PROFITABILITY AND TECHNICAL EFFICIENCY ANALYSIS OF RICE PRODUCTION IN ESAN CENTRAL AND NORTH EAST LOCAL GOVERNMENT AREA OF EDO STATE

TABLE OF CONTENT

Title page-------i

Certification--------ii

Dedication--------iii

Acknowledgement-------iv

Table of content-------v

List of Tables--------viii

Abstract--------x

CHAPTER ONE

1.0Introduction-------1

1.1Rice Grain Quality Indicators-----2

1.2Origin of Rice-------4

1.3Introduction of Rice into Africa---- 5

1.4Statement of Problem------7

1.5Objective of the Study-----8

1.6Justification of the Study-----8

CHAPTER TWO

2.0Literature Review------10

2.1Concept of Efficiency------10

2.2Technical Efficiency ------10

2.3Cost Measurement/Production Cost----11

2.4Rice-Based Production System----14

2.5Rice Farming System------16

2.6Irrigation Development-----17

2.7Rice Production in Nigeria -----18

CHAPTER THREE

3.0Methodology-------20

3.1Area of the Scope of Study-----20

3.2Data Collection------20

3.3Data Analysis-------21

3.4Limitation of the Study-----23

CHAPTER FOUR

4.0Results and Discussion-----24

4.1Socio-Economic Characteristics of Respondents--24

4.2Input Information------29

4.3Information to Farmers-----32

4.4Output Information ------32

4.4.1Unit of Sales of rice of Respondents----32

4.4.2Place of Sales of Output------33

4.4.3Return to Scale Analysis-----38

4.5Cost and Returns------40

4.5.1Costs--------40

4.5.2Returns and Revenue------41

4.5.3Gross Margin Analysis-----41

4.5.4Profitability Analysis------41

4.6Constraints to Rice Production----42

CHAPTER FIVE

5.0Summary, Conclusion and Recommendation---44

5.1Summary-------44

5.2Conclusion-------46

5.3Recommendation------47

Reference--------48

Questionnaire--------49



LIST OF TABLES

Table 1: Rice import into Nigeria: 1995-2004 (‘000 tonnes)--19

Table 2: Distribution by respondents by sex----24

Table 3: Education background of respondents---25

Table 4: Age distribution of respondents -----26

Table 5: Marital status of respondents----27

Table 6: Occupation of the respondents ----27

Table 7: Household distribution of respondents---28

Table 8: Farming experience of respondents----29

Table 9: Source of farmland of respondents ----29

Table 10: Farm size distribution of respondents---30

Table 11: Planting material sources-----31

Table 12: Source of farm labour of respondents---31

Table 13: Visit by Extension Agents Distribution---32

Table 14: Units of Sales Distribution-----33

Table 15: Output Distribution of respondents ---33

Table 16: Estimated Production Function for the OLS and MLE-34

Table 17: Distribution of Technical efficiency range for Rice Farmers -38

Table 18: Return to Scale for Rice Production---39

Table 19: Estimated Cost of Production per hectare per production season 40



ABSTRACT’

This research was designed to access the Profitability and Technical Efficiency Analysis of Rice Production in Esan Central and North East Local Government Areas of Edo State with a specific objective of examine the socio-economic characteristics of the farmers, determine the profitability of rice in the stud area.

The study used information gathered from One hundred and eighty (180) copies of a structured questionnaires were administered to rice farmers in the study area. Data so collected were analyzed using descriptive statistical instruments like means. The result gave a gross margin of n46, 445.03 per ha. Return on investment (ROI) of 1.03.

This implies that rice production is a profitability and viable enterprise. It is therefore recommended that inputs such as fertilizers, herbicide, pesticides (used to control birds and rodents) be subsidized to rice farmers to help boost indigenous rice production. Some factors of production that were identified are: tractors, cutlasses, hoes, planting materials, cost of land preparation etc. While the major problems were inadequate finance, birds and rodents attack, insufficient rainfall, inadequate storage facility etc.



CHAPTER ONE

INTRODUCTION 

Rice is a staple food for more than 60 percent of the world’s population (Richardson and Stubbs, 1978). Rice has become a staple food crop of considerable strategic importance in many rapidly growing African countries where consumption among the urban poor household has increased substantially (WARDA, 1993).

