Empirical Analysis of Economies of Scale and Cost Efficiency of Small-scale Maize Production in Niger State, Nigeria

Abstract

This research presents empirical analysis of economies of scale and cost efficiency of small scale maize production in Niger State of Nigeria, using multi stage sampling technique to elicit farm level survey data from 120 farmers in the study area via interview and administration of validated pre-tested questionnaire. Cobb-Douglas Cost stochastic frontier function was used to analyze the data collected. 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 was further collaborated by the mean cost efficiency of 0.96 obtained from the data analysis which shows that an average farm in the sample area was about 96 percent close to the frontier cost, indicating that they are relatively efficient in allocating their scarce resources. The result ofthe analysis indicate that presence of cost inefficiency effects in the maize production as depicted by the significant estimated gamma coefficient of about 0.98 and the generalized likelihood ratio test result obtained from the data analysis.