Technical Efficiency Differentials and Resource-Productivity Analysis

among Smallholder Soybean Farmers in Benue State, Nigeria

Keywords:
Technical efficiency, productivity, transcendental logarithmic stochastic
frontier model, smallholder soybean production.
ABSTRACT:

The importance of soybean as a high protein, primary input in vegetable oil,
diary and feed industries is not in doubt. The technical efficiency and
resource-productivity of smallholder soybean farmers in Benue State, Nigeria were
estimated using cross sectional data obtained on 96 soybean farmers in the empirical
analysis. Results obtained with transcendental logarithmic (translog) stochastic
frontier model showed that the technical efficiencies varied widely from
0.254 to 0.999 with a mean of 0.718. This indicates that smallholder soybean
production was in the irrational stage of production (stage III) as depicted by the
returns-to-scale (RTS) of -2.848. Land and fertilizer were effectively allocated and
used, as confirmed by each variable having estimated coefficient value between zero
and unity, depicting stage II in the production curve. The productivity of the factors
can be enhanced by expanding the farm size at the existing level of labour so that the
variable of labour used could move from stage III to stage II in the production curve.
Labour saving resource and/or practices should be encouraged for productivity and
technical efficiency to be enhanced.
108-113 | JRA | 2012 | Vol 1 | No 2

This article is governed by the Creative Commons Attribution License (http://creativecommons.org/
licenses/by/2.0), which gives permission for unrestricted use, non-commercial, distribution and
reproduction in all medium, provided the original work is properly cited.
www.jagri.info
Journal of Research in
Agriculture
An International Scientific
Research Journal
Authors:
Otitoju MA
1
, Omole MO
2
,
Ezihe JAC
3
, Arene CJ
4
.

Institution:
1.Agricultural
Biotechnology and
Bioresources Development
Department, National
Biotechnology Development
Agency, Abuja, Nigeria.

2. School of Business
Education, Federal College
of Education (Technical),
Bichi, Kano State, Nigeria.

3. Department of
Agricultural Economics,
University of Agriculture,
Makurdi, Benue State,
Nigeria.

4. Department of
Agricultural Economics,
University of Nigeria,
Nsukka, Nigeria.







Corresponding author:
Otitoju MA.


Email:
maobanjo@yahoo.co.uk

Phone No:
+2347063036013.


Web Address:
http://www.jagri.info
documents/AG0024.pdf.

Dates:
Received: 9 Jun 2012 Accepted: 02 Jul 2012 Published: 24 Aug 2012
Article Citation:
Otitoju MA, Omole MO, Ezihe JAC, Arene CJ.
Technical Efficiency Differentials and Resource-Productivity Analysis among
Smallholder Soybean Farmers in Benue State, Nigeria.
Journal of Research in Agriculture (2012) 1(2): 108-113
Original Research
Journal of Research in Agriculture
J
o
u
r
n
a
l

