An Examination of Technical, Economic and Allocative ...

1 185 Bulgarian Journal of Agricultural Science, 13 (2007), 185-195 National Centre for Agrarian SciencesAn Examination of technical , Economic and AllocativeEfficiency of Small Farms: The Case Study of CassavaFarmers in Osun State of NigeriaK. OGUNDARI and S. O. OJODept of Agricultural Economics and Extension, Federal University of Technol-ogy, Akure, NigeriaAbstractOGUNDARI, K. and S. O. OJO, 2007. An Examination of technical , Economic andallocative efficiency of small farms: the case study of cassava farmers in Osun state ofNigeria. Bulg. J.

2 Agric. Sci., 13: 185-195 This study examined empirically productive efficiency of cassava farms in Osun state ofNigeria. Using farm level data, the study estimates a stochastic frontier production and costfunctions model, which was used to predict the farm level technical and Economic predicted technical efficiency and Economic efficiency are the basis for estimating allocativeefficiency of the farms. Estimated results shows that cassava farms exhibits decrease positivereturn to scale judged by the value of return to scale (RTS) of obtained from the analysis,meaning that cassava farmers were efficient in allocating their resources.

3 Additionally, the analy-sis reveal that predicted efficiency measure disaggregated into technical , Economic and allocativeefficiency with a view of examining not only TE but EE and AE when ,the results of the predicted efficiency shows that mean TE,EE and AE , and were obtained respectively. Meaning that TE appears to be more significantthan AE as a source of gain in EE. The policy implication of these findings is that cassava farmsin the study area were efficient in allocating their resources considering their scope of operationand the limited words: cassava, smallholder farms, technical , Economic , Allocative efficiencies,NigeriaJEL CLASSIFICATION: Q12 IntroductionFood has been persistently used as aweapon during wars, national and inter-national politics.

4 Whosoever therefore con-trols the key to the storehouse controls theconscience of a hungry man or nation. Inview of this, cassava not only serves asfood crop, it is a major source of incomeand employment for rural households ine-mail: Ogundari and S. O. OjoNigeria. As a food crop, cassava has someinherent characteristics which make it at-tractive especially to the small holder farm-ers in Nigeria. Firstly, it is rich in carbohy-drates especially starch and consequentlyhas multiplicity of end uses, secondly, it isavailable all the year round, making it pref-erable to other more seasonal crops suchas grains, peas, beans and other crops forfood security and lastly it is tolerant of lowsoil fertility and more resistant to , Nigeria is the largest producerof cassava in Africa with an annual pro-duction of about 35 million metric tones oftuberous roots (CBN 2003).

5 Cassava tubers are mostly processedinto cassava flour (lafun), gari and fufu inNigeria. It can also be cooked or eaten,pounded and consumed in its raw form,most especially the sweet variety. By im-plication therefore, cassava has becomea regular item in household diets in Nige-ria. Presently, the crop had achieved an'export statuses because of the increasingdemand for cassava as industrial rawmaterials abroad. To meet the export de-mand and domestic demand, Nigeria needsabout 150 metric tones of cassava, hencethe Federal government of Nigeria hascome out with a policy for cassava pro-duction with a view of setting policies thatwill stimulate domestic production.

6 The roleof increased efficiency and productivity ofcassava farms is no longer debatable buta great necessity in order to reverse thelow technical , Economic and allocativeefficiency of small holder farms in Nige-ria, since cassava has the potential forbridging the food gap, as it has been dis-covered from research that famine rarelyoccurs where cassava is widely grown(Nweke et al., 2002).This study is aimed at opening a newdimension to farmers and policy makerson how to increase cassava production bydetermining the extent to which it is pos-sible to raise efficiency of cassava farmswith the existing resource base and avail-able technology in order to address foodproduction problem in Nigeria.

7 To be use-ful for policy intervention, the efficiencymeasurement in this study were disaggre-gated into technical , Allocative and eco-nomic paper is organized as follows: sec-tion 1 is introduction and objectives, studyarea and data used in section 2. Section 3describes conceptual framework to mea-sure both technical , Economic andallocative efficiency using production andcost function framework plus model speci-fication, while section 4 describes resultsand discussion. In section 5 conclusion andpolicy implication from the result Area and the DataStudy areaThe state is located in the south west-ern part of the country with a land area squared kilometers and a populationof people [FOS, 1996].

8 The stateis agrarian and well suited for the produc-tion of permanent crops such as cocoa andoil palm and arable crops such as maize,yam and cassava because of favorableclimatic conditions. The annual rainfall isbetween 1000mmand 1500mm with highdaily temperature of about 30oC. Thepeople are predominantly pleasant farm-ers with a relatively smallholding rangingbetween collection and sampling techniqueThe data used in this study were cross-sectional survey collected from 200 cas-sava farmers selected from four Local187An Examination of technical , Economic and Allocative efficiency of Small Farms.

9 Government Area (LGAs) of Osun stateof Nigeria which include; Ilubu, Ife-cen-tral, Ilesa and Ede using multistage sam-pling technique. The first stage involved apurposive sampling of four LGAs basedon the prevalence of cassava farmers inthese areas. The second stage involved asimple random selection of 50 respondentsfrom each were collected withthe aid of a structured questionnaire de-signed to collect information on output, in-put and prices of input which serve as basisfor compacting cost of materials used incourse of production. Information wascolleted on total output measure inkilogram(kg), labour used in man days,planting materials [kg], farm size in hect-ares [ha], age of farmer(yrs), cost oflabour (naira), cost of plantingmaterials(naira) and cost of farm tools innaira (Nigerian currency).

10 Conceptual Framework\Model Speci-ficationEfficiency and Frontier ProductionFunctionsFarrell (1957) provided the impetus fordeveloping the literature on empirical esti-mation of technical , Allocative and eco-nomic efficiency . His work led to a betterunderstanding of the concept of the effi-ciency. He proposed that the efficiencyof a firm consisted of these components- technical , Allocative and Economic efficiency which is definedas the ability to produce a given level ofoutput with a minimum quantity of inputsunder certain technology. Allocative effi-ciency refers to the ability to choose opti-mum input levels for given factor or total efficiency is the prod-uct of technical and Allocative economically efficient input-outputcombination would be on both the frontierfunction and the expansion studies focused primarily on tech-nical efficiency using a deterministic pro-duction function with parameters com-puted using mathematical programmingtechniques.