Technical Efficiency and Factor Productivity in Upland and Lowland Rice Production Systems in Kwara State, Nigeria

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ABSTRACT

 

The issue of low productivity of the Nigerian farm-firms is topical. This is more so for the rice commodity in Nigeria. Though over 1.3 million hectares of land is devoted annually to paddy rice cultivation, average yield of upland and lowland rice in Nigeria is 1.8 tonnes/ha compared to 3.0 tonnes/ha of upland and lowland rice and 7.0 tonnes/ha of irrigated rice in neighbouring West African countries. It is therefore necessary to identify ways of increasing rice output from existing hectarages. This study therefore compared the structure of costs and returns, technical efficiency and factor productivity, and constraints that confront upland and lowland rice farmers in Kwara State, Nigeria.

 

 

 

A three-stage random sampling procedure was used to collect primary data for the study. Pre-tests and data collection proper were carried out between April 2007 and May 2008.The first stage involved a selection of three major rice producing zones from the four Kwara State Agricultural Development (KWADP) zones. The second stage involved a random selection of ten villages (5 percent) from zone B, eight villages (17 percent) from zone C while four (10 percent) were selected from zone D. A total of twenty two major rice-producing villages were therefore selected, out of the two hundred and ninety nine rice-producing villages in the selected zones. The final stage involved the random selection of two hundred and sixty four (168 Lowland rice-producing households and 96 Upland rice-producing households) rice-producing households from the villages selected. Data were analysed using descriptive statistics, partial farm budget, Cobb-Douglas stochastic frontier production function, OLS regression, Chow-test, Total Factor Productivity (TFP) and the Likert-type scale analyses.

 

 

The descriptive statistics analysis results showed that farming tools and equipment used by the rice farmers are generally of the crude types. Farm budget analysis of costs and returns analysis results indicated that lowland rice farms have higher returns to labour and management (RLM) of N53,326.0 per hectare while the RLM estimate for upland rice was N34,101.4 per hectare.

 

 

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The Cobb-Douglas stochastic frontier production function indicated that the lowland rice production system is at a higher level of technical efficiency of 60.08 percent, while the upland farms average was 40.10 percent. Farmer’s farming experience, household size and type of rice variety planted were found to significantly (P< 0.05) affect technical efficiency of the lowland farms. Farmer’s farming experience and household size of the farmers were found to significantly affect (P< 0.05) technical efficiency of the upland farms. Chow-test comparison between the technical efficiency for the upland and lowland rice farms showed significant differences (P< 0.05) between the technical efficiency levels of the two rice farms. The analysis of factor productivity of rice farms indicated that lowland rice farms were operated at a higher total factor productivity (TFP) level of 4.3 on average. For upland rice farms, mean TFP estimate was 3.4. The Likert-type scale analysis of farmers’ constraints revealed inadequate funds as the main problems confronting both upland and lowland rice farmers. This is followed by expensive agro-chemicals, pest and diseases and inadequate labour supply respectively. Flood problem was reported only under the lowland rice production systems.

 

 

In conclusion, the lowland rice system has higher profitability, technical efficiency and TFP compared to the upland rice system. The study therefore suggests intensive efforts at expanding the present scope of lowland rice farming, given the estimated technical efficiency and productivity estimates for the production system. The use of improved tools and equipment in rice farming and processing should be encouraged as this would help to reduce the debris and stones that accompany the final consumable rice commodity. Farmers should also be availed the opportunities of being able to access loanable funds. Efforts should be geared towards organizing farmers into cooperatives, as this will enhance the delivery of agricultural extension services to farmers and also help mobilize rural resources for agriculture. Farm extension in terms of personnel, educational and the material needs of the farmers should also be strengthened.

1.0	CHAPTER ONE:	INTRODUCTION
1.1	Background to the Study		1
1.2	Rice Production in Nigeria: The Place of Upland and Lowland Rice Production Systems		6
1.3	Problem Statement		8
1.4	Objectives of the Study		10
1.5	Justification		11
1.6	Plan of Thesis		13
2.0	CHAPTER TWO:	LITERATURE REVIEW AND THEORETICAL FRAMEWORK

 

2.1	Literature Review	14
2.1.1	The Rice Production Scenario in Nigeria	14
2.1.2	Rice Processing in Nigeria	16
2.1.3 The Competitiveness of the Nigerian Local Rice		17
2.1.4 The Presidential Initiative on Rice Production, Processing and Export in Nigeria		19
2.2 Definition of Concepts		21
2.2.1 Productivity Concepts		21
2.2.2 Production Efficiency: Technical Efficiency, Allocative Efficiency and Economic
	Efficiency	25
2.2.3 Productivity and Technical Efficiency		25

 

 

 

