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COMPARATIVE ANALYSIS OF RESOURCE USE EFFICIENCY IN RICE PRODUCTION AMONG FADAMA III AND NON-FADAMA III BENEFICIARY RICE FARMERS IN NIGER STATE, NIGERIA
ABSTRACT
This study investigated resource use efficiency of Fadama III and non-Fadama III beneficiary rice farmers in Niger State, Nigeria. Primary data were collected using questionnaire/interview schedule administered to a sample of one hundred and twenty rice farmers, selected using multi-stage sampling technique. Data were analyzed using descriptive statistics, stochastic frontier production function, return to scale analysis, gross margin analysis, net farm income analysis and likert scale rating technique. Maximum likelihood estimates of the Cobb-Douglas frontier function showed that coefficient of seeds (0.479), labour ( 0.445) and herbicides ( 0.093) had significant effects on output of Fadama III beneficiary rice farmers while fertilizer ( 0.069) is the input with significant effect on output of the non-beneficiary farmers. The estimated coefficients of the inefficiency model revealed that age, household size, educational level, extension contact and Fadama advisory services positively affected Fadama III rice farmers’ technical efficiency, but only age and educational level were significant. On the other hand, age, household size and extension contact positively affected non-Fadama III rice farmers’ technical efficiency, but only extension contact was significant. An increasing return to scale of 1.432 and 1.168 were recorded for the Fadama III and non-Fadama III rice farmers, respectively. The technical efficiencies of the Fadama III rice farmers ranged from 0.411 – 1 with a mean value of 0.79 while that of the non Fadama III beneficiary rice farmers ranged from 0.435 – 0.989 with a mean value of 0.81 on the scale of 1.This showed that technical efficiency can be increased by 21 and 19 percents to attain optimal level in the Fadama III and non Fadama III beneficiary rice farmers, respectively. Allocative efficiency analysis showed that all resource inputs were underutilized. Fadama III rice farmers made a gross margin of N69, 288.37, a net farm income of N67, 599.91 and a return on Naira Invested of 1.81 per ha while the non-Fadama III rice farmers made a gross margin of N30, 250.36, a net farm income of N28, 550.26 and a return on Naira invested of 1.12 per ha. The student t-test showed that there was no significant difference between the technical efficiencies of Fadama III and non-Fadama III beneficiary rice farmers. However, the t-test showed a significant difference between the profit of the Fadama III and non-Fadama III rice farmers. The study recommended that project implementers should tackle the challenge of elite capture, inputs diversion and intensify advisory services/training, while policy makers facilitate the usage of high yielding seeds, labour saving technology and agro-chemicals for rice farmers.
TABLE OF CONTENTS
Title page – – – – – – – – – ii
Certification – – – – – – – – – iii
Dedication – – – – – – – – – iv
Acknowledgement – – – – – – – – v
Table of Contents – – – – – – – – vi
List of Tables – – – – – – – – – ix
List of Figures- – – – – – – – – x
Abstract – – – – – – – – – xi
CHAPTER ONE: INTRODUCTION
Background of the Study – – – – – – 1
Problem Statement – – – – – – – 3
Objective of the Study – – – – – – 5
Hypotheses of the Study – – – – – – 6
Justification of the Study – – – – – – 6
CHAPTER TWO: LITERATURE REVIEW
2.1 Definition and Development of Fadama farming – – – 8
2.2 Economic Importance of Fadama farming – – – – 9
2.3 Rice Production Systems – – – – – – 10
2.4 Inputs Used in Rice Production in Nigeria- – – – 12
2.5 Trends in Rice Production in Nigeria – – – – – 14
2.6 Efforts to Boost Rice Production in Nigeria- – – – 16
2.7 Developments in the Nigeria Rice Sector Policy – – 17
2.8 Profitability of Rice Production Nigeria – – – – 19
2.9 Efficiency of Rice Production in Nigeria – – – – 21
