Profitability and Production Efficiency in Cotton Production in North-West Nigeria

Profitability and Production Efficiency in Cotton Production in North-West Nigeria

Abstract

The main objective of the study was to estimate the profitability and production efficiency in cotton production in North-West Nigeria. The study used on primary data generated during the 2013/2014 cotton production season. Data were collected through the use of structured questionnaire administered to three hundred and fifty five cotton farmers. The data were analyzed using descriptive statistics, net-farm income model and stochastic frontier production model. The results of the socio-economic characteristics of the farmers showed that the mean age of the farmers was 49 years and average years of farming experience was 12 years. The results also showed that very few farmers (18%) were registered with a cooperative for an average period of five years. Farm sizes in the study area were small with an average of 1.3 hectares. About 98% of these farmers were married with average household size of 9 persons per household. Also 94% of the farmers did not have access to credit. Result of average net farm income was ₦41525 per hectare. Results of the estimated determinants of technical efficiency in cotton production showed that age was positive and significant at 10%, while cooperative association and extension contact were positive and significant at 1% level of probability. The average levels of technical, allocative and economic efficiencies in cotton production were 0.65, 0.72 and 0.48 respectively. The socioeconomic factors that significantly influenced technical inefficiency were age of farmer, access to credit, membership of cooperatives, and farming experience; those that influenced allocative inefficiency were education, extension contacts and farming experience; and those that influenced economic inefficiency were age of farmers, access to credit, cooperative membership and farming experience. Major constraints to cotton production were low price of cotton, high cost of fertilizer, poor soil fertility, pests and diseases, inadequate rainfall, poor extension contacts, and farmers-Fulani clash. It was recommended that farmers should increase the levels of utilization of each of these inputs (fertilizer and agrochemicals) that result in an increase in the level of output of cotton. Farmers should therefore be encouraged to increase the use of these inputs to the recommended levels so as to increase the low levels of technical, allocative and economic efficiencies recorded. Governments at various levels in collaboration with private extension outfit should put in place policy measures aimed at increasing extension contacts and building the educational capacities of farmers so as to strengthen their managerial capacities which will lead to a substantial reduction in technical, allocative and economic inefficiencies. It is also recommended that farmers should be encouraged to form goal driven cooperative groups and pool their resources together to improve their bargaining power, input procurement and greater access to credit in order to increase output and income. Finally and most importantly policy measures aimed at regulating the price of cotton are hereby recommended.