Estimating technical efficiency, input substitution and complementary effects using output distance function: a study of cassava production in Nigeria.

Abstract

AbstractIn this study, we estimate an output distance function in the context of a multi-output and multi-input production technology by stochastic frontier techniques. Unbalanced panel data for smallholder farms that grown cassava and other crops in Southwestern Nigeria covering 2006/07 to 2008/09 farming seasons is used for the analysis. The results show that the marginal rate of transformation (MRT) between "other crops" grown by the farmers and cassava produced relative to the output mix is negative and significantly different from zero. We observed also that increasing returns-to-scale as well as technical progress characterized cassava production in the region. Furthermore, fertilizer and pesticides are found to have significant substitution effects on cassava production in the sample. We also found evidence that, in pairs, farm size and pesticides, labour and fertilizer as well as fertilizer and pesticides jointly exhibit significant complementary effects on cassava production in the region. An average technical efficiency level of 72.1 percent which implies approximately a 38 percent inefficiency level is observed from the study. Over the seasons, we found significant evidence of an increasing trend in technical efficiency level of the farms. Extension, credit and, occupation (i.e., full time farming) are indentified as efficiency increasing policy variables from the study.Key words: Cassava, technical efficiency, inputs substitution and complementary effects(ProQuest: ... denotes formulae omitted.)IntroductionCassava (manihot esculenta Crantz) is a perennial, vegetatively propagated shrub, grown throughout the lowland tropics. The crop is not only regarded as a benchmark for food security in the sub-Saharan Africa, but is also known as the second most important staple crop after maize, in terms of calorie intake.African countries produce over 103 million metric tonnes cassava per annum with Nigeria accounting for approximately 35 million metric tons per annum (FAOSTAT, 2009). Nigeria has the largest harvest in the world; three times more than the production level in Brazil and almost double the production level in Thailand and Indonesia.Cassava constitutes a major item in the crop combination of the most farmers and contributes significantly to total farm income in Nigeria (Bamire et al, 2004). This observation could offer reasons as to why the federal government of Nigeria launched the "Presidential Committee on Cassava Export Promotion" in 2001 with the aim of making cassava a major non-oil foreign exchange earner because of its comparative advantage in the country.Cassava production is, well suited to intercrop with short-duration crops such as: maize, cowpea, melon, okra, and several leafy vegetables (Ugwu and Nweke 1996). Other crops that can be intercropped with cassava include; sweet potatoes, yam, and cocoyam (Chukwuji 2008). Traditionally, an average of three to five crops is often intercropped with cassava. The crops are selected on the basis of differences in growth habits and can be combined in either simple or complex mixtures. This implies that cassava production in the country is characterized by a mixed cropping pattern of production systems. Aderinola et al, (2006) in a study of comparative analysis of three cassava-based farming systems in Nigeria which includes: cassava-sole, cassava + maize, and cassava + other crops, concluded that the cassava expansion program of the Nigerian government would enjoy a boost through the promotion of the cultivation of cassava with other crops. A similar observation was observed by Chukwuji (2008).However, a resilient issue among the industry's experts/researchers is the level of productivity (i.e., input, output growth or input and output mix productivities) and the efficiency of the cassava industry in the country (Onu and Edon 2009, Edeh and Awoke 2009, Udoh and Etim, 2007). Based on this, the paper seeks to update literature on the efficiency of the Nigerian cassava industry while it will at the same time complement various efforts of research in improving cassava production in the country. …