Economic efficiency of small scale soyabean farmers in Central Agricultural Zone, Nigeria: A Cobb-Douglas stochastic frontier cost function approach

Abstract

This study employed the Cobb-Douglas stochastic frontier cost function to measure the level of economic efficiency and its determinants in small scale soyabean production in Central Agricultural Zone of Nigeria. A multistage sampling procedure was used to select 485 soyabean farmers in the Zone, in 2010, from whom input-output data and their prices were obtained using the cost-route approach. The parameters of the stochastic frontier function were obtained using the maximum likelihood method. The result of the analysis showed that average economic efficiency was 52%. The study found age, farm size and household size to be negatively and significantly related to economic efficiency at 5 and 1%. Education, farming experience, access to credit and fertilizer use were significantly and positively related to economic efficiency. No significant relationship was found between economic efficiency and extension contact and membership of farmers’ association. It was recommended that policies that will increase farmers’ economic efficiency level be targeted at improving their educational levels and easy access to credit and fertilizer, while experienced farmers should be encouraged to remain in soyabean farming.   Key words: Cobb-Douglas stochastic frontier cost function, economic efficiency, small scale soyabean farmers