PRODUCTION EFFICIENCIES OF ARABLE CROP FARMERS IN OGUN STATE: A COMPARATIVE ANALYSIS OF BANK OF AGRICULTURE LOAN BENEFICIARIES AND NON-BENEFICIARIES

Abstract

This study compared the production efficiencies of Bank of Agriculture loan beneficiary and non-beneficiary arable crop farmers in Ogun State. Two hundred and forty arable crop farmers were sampled using multistage sampling technique. The data collected were analyzed using descriptive statistics and stochastic frontier analysis. The finding revealed that the farmers are in their active age. The significant determinants of farm output include farm size, labour, planting material and fertilizer. The production inefficiency model revealed that education, extension contact and loan significantly determined the technical efficiency of the farmers. The determinants of cost of production include farm output, labour wage rate, price of planting material and price of herbicide. The cost inefficiency model showed that age, household size, extension contact and loan have significant effect on the cost efficiency of the arable crop farmers. The mean technical efficiency of 86 percent and 79 percent shows that there is potential to increase the technical efficiency by 14 percent and 21 percent by the loan beneficiaries and non-beneficiaries, respectively. The mean allocative efficiency of 0.81 and 0.67 for the loan beneficiary and non-beneficiary respectively implies there is room for improvement in the allocative efficiency by 19 percent and 33 percent respectively. The mean economic efficiency of 0.78 and 0.60 for the loan beneficiary and non-beneficiary respectively implies the farmers can improve their economic efficiency by 22 percent and 40 percent respectively. The z-test revealed that the loan beneficiary arable crop farmers are more technically, allocatively and economically efficient (P<0.01) than their non-beneficiaries’ counterpart. Policy option requires the arable crop farmers to expand their farm land to ensure efficient utilization of other resources. Extension and adult literacy education should be encouraged among arable crop farmers to afford the farmers the benefit of agricultural loan. Access to agricultural loan should be strengthened among the non-beneficiary arable crop farmers for increased production efficiency.