Data Envelopment Analysis Approach to Estimating Economic and Scale Efficiency in Processing Cassava into Gari in Ankpa Local Area, Kogi State, Nigeria

Abstract

This study examined the economic and scale efficiency in processing cassava into gari in Ankpa Local Government, Kogi State. Data were collected from 120 cassava processors through a multistage sampling technique in 2019 using questionnaire as the instrument for data collection. Data collected were analyzed through the use of Data Envelopment Analysis (DEA), ordinary Least squares regression analysis and simple descriptive statistics. The result of the study revealed that about 8.33% and 63.33% achieved full technical efficiency (TE = 1) under the CRS and VRS respectively while 12.50% achieved both full allocative and economic efficiency. About 8.33% achieved full scale efficiency. These efficiency scores revealed the presence of considerable level of inefficiency and room for improvement in order to become fully efficient. The returns to scale analysis revealed that majority of cassava processors (about 90%) are operating under increasing returns scale implying that most of the firms in the sample are too small and therefore would benefit from an increase in scale. The OLS result showed that household size, experience and education are the most important and significant factors affecting both technical and economic efficiency of the processors in the study area. We recommend that processors should be encouraged to form and join viable cooperatives where they can access credit, information, training and processing facilities in order to improve their efficiency.