o
f

R
e
s
e
a
r
c
h

i
n

A
g
r
i
c
u
l
t
u
r
e

An International Scientific Research Journal


109 Journal of Research in Agriculture (2012) 1(2): 108-113
Otitoju et al., 2012
INTRODUCTION
Benue State is the largest producer of soybean in
Nigeria with almost all the tonnage coming from the TIV
dominated zones of the state (Eastern and Northern
Agricultural zones) (Iwe, 2003). The importance of
soybean as a high protein, primary input in vegetable oil,
diary and feed industries is not in doubt (Ayoola, 2001).
The efficacy of the soybean protein has been reported in
comparison to other traditional sources of protein, 1kg of
soybean contained as much as 2kg of boneless meat or 5
dozens of eggs or 45 cups of cow milk (Dashiell, 1993).
It is relatively cheap with 40% protein content compared
to these other sources of protein (Ayoola, 2001).
Soybean is used to make soup condiment called
dawadawa by the Hausa, which is also known as iru
or ogiri in the Yoruba land, as a substitute for maggi.
It has also been successfully incorporated into at least
140 traditional food products of different regions and
ethnic groups in Nigeria (Iwe, 2003; Okoruwa, 1999).
Examples of these products are soy-ogi, soy vegetable
soup, soy garri, soy-alibo, soy-akpu, soy-tuwo; soy-
kuruzaki, soy-opa, soy-hatsi and soy-ice cream, etc.
These products have been widely accepted and this has
made the demand for soybean not to keep pace with its
supply.
Efforts had been made by various successive
governments to correct supply deficits in agricultural
production in Nigeria (Olaitan, 2007), soybean
production inclusive. Examples of these efforts through
policies are the Institute of Agricultural Research (IAR)
at Ahmadu Bello University, Zaria, Nigeria who
generated the samsoy varieties; University of
Agriculture, Makurdi established in 1988 which has as
part of her mandates to increase the production of crops
in the Northern Nigeria and more recently Vegetable Oil
Development Programme (VODEP) launched in 2002 to
address five oil-producing crops; cocoa, oil palm, cotton,
ground nut and soybean (FMARD, 2006). VODEP is
assumed to increase the production of these crops to
meet the 300,000-400,000 tonnes per annum supply
deficit of vegetable oil (PRCU, 2003). Also the
International Institute of Tropical Agriculture (IITA)
Ibadan also tried in the generation of better adaptable
varieties (Tgx and Tgm). These generated varieties are
assumed to replace the old Malayan variety. With all
these policies and programmes the demand/supply gap is
yet to be bridged. It has been observed that these policies
are inconsistent and usually short-lived. As identified by
Idachaba (2000), inconsistent policies are the major
source of poor performance of Nigeria Agriculture.
Central to the inability of the Nigerian soybean to correct
the supply deficits is the issue of efficiency of the
soybean farmers in the use of available resources or
technology. Ajibefun, (2006) opined that efficiency of
production is central to raising production and
productivity in the African agriculture. The efficient use
of available technology is what is referred to as technical
efficiency (Obwona, 2006).
Arene and Okpupara, (2006) defined technical
efficiency as the maximisation of the ratio of output to
input. In his own view Lovell (1993) explained technical
efficiency to mean the ability to avoid waste by
producing as much output as input usage allows, or by
using little inputs as output of production allows. Bishop
and Toussaint (1958) defined productivity as the ratio of
valuable output to valuable inputs.
Most soybean production is under smallholder
agricultural systems. These smallholder soybean farmers
cultivate about two hectares on the average, use
traditional implements like hoes and machetes, and often
do not use appropriate quantity of fertilizers, and
appropriate spacing. The purpose of this study was to
investigate the technical efficiency and resource-
productivity of smallholder soybean farmers located
within Eastern and Northern agricultural zones of Benue
State, Nigeria, the major soybean producing area of the
state.

METHODOLOGY:
Following the 2005/2006 production period, a
survey was conducted in Benue State, the largest
producer of soybean in Nigeria. The two agricultural
zones (Northern and Eastern) were purposively selected
being the major soybean-producing areas of Benue State.
A multi-stage random sampling technique was used for
the selection of the respondents. Two districts were
selected from each zone. Sixteen villages were chosen in
the two zones (8 villages in each zone) as the study area.
Six smallholder soybean farmers were selected from
each village. A total of 96 respondents were used for the
study. A structured questionnaire and/or interview
schedule was used to collect data for the study. Data on
inputs - labour, land and fertilizer and soybean yields
collected from smallholder farmers were used in the
technical efficiency and productivity analysis.
Benue State is located in the middle belt of
Nigeria, approximately between latitudes 6.3
o
N to 8.1
o
N
and longitudes 8E to 10
o
E. The state is blessed with two
major rivers namely River Benue and River Katsina-Ala.
She has a total land area of 32, 866.25 squared
kilometres (BNARDA, 2000). According to 2006 census
by the National Population Commission, the state has a
population of about 4,219,244 million (Nigerian Muse,
2007) She is referred to as the food basket of the
nation because of the abundance of agricultural
resources in the state.
The production technology of the farmers was
assumed to be specified by the transcendental
logarithmic (translog) stochastic frontier production
function, which is stated as:
u> 0
Where:
ln represents the natural logarithm;