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2.2.4		Empirical Applications of Stochastic Frontier Production Functions		32
2.2.5		Determinants of Technical Efficiency		36
2.2.6  Empirical Applications of the Total Factor Productivity (TFP) Analysis				38
2.2.7 Use of Productivity Measures				39
2.2.8 Determinants of Agricultural Productivity				41
2.3		Theoretical Conceptual Framework		44
2.3.1 Approaches to the Measurement of Productive Efficiency in Agriculture: the
		Frontier Models		44
2.3.1.1 Parametric Frontiers				44
2.3.1.2 Non- Parametric Frontiers				49
2.3.2		Farm Productivity Analysis		52
2.3.3		Approaches to Farm Productivity Measurement		53.
2.3.3.1 The Index Number Approach				52
2.3.3.2 The Parametric Approach				53
2.3.4 Partial Productivity Measures				56
2.3.6 The chow test				57
3.0 CHAPTER THREE:			METHODOLOGY
3.1	Study Area			60
3.2	Sampling Technique and Sample Size			65
3.3		Method of Data Collection		68
3.4		Analytical Techniques		68
3.4.1 Estimation of Technical Efficiency in Upland and Lowland Rice Production
		Systems		69
3.4.1.2 Determinants of Efficiency				74

 

 

 

 

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3.4.2 Technical Efficiency Comparison			75
3.4.3  Total Factor Productivity (TFP) Estimation			78
3.4.4 Determinants of Agricultural Productivity			78
3.4.5 Farm budget Analysis			82
3.4.6 Likert Scale Analysis			83
4.0 CHAPTER FOUR:		RESULTS AND DISCUSSION
4.1	Socio-economic Characteristics of Rice Farm Households		88
4.2	Production Resources of Rice Farmers		92
4.2.1 Land Resource			92
4.2.1.1 Mode of Land Acquisition.			92
4.2.1.2 Farm Size			93
4.2.2 Type of Non-family Labour Employed			94
4.3	Rice Seeds Variety Planted		94
4.4	Agro-Chemicals		95
4.4.1 Types of Agrochemicals Used			95
4.4.2 Sources of Agro-Chemicals			96
4.5	Amount of Loan		96
4.6	Tools and Equipments		97
4.6.1 Tools and Equipment Ownership			97
4.6.2 Sources of Tools and Equipments			98
4.7	Costs and Returns		98
4.8	Technical Efficiency Estimates		103
4.9.1 OLS Regression Estimates for Lowland TE Determinants			111
4.9.2 OLS Regression Estimates for the Upland Rice Farm TE Determinants			112
4.10 Chow Test Comparison between Lowland and Upland Rice Farms Technical
	Efficiency		113

 

 

 

 

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4.11.1 Total Factor Productivity TFP Estimates				116
4.11.2 Determinants of Total Factor Productivity				117
4.12		Estimates of the Partial Factor Productivity		121
4.13		Constraints to Rice Production		123
5.0		CHAPTER FIVE:	SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1	Summary of Findings			124
5.2	Conclusion			126
5.3		Recommendations		127

 

5.4 Suggestions for Further study	130
REFERENCES	132
APPENDIX
Survey Questionnaire	145

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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LIST OF TABLES
Table 1: Comparison between Nigeria and the rest of West Africa	3
Table 2; Features of Rice Production in Nigeria	11
Table 3: Trend in Rice Imports (‘000 tonnes)	14
Table 4: International (indicative) Prices for Rice by Grade and Quality	18
Table 5: International Prices Relative to Domestic Rice Prices in Nigeria from 1999-2001	18
Table 6: Kwara State Rice Production Area and Output: 1991-2006	62
Table 7: Sample Design Outlay for the Study	67
Table 8: Socio-economic Characteristics of Rice Farmers	88
Table 9: Mode of Farmland Acquisition by Respondents	92
Table 10: Farm Size Distribution of Respondents	93
Table 11: Types of Non Farming Labour Used by Respondents	94
Table 12: Rice Variety Planted by Respondents	95
Table 13: Distribution of Rice Farmers based on the Type of Agro-Chemical Used on
their Rice Farms	96
Table 14: Sources of Agrochemicals Used by Respondents	97
Table 15: Tools and Equipments Ownership Distribution of Respondents	97
Table 16: Summary of Costs and Return Structure to Rice Production (N /Ha)	99
Table 17: “t” test Comparison of Gross Margin and Returns to Farmers’ Labour
and Management between Lowland and Upland rice farmers	102
Table 18: Maximum Likelihood Estimates (MLE) of Cobb-Douglas Based Stochastic
Production Frontier for Lowland Farms	103
Table 19: Elasticity of Production and Returns to Scale for Lowland Farms	105
Table 20: Frequency Distribution of Technical Efficiency Indices of lowland Rice Farms	106
Table 21: Maximum Likelihood Estimates (MLE) of Cobb-Douglas based Stochastic
Production Frontier for Upland Farms	107
Table 22: Elasticity of Production and Returns to Scale for Upland Farms	109

 

 

 

 