2.10 Community Driven Development Approach and Fadama Project 22
2.11 Theoretical Framework- – – – – – – 23
2.12 Analytical Framework- – – – – – – 29
CHAPTER THREE: METHODOLOGY OF STUDY
Study Area – – – – – – – – 32
Sampling Technique – – – – – – – 33
Method of Data Collection – – – – – – 33
Data Analysis – – – – – – – – 34
Model Specification – – – – – – – 34
Stochastic Frontier Production Function for Rice Farmers – – 34
Gross Margin, Net Farm Income and Return on Naira Invested – 36
Likert Scale Rating Technique- – – – – – 37
Hypotheses Testing- – – – – – – – 38
CHAPTER FOUR: RESULTS AND DISCUSSION
Socio-Economic Characteristics of the Respondents – – – 39
4.1.1 Age of the Respondents – – – – – – 39
4.1.2 Gender of Respondents – – – – – – 40
4.1.3 Marital Status of Respondents- – – – – – 41
4.1.4 Household Size of Respondents- – – – – – 41
4.1.5 Farm Size of the Respondents – – – – – – 42
Farming Experience of Respondents- – – – – 43
Educational Qualification of Respondents- – – – – 44
4.1.8 Major Occupation of Respondents – – – – – 45
4.2.1 Technical Efficiency of Fadama III and non-Fadama III Rice Farmers 46
4.2.2 Diagnostic statistics- – – – – – – – 50
4.2.3 Frequency Distribution of Technical Efficiency of Respondents- – 51
4.2.4 Elasticity of Factor Inputs and Return to Scale – – – 53
4.3 Assessments of the Allocative Efficiencies of Rice Farmers – – 54
4.3.1 Allocative Efficiency of Fadama Rice Farmers- – – – 55
4.3.2 Allocative Efficiency of non-Fadama III Rice Farmers- – – 55
4.4. Costs and Returns of Fadama III and non-Fadama III Rice Farmers – 56
4.5 Constraints of Rice Farming in Niger State – – – 59
Test of Hypotheses- – – – – – – – 61
CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATION
5.1 Summary – – – – – – – – 64
5.2 Conclusion – – – – – – – – 66
5.3 Recommendations – – – – – – – 67
5.3.1 Project Implementers- – – – – – – – 67
5.3.2 Policy Implication for Policy Makers- – – – – 68
5.3.3 Possible Areas for Further Studies- – – – – 69
REFRENCES – – – – – – – – 71
APPENDICES – – – – – – – – 80
CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
The food sub-sector of Nigerian agriculture has a large array of staple crops, but rice has risen to a position of pre-eminence. At independence in 1960, rice was merely a festival food consumed mostly in affluent homes during the Christmas and other religious festivals (UNEP,2002). However, as shown in the report of Akpokoye, Lancon and Erenstein (2001), since the mid-1970s, rice consumption in Nigeria has risen tremendously, (+10.3% per annum) as a result of accelerating population growth rate and changing consumer preferences. Urbanization appears to be the main cause of the shift in consumer preferences towards rice in Nigeria. Rice is easy to prepare compared to other traditional cereals, thereby reducing the chore of food preparation and fitting more easily the urban lifestyles of rich and poor alike. The poorest third of urban households obtain 33% of their cereal-based calories from rice, and rice purchases represent a major component of cash expenditures on cereals (World Bank 1991).
Ogundele and Okoruwa (2006) noted that in an apparent move to respond to the increased per capita consumption of rice in Nigeria, local production boomed, averaging 9.3% per annum. These increases have been traced to vast expansion of cropped rice area at an annual average of 7.9% and to a lesser extent to an increase in rice yield of 1.49% per annum. In spite of this, the production increase was not sufficient to match the consumption increase.
Rice production, according to Onoja (2007), can be found in each of the geopolitical zones of the country. These extend from the Northern to Southern zones with most rice grown in middle Belt (Niger, Benue, Kaduna, Kogi and Taraba States) and the Eastern states (Enugu, Cross River and Ebonyi States). Daramola (2005) observed that the middle belt of the country (where Niger state is located) has a comparative advantage in production over the other parts of the country.
