Determinants of Profit Efficiency among Small Scale Rice Farmers in North Central, Nigeria: A Profit Function Approach

Abstract

The study employed a stochastic frontier profit function to measure profit efficiency among rice farmers in North Central, Nigeria. A multi-stage sampling procedure was employed in selecting 218 rice farming household heads in six Local Government Areas of North Central, Nigeria. The results showed that rice production is highly profitable with an estimated net farm income and Gross margin of N67,808.31 and N 70,273.56 per hectare and the return on investment of N1.26 was realized as profit for every one naira invested in production of rice in North Central Nigeria. The gross ratio of 0.46 and the operating ratio of 0.44 are indicators that rice production was profitable in the study area. Furthermore, the result of tranlog stochastic function revealed that rice farmers in North Central were not all fully profit efficient and thus an average farmer in study area could potentially increase profit level if resources are more efficiently utilized. However, the results show that fertilizer, labour, agrochemical, farm size, age, household size, education, farming experience, awareness of climate change and access to climate information had significant effects on the profit efficiency of rice farmers in the study area. The study recommended that since the area has a great potential to increase rice production and farmers’ income, efforts should be made by encouraging rice farmers to intensify the use of improved varieties of rice in order to increase their output. Now that the present administration change agenda is geared towards agriculture, youths in the country could be encouraged by government at all levels and Non-Governmental Organizations (NGOs) to venture into rice farming agribusiness that will serve as potential employment source.