profit efficiency positively.
efficiency of upland and wetland yam based
enterprises in Ekiti State, Nigeria. The result
shows an average economic efficiency of 0.80
Materials and Methods
for wetland farmers, while farm size and
planting material significantly affected wetland Study area Sampling Technique: The study
farmer’s profit. Ogundari and Ojo, (2007) was conducted in Calabar municipality and
estimated Cobb-Douglas stochastic cost Odukpani Local Government areas of Cross
function of small scale food crop production in River State. These areas are located in the
Ondo State. They found an average economic southern part of Nigeria and fall within the
efficiency of 68.38%. In addition, the results humid tropics region; and have two distinct
reveal that year of schooling, and accessed to seasons (i.e. the dry and wet season). In this
credit significantly affected economic study, we defined homestead based cassava
inefficiency of farmers. Nwachukwu et al., farmers as those farmers that cultivate cassava
around their residential houses, either as sole or
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Stochastic Profit Efficiency of Homestead based.....
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Asian Journal of Agriculture and Rural Development, 2(3), pp. 498-505.
Table 2: Efficiency model of Homestead based cassava farmers in Southern Cross River State
Variable Parameter Coefficient Std. error t-value
Constant γ0 0.6469 0.1286 5.030***
Age γ1 0.2157 0.6041 0.357
Sex γ2 0.1081 0.8626 0.125
Level of farming involvement γ3 0.2409 0.1012 2.380**
Education γ4 0.8532 0.2881 2.961***
Credit γ5 -0.4164 0.9357 -0.445
Ability to predict rainfall γ6 -0.5847 0.9389 -0.623
Farming experience γ7 0.6069 0.2820 2.152**
Household size γ8 -0.9112 0.4137 -2.203**
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Stochastic Profit Efficiency of Homestead based.....
On the other hand, the coefficient of household eventually economic efficiency in farm
size (-0.9112) has a negative significant impact resource utilization.
on economic efficiency of homestead based
cassava farmers. An increase in the farmer’s From the analysis of economic efficiency
household size could exert considerable model, it could be infer that increase in
pressure on the relatively finite land area meant household size, ability to predict rainfall
for cassava cultivation, as part or whole might pattern, and credit accessibility increase
be converted to alternative land uses (Ogunniyi, economic inefficiency among homestead based
2008). This would reduce available land for cassava farmers in the study area; while
cassava cultivation. Hence economic efficiency increase in other variables in the model reduce
of the farmer will be reduced as good economic inefficiency.
proportion of revenue will be lost. Also,
increased family size could increase the Economic Efficiency Distribution
quantity of farm produce consume by the The distribution of respondents according to
family in addition to increase family efficiency class interval, frequency and
consumption expenditure. All these factors tend percentage of each class interval is described in
to reduce farmer’s income, farm investment and Table 3.
Table 3, reports the frequency distribution of produced by the farmers because of economic
economic efficiency indices of homestead inefficiency in the used of the specified farm
cassava farmers in southern Cross River state. resources. About 3.33% of farmers were very
Homestead based cassava farmers showed far from the efficiency frontier, while 6.67% of
varied economic efficiencies ranging from the farmers were much closed o the efficiency
lowest 0.0429 to the highest 0.9380 with an frontier. However, the least economic efficient
average of 0.6122. The extent of variation in homestead based cassava farmer needs an
economic efficiency among farmers shows that efficiency gain of 95.43% (i.e., 1.00 –
a significant proportion of cassava is not 0.0429/0.9380)100 in the use of specified farm
503
Asian Journal of Agriculture and Rural Development, 2(3), pp. 498-505.
resources if such farmer is to attain the will push the farmer’s efficiency nearer to the
economic efficiency of the best farmer in the frontier efficiency. Finally, the review of the
region. Likewise for an average efficient land use Act of 1990 may be imperative to ease
farmer, he will need an efficiency gain of difficulties associated with land acquisition for
34.73% (i.e., 1.00 – 0.6122/0.9380)100 to attain agricultural production in the area. If farmers
the level of the most efficient farmer. Also, the have more accessed to agriculture land, their
most economic efficient farmer in the study efficiencies would increase as well as the
area needs about 6.20% gains in economic productivity which is the major objective of the
efficiency to be on the frontier efficiency. federal government agricultural policy.
Conclusion References
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