ECONOMIC ANALYSIS OF CASHEW PRODUCTION IN OYO STATE, NIGERIA

Abstract

The study carried out economic analysis of cashew production in five Government Areas (LGAs) in Oyo State. The study examined the socio-economic characteristics of cashew farmers in the study area, cost structure for cashew production, analysis of profitability and resource-use efficiency in cashew production. Data were collected from 200 farmers using purposive sampling for the selection of the LGAs and systematic random sampling technique for the selection of respondents. Data were collected through the use of structured questionnaires. The methods of analysis adopted were statistical analysis such as descriptive statistics like frequency distribution, mean, standard deviation and percentages for the demographic data and cost structure analysis, while the profitability of cashew production was determined using Budgetary Analysis (for gross margin and net revenue), and Production Function Analysis using the Ordinary Least Square (OLS) method was used in determining resource-use efficiency of cashew farmers in the study area. The cost structure showed that labour is the highest variable, cost element at N2,050,1 00.00 (23.59% of total costs), while the profitability analysis showed that cashew farming was profitable in the study area with total gross margin ~ing.N6,,388,175.76. The production function analysis showed that farm size (ha) and amount of labour (mandays) were statistically significant at 5.0 per cent level. They, are the most important policy variables which has serious economic implications 011 cashew production in the study area. The returns to scale value of 0.970 revealed positive decreasing returns to scale in cashew production in the study area Hence, cashew farmers in Oyo State are operating on the efficient stage (Stage II) of the production frontier. The study recommends that old cashew farmers in Oyo State with trees that are over 30 years old should reduce area used for cashew cultivation and also reduce the use of labour and inputs such as fertilizers, agro-chemicals, and implements on their farms. However, new cashew farmers should expand area cultivated by planting the new, high-yielding, improved varieties of cashew seeds. Old trees, whose productivity has diminished, should be cut down. It is expected that if cashew farmers in Oyo State and the policy makers in the field of agricultural developments adopt the above mentioned recommendations; there will be more efficient use of production resources and the gains from foreign exports that would improve Oyo State economy will be maximised.