Economies of Scale and Cost Efficiency in Small Scale Maize Production: Empirical Evidence from Nigeria

Abstract

This paper presents empirical study of economies of scale and cost efficiency of small scale maize production in Ondo State of Nigeria, using farm level survey data collected from 200 farms in the study area. The results shows that there is a relative presence of economies of scale among the farmers meaning that an average farm in the sampled area produce at a minimum cost considering the size of the farm which is an indication that they operates in stage II of production surface (stage of efficient utilization of resource).This result was further collaborated by the mean cost efficiency of 1.161 obtained from the data analysis which shows that an average farm in the sample area is about 16% above the frontier cost, indicating that they are relatively efficient in allocating their scarce resources. The result of the analysis indicate that presence of cost inefficiency effects in the maize production as depicted by the significant estimated gamma coefficient of about 0.81 and the generalized likelihood ratio test result obtained from the data analysis.