Technical efficiency of small scale farmers: An application of the stochastic frontier production function to rural and urban farmers in Ondo State, Nigeria

Abstract

The main objective of this study was to estimate empirically the technical efficiency of rural and urban small-scale farmers in Ondo State, Nigeria, using the stochastic frontier production function. With the rapid urbanization being currently experienced in Nigeria, the socio-economic and the farming environment in both the rural and urban centres are undergoing transformation. This study involved collection and analysis of data on 200 food crop farmers from rural and urban centres in Ondo state of Nigeria. The results of analysis show that there are wide differences in the socio-economic and production inputs of the farmers from rural and urban centres. While farmers from rural centres have relatively larger farms, the urban farmers have better access to production inputs, especially, fertilizer. However, rural farmers, with a mean technical efficiency of 0.66 are found to be more technically efficient than urban farmers, who have a mean technical efficiency of 0.57. There is a wide confidence interval around the point estimates of the technical efficiency scores. Level of education, farming experience and land are found to have negative effects on technical inefficiency of both rural and urban farms. The marginal effect of inefficiency variables is, however, found to be highest for education among both rural and urban farms.

Keywords:

• Technical efficiency
• returns-to-scale
• rural and urban farmers
• Nigeria

Acknowledgements

This article emanates from the PhD thesis of the first author. He wishes to express thanks to George Battese and Tim Coelli, for the opportunity to work with them at the University of New England, Armidale, as a visiting scholar while on the PhD programme and for a copy of the FRONTIER 4.1 PROGRAM provided to him. Thanks are also due to the Federal University of Technology, Akure, Nigeria for granting the fellowship leave during the period. The authors are grateful to the two anonymous reviewers for their constructive suggestions. Any errors remain the responsibility of the authors.