Cultivated rice is designated as either oryza sativa or oryza glabberima, oryza sativa is the predominant species. “Oryza glabbenma is grown only in Africa” on a limited scale.

The rapid rise in rice production in the years, following world was 11, mainly in Asia, stemmed from expanded irrigation areas, the increased use of fertilizers, effective control of pests, double rice cropping, and the widespread adoption of improved genetic materials. The combined use of nitrogen fertilizers and use of high-yielding varieties has made possible the expression of high yield in irrigated areas. Varieties of short growth duration which are insensitive to the photoperiod have allowed year round planting and multiple cropping.

The adoption of semi-dwaft high yield varieties triggered the beginning in 1967: Chinese farmers also turned to the utilization of the semi-dwaft varieties. The development of hybrid rice in China since the 1970s has set off a second “Green Revolution” in that area.

New genetic information and genetic diversity provide the foundation for more efficient breeding programs for rice production. It remained for the simply inherited recessive gene (Sdi) in the Chinese semi-dwaft rice to provide rice breeders with the impetus to achieve further progress in rice breeding.



1.1RICE GRAIN QUALITY INDICATORS 

The most important factors that plant breeders consider in developing new rice varieties are grain quality and yield. The term “grain quality” has many meanings and is perceived differently defending on end use, field of interest, specialization and ethnic importance as a quality characteristic, rice millers emphasize processing quality: and consumers demand a widely divergent array of cooking and eating qualities.

Quality in rice may be categorized into four broad areas: 

Milling quality 

Cooking and processing quality 

Nutritive quality 

Specific standards for cleanliness, soundness and purity.

All four (4) categories are important in judging the suitability of rice for a specific use. The quality characteristics desired vary considerably, being ultimately related to final consumer acceptance of each rice product.

Characteristics that influence rice quality include those under genetic control and those independent of genetic control, such as purity and cleanliness. These latter characteristics are primarily a function of handling and storage and as such are described thoroughly in United States standards for rice and in the rice inspection handbook.

A major factor influencing rice quality is the environment in which the plants are grown. Once a new variety is released for commercial production, it spreads to wherever it can be produced advantageously compared to currently grown varieties. Consequently, before released, new varieties are tested agronomical and for quality over their likely production area.

Tests are carried out in rice performance nurseries in each rice producing state. These trials permit evaluating quality characteristics of new varieties over wide ranges of environmental influence such as soil, climate and cultural practices.

Characteristics Influencing Qualities in Rice Include:

Hull and pericarp colour 

Grain-shape, weight, uniformity, and general appearance 

Milling cut turn.

Kernel, chalkiness, translucency and colour and cooking, eating and processing characteristics.

1.2ORIGIN OF RICE

Rice has been cultivated for such countless ages that it’s base their evidence must always be a matter for conjecture. Botanists base their evidence of the origin of rice largely on the habitats the wild species. It is presumed that the cultivated species have developed from certain of the wild rice.

The genus oryza comprises twenty five species distributed through tropical and subtropical regions of Asia, Africa, Central and South American and Australia. Both diploid (2n=24) and tetraploid species occur, he diploids being more numerous. 

There are only two cultivated species, oryza glabberima and oryza sativa linn. Oryza glabbermma is conformed to West Africa where it is an upland crop but is being replaced by oryza sativa. Morphological there are only small differences between these species, mainly in ugule size and glume pubescence, but oryza glabberima always has a red pericarp and hybrids between oryza glaberrima and oryza sativa are sterile. Oryza glaberrima is not confirmed to West Africa.

According to Chaudraratna (1964), the center of origin of oryza sativa linn in Southeast Asia, particularly India and Indo-China, where richest diversity of cultivated forms has been recorded. It spread northwards in Asia before the later movement, it also spread south and East through the Maby Archipelago with the flow of human culture.

1.3INTRODUCTION OF RICE INTO AFRICAOryza stapfil Rosecher, and oryza glaberrima steud are presumed to have been cultivated on the margins of the Neolithic Sahara. The historian Ibu Batouta (AD 1350) mentions the existence of rice in Nigeria, which certainly is oryza glaberrima. Oryza glaberrima was introduced into Northern Nigeria in the 16th Century.

