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COMPARATIVE ANALYSIS OF PRODUCTIVITY AND EFFICIENCY IN LOW AND HIGH EXTERNAL INPUTS TECHNOLOGY AGRICULTURE IN IMO STATE

ABSTRACT

The study was designed to compare productivity and efficiency of Low External Input Technology and High External Input Technology Farms in Imo State. Specifically, it aimed at comparing the socio- economic characteristics of the two groups of farmers as well as their productivities, ascertain the factors influencing aggregate and individual resource productivities, determine production efficiency and returns to scale in the two farm types.  The study was conducted in Imo State, Nigeria. Primary data used for the study were collected using structured questionnaire. The sample size comprised 80 Low external input technology and 80 High external input technology farmers who were selected using the multistage and purposive sampling techniques. The sampling frame comprised all the LEIT and HEIT farmers in Imo State.  Data were analyzed using both statistical techniques, the Ordinary Least Square (OLS), multiple regression and profit function. The results of data analysis for the two farm types showed that farmland was more productive in the HEIT than LEIT farms while planting materials and organic manure were more productive in LEIT than planting materials and inorganic fertilizer in HEIT farms. Furthermore, man-days of labour and capital inputs are statistically significant in LEIT farms but non significant in the HEIT farm type at the 5% and 1% levels of probability though they possess the expected positive signs.  The results of data analysis further showed that farm size, expenditure on planting materials, capital inputs, expenditure on organic manure, number of crops planted in a mixture in the farms, level of education and farming experience are the main determinants of aggregate agricultural productivity in LEIT farms. These variables are statistically significant at 1% and 5% levels. On  the other hand farm size, capital input, number of crops planted in a mixture in the farm, distance to the nearest market, level of education, farming experience, man-days of labour, and non farm income are the main determinants of aggregate agricultural productivity in HEIT farms. These variables are statistically significant at 1% and 5% levels. A comparative analysis of aggregate agricultural productivity between LEIT and HEIT farms showed that LEIT farmers achieved higher aggregate agricultural productivity than HEIT farmers. The results of data analysis on production efficiency showed that HEIT farmers were relatively more technically efficient than the LEIT farmers, in the use of resources. However, both farm types are allocatively inefficient in the use of farmland, labour, planting materials, capital inputs and organic manure or inorganic fertilizer. The existence of resource use disequilibria in both farm types implies that there is still the possibility of increasing output at the current level of technology in the study area.  The result also showed that the LEIT and HEIT farm types are equally economically efficient in the use of productive resources as there is no significant difference in their levels of economic efficiency. The result further showed that LEIT farmers experienced increasing returns to scale while HEIT farmers experienced decreasing returns to scale.

TABLE OF CONTENTS

Page

TITLE PAGE                                                                                           i

DEDICATION                                                                                                                  ii

CERTIFICATION                                                                                                            iii

ACKNOWLEDGEMENT                                                                                                iv

ABSTRACT                                                                                             vii

TABLE OF CONTENT                                                                           ix

LIST OF TABLES                                                                                   xvii

LIST OF FIGURES                                                                                 xx

CHAPTER ONE                                                                                     1

1.0 INTRODUCTION                                                                             1

1.1 Background of the Study                                                                     1

1.2 Statement of the Problem                                                                    3

1.3 Objectives of the Study                                                                       6

1.4 Hypotheses of the Study                                                                      7 1.5 Significance of the Study                                                                    7                                                                                                                       x 1.6 Plan of the Study                                                                                 8

CHAPTER TWO                                                                                      10

LITERATURE REVIEW                                                                         10

2.1Theoretical Framework                                                                           10

2.1.1 Sustainable agriculture                                                                       10

2.1.2 Agro- ecology                                                                                     12

2.1.3 Organic agriculture                                                                             12

2.1.4 Permaculture                                                                                       13

2.1.5 Low External Input Technology                                                        14

2.1.6 The Concept of Low External Input Technology and High External

Input  Technology Agriculture                                                         15

2.1.7 Low External Input Agricultural Technologies and resource

Utilization                                                                                       18

2.1.7.1 Intercropping                                                                                   18

2.1.7.2 Alley cropping                                                                                 19

2.1.7.3 Cover cropping and green manure                                                  20

2.1.7.4 Compost                                                                                          20

2.1.7.5 Animal manure                                                                                21 2.1.7.6 Improved fallow                                                                             22                                                                                                                      xi

2.1.7.7 Land utilization                                                                             24

2.1.7.8 Labour utilization                                                                            25

2.1.7.9 LEIT and Gender Issues                                                                  25

2.1.8 High External Input Agricultural Technologies                                 26

2.1.9 External Inputs and Agricultural Development                                 30

2.1.10 Concept and meaning of agricultural productivity                          32

2.1.10.1 Input Productivity                                                                         32

2.1.10.2 Determinants of Agricultural Productivity                                   39

2.1.11 The Concept of Efficiency of Resource Use                                  44

2.1.12 The Concept of Production Function                                              47

2.2 Empirical Framework                                                                          51

2.2.1 Socio-Economic Characteristics of LEIT and HEIT Farms            51

2.2.1.1 Socio-Economic Characteristics of LEIT Farms                          51

2.2.1.2 Socio-Economic Characteristics of HEIT Farms                         57

2.2.2 Empirical Literature on Resource Productivity in

LEIT and HEIT Farms                                                                    58

2.2.2.1 Resource Productivity in LEIT Farms                                         58

2.2.2. 2 Resource Productivity in HEIT Farms                                       62 2.2.3 Empirical Literature on Production Efficiency

in LEIT and HEIT Farms                                                            64

