Economies of scale and production efficiency in smallscale rice farmers in Nigeria: empirical approach for hybrid and local rice.

Abstract

The study examined the economies of scale and technical efficiency of small-scale farmers in Edo State, Nigeria. The data used in the study were mainly from primary sources. The data were collected from 200 rice farmers selected using multistage sampling technique and analyzed using descriptive statistics, and stochastic frontier model. Production functions among hybrid rice and inbred (local) rice producers were estimated independently using the Battese and Coelli (1995) model to specify a stochastic frontier Cobb-Doglas production function with behaviour inefficiency component to estimate all parameters together and the level of significance in one-step maximum likelihood estimation. The returns-to-scale (RTS) for the production function showed that the farmers operated in the irrational zone (stage I) of the production surface having RTS of 0.676 and 1.299 for inbred and hybrid species respectively. The mean technical efficiency of 0.317 and 0.925 for inbred and hybrid varieties respectively were obtained from the data analysis, indicating that the hybrid sample farmers were relatively more efficient technically than the inbred rice farmers. The mean technical efficiency of the farms was estimated as 1.263. This means that average rice farm in the sample area has production that are about 26% above the minimum defined by the frontier. However, the result of the analysis indicated that presence of technical inefficiency had effects in the food crop production as depicted by the significant estimated gamma coefficient of each model, the generalized likelihood ratio test and the predicted technical efficiencies within the farmers. Improved variety of rice as well as the technology improves the efficiency of the farmers.

KEYWORDS: hybrid, inbreed, output, inefficiency and Edo State.