ANALYSIS OF TECHNICAL EFFICIENCY IN AGGREGATE PRODUCTION IN SELECTED QUARRIES,SOUTH-WESTERN NIGERIA

Abstract

This study analysed the productivity and technical efficiency in aggregate production and investigated the causes of inefficiencies in selected Quarries across the south western region (Ogun, Oyo, Ondo and Osun State) of Nigeria using stochastic frontier production function which incorporates a model of inefficiency effect. This was achieved through the collection of data with a careful and thoughtful review of literature and the technical efficiency was estimated using Software for Statistics and Data Science (STATA). It was determined that the mean aggregate production is 17,854.23 tonnes/mnth, monthly productivity per worker is 706.04 tonnes and monthly productivity per hour is 41.74 tonnes/hr. Also, about 86% of mean production was influenced by the factors of production used in the study. The result shows 100% of the variation in Quarries’ output was due to inefficiencies on the part of the production processes rather than random variability. The variables such as total number of equipment, mean days of weekly use, number of skilled staff and quantity of fuel used per month, are factors which positively influence the output of the Quarries. An investment on equipment would increase productivity and allow continuity of operation against possible breakdown. The results of the study further revealed that the technical efficiency varied between 0.9937 and 0.4352 with a mean of 0.6843 (68.4%), an indication that there is a chance to improve production. The implication of this is that efficiency in aggregate production among the quarries could be increased by 31.6%. In conclusion, the research was able to show the relationship between productivity and technical efficiency. Also factors such as age of equipment, availability of Technicians for repair and number of working hours per day were found to be the sources of technical inefficiency. It is recommended that provision should be made by stakeholders investing in the Quarries to provide access to affordable production inputs for an effective improvement in efficiency of the company.