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Table 23: Frequency Distribution of Technical Efficiency Indices of Upland Rice Farms	110
Table 24: OLS Regression Estimates for Determinants of Technical Efficiency of
Lowland Farms	112
Table 25: OLS Regression Estimates for Determinants of Technical Efficiency of
Upland Farms	112
Table 26: Result of Chow Test Comparison between determinants of TE across upland
and Lowland Rice Farms	114
Table 27: Result of Chow Test Comparison between Lowland and Upland Rice Farms
Technical Efficiency Regressions	115
Table 28: Frequency Distribution of Total Factor Productivity TFP Indices of Rice Farms 116
Table 29: OLS Regression estimates for Determinants of Total Factor Productivity TFP
of Lowland Farm	119
Table 30: OLS Regression estimates for Determinants of Total Factor Productivity TFP
of Upland Farms	120
Table 31: Partial Factor Productivity Estimates of Rice Farmers.	121
Table 35: Likert Scale Ranking of Constraints to Rice Production	123

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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LIST OF FIGURES
Figure 1: Production Frontiers and Technical Efficiency	27
Figure 2: Productivity, Technical Efficiency and Scale Economies	29
Figure 3: Productivity, Technically Efficient and Scale Economics	31
Figure 4: Stochastic Frontier Production Function	48
Figure 5: Map of Kwara State	64

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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CHAPTER ONE

 

 

INTRODUCTION

 

 

1.1  Background to the Study

 

Rice is an annual crop and the most important staple food crop in the tropical countries. Commercially, the crop is the most important cereal after wheat. It is widely consumed and there is hardly any country in the world where it is not utilized in one form or the other. In Nigeria, rice is one of the few food items whose consumption has no cultural, religious, ethnic or geographical boundary. It is available in five-star hotels in the big cities and towns, as well as in the “most local” of the eating places in the remotest villages throughout the country. It is highly priced and widely accepted for festivity. In some rural areas, it is so adored that it is eaten only on Sundays and sometimes on market days (Omofonmwan and Kadiri,2007).

 

 

Rice is one of the major staples, whose production if encouraged can provide the population with the nationally required food security minimum of 2400 calories per person per day (FAO, 2000). The crop is commonly consumed even as a food crop for household food security. The average Nigerian consumes about 24.8 kg of rice annually, representing 9 per cent of the total annual calories intake and 23 per cent of total annual cereal consumption. Since the mid-1980s, rice consumption has increased at an average annual rate of 11 per cent of which only 3 per cent can be explained by population growth. The remainder represents a shift in diet towards rice at the expense of the coarse grains (millet and sorghum) and wheat. Nigeria’s demand for rice is

 

 

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roughly four million tonnes annually. Rice imports account for close to a third of Nigeria’s total rice supplies (GAIN Report, 2005).

 

 

Due to its increasing contribution to per capita calorie consumption of Nigerians, the demand for rice has been increasing at a much faster rate than domestic production and more than in any other African countries since mid 1970s (FAO, 2001). For instance, during the 1960s, Nigeria had the lowest per capita annual consumption of rice in the West African sub-region with an annual average of 3kg. Since then, Nigeria’s per capita consumption levels have grown significantly at 7.3 per cent per annum. Consequently, per capita consumption during the 1980s increased to an annual average of 18kg and reached 33kg in 2000-2005 (See Table 1).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Table 1: Comparison between Nigeria and the Rest of West Africa

 

					Indicator
Yearly Averages				1961-1970	1971-1980	1981-1990	1991-2000	2001-2005
					Nigeria
Production		(t)		264,100	533,200	1,758,132	3,111,700	3,833,400
Import	(t)			1,187	205,907	390,489	471,254	17,084,000
Total Consumption			(t)	138,353	468,413	1,324,916	2,260,779	5,087,000
Per Capita		Consumption		2.76	7.08	15.83	22.38	33
(Kg per year)				West Africa without Nigeria
Production		(t)		1900746	2,735,414	4,285,379	6,810,660	2520,000
Import	(t)			375,637	851,070	2,468,998	3,729,891	n.a
Total Consumption			(t)	1,340,202	2,261,066	4,156,247	6,244,283	6550000
Per Capita		Consumption		13.07	16.99	24.01	28.49	n.a
Kg per year

n.a = data is not available

 

Computed from West African Rice Development Association (WARDA) Data (2005) and FAOSTAT, (2007)

 

The 2005 national rice production of 4.50 million tonnes of paddy cultivated on an area of 2 million hectares implied a yield estimate of 2.25 metric tonnes per hectare. The total milled production of rice is 2.7 million tonnes which indicates a milling recovery rate of 60 per cent while total national demand of milled rice is estimated at 4.920 million tonnes per annum. There is therefore a deficit of 0.42million tonnes of rice (USDA.2007). Estimates indicate that rice imports represent more than 25 per cent of the nation’s agricultural imports and over 40 per cent of domestic consumption. Between 1999 and 2001, the value of rice imports rose steadily from

 

 

 

 

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US $259 million to US $655 million. By 2002, the value had risen to US $756million (CBN, 2006).

 

 

Over the years, the cultivation and production of this highly priced and very important food crop is dwindling, the price