ECONOMIC EFFICIENCY OF GROUNDNUT PRODUCTION IN KANO STATE, NIGERIA

Abstract

The study examined the economic efficiency of groundnut production in Kano State, Nigeria. Using a simple random sampling, two hundred and sixty-seven (267) farmers were selected and interviewed from nine communities, under the three selected LGAs from the study area. Descriptive statistics, DEA, as well as Tobit regression model were used for data analysis. The result of the Data Envelopment Analysis (DEA) reveals that the farmers were operating below the optimum frontier with average Technical Efficient (TE), Allocative Efficiency (AE) and Economic Efficiency (EE) scores was 0.265, 0.371 and 0.098 respectively, with the GM enterprise having a higher mean TE score of (0.7654). All the inefficiency variables met a prior expectation with positive coefficients except age and level of education. This indicates that increase in age and years of schooling have minimal effect in reducing the farmers’ inefficiency in groundnut production. Four out of the eight fitted inefficiency variables were significant at 10%, while three at 5%, but the extension contact was not significant. It was thus concluded that even though groundnut production enterprise is a profitable one, groundnut farmers in the study area were both technical and allocative inefficient. It was therefore recommended that farmers should be encouraged through extension to adopt new available technologies and improved varieties which will help improve both their technical and cost efficiency thereby widen their margin gaps.