EFFICIENCY OF SMALL HOLDER COCOA PRODUCERS IN ONDO STATE NIGERIA; A STOCHASTIC FRONTIER ANALYSIS

Abstract

The main objective of this study is to investigate the technical efficiency of small holder cocoa farmers in Ondo State and to identify the influence and direction of the influence of farmers' socio-economic variables on technical efficiency. To this end, one hundred and fifty cocoa farmers were randomly selected from major cocoa producing area of Ondo State to collect both socio-economic data and cocoa production data, including inputs as well as constraints in cocoa production. The collected data were subjected to both descriptive statistics and econometric analysis using the stochastic frontier production functions to determine the level of technical efficiency of the farmers as well as those factors that influence the level of technical efficiency. For the stochastic frontier model, both Cobb-Douglas and the translog functional forms were estimated and the model that best represented the data was selected. The result of the analysis indicate that maximum likelihood estimate (MLE) of Cobb-Douglas frontier model presents better representation of the data and hence selected as lead equation. The result shows that apart from shade and pesticides that carry negative coefficient, all other coefficients in the model are highly significant. The results show that farmers age, level of formal education, farming experience, farm size, use of pesticide and use of shade trees are jointly significant influencing the level of efficiencies of the fanners. The result also indicate that older farmers are less technically efficient than the younger farmers, since increase in age leads to decline in technical efficiency. This implies that as the age of cocoa tree increases, the level of technical efficiency would also increase. This is because the yield of cocoa trees normally increases with the age of tree until it reaches a peak before declining. The coefficient of education is also positive, implying that increase in the years of schooling would lead to higher level of efficiency. This result follows a priori expectation as educated are expected to be more receptive to adoption of new technologies that would likely lead to higher level of productivity. The wide variation in the level of technical efficiencies of the sampled cocoa farmers implies that there is ample opportunities for raising the current level of efficiency, especially of factors identified in this research work are addressed.