Analysis of profit efficiency of smallholder beef cattle farms in South-West Nigeria

Figures & data

Table 1. Estimated Demand for and Supply of Beef and gap in Nigeria between 1990 and 2010 (000mt)

Year	Demand	Supply	Demand/Supply Gap
1990	252.52	180.56	91.94
1991	272.65	165.24	107.41
1992	294.41	171.60	122.81
1993	317.90	176.88	141.02
1994	343.28	182.16	160.66
1995	370.67	187.44	183.23
1996	400.25	190.77	204.48
1997	432.19	196.33	235.86
1998	466.67	202.05	264.62
1999	503.92	207.94	295.98
2000	544.13	214.00	330.13
2001	587.55	220.24	361.31
2002	634.44	226.66	407.78
2003	685.07	233.26	451.81
2004	739.74	240.06	499.69
2005	798.72	247.06	551.71
2006	862.52	254.26	608.26
2007	931.30	261.67	669.68
2008	1005.67	269.30	736.37
2009	1058.92	277.15	807.85
2010	1172.58	285.23	887.55

Source: (Federal Department of Livestock and Pest control, 2010)

Figure 1. Framework for Profitability and Profit Efficiency in Beef Cattle Production.

Table 2. A priori expectations for Cobb-Douglas stochastic profit frontier inefficiency model

Variables	Units	Expected Signs	Authors
Age	Years	±	Kalangia et al. (2016)
Level of education	Years	±	Zekeri and Mukhtar (2015)
Household size	Number	±	Mohammed et al. (2015)
Off farm income	Off farm income = 1; Otherwise = 0	-	Mohammed et al. (2015) Busisiwe et al. (2018)
Access to credit	Access = 1; No access = 0	±	Mohammed et al. (2015) Busisiwe et al. (2018)
Production experience	Years	±	Mohammed et al. (2015)
Marital status	Married = 1; Otherwise = 0	±	Mohammed et al. (2015)
Extension contact	Yes = 1; Otherwise = 0	+	Zekeri and Mukhtar (2015)
Membership in association	Member = 1 Non- member = 0	+	Tsue et al. (2012)

Table 3. Socioeconomic characteristics of beef cattle producers

Variables	Frequency	Percentage (%)
Sex
Male	108	90.0
Female	12	10.0
Age (years)
˂30	9	7.50
31–40	28	23.33
41–50	47	39.17
51–60	30	25.0
>61	6	5.0
Mean	45.74
Std dev.	9.9
Marital Status
Single	8	6.67
Married	103	85.83
Widowed	8	6.67
Divorced	1	0.83
Level of Education
No formal Education	5	4.17
Primary	67	55.83
Secondary	21	17.5
Tertiary	6	5.0
Arabic	21	17.5
Household Size
1–5	51	42.5
6–10	49	40.5
11–15	10	8.33
16–20	8	6.66
˃21	2	1.67
Mean	8.4
Std. dev.	3.7
Years of Production Experience
1–10	22	18.33
11–20	56	46.67
21–30	23	19.16
˃31	19	15.84
Mean	28.8
Std. dev.	14.83
Membership of Association
Belong	87	72.5
Do not belong	33	27.5
Herd Size
10–20	81	67.5
21–30	36	30.0
>31	3	2.5
Mean	17.6
Std. dev.	7.6

Source: Data Analysis, 2019

Table 4. Distribution of Respondents by Purpose of Keeping Cattle

Purpose	Frequency	Percentage (%)
Meat	24	20.00
Work/draft	2	1.67
Blood	1	0.83
Hide	2	1.67
Cash from sales	76	63.33
Investment	11	9.17
Ceremonies	3	2.50
Cultural	1	0.83
Total	120	100.00

Source: Data Analysis, 2019

Table 5. Distribution of Respondents by Breeds of Beef Cattle reared

Breeds	Frequency	Percentage (%)
Bungi	12	10.00
N’dama	56	46.67
Keteku	44	36.67
Others	8	6.67
Total	120	100.00

Source: Data Analysis, 2019

Table 6. Distribution of Respondents by Systems of Production

System of production	Frequency	Percentage (%)
Nomadic	7	5.83
Agro-pastoralists	80	66.67
Ranching	33	27.50
Total	120	100.00

