Revisiting the profitability and technical efficiency of cocoa production amidst economic diversification program of the Nigerian Government

Wasiu Olayinka Fawole and Burhan Ozkan

Journal of Agribusiness in Developing and Emerging Economies, 2018, vol. 8, issue 1, 186-200

Abstract: Purpose - The purpose of this paper is to assess how profitable and technically efficient is cocoa enterprise in Ondo State of Nigeria especially amidst the ongoing diversification program of the current administration in Nigeria. Design/methodology/approach - The study made use of primary data collected with the aid of structured questionnaires. The multistage random sampling technique was used to select the sample for the study. Data collected during the survey were analyzed by both descriptive and inferential techniques. A total of 140 respondents who were majorly cocoa farmers were selected for this study with data on their socioeconomic characteristics and input utilization taken and subsequently analyzed. Findings - This study found that the cocoa enterprise in the study area was efficient and profitable with rooms for improvement, especially in the areas of labor and input used as identified by the outcome of the study. The average yield, total revenue, gross margin and efficiency ratio were 1.2 ton/ha, ₦1,344,000.00/ha, ₦1,071,717.00/ha and 0.36, respectively. The highest, average and least technical efficiencies among farmers in the study area were 98.86, 88.81 and 75.12 percent, respectively. It was also discovered that none of the farmers investigated operated at 100 percent, confirming that there are still rooms for improvement in the production processes in the study area by adopting modern methods of production and replacement of the old breeds with resistant and high yielding breeds. Research limitations/implications - The major limitation of this study was that the study sample is quite smaller and could as well not be used to make a strong policy case for the topic under consideration. However, as it is found among the majority of cocoa farmers in Nigeria, they mostly operate under the same conditions of production which suggests that the outcome of this research is not meaningless, considering the similarities in the production environment and other factors of production among cocoa farmers in Nigeria. It is therefore strongly recommended that future studies take into consideration this limitation and address it appropriately by widening the scope and sample for the study as this will go a long way in giving true representation as regarding the topic under consideration. Social implications - The social implication of this study has to do with the employment opportunities that will be created for the teaming youths if the cocoa enterprise is made to attract them by creating enabling environment as recommended by the study. When quantity of production is improved, it will create additional income for the farmers and also provide foreign earnings to government. Originality/value - This study is strictly original, considering its content and the contribution it is making to the body of knowledge. The study will be contributing to the knowledge by pointing out the potentials inherent in cocoa production as especially coming at a time when the price of crude oil that provides over 80 percent of Nigerian foreign earnings is down and the cocoa price is not only high but also stable at the international market.

Keywords: Profitability; Technical efficiency; Economic diversification; Efficiency ratio; Gross margin; Ondo (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eme:jadeep:jadee-04-2016-0020

DOI: 10.1108/JADEE-04-2016-0020

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