TECHNICAL EFFICIENCY OF SMALL SCALE FARMERS IN GINGER PRODUCTION (A CASE STUDY OF MAKURDI L.G.A OF BENUE STATE)

CHAPTER ONE

INTRODUCTION

1.1. BAKGROUND OF THE STUDY

The agricultural sector in Nigeria is dominated by small scale farmers who produce the bulk of food requirements in the country. The small scale farmers belong to the poorest segment of the population despite their unique and pivotal position and therefore cannot invest much on their farms.

The vicious circle of poverty among these farmers has led to the unimpressive performance of the agricultural sector. While several efforts have been undertaken to raise the production and productivity of these farmers so as to achieve food security, such efforts have had negative implications for the environment.

At the industry level, the resources managements are a key element for its development. Agriculture, as an industry, also needs an efficient use of resources in order to sustainably increase income and reduce poverty while improving agricultural productivity. For instance, Christiaensen (2017) finds that increasing productivity requires a rational or efficient use of resources as supports the neoclassical production theory.

The rational behavior is, therefore, a key factor of productivity and producers’ income while contributing to the development dynamics. Indeed, the agricultural sector continues to be the key driver of economic and social development for most developing countries (Dorosh and Thurlow, 2018; Christiaensen et al., 2011).

According to Diao et al. (2010), agriculture employs more than 60% of the workforce and contributes more than 35% of the gross domestic product (GDP) of most African countries and more than 40% for the least developed countries.

In most developing countries, agricultural products fulfill food security and play an important role in income generation and meet farmers’ subsistence needs (Sun and Li, 2018; Christiaensen et al., 2011; Valdés and Foster, 2010).

Moreover, agricultural products, mainly cash crops, account for a significant share of exports (Narayan and Bhattacharya, 2019). Given the various agricultural programs and policies implemented over the years to increase agricultural productivity in Nigeria,

it then becomes imperative to quantitatively measure the current level of and determinants of technical efficiency and policy options available for raising the present level of efficiency, given the fact that efficiency of production is directly related to the overall productivity of the agricultural sector vis-à-vis the ginger sub-sector.

Nigerian agricultural sector experienced staggering growth before and after the implementation of the Structural Adjustment Programme (SAP) between 2018 and 1986 (just before the implementation SAP) and between 2012 and 2010 (after the implementation of SAP). However, the growth rate decline to an average between 2013 and 2015.

The reasons behind this decline are not far-fetched going by the sudden resurgence of the oil sector and the neglect of the agricultural sector by the government of Nigeria.

The collapse of the oil market in the early 2018s brought into focus the fact that the Agricultural sector could not meet domestic food requirements, provide raw materials for industry or earn substantial foreign exchange through export of crops.

Realizing this fact, the federal government in 1986 introduced the Structural Adjustment Programme (SAP). SAP was introduced to alter and restructure the production and consumption patterns in the economy in order to eliminate price distortion, heavy dependence on oil revenue and importation of consumer and producer goods.

With respect to specific agricultural sector policies, the core of the measures under SAP included institutional reforms, improved pricing policy, and specific production schemes for local staples, the government also introduced an agricultural policy in 2016.

The policy blueprint adequately reflected the new government philosophy of minimum administrative control of economic activities and a wide scope for free market forces in the economy, being a greater role for the private sector and more emphasis on efficiency and productivity as well as economic self-reliance (Ajibefun et al, 2016).

With the introduction of these policies, the Nigerian small-scale farmers became the central focus. The reason, according to Okuneye (2014), is due to the fact that the nation’s agriculture has always been dominated by small-scale farmers, who represent a substantial proportion of the total population and produce about 90-95 percent of the total agricultural output in the country.

It is against this background, that Nigerian governments, at various times adopted different agricultural development programs aimed at raising the production, efficiency, and productivity of these farmers.

The programs included the Agricultural Development Project, National Agricultural Insurance Scheme, National Directorate of Employment, River Basin Development Authority, Green Revolution, National Agricultural Land Development Programme, the Agricultural Credit Guarantee Scheme, National Accelerated Food Production Programme and many other programmes.

For Nigeria, raising productivity per area of land is the key to effectively addressing the challenges of achieving food security. From the available literature, only a few studies have been carried out on the technical efficiency of farmers in the African setting. Such studies include Adesina and Djato, 2017; Ajibefun and Abdulkadri, 2017; Ajibefun, Battese and Daramola, 2015.

It is noteworthy to state that, the socioeconomic welfare of a particular nation is dependent on the level of productivity of the agricultural and industrial sectors of that economy. Therefore, if this level of productivity is hampered or not maximized, the economy will suffer as in the case of the Nigerian agricultural sector, which has been suffering from poor productivity due largely to inadequate supply of input and at the right quality.

It is in this wise that, it is expedient for us to examine the level of technical efficiency of input use of the agricultural sector vis-à-vis, the ginger sub-sector. The measurement of farm efficiency is an important area of research both in the developed and developing world (Tadesse and Krishnamoorthy, 2017).

Odulaja and Kiros, (2015) mentioned that at least 73 % of all rural Africans are small-scale farmers, but despite the fact that such a high percentage of the population are farmers, food demand is still not being met from this source. This suggests that policy interventions should always be linked to efficiency.

It has also been observed that one of the most serious constraints of agricultural growth in Nigeria is the inefficient use of productive resources and that considerable growth can be achieved by simply improving the level of efficiency in resource use (Fabiyi and Adegboye, 2013; Ogunfowora, 1975, Kareem et al. 2018).

Technical efficiency is the ability to produce a given level of output with a minimum quantity of inputs under a given technology. Efficiency is also an important factor in productivity growth. In an economy where resources are scarce and opportunities for new technologies are lacking, inefficiency studies will be able to show that it is possible to raise productivity by improving efficiency without increasing the resource base or developing new technology.

