Determinants of profit efficiency of small and medium scale agribusiness based cassava processing enterprises in Imo State, Nigeria

Abstract

This study estimated profit efficiency and its determinants among  agribusiness based cassava processing enterprises in Imo State, Nigeria. Multi-stage and simple random sampling techniques were used in selecting one hundred and sixty respondents (80 each from small and medium scale) from two Agricultural Zones of the state namely Orlu and Owerri zones. Profit efficiency was analyzed using the stochastic translog profit function and Maximum Likelihood Estimation (MLE) technique. Full profit efficiency was tested using Generalized Likelihood Ratio (LR). The result
depicted that both enterprises were not efficient, but small scale enterprise was more efficient than medium scale enterprise. The determinants of profit efficiency for small scale shows that labour, access to credit and extension contact are significant variables influencing profit efficiency while labour, access to credit, business experience and number of employees are statistically significant factors influencing medium scale enterprises. Based on the findings, the entrepreneurs should be enlightened by extension agents to improve their skills in the business.

Keywords: Determinants, Profit efficiency, Stochastic, Profit function, Cassava processing, Agribusiness