Profit Efficiency of Smallholder Maize Farmers in Niger State, Nigeria

Coster, A.S.
Inability of the smallholder farmers to operate on the profit frontier given farm specific prices and resource base continue to undermine sustainable production level and its attendant loss of farm profit over the years. Therefore, the analysis of profit efficiency of smallholder maize farmers was investigated. A cross section of 173 smallholder maize farmers in Niger State was selected through multistage random sampling procedure. Data were analyzed using descriptive statistics, budgetary technique and stochastic profit frontier function. Result showed that majority of the respondents were male with mean age of 43.5 years. Majority of the farmers had no formal education. Analysis of costs and returns showed the gross margins of N52,232.66 was realized per hectare per production cycle and return on investment of 0.62 was estimated suggesting viable and profitable maize enterprise. Maximum likelihood estimate (MLE) of the profit model revealed that profit efficiency ranged between 12% and 98% with a mean profit efficiency level of 74.2% suggesting that average smallholder farmer lost 25.8% of their profit due to inefficiencies in production. Result revealed further that age, sex, extension contact and access to credit were the relevant and significant factors that positively influenced profit efficiency while farm size and experience negatively affected profit efficiency of smallholder maize farmers. It is recommended that credit institution and extension delivery system should be strengthen, adult education that offered training of ageing farmers on new innovation, better method of resources combination and optimal use of available land to achieve maximum output and improved profit efficiency level should be given adequate attention by policy makers.