ECONOMIC ANALYSIS OF OFADA RICE PRODUCTION IN OBAFEMI-OWODE LOCAL GOVERNMENT AREA OF OGUN STATE, NIGERIA

Abstract

The paper undertook an economic analysis of ofada rice production in the prominent rice producing
area of Obafemi-Owode Local Government Area in Ogun State, Nigeria. The data used for the study
were elicited from 100 ofada rice farmers who were selected using two stage sampling technique. The
first stage was the random selection of ten rice producing villages from two rice blocks of Someke and
Obafemi in Obafemi Local Government Area, while the second stage was the random selection of ten
ofada rice farmers each from the ten villages to make the sample of one hundred ofada rice farmers.
The analytical techniques used were descriptive statistics of rice producers, the determination of the
rate of return on capital invested (RORCI) on the enterprise after analyzing enterprise profitability and
the stochastic production frontier model. The results revealed that an average rice farmer in the study
area is a married male of 51 years of age, with farming experience of 19 years, cultivated 3.34 hec-
tares of rice and had little access to credit, extension services and tractor services considered essen-
tial for hectarage expansion. The production cost per hectare of rice was estimated as N64,565 with a
revenue of N119,222 per hectare. The rate of return on invested capital (RORCI) was 85 percent and
this favourably exceeded the prevailing capital lending rate of 18.38 percent. This indicated that on
every naira invested in ofada rice production, there was a return of N0.85. It thus buttressed the fact
that ofada rice production is a profitable venture in the study area. There was low technical inefficiency
in ofada rice production in the study area during the 2008 cropping season which was investigated.
Technical efficiency of the farmers varied between 0.52 and 0.98 with a mean of 0.89 and about 85%
of the sampled farmers had technical efficiency above 0.80. The finding suggested that there is room
for improvement in the production system. The variables that influenced ofada rice output included
farm size which was significant at the probability level of Pα <0.01, pesticide Pα<0.05 and seed at
Pα<0.01 level The variables were all positively related to ofada rice output level. It was therefore rec-
ommended among others that the rice farmers are old and thus need a succession plan of new gen-
eration farmers which should be organized into rice farmers association for easy access to credit facili-
ties, extension services and provided tractor services to increase their farm size which is essential for
their economic improvement.