ECONOMIC EFFICIENCY OF RAIN-FED UPLAND RICE PRODUCTION IN OSUN AND OYO STATES OF NIGERIA

Abstract

Rice (Oriza sativa) is one of the food crops by which successive Nigerian governments had desired to boost food production since the early 1970s without much progress. Thus, this study examined the socio-economic characteristics of rain-fed upland rice growers in Osun and Oyo States of Nigeria; estimated their profitability, technical, allocative and economic efficiencies; determined resource-use efficiency and the influence of growers' socio-economic characteristics on technical efficiency on rain-fed upland rice production in the study areas. Data collected from 300 rice growers in the two States through a combination of purposive and multi-stage random sampling techniques were analyzed, using descriptive statistics, gross margin analysis and the stochastic frontier production function analysis. Results showed that the mean ages of the rice farmers were 44.3 years and 37.5 years while the mean rice farm sizes were 1.3 ha and 1.9 ha for Osun and Oyo States respectively. Paddy outputs averaged 1,679.48kg/ha in Osun while that of Oyo State was 1,158.11kg/ha. Paddy growers in Osun State earned average gross margin/ha of W34,181.38 while their counterparts in Oyo State received W25,448.84 with average profit per grower being W41,132.74 and W44,476.8 respectively. Results of the stochastic frontier production function analysis showed that the value of the estimated sigma squared of 0.008 which was significant at the 5.0% level indicated that the estimated production function for Osun State fitted the data very well. The estimated coefficients of included regressors were 0.961 (for farm size); 0.016 (family labour);-0.036 (hired labour); 0.534 (fertilizer);-0.063 (rice seed); 0.037 (cost of agro-chemicals) and-0.047 (cost of implements). For Oyo State, the estimated value of sigma squared of 0.018 which was also significant at 5.0% showed that the estimated production function fitted the data quite well. The estimated coefficients of the explanatory variables were 0.314 (for farm size); 0.142 (family labour); 0.284 (hired labour); 0.001 (fertilizer); 0.026 (rice seed); 0.010 (cost of agro-chemicals) and 0.051 (cost of implements). Land was the most productive resource with elasticity of production of 0.961 and 0.314 for Osun and Oyo States respectively. With the exception of the estimated coefficient of family labour which was insignificant, the estimated coefficients of other explanatory variables were significant at the 5.0% level for Osun State. In Oyo State, the coefficients of farm size, family labour and hired labour were significant while those of the quantity of fertilizers, rice seed, costs of agrochemicals and implements were not statistically different from zero at the 5.0% level. The computed RTS for paddy production in Osun State was 1.40 while that of Oyo State was 0.83. Results of efficiency measurements showed an average of 90.1% in technical efficiency, 92.0% in allocative efficiency and 83.4.0% in economic efficiency for Osun State. On the other hand, Oyo State paddy producers recorded an average of 94.3% in technical efficiency, 88.9% in allocative efficiency and 84.0% in economic efficiency. It was concluded that although rice enterprise was profitable in the two States, rain-fed upland rice farmers were not fully economically efficient in the use of production resources available to them.