A COMPARATIVE STUDY OF PRODUCTION EFFICIENCY OF INSURED AND UN-INSURED SMALL-SCALE FARMS IN EDO AND DELTA STATES,NIGERIA

Abstract

This study is a comparative analysis of the production efficiency of insured and un-insured small-scale farms in Edo and Delta States. The study covered six local government areas randomly selected from each of the two States. Primary and secondary data were used for the analysis. While the secondary data were obtained from the Agricultural Development Projects (ADPs), Ministry of Agriculture and the State office of the Nigerian Agricultural Insurance Corporation (NAIC) in each of the two States, the primary data were obtained through the use of a questionnaire, copies of which were administered on two categories of small-scale farmers in the two states; namely: participants in the agricultural insurance scheme (who operated the insured farms) and nonparticipants (who operated the un-insured farms), all of whom were crop farmers. Three analytical approaches were adopted in the study. They were descriptive statistics, production function analysis and the estimation of costs and returns using gross margin analysis. Three (3) hypotheses were tested at the 0.05 and/ or 0.01 levels of significance. Results of the production function analyses and production elasticities indicate that land and labour were over-utilized, while planting materials were under-util ized by both categories of farmers in both states. Results from the gross margin analyses indicate that Delta State farmers had higher and significant returns (at the 95 per cent confidence limit) per respondent and per hectare basis, both for the insured farms operators and un-insured farms categories, than their Edo State counterparts. However, the variable costs items were not significantly different from each other at the 95 per cent confidence limit. The expenditure profiles of the farmers (insured farms operators and un-insured farms operators) indicate that capital items accounted for less than 4 per cent of total cost of production .. The major recommendations emanating from the study include, among others, the need to strengthen agricultural information apparatus to effectively motivate the farmers to voluntarily enter into insurance contract/policy, the need for corporate organizations/multi-national companies to have keen interest in the food security of the nation to enhance their profitability by engaging in farm input supplies, provision of insurance cover to farms and farming households, as part of their social responsibility to society; and the need for the Nigerian Agricultural Insurance Corporation to effectively monitor all participants loans.