Cost Efficiency of Yam Production in Oguta LGA of Imo State, Nigeria

Abstract

The study applied a stochastic frontier cost function to analyze cost efficiency of yam farmers and ascertained variation in cost efficiency due to inefficiency effects on yam production in the study area. Data were collected with the aid of a well-structured questionnaire from 35 randomly selected yam farmers from 5 purposively selected communities. Data were analyzed using descriptive statistics and stochastic cost function. Results showed that the mean age of yam farmers was 41 years and more males (91.4%) were involved in yam production. Cost of land, yam seed, hired labour, agrochemicals and transportation were significant factors that are determinants of total cost associated with yam production in the study area. That is, 1% increase in the cost of land, yam seed, hired labour, agrochemicals and transportation will increase total production cost by approximately 0.69%, 0.49%, 0.29%, 0.57% and 0.40% respectively with the value of the sigma squared (δ2) being 0.820 indicating a good fit. The maximum likelihood estimates for the Stochastic cost function used in explaining the inefficiency parameters for yam farmers showed that the coefficient of credit availability, farming experience, extension contact all had the a priori expected signs and statistically significant showing that an increase in any of them decreases cost inefficiency. The mean cost efficiency was 0.63, meaning that an average yam farmer in the study area has the scope for increasing cost efficiency by 37%. It was concluded that farmers are not cost efficient from their cost efficiency indices.