ESTIMATION OF TECHNICAL INEFFICIENCY AND PRODUCTION RISK AMONG SMALL SCALE MAIZE FARMERS IN THE FEDERAL CAPITAL TERRITORY (FCT) ABUJA, NIGERIA

Abstract

Background. Estimation of technical inefficiency and Production risk play a key role in farmers’ decisions pertaining to input allocation and subsequent output. The study provided empirical evidence on technical inefficiency and associated production risk among small scale maize farmers in the Federal Capital Territory (FCT) Abuja, Nigeria. Material and methods. A multistage sampling technique was adopted in the selection of 154 respondents. Data were analyzed using descriptive statistics and a stochastic frontier function with a heteroskedastic error structure. Results. The results show that farm size and agrochemicals significantly influenced maize production at (P < 0.01) and (P < 0.1), respectively. An increasing return to scale in Maize production was observed in the study area. There was significant evidence of production risk associated with inputs used in maize production. From among the production inputs considered in the study, only seed was found to significantly reduce risk (P < 0.01). The technical inefficiency of farmers in the area ranged between 0.06-0.99 with a mean inefficiency of 0.27 (27%). Conclusion. On average 27% of the output was lost as a result of technical inefficiency in maize production and production risk could be reduced significantly if an additional quantity of maize seed is planted per hectare.