S
are parameters estimated;
stands for summation;
j represents the input variables in the second-order term
of the translog model.
Yi = output of soybean harvested for the sample ith
farmer (in kilogrammes);
X
1
=total labour used (in man-days);
X
2
= total land area planted to soybean (in hectares);
X
3
=total fertilizer used in soybean production
(in kilogrammes);
V
i
= random errors that are assumed to be independent
and identically distributed as N (0,
v
2
) random
variables; and
U
i
= non-negative technical inefficiency effects that are
assumed to be independently distributed among
themselves and between V
is
such that U
i
is defined by the
truncation of N (0,
v
2
) distribution.
TE = Exp (-U
i
). Technical efficiencies (TE) vary
between zero and one.
Journal of Research in Agriculture (2012) 1(2): 108-113 110
Otitoju et al., 2012
Table 2: Loglikehood - ratio (LR) test of null hypothesis
Null Hypothesis Likelihood-ratio Test statistic Critical value Decision
H0: =0 - 31.626 67.04 12.59* Reject H
0

* Critical value was obtained from the chi-square (2) table.
Variable Sample mean Standard Deviation Minimum value Maximum value
Output (Kilogrammes) 1741.11 1081.99 300 5550
Land (Hectares) 2.19 1.20 0.5 5.5
Labour (man-days) 416.96 222.42 121 1021
Fertilizer (Kilogrammes) 134.22 168.75 50 750
Table 1: Summary statistics for variables used in the productivity and technical efficiency analysis
Source: Computed from field data, 2007
3 3
1
3
1
; ln ln
2
1
ln ln Ui Vi Xj Xi ij xi i o yi
i j i


The Maximum Likelihood Estimates (MLE) for all the
parameters of the SFA was estimated with FRONTIER
version 4.1 computer programme (Coelli, 1996).

RESULTS:
The presence of technical inefficiency effects
using the generalised likelihood ratio test is given in
table 2. The test statistic computed had a value of 67.04.
The null hypothesis (there is no technical inefficiency in
smallholder soybean production, H
0
: =0) was rejected
at 5% level of significance, indicating that the
coefficients of the frontier production function are
significantly different from the average production
function estimated with the Ordinary Least Sqaures
(OLS) model (Battese and Coelli, 1988; Ojo, 2003).
Hence, translog model was the preferred model. The
Maximum Likelihood Estimates (MLE) of the
parameters of the stochastic frontier model are presented
in table 3. The signs of the coefficients of land and
fertilizer were positive, but all the coefficients of the
three input variables considered in this study were
significant at 5% level. The estimated gamma parameter
() of translog model of 0.999 indicated that about 99%
of the variation (or differential) in soybean output among
the farmers was due to technical inefficiency.
The estimated elasticities of independent
variables of the translog model (table 4) shows that land
and fertilizer exhibited positive decreasing returns-to-
scale in soybean production, indicating the variables
allocation and use were in the stage of economic range of
the production function (stage II). The elasticity of
labour demonstrated negative decreasing returns-to-scale
in soybean production indicating it was over utilized,
which depicts stage III of the production schema. This
might partly due to the availability of family labour,
which is predominant in Nigerian agriculture. The
returns-to-scale parameter (-2.848), indicated a negative
decreasing returns-to-scale which is less than zero. This
implies that small scale soybean production was in stage
III of the production region. At this stage, every addition
to the production inputs would lead to less than
proportionate addition to output. This stage III never
denotes stage of economic production. The productivity
of the factors could be enhanced by expanding the farm
size at the existing level of labour so that the variable of
111 Journal of Research in Agriculture (2012) 1(2): 108-113
Otitoju et al., 2012
OLS Translog
a

