Technical, Economic and Allocative Efficiencies of Pepper Production in South-West Nigeria: A Stochastic Frontier Approach

Abstract

Despite increases in the cultivation of pepper among farmers in South-West Nigeria, massive transportation of pepper from the Northern parts of the country and seasonal fluctuation in prices are still very common. Given a good knowledge of the efficiency levels of various production units (farms), output can be increased in the short-term by improving production efficiency. This study examined technical, allocative and economic efficiencies in pepper production in south-west Nigeria. Data were collected from three hundred pepper farmers who were sampled through a multi-stage sampling procedure. Data were analyzed using the stochastic frontier approach. The results revealed average technical, allocative and economic efficiencies of 0.737, 0.893 and 0.658 respectively. These imply that given the present efficiencies levels, there is room for the average farmer to increase pepper output or save costs without the need to change existing technology. Extension contact, gender, indigeneship status, age and household size have significant effect on technical inefficiency. The study recommended among others, intensive extension services which focus more on native, older and female farmers and are geared towards raising technical knowledge of pepper farmers in order to improve output significantly.