Economic Analysis of Grasscutter Production (Thryonomys swinderianus) in Osun State, Nigeria: A Case of Data Envelopment Approach

Abstract

Aim: The study estimated the technical, allocative and economic efficiency indices and further examined the factors influencing technical efficiency for the sampled Grasscutter farms in Osun State.
 Study Design: The study made use of only primary data obtained from sampled Grasscutter farmers in the three agricultural zones of the State.
 Place and Duration of Study: The study was carried out in Osun State, Nigeria during 2017/2018 farming season.
 Methodology: Twenty four respondents, each, were randomly selected from the list of Grasscutter farmers obtained from Osun State Agricultural Development Project (ADP). Data collected was analyzed using the stochastic frontier model and Tobit regression model. The overall technical efficiency was estimated with no effort of decomposing it into pure and scale efficiencies.
 Results: The results showed that the range of efficiency indices varies greatly with minimum of 0.742, 0.263 and 0.168 and maximum of 1.0 for technical, allocative and economic efficiencies, respectively. The mean efficiencies which indicate the average potential therein in Grasscutter production in the study area were 0.96, 0.63 and 0.83 for technical, allocative and economic efficiency, respectively. Only one, out of the seventy two grasscutter farmers involved in the analysis was found to be technically, allocatively and economically efficient. Many sampled grasscutter farmers employed the ‘wrong’ input mix, given input prices, so that, on average, costs were (37%) higher than the cost minimizing level. However, farms have the potential to reduce their physical input, on average, by (4%) and still produce the same level of output.
 Conclusion: There was a great potential to improve the output of grasscutter farms and save cost, if variable inputs were adjusted to the optimal level along the short-run isoquant. Education and farming experience significantly influenced technical, allocative and economic efficiencies, respectively, while inefficiency results, in large part, from allocative rather than technical inefficiency.