According to Singh et al (1997) rice production systems in Nigeria include upland rainfed, lowland rainfed, irrigated lowland and deep water and mangrove rice. Daramola (2005) asserted that mangrove is the least important in terms of area, accounting for less than 1% of the total rice area with deep water accounting for 5% of the rice production area, although this figure is most likely overestimated given the physical unit to area expansion in this environment. Of the estimated three million metric tons of annual rice production, three major rice production systems, namely upland rainfed, lowland rainfed and irrigated productions account for 97%. West African Rice Development Association – WARDA (2003) and Daramola (2005) agree that lowlands without water control i.e. Fadama areas are the main ecology followed by upland and irrigated rice.
In order to address the demand /supply gap, governments have at various times come up with policies and programmes. These include National Accelerated Food Production Programme established in 1972, Agricultural Development Project established in 1975, Operation Feed the Nation established in 1975, River Basin Development Authority established in 1978, the Green Revolution established in 1980, the Directorate of Food, Road and Rural Infrastructure established in 1985, National Land Development Authority established in 1988, National Fadama Development programme established in 1992 and FADAMA II established in 2004. The first National Fadama Development Project was approved on March 26, 1992 and became effective February 23, 1993. Small scale irrigation in the fadama has been hampered by several constraints which include poor infrastructure in the Fadamas, low investment in technology development and extension for irrigated agriculture, weak financial intermediation, poorly organized Fadama Farms and limited access to foreign exchange for importation of irrigation equipment. The first National Fadama Development Project – FADAMA I was designed to tackle these constraints (NFDP, 2003). The programme came to a close on March 31, 1999 and FADAMA II and III later came on board.
The second and the third National Fadama Development Project which started in May, 2004, and March, 2009, respectively aims to sustainably increase the income of all users of Fadama resources that include crop farmers, gatherers of edible and non edible fruits, fisher folks, hunters, pastoralists and service providers. In Niger State the Fadama II was implemented in the eleven participating local government areas which are Agaie, Lavan, Katcha, Lapai, Shiroro, Suleja, Chanchaga, Kontagora, Mariga, Magama and Borgu, while Fadama III is being implemented in the entire twenty-five LGAs of Niger State. The project development approach is the Community Driven Development (CDD) which is a bottom up approach that empowers communities /associations to develop social and all inclusive local development plans whereby communities take responsibility for designing, implementing, operating and maintaining as well as monitoring and evaluating the sub projects as prioritized in their local development plans (NSFDO 2005).
Having expended much in the Fadama Project, a World Bank intervention that employs a Community Driven Development approach, it is very pertinent to determine the resource use efficiency of rice farmers, the major users of Fadama in Niger State, since World Bank (2009 ) observed that out of the three CDD objectives (service delivery, empowerment/governance and economic livelihood) evaluation data has been most lacking on outcomes in terms of improvements in the lives and incomes of the poorest people themselves.
1.2 The Problem Statement
The demand for rice has been increasing at a much faster rate in Nigeria than in any other African country since the mid 1970s (FAO, 2001). According to Coalition for Africa Rice Development (2009), Nigeria’s estimated annual rice demand is about 5 million tons, while it produces on the average about 2.21 million tons milled product. The national rice supply demand gap of 2.79 million tons is abridged by importation. Agriculture Digest (2008), reported that the shortfall that is imported annually is projected to cost $267 million. In the light of foreign exchange constraints, this scenario will jeopardize the food security policy of the federal government if left unchecked.
Generally, expected increases in agricultural demand associated with population growth and rising per capita incomes will require continuing increases in agricultural productivity. Agricultural productivity of a production unit, defined as the ratio of its output to its input, varies due to differences in production technology, differences in the setting in which production occurs and differences in efficiency of the production process (Kebede, 2001).
Central to the challenge of Nigeria’s rice supply and demand gap is the issue of efficiency of the rice farmers in the use of resources. Average yield of upland and lowland rainfed rice in Nigeria is 1.8 tons per hectare, while that of the irrigation is 3.0 ton /ha. This is very low when compared with 3.0 ton/ha from upland, and lowland systems and 7.0 ton/ha from irrigation systems in places like Cote d’Ivoire and Senegal (WARDA and NISER, 2001). It, therefore, appears that rice farmers in Nigeria are not getting maximum return from the resources committed to the enterprise. The question posed by Mbah (2006) was whether this scenario was a result of farmers’ inability to accept changes or inability to utilize resources efficiently.
