ANALYSIS OF TECHNICAL EFFICIENCY AND POVERTY AMONG OIL PALM FARMERS IN ODIGBO LOCAL GOVERNMENT AREA OF ONDO STATE, NIGERIA

Abstract

The study focused on the analysis of technical efficiency and poverty status of oil palm farmers in Ondo State. A multi-stage random sampling technique was used to select 100 oil palm farmers from the State. Structured questionnaire and interview scheduled were used to elicit the required information from the selected respondents. Both descriptive and relevant inferential statistics such as frequency, percentages, mean, correlation, stochastic frontier production and stochastic cost function were used for data analysis. Socio-economic, farm specific and institutional characteristics and resources used constituted the explanatory variables for the study. Major possible constraints confronting the oil palm farmers were also identified. The Maximum Likelihood Estimate (MLE) of the parameters of the stochastic frontier production function indicated that the coefficients of the production factors had expected signs. Labour had a positive relationship with oil palm production. The mean technical efficiency was 87.29% with minimum and maximum efficiencies of 60.72% and 98.78%. The inefficiency model showed that household size, education and farm expenditure were variables that reduce the technical inefficiency of the respondents and were all significant at 1.0%. Age was significant at 5.0% and increased the farmers’ technical inefficiency. The maximum likelihood estimate of the stochastic cost function indicated that the coefficients of labour cost and cost of agrochemicals carried the expected signs and were related with cost of oil palm production. Cost of transportation and cost of harvesting were significant at 1.0% while, cost of fertilizer was significant at 5.0%. Age, household size and farmers’ experience were found to produce a reduction in cost inefficiency among the respondents, while years spent in school increased their cost inefficiency and both significant at 5.0%. There was significant negative correlation between poverty gap and technical efficiency estimates among the respondents. The implication is that as technical efficiency estimate increased, poverty gap decreased. It is therefore recommended that adequate on-farm education on resource use be given to farmers by governmental and non-governmental agencies, this will reduce incidences of poverty.