Estimates of the extent of inefficiency also help in deciding whether to improve efficiency or to develop new technologies to raise agricultural productivity (Tijani, 2016). Numerous studies (e.g. Obwona, 2010; Son et al, 2013) have attempted to examine technical efficiencies of small scale farmers in developing countries because determining the efficiency status of farmers is important for policy purposes (Tijani, 2016).

There is a need, therefore, to study the input and output technical efficiencies of small-scale ginger farmers, because this will serve as a source of guidance for investment decisions of farmers and the basis for policy recommendations to the government. The issue of inputs used and outputs made, pose a lot of problems to small-scale ginger producers.

Consequently, information on the various inputs at the optimum formulation that contribute significantly to maximization of output would be of many benefits to intending ginger farmers in Makurdi L.G.A Benue State, Nigeria.

1.2 STATEMENT OF THE PROBLEM

Ginger is an important spices crop which is grown primarily for sales as an economic enterprise. Despite the importance of ginger as source of revenue in the producing areas, the production is decreasing (Onwueme, 2011)

High-expected price provides incentive for expanding ginger production by increasing resources allocated to its production through the adaption of improve production technology. Presently, farmers complained of low price (Manjunath, 2014). The poor output of farmers may be an indication that resources deployed into the production of the crop are not being used efficiently.

The relatively small emphasis placed on the crop by farmers raise the questions of whether it is profitable to grow the crop or not. A strong and efficient agricultural sector leads to a multiplier effect on any nation’s socio-economic life.

Technical efficiency which has to do with obtaining the maximum output from a given set of inputs is pivotal to the enhancement of farmers’ productive capacities (Shehu, 2013). Thus the in-efficiency in the agricultural sector especially among small scale farmers resulting in poor quality and quantity of outputs, poverty and food insecurity are issues facing the agricultural sector.

Therefore, this study is directed towards examining the determinants and measures of technical efficiency in the production of maize in order to chatter the way forward for small scale farmers to improve their productivity. Thus, there is need to evaluate the resource use allocation in the production of ginger in the study area.

1.3 RESEARCH QUESTIONS

1. 1. What are the socio-economic characteristics of the ginger farmers in the study area?

1. 1. How is the production and efficiency of low technology of ginger farmers in the study area?

1. 1. What are the factors affecting the technical efficiency of ginger production in the study area?

1. 1. How does suboptimal technology adoption affect the technical efficiency of small scale ginger farmers?

1. 1. What are the problems associated with ginger production in the study area?

1. 1. How do policy variables such as extension programs affect the technical efficiency of small scale ginger farmers?
      1. 1. AIMS OF THE STUDY

       

The major purpose of this study is to examine the technical efficiency of small scale farmers in ginger production. Other general objectives of the study are:

1. 1. To determine the socio-economic characteristics of ginger farmers in the study area.

1. 1. To examine the production and efficiency of low technology in ginger production in the study area.

1. 1. To examine the factors affecting the technical efficiency of ginger production in the study area

1. 1. To examine how suboptimal technology adoption affect the technical efficiency of small scale ginger farmers

1. 1. To identify the problems associated with ginger production in the study area.

1. 1. To examine how policy variables such as extension programs affect the technical efficiency of small scale ginger farmers
      1. 1. RESEARCH HYPOTHESIS

       

Hypothesis 1

H0: There is no impact of technical efficiency on ginger production output of small scale farmers in Makurdi L.G.A, Benue state.

H1: There is a significant impact of technical efficiency on ginger production output of small scale farmers in Makurdi L.G.A, Benue state.

Hypothesis 2

H0: There is no significant relationship between technical efficiency and ginger production output of small scale farmers in Makurdi L.G.A, Benue state.

H1: There is a significant relationship between technical efficiency and ginger production output of small scale farmers in Makurdi L.G.A, Benue state.

1.6 SIGNIFICANCE OF THE STUDY

This study is essential because ginger is a major cash crop of the study area which is confronted with the problem of decrease in production. And in order to increase its production and also improve the standard of living of the farmers, it is important to carry out an economic analysis of ginger production.

Anamayi et al. (2014) asserted that for adequate investment in any project, it requires the evaluation of its economic viability. Gittinger (2011) also opined that the economic aspect of a project preparation and analysis require a determination of the likelihood that a proposed project will contribute significantly to the development of the total economy and that its contribution will be great enough to justify using the scarce resources it will need.

This study provides valuable information on the economics of growing gingers to prospective investors, to enable them consider its production as a viable option for investment. To farmers who are already producing the crop, research scientists and scholars. Above all the study has provides valuable information on resources management needed to increase the output of the crop.

1.7    SCOPE OF THE STUDY 

The study is based on the technical efficiency of small scale farmers in ginger production, case study of Makurdi L.G.A, Benue state.

1.8 LIMITATION OF STUDY

Financial constraint– Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint– The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1.9 OPERATIONAL DEFINITION OF TERMS

Technical Efficiency: Is the effectiveness with which a given set of inputs is used to produce an output. A firm is said to be technically efficient if a firm is producing the maximum output from the minimum quantity of inputs, such as labour, capital, and technology.

Ginger: A hot, fragrant spice made from the rhizome of a plant, which may be chopped or powdered for cooking, preserved in syrup, or candied.

Production:  Is a process of combining various material inputs and immaterial inputs in order to make something for consumption. It is the act of creating an output, a good or service which has value and contributes to the utility of individuals.

Small Scale Farmers: Are those farmers owning small-based plots of land on which they grow subsistence crops and one or two cash crops relying almost exclusively on family labor.