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Economic efficiency of organic and peri-urban fadama agriculture in southwestern, Nigeria: A stochastic frontier approach

Adeyemi Ayotunde Adewale

Abstract

OAs part of the major effort to improving the food situation and livelihood of the Nigerians particularly the city dwellers as more than half of the poor people in developing countries including Nigeria live in urban areas (UNDP, 2003). A study was conducted on the economic efficiency of small scale organic and peri-urban fadama farmers in Nigeria. Data were collected from 480 organic and peri-urban fadama farmers selected using multi-stage sampling technique and analysed using budgetary technique, stochastic frontier production and cost function models. The result of the budgetary technique shows that the average revenue and profit generated by peri-urban fadama farmers in the study area were N105,897.86 and N39,342.24 respectively. The return to scale (RTS) for the production function revealed that farmers operated in the irrational zone (stage 1) of the production surface having RTS of 1.135. The mean technical, allocative and economic efficiency of 88.3, 72.1 and 61.4 percent respectively were obtained from the data analysis, indicating that the sampled farmers were relatively technically efficient in their resource use. The results of the analysis indicate that presence of technical and allocative efficiencies had effects in peri-urban fadama crop production as depicted by the significant gamma coefficient of the model, generalized likelihood ratio test, predicted technical and allocative efficiencies within the farmers.

Key words: Peri-urban fadama farmers, budgetary technique, efficiency, stochastic frontier production and cost functions.

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