Economic implication of contract farming on small-scale rice farmers in Kwara State, Nigeria

Abstract

This study examines the implication of contract farming on Olam Out-growers farming scheme in Kwara State, Nigeria. The objectives of the study are to determine the costs and returns to production of rice, assess the productivity level of rice, evaluate the technical efficiency of rice farm and identify the determinants of the technical inefficiency of the rice farms in contract farming. In this study, the average net farm income of the rice farmers under the scheme was N191,862.56 and the land productivity level was 2,006.04kg/ha. The technical efficiency of the rice farm was estimated using Cobb-Douglas Stochastic Frontier Production function which shows that likelihood coefficients for quality of seeds, hired labour and farm size were statistically significant at 1% level. Likewise, the determinants of technical efficiency among the farmers were household size and farming experience. The results further show that the contract farming scheme has a positive impact on the lives of rice farmers. Therefore, there is a need for partnership with private contract farming outfits in order to improve the current level of access to inputs by rice farmers.

Keywords: Contract farming, Out-growers rice farmers, Technical efficiency, Farm income