TECHNICAL EFFICIENCY ON COCOA PRODUCTION IN ESAN WEST LOCAL GOVERNMENT AREA OF EDO STATE, NIGERIA

TABLE OF CONTENTS

Title page---------i

Certification---------ii

Dedication---------iii

Acknowledgement--------iv

Table of content---------v

List of tables---------viii

Abstract---------ix

CHAPTER ONE

Introduction--------1

1.1Background of the study -------1 

1.2Background to the Study------2

1.3Statement of Problem-------3

1.4Objective of Study-------3

CHAPTER TWO

Literture Review-------4

2.1Background--------4

2.2Important of Cocoa-------4

2.3Production of Cocoa in Nigeria-----5

2.4Theoretical Framework of Efficiency-----5

2.5Concept of Efficiency-------6

2.6Technical Efficiency-------7

2.7Factors Influencing Technical Efficiency----9

2.8Application of the Stochastic Frontier Model----10

CHAPTER THREE 

Research Methodology ------12

3.1Area of Study --------12

3.2Data Collection -------13

3.2.1Data Source --------13

3.2.2Sampling Frame -------13

3.2.3Sampling Procedure -------13

3.3Data Analysis Technique ------14

3.3.1Socio-economic Characteristics of Cocoa Producers---14

3.3.2Estimate the Levels of Technical Efficiency in Cocoa --14

3.3.3Factor Influencing Efficiency in Cocoa Production---16

3.4Limitations of the Study ------17

CHAPTER FOUR

Result and Discussion ------18

4.1Socio-economic Characteristics of Respondents---18

4.2.1Production Functions of Cocoa Farmer----29

4.2.2Determinants of Technical Efficiency in Cocoa---31

4.2.3Technical Efficiency Estimate ------33

CHAPTER FIVE 

Summary, Conclusion and Recommendation ---35

5.1Summary --------35

5.2Conclusion ---------35

5.3Recommendation -------36

REFERENCES --------37

APPENDIX ---------39

LISTS OF TABLE

Table 4.1: Distribution of Respondent --19

Table 4.2: Age Distribution of cocoa producer --20

Table 4.3: Marital Status of Respondents in the Study Area --21

Table 4.4: Level of Education of Respondents----22

Table 4.5: Family Size of Respondents by Distribution---23

Table 4.6: Farming Experience of Respondents by Distribution--24

Table 4.7: Extension Contact of Respondents----25

Table 4.8: Farm Size of Respondents------26

Table 4.9: Source of Labour of Respondents by Distribution --27

Table 4.10: Fertilizer Application of Respondents by Distribution--28

Table 4.11: Occupation of Respondents-----29

Table 4.2.1: Ordinary Lease Square Estimate of Production Function of Cocoa Production---------31

Table 4.2.2: Determinants of Technical Inefficiency of Cocoa Production-33

Table 4.2.3: Technical Efficiency Distribution of Respondents-34

ABSTRACT

There has been a continuous problem in the production of cocoa over the years. As a result of, lack of application technical knowhow and other economic tools. At a point in the country economic history, agricultural production was of a major priority in Nigerian. But as time went by, there has been a gradual and small fall in the output overtime. 

The study relied upon primary data generated from interviewing cocoa farmers using a set of structured questionnaire. A two stage sampling technique was adopted in selecting one hundred and twenty (120) cocoa farmers in Esan West Local Government Area of Edo State, Nigeria. The data on the socio-economic characteristics of the farmers were analyzed using descriptive statistic, while the stochastic production function using the ordinary lease square estimate (OLS) techniques was used in estimating the farmer’s technical efficiency and their determinants. 

Result of the analysis showed that farmers are not fully technically efficient due to inefficient usage of resources. The efficiency level ranged between 0.02-0.99 with a mean of 0.29. The result confirmed that the cocoa farmers in the area were technically inefficient. The major contributing factors to efficiency were farmer experience, level of education, family size. The study observed that there is enough room to improve efficiency with the farmers current resources base and available technology and concluded that polices that would directly affect these identified variables should be pursued.

CHAPTER ONE

1.0INTRODUCTION

1.1Background Study

Cocoa (Theobroma cacao) is one of the most import economic produce in Nigeria. This can be drawn out in terms of annual contribution to foreign exchange earnings, income earning, employment, internal revenue generation and as source of raw material for industry.

Nigeria is potentially one of the most economically endowed nation of the world, having abundant of resources e.g. coffee, rubber, oil palm, cocoa and other non crop product, such as petroleum.

In Nigeria, cocoa is a very important part of the cash crop family in the agricultural sector. Analysis shows that, in the 1980's cocoa production in Nigeria was at its peak, Overtime, the output has fallen by over 50%. from 1980 to 2002 due to technical inefficiency of the agricultural sector. Tian and Guary (2000) in China has shown that there is room for increasing agricultural productivity in developing countries by improving technical efficiency of agricultural production. That every factors of production should be efficiently and effectively mobilized in cocoa production to reduce the gap between actual and potential output.

The major objective of stakeholders of cocoa produce in the state is to increase production on a sustainable basis at the farm level. Cocoa productivity levels can be enhance either by improving technical efficiency and or by improving technological application (Nkamleu et al, 2010). This aspect shows that proper farm maintenance through weeding and increased use of input like pesticides and fertilizer is considered to be the more effective way to increase production. This is because a greater part of cocoa produce is lost due to diseases, pests, and weeds (Binam et al , 2008; Dzene, 2010). Cocoa yields depends on how farmers combine their resources optimally to maximize output for cocoa produce and also optimize resource use in the industry, for cocoa to continue to play its key role in the economy.

1.2Problem Statement

There has been a continuous problem in the production of cocoa over the years. As a result of the lack of application technical knowhow and other economic tools. As we know, at a point in the country economic history, agricultural production was of a major priority in Nigerian. But as time went by, there has been a gradual and small fall in the output overtime. Nigeria produces a little more than half of what she used to produce in the 1970's (CBN 2004).

In order to increase and maintain a quality and quantity production of cocoa, there is a need to improve on technical efficiency and application aspect of economic principles to production, cut down over-regulation of the sector, provide effective marketing system and invest more on the sector. This works intends to answer the following questions: What are the challenges faced by cocoa farmers; and what method to adopt to improve on cocoa production.

1.3Objective of the Study

The general objective of this study is to ascertain the technical efficiency of cocoa (Theobroma cacao) production in Esan West Local Government area of Edo state.

i. Examine the socio-economic characteristics of cocoa producers.

ii. Estimate the levels of technical efficiency in cocoa production.

iii. Examine the factors that influence the level of efficiency in cocoa production. 

1.4Justification

An interest in this study stems from the fact that cocoa production in Nigeria is reducing and Nigeria is experiencing difficulties meeting local demand for cocoa product.

This however, creates an opportunity for increased production. It therefore becomes necessary to offer information on this sub-sector of the agricultural sector in order to show the potentials of cocoa production and also to highlight the potential for boosting the Nigerian economy by concentrating on the cocoa production sector.

The study will provide the information needed for a successful cocoa enterprise which also would boost the confidence of the cocoa farmer and also could serve as guide for investors in the enterprise.