Source: Data Analysis, 2019

Table 7. Average Costs and Returns of Beef Cattle Enterprise

Variables	Mean amount (₦)	%Total of revenue/cost
*Revenue
19 matured cows /Bull at ₦80,060.00 per cow	1,521,140.00	80.91
51.36 kg manure at ₦20.25/ kg	1,040.04	0.06
19 hide at ₦13,813.33/ hide	262,453.27	13.96
8.8 litres Blood at ₦200.83/litre	1,767.30	0.09
19 cows slaughtered at ₦4,922.5/cow	93,527.50	4.98
A. Total revenue	1,879,928.11
Variable costs
Feeds
922.17 kg Corn-stalk at ₦20/kg	18,443.40	1.59
465.21 kg Cotton seed cake at ₦20.00/kg	9,304.20	0.81
465.21 kg Groundnut cake at ₦30.00/kg	13,956.30	1.21
925.21 kg Bran/wheat offal at ₦40.00/kg	37,008.40	3.21
477.5 kg Chaff at ₦20.00/kg	9,550.00	0.82
927.08 kg Concentrates at ₦30.00/kg	27,812.40	2.41
18.21 kg Table salts at ₦70.00	1,274.70	0.11
6.7 g Potash at ₦100.00/g	670.00	0.06
732.33 kg Rice straw at ₦20.00	14,646.60	1.27
18 g Dewormers at ₦30.00/g	540.00	0.05
19 g Anti-biotics at ₦40.00/g	760.00	0.07
18 g Multi-vitamins at ₦40.00/g	720.00	0.06
Labour	10,532.26	0.91
Security	10,046.22	0.87
Association levy	2,570.00	0.22
Taxes	6,750.00	0.59
21 calves at 41,900 per calf	879,900.00	76.27
B. Total Variable cost	1,044,484.48	90.54%
Fixed costs (depreciated value)
Rent on Land	15,666.67	1.36
Sack	1830.83	0.16
Shed construction	19,350.00	1.68
Iron sheet	19,888.98	1.72
Wood	17,198.33	1.49
Well construction	30,158.33	2.61
Boots	3,004.17	0.26
Cutlass	2050.67	0.18
C. Total Fixed Cost	109,147.98	9.5%
D. Total cost (B + C)	1,153,632.46
E. Gross Margin (A-B)	835,443.63
F. Net return (A-D)	726,295.65
Profit margin (%) F/A x100	38.63
ROI	0.63
BCR	1.63

Source: Field Survey, 2019

*21 calves stocked at 8 months old; Number of bulls/cows remaining at maturity = 19 (9.5% mortality); production period = 16 months.

Table 8. Maximum-likelihood Estimate of Stochastic Profit Frontier Function of Beef Cattle Production

	Parameters	Coefficients	Std .Error	T-ratio
Profit Function
Ln (labour)	β1	0.610**	0.273	2.24
Ln (rice straw)	β2	0.282***	0.058	4.48
Ln (farmland)	β3	0.578***	0.091	6.34
Ln (calve)	β4	0.318**	0.141	2.25
Ln (Vet. medication)	β5	0.174***	0.049	3.56
Constant	β6	7103.22***	1081.428	6.57
Inefficiency model
Age	δ1	0.013	0.021	0.63
Education	δ2	0.020	0.020	1.01
Household size	δ3	0.282***	0.058	4.48
Off-farm income	δ4	−4.286***	1.281	−3.34
Access to credit	δ5	0.110***	0.007	15.74
Experience in beef cattle	δ6	−0.042***	0.007	−5.63
Production
Membership of Association	δ7	−0.045	0.029	−1.52
Marital status	δ8	0.004	0.034	0.13
Constant	δ9	0.174***	0.049	3.56
Diagnostic statistics
Sigma-square	σ^2	0.045***	0.017	2.65
Gamma	γ	0.947***	0.103	9.19
Log of likelihood		59.581
LR test		11.67

***,**,* Significant at 1%,5%, and 10%

Source: Data Analysis, 2019

Table 9. Distribution of Profit Efficiency of Farmers

Efficiency Range (%)	Frequency	Percentage (%)
20–30	8	6.67
30–40	16	13.33
40–50	27	22.5
50–60	21	17.5
60–70	17	14.17
70–80	19	15.83
80–90	9	7.5
˃90	3	2.25
Total	120	100.00
Mean	0.6221
S.D	0.2252
Variance	0.0507
Min.	0.2118
Max.	0.9999

Source: Data Analysis, 2019

Federal Department of Livestock and Pest control. (2010). Agricultural Policy in Nigeria. Federal Ministry of Agriculture and Rural Development.

 Google Scholar

Kalangia, L. S., Syaukat, Y. S. U., & Kuntjoroand Priyanti, A. (2016). Factors affecting profit analysis of beef cattlefarming in East Java, Indonesia. Livestock Research for Rural Development, 28(12), 1–9.

 Google Scholar

Zekeri, M., & Mukhtar, L. A. (2015). Analysis of Costs and Return to Small Scale Dairy Producers and Marketing in Igabi Local Government Area, Kaduna State, Nigeria. Journal of Agricultural Science and Environment, 15(1), 1–14. https://doi.org/10.51406/jagse.v15i1.1467

 Google Scholar

Mohammed, D., Mohammed, A., & Dahiru, A. B. (2015). Determinants of Profitability of Cattle Fattening Scheme in Song Local Government Area, Adamawa State. Nigeria. Journal of Agricultural Economics, Environment and Social Sciences, 1(1), 155–162.

 Google Scholar

Busisiwe, N. M., Folasade, T. O., & Abiodun, O. O. (2018). Socioeconomic Factors Influencing Livestock Production Among Smallholder Farmers in The Free State Province of South Africa. International Journal of Entrepreneurship, 22(4), 1939–4675.

 Google Scholar

Tsue, P. T., Lawal, W. L., & Ayuba, V. O. (2012). Profit Efficiency Among Catfish Farmers in Benue State, Nigeria. African Journal of Food, Agriculture, Nutrition and Development, 12(54), 6. https://doi.org/10.18697/ajfand.54.10200

 Google Scholar