Variable Parameter Coefficient t-ratio Coefficient t-ratio
Constant
0
0.262 (0.113) 2.323* 20.091 (1.665) 12.068*
Ln (labour)
1
-6.576 (4.064) -1.618 -4.314 (0.606) -7.114*
Ln (land)
2
0.960 (0.264) 3.641* 0.961 (0.112) 8.615*
Ln (fertilizer)
3
0.219 (0.593) 0.369 0.505 (0.172) 2.935*
[Ln (labour)]
2

11
0.541 (0.369) 1.467 0.340 (0.0564) 6.032*
[Ln (land)]
2

22
-0.826 (0.385) -2.215* -0.595 (0.0721) -8.251*
[Ln ( fertilizer)]
2

33
0.453 (0.0132) 0.344 -0.0570 (0.0437) -1.305
Ln (labour) x Ln (Land)
12
0.211 (0.0518) 4.063* 0.182 (0.0135) 13.50*
Ln (labour) x Ln (fertilizer)
13
-0.044 (0.112) -0.397 0.0851 (0.0304) -2.800*
Ln (land) x Ln (fertilizer)
23
-0.029 (0.104) 0.285 0.808 (0.0271) 2.978*
Total variance
s
2
0.126 0.867 (0.162) 5.365*
Gamma - 0.999
(0.0000000235)
4.262 x 10
7
*
Loglikelihood function Llf -31.626 1.893
Table 3: The maximum likelihood estimates (MLE) of the stochastic frontier production function for
smallholder soybean farmers
* Significant at 5% level
a
Preferred model
OLS means Ordinary Least Square
Translog means Transcendental Logarithmic
labour used could move from stage III to stage II in the
production curve.
Table 5 shows the technical efficiency estimates
for smallholder soybean farmers. The predicted technical
efficiencies differ substantially among the farmers,
ranging between 0.254 and 0.999, with the mean
technical efficiency estimated to be 0.718. It shows that
about 79% (79.17%) of the farmers had technical
efficiency exceeding 0.60 and about 21% (20.80%) had
technical efficiency of less than 0.60.

CONCLUSION
This study observed that technical efficiency of
smallholder soybean farmers varied due to the presence
of inefficiency of soybean farmers in the use of
productive resources in their production activities. The
technical efficiencies of smallholder soybean farmers
clustered around 0.61 and 0.70 range. Although the
farmers were small-scale and resource poor, they were
fairly efficient in the use of their resources as the result
predicted. The mean technical efficiency score was
0.718. This indicates that technical efficiency can be
increased by about 28% through better use of available
resources, while using the present technology. Labour
saving practices has to be introduced for productivity and
technical efficiency to be improved in soybean
production.

ACKNOWLEDGEMENT
This article emanates from the M.Sc. dissertation
of the corresponding author. He wishes to express
worthy thanks to Prof. C. J. Arene who supervised the
work and also Mrs. J. A. C. Ezihe and Mr. Mathias
Omole for their valuable contributions which helped to
sharpen the focus of the work.

REFERENCES
Ajibefun IA. 2006. Linking socio-economic and policy
variables to technical efficiency of traditional
agricultural production: Empirical evidence from
Nigeria. A poster paper prepared for the 26th conference
of the International Association of Agricultural
Economists, August 12-18, 2006. Queensland Australia.

Arene CJ and Okpupara BC. 2006. Economics of
agricultural production, resource use and development:
An introduction to the micro and macro level
perspectives,Nsukka, Nigeria, Prize publishers.

Ayoola GB. 2001. Essays in the agricultural economy: A
book of readings in agricultural policy and
administration in Nigeria. 1:1-5. Ibadan: TMA
publishers.