The cultivation of oryza sativa linn in Nigeria was about 1890 when upland varieties were introduced to the high forest zone in Western Nigeria. Shallow swamp varieties from Guyana and srilanka were established in the smaller tributaries of several rivers where they rapidly replaced the swamp varieties of red rice (oryza glaberrima), their most extensively grown. Oryza glaberrima is now mostly confirmed to the fat North of Nigeria and to Sierra Leone.

Red rice (oryza glabberrima) which probably originated in the middle Niger Delta some 3,500 years ago is gradually being replaced in Africa by oryza sativa. The date and mode of introduction of oryza sativa to West Africa is unknown. It has been suggested that it was introduced by Portuguese traders who visited the coastal regions, but is equally possible that it came across African by the caravan desert routes; it may have been already in cultivation in West Africa when the first Portuguese arrived (Jordan, 1965).

The significance of rice is shown in it’s widespread use as a staple food by more than\half of the world’s population. Millions of people in Asia subsist almost entirely on rice. Most countries rely mostly entirely on domestic production to feed their populations with only about 4% of the world’s rice production reaching the international market. More than 90%of World rice is produced in Asia (FAO, 1989).

Rice is widely consumed in Nigeria today and there is hardly any where in the world here it is not utilized in one form or other. In Nigeria, rice is the one of the few food items whose consumption has no cultural, religions, ethnic or geographical boundary (Udoh, 2003). But fortunately, the cultivation and production of this highly consumed priced and very important food crop is not encouraging, this may be due to the fact that production of rice in the country is carried out by small scale farmers, who can barely meet the demand for it. The problem, of low level of production amounting small farmers, who can barely meet the demand for it. The problem of low level of production amounting small scale farmers can be attributed to the poor use of locative and economic efficiencies.

There is need therefore, to look into the various ways to increase production, cost efficiency, to meet the overwhelming demand for rice in the country since an increase in agricultural production of rice is invariable linked to farm profits. 

1.4 STATEMENT OF PROBLEM

In Nigeria, rice has become a major staple food crop in most homes today and unfortunately the domestic production of the product has not been met with the demand for it. Which has expressed itself in the food shortages experienced in the country recently? (CBN, 2003).

Esan Central and North East Local Government Area of Edo State is one of the areas where rice is grown in Edo State, Nigeria. The area is blessed with natural requirements (in terms of soil, rainfall and other factors) for rice production which when properly tapped can lead to an increase in rice production and source of employment to the unemployed.

The problem of socio-economic changes such as population explosion, industrialization and urbanization call for a sufficient and wholesome food supply and where possible in convenient forms. Infact this is a challenge to Nigeria farmers, researchers and members of the public.

Rice farmers in Esan Central and North East are mainly peasant farmers who depend entirely on traditional farming techniques for the production and their standard of living not present as through the enterprise is viable.

This study will provide answer to the following questions:

What are the socio-economic characteristics of respondent in the study area?

Are the farmers able to efficiently hand their input costs?

What are the factors that determine the cost efficiency of production of the farmers in the study area?

What is the farmers cost efficiency level in the study area?

What are the socio-economic factors affecting the cost efficiency of farmers in the study area 

1.5OBJECTIVES OF THE STUDY

The broad objective of the study is to estimate the portability and cost efficiency of rice production in Esan Central and North East Local Government Areas of Edo State. The specific objectives are to:

Examine the socio-economic characteristics of respondent in the study area.

Determine the profitability of rice in the study area

Estimate the cost efficiency of rice farmers in the study area. 

Ascertain if there is any socio-economic factor that affects the technical inefficiency of farmers.

Determine any other constraints the farmers are experiencing.

1.6 JUSTIFICATION OF THE STUDY

Food and agricultural organization (FAO, 1996) record has it that the world population is increasing an alarming rate, and it is expected to increase in the next decade by 88 million per annum with this record so far it’s estimated that more than 60 millions of this population will be absorbed in cities and towns, globally there will be an increase in demand for major food crops and rice. This overwhelming increase in demand for major food crops and rice. This overwhelming increase in demand will definitely lead to an overwhelming increase in price of rice.

There is need therefore the need to look into the cost efficiency and profitability of rice production by farmer in the study area.

The empirical evidence from this study will add to the already wide stock of knowledge about rice production and also help policy marker in policy formulation concerning rice production and also potential investors on how to go about investing in rice productions.