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Estimating financing gaps in rice production in southwestern Nigeria

Temitope O. Ojo, Abiodun A. Ogundeji, Suresh Chandra Babu and Taiwo Alimi

No 1818, IFPRI discussion papers from International Food Policy Research Institute (IFPRI)

Abstract: This study analyzed the financing gaps relative to production frontier of rice farmers in Southwestern Nigeria. A multistage sampling technique was used to collect cross sectional data from 360 rice farmers selected from three States in the region. A Cobb-Douglas stochastic frontier and an adapted form of Harrod-Domar (HD) Growth model was employed to determine the financing gap required for the farmers to be at the frontier level. The empirical results of the frontier model show that quantity of labor, quantity of rice as planting material and herbicides were statistically significant in explaining the variations in the efficiency of rice production in Nigeria. However, age, gender, farming experience, household size, access to credit, access to information, adoption of improved variety and location of rice farmers as sources of technical inefficiencies. As revealed by the result of the HD growth model, the average amount of credit per season that farmers had access to was, ₦38,630.56 while the mean financing in the form of credit required to produce at the frontier level was ₦193,626.50, showing a financing shortfall of about 80%. As unravelled by the result of the study, it can thus be concluded that technical efficiency of rice farmers can be improved by improving access to timely credit and agricultural information for improving rice productivity. These findings suggest that filling the financing gap of smallholder rice farmers will improve rice productivity in Nigeria. The study, therefore, recommends that strengthening the existing technology by building farmers’ capacity on farm management practices would be surest means of improving rice productivity growth in Nigeria. This would not only contribute to the intensification of rice production in Nigeria to meet its increasing rice demand, but also improve rice farmers’ productivity and their households’ incomes.

Keywords: NIGERIA; WEST AFRICA; AFRICA SOUTH OF SAHARA; AFRICA; financing; rice; crop production; labour; herbicides; seed quality; smallholders; farm income; stochastic models; agricultural production; technical efficiency; financing gaps; stochastic frontier; Harold-Domar Growth Model (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-agr and nep-eff
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