Battese GE and Coelli TJ. 1988. Prediction of firm
level technical efficiencies with a generalised frontier
production function and panel data. Journal of
Economics. 6:21-37.

Benue State Agricultural and Rural Development
Authority (BNARDA). 2000. Agricultural production
recommendation for Benue. Extension bulletin 3.1-20.
Journal of Research in Agriculture (2012) 1(2): 108-113 112
Otitoju et al., 2012
Variable Elasticity
Labour -4.314
Land 0.961
Fertilizer 0.505
Returns-to-scale (RTS) -2.848
Table 4: Elasticities of Production and
Returns-to-Scale for Smallholder Soybean Farmers
Source: Computed from field data, 2007
Efficiency level Frequency Percentage
0.91 - 1.00 17 17.71
0.81 - 0.90 15 15.63
0.71 - 0.80 13 13.54
0.61 - 0.70 31 32.29
0.51 - 0.60 13 13.54
0.41 - 0.50 4 4.16
< 0.40 3 3.13
Total 96 100.00
Mean 0.718
Minimum value 0.254
Maximum value 0.999
Table 5: Frequency Distribution of Technical
Efficiency Estimates of Smallholder Soybean
Farmers




Bishop CC and Toussaint WD. 1958. Introduction to
agricultural economic analysis.New York: John Wiley &
Sons.

Coelli TJ. 1996. A guide to FRONTIER version 4.1: a
computer program for stochastic frontier production and
cost function estimation, CEPA working paper 96/07.
University of New England, Armidale, Australia.

Dashiell KE. 1993. Soybean production and utilization
in Nigeria. A paper presented at the National workshop
on small scale and industrial level processing of soybean
held at International Institute of Tropical Agriculture,
Ibadan, Nigeria, 27 - 29 July.

Federal Ministry of Agriculture and Rural
Development Document (FMARD) 2006. (not dated).
Retrieved September 2, from http://www.nigeria.gov.ng

Idachaba FS. 2000. Desirable and workable agricultural
policies for Nigeria in the first decade of the 21st
century. Topical issues in Nigerian agriculture series,
University of Ibadan, Nigeria.

Iwe MO. 2003. The science and technology of soybean:
chemistry, nutrition, processing and utilization. Enugu,
Nigeria: Rejoin communication services Ltd.

Lovell CAK. 1993. Production frontiers and production
efficiency. In: H. O. Fried, C. A. K. Lovell, and S. S.
Schmidt (eds.) The measurement of productive
efficiency. New York: OxfordUniversity Press.

Nigerian Muse. 2007. Provisional figures for 2006
Nigerians census. Retrieved August 6, 2006 from
http://www.nigerianmuse.com.

Obwona M. 2006. Determinants of technical efficiency
differentials amongst small and medium scale farmers in
Uganda.A case of tobacco growers.AERC research paper
152, Nairobi, Kenya.


Ojo SO. 2003. Productivity and technical efficiency of
poultry egg production in Nigeria. International Journal
of Poultry Science 2(6):459-464.

Okoruwa AE. 1999. Soybean processing and utilization
for healthy nutrition in West Africa.IDRC/IITA soybean
utilization project phase III final report, May
1994 - September 1999.

Olaitan SO. 2007. Sustaining reforms in agriculture for
the achievement of the millennium goal in food
production, employment creation and poverty reduction.
A paper presented at the national conference of faculty of
education held between 6 -9 August, 2007, University of
Nigeria, Nsukka.

Presidential Research and Communication Unit
(PRCU). 2003. Recent development in the agricultural
sector.May 7, 2003. Retrieved September 2, 2006 from
http://www.nigeriafirst.com.
113 Journal of Research in Agriculture (2012) 1(2): 108-113
Otitoju et al., 2012
Submit your articles online at www.jagri.info

Advantages
Easy online submission
Complete Peer review
Affordable Charges
Quick processing
Extensive indexing
You retain your copyright


submit@jagri.info

www.jagri.info/Sumit.php.