With the advent of the National Fadama Development project, fadama rice farmers in Niger State have been facing rapid changes in circumstances that shape their households and even community lives. The intervention of the project in the form of Capacity Building, Advisory Services, Community Driven Capital Asset Acquisition, Economic and Rural Infrastructure should affect farmers’ behaviour in their decision making process. Under these circumstances and in light of the aforementioned factors which Kebede (2001) said occasion variation in productivity, it is important to raise the questions: Are Fadama rice farmers now making efficient use of resources? Do rice farmers in the benefiting communities of Fadama project record higher profit than those in the non-benefiting communities? Given the changes brought about by the Fadama project this study seeks to find out if Fadama rice farmers in Niger State have overcome challenges pertaining to productivity, profitability and if they now make efficient use of resources.
1.3 Objectives of the Study
The broad objective of this study is to conduct a comparative analysis of resource use efficiency in rice production among Fadama III and non-Fadama III beneficiary rice farmers in Niger State.
The specific objectives of the study are to:
examine and compare the socio-economic characteristics of Fadama III and non-Fadama III beneficiary rice farmers in Niger State;
determine and compare the technical efficiencies of Fadama III and non-Fadama III beneficiary rice farmers in Niger State;
estimate the return to scale of Fadama III and non-Fadama III beneficiary rice farmers in Niger State.
determine and compare allocative efficiencies of Fadama III and non-Fadama III beneficiary rice farmers in Niger State;
determine and compare profitability of Fadama III and non-Fadama III beneficiary rice farmers in Niger State;
identify the major constraints of rice farming in Niger State and
make recommendations based on the findings of the study.
1.4 Hypotheses of the Study
The following null hypotheses guided the study:
H01: There is no significant difference in technical efficiency between Fadama III and non-Fadama III beneficiary rice farmers in Niger State.
H02 : There is no significant difference in profitability between Fadama III and non-Fadama III beneficiary rice farmers in Niger Sate.
1.5 Justification for the Study
Developing economies can benefit from efficiency studies. Measurements of the extent of efficiency indicate which aspects of farm characteristics can be addressed by public investment to improve efficiency (Kebede, 2001).
The food problem in Nigeria has been exacerbated by the low level of productivity of resources used in recent time. Existing low level of productivity in food grain production reflect low level of technical, allocative and economic efficiencies. According to CBN (2003) increase farm productivity and efficiency is no longer debatable but a necessity in view of imminent food deficit experienced in the country as judged by the over reliance on food importation.
At the moment there is no comprehensive and up to date information as regards the level of resource use efficiencies of the farmers. The few available ones were either based on other systems or on other locations. Anvebuwa’s (2006) and Mba’s (2006) focused on profitability of rice marketing in Ebonyi State. Aye and Oboh (2005) studied resources use efficiency in rice production in Benue State. Onoja (2007) studied the efficiency of rice production under small scale FMIS and lowland rain-fed system in Kogi State. Nweze and Abdurrahman (2008) studied Fadama farming system in Bauchi and Gombe State.
In recent years, despite all the human and material resources put into the sector, the rate of its productivity increase is said to be declining (Falusi, 1995). According to FACU (1992) and FDA (1995) the productive efficiency for most crops still falls short of 60 percent. The shortfalls are attributable to inefficiency in production. This implies that there is scope for additional increases in output from existing hectarages of food crops if resources are properly harnessed and efficiently used. This study becomes crucial since increased output and productivity are directly related to production efficiency /inefficiency given the state of technology.
Given the huge financial investment in the Fadama Project, the unimpressive performance of some similar earlier efforts, the potentialities of the project to empower farming households in communities with Fadama resources as well as the manifest gap between demand for and supply of rice in Nigeria, the need for a study to ascertain the resource use efficiency of Fadama rice farmers is justified.
The findings of this research would serve to guide policy makers, extension workers, Fadama Project implementers, governments and donor agencies in some areas of their projects or programmes with needs for adjustments. The results of this study will also provide baseline information for further research and policy formulation in agriculture – specifically, policies for improving technical efficiency and profitability of rice farm households.
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