Economics of Soybean Production Technology in the Guinea Savanna of Nigeria

Abstract

This study examined the economics of soybean production technology in the Guinea Savanna of Nigeria within the framework of small scale farming households using rain-fed soybean production technology, The study measured the rate of compliance with the recommended package, profitability of, as well as the technical efficiency of the production technology. Primary data were collected from one hundred and fifty soybean farming households using structured questionnaire. Descriptive and inferential statistics were used to analyze the data. A Cobb Douglas production function was further employed to analyze the data using the Maximum Likelihood Estimation (MLE) procedure to derive the Stochastic Frontier Production Function. The study revealed that the typical farming household using the technology had an average farm size of 1.2ha. Further analysis of level of technology compliance revealed a 60% level with a yield gap of 43%. The farm budget analysis showed that the farming households had positive net farm income using the technology. The MLE of the stochastic frontier function revealed the presence of increasing returns to scale for the production technology. It further revealed a mean output-oriented technical efficiency of 0.75 with possible room for improvement. The estimated parameters of labour, farm size and level of compliance included in the production equation had expected  positive signs and are significant at 5% level. While the present level of compliance with recommended production package affords the farming households positive gross margins, they are yet to attain their potential yields. In order to move closer to this potential, the present soybean production technology need to be revaluated for improvement and better efficiency. This should include modifications that fulfill the low-cost input
desires of the small-scale farming households.

KEYWORDS: Production technology, technology compliance, yield gap, technical efficiency