2.2.3. 1 Production Efficiency in LEIT Farms                                    64

2.2.3. 2 Production Efficiency in HEIT Farms                                   65

2.2.4 Empirical Literature on Nature of Returns to Scale

in LEIT and HEIT Farms                                                          66

2.2.5 LEIT and Land Requirements                                                    67

2.2.6 LEIT and Labour Requirements                                                 68

CHAPTER THREE                                                                           69

3.0 METHODOLOGY                                                                       69

3.1 Study Area                                                                                      69

3.2 Sample Selection                                                                             71

3.3 Data Collection                                                                                72

3.4.0 Method of Data Analysis                                                              74

3.4.1 Determination and Comparison of Productivity of Resources

Among High External Input Technology and Low External

Input Technology Farms                                                              74

3.4.2 Analysis of the Determinants of Aggregate Agricultural and

Individual Resource Productivities among LEIT and HEIT farms   76

3.4.3 Comparative Analysis of Productivities among LEIT

and HEIT Farmers                                                                             79

3.5.0 Analysis and Comparison of production

Efficiencies among LEIT and HEIT Farmers                               82

3.5.1 Analysis and Comparison of Technical Efficiency

among LEIT and  HEIT Farmers                                                  82

3.5.2 Determination and Comparison of Allocative Efficiency

among LEIT and HEIT Farmers                                                     87

3.5.3 Determination of Economic Efficiency of LEIT

and HEIT Farmers                                                                           90

3.6 Estimation and Comparison of Returns to Scale among

LEIT and HEIT Farmers                                                                  92

CHAPTER FOUR                                                                                  95

4.0 RESULTS AND DISCUSSION                                                        95

4.1 Socio- economic Characteristics of Survey Farmers                           95

4.1.1 Age Distribution                                                                                96

4.1.2 Farming experience                                                                            97

4.1.3 Farm size                                                                                            98

4.1.4 Household size                                                                                   100

4.1.5 Level of education                                                                             101

4.1.6 Labour use                                                                                         102

4.1.7 Number of crops in a mixture                                                            103

4.2.0 Determination and Comparison of Productivity of Resources       among LEIT and HEIT Farmers                                                       104

4.2.1 Low External Input Technology (LEIT) Farms                                 104

4.2.2 High External Input Technology (HEIT) Farms                                107

4.2.3 Comparison of Productivity of Resources among LEIT and HEIT

Farms                                                                                                 110

4.3 Determinants of Aggregate Agricultural Productivity among LEIT

and HEIT Farms                                                                               114

4.3.1 Determination of Aggregate Agricultural Productivity in

LEIT Farms in Imo State                                                                  116

4.3.2 Determination of Aggregate Agricultural Productivity in

HEIT Farms in Imo State                                                                   120

4.3.3 Comparative Analysis of Aggregate Agricultural Productivity

among LEIT and HEIT Farmers                                                        124

4.4.0 Determination and Comparison of Individual Resource

Productivities among LEIT and HEIT Farmers                                       128

4.4.1 Determination and Comparison of Land Productivity             among LEIT and  HEIT Farmers                                                  128

4.4.2 Determination and Comparison of Labour Productivity

among LEIT and HEIT Farmers                                                       131

4.4.3 Determination and Comparison of the Productivity of

Capital among LEIT and  HEIT Farmers                                         134

4.4.4 Determination and Comparison of the Productivity of Organic

and Inorganic Fertilizer among LEIT and HEIT Farmers               137      4.4.5 Determination and Comparison of the Productivity of Planting

Materials among LEIT and HEIT Farmers                                      139

4.5.0 Determination of Production Efficiency

of LEIT and HEIT Farmers                                                            142

4.5.1 Analysis and Comparison of Technical Efficiency

among LEIT and HEIT Farmers                                                     142

4.5.2 Determination and Comparison of Allocative Efficiency among

LEIT and HEIT Farmers                                                                147

4.5.3 Determination and Comparison of Economic Efficiency

among LEIT  and HEIT Farmers                                                      151

4.6 Estimation and Comparison of Returns to Scale among

LEIT and HEIT Farmers                                                                 152

CHAPTER FIVE                                                                                     155

5.0 SUMMARY, CONCLUSION AND RECOMMENDATIONS   155

5.1Summary                                                                                              155

5.2 Conclusion                                                                                           159

5.3 Recommendations                                                                               160

REFERENCES                                                                                          164

APPENDIX                                                                                                184

CHAPTER ONE

INTRODUCTION

1.1   Background to the Study

The agricultural sector was the mainstay of the Nigerian economy before and immediately after independence until the oil boom of the 1970’s. In the period before the 1970’s agriculture provided the needed food for the population as well as serving as a major foreign exchange earner for the country (CBN, 2003).

Nigerian agricultural development policy over the years has been informed by the belief that the development of agriculture is a sine qua non for the over all growth and development of the economy. This understanding constituted the basis of all efforts made in the planning and design of programmes and projects to ensure growth in the sector (CBN, 2003).   Agriculture is the largest non oil export earner and largest employer of labour accounting for 88% of the non oil foreign exchange earnings and 70% of the active labour force of the population (FGN, 2001).

However, over the years the growth rate of agricultural production has either stagnated or failed to keep pace with the country’s rapid population growth rate of about 3.2 per cent resulting in perennial food shortages, soaring food prices and massive importation of food by governments. While food production increases at the rate of 2.5 per cent, food demand increases at a rate of more than 3.5 per cent (FOS, 1996).

It is very obvious that the sustainable growth rates of the Nigerian economy cannot be achieved in the absence of increased agricultural output in the country. Harsch (2004) noted that higher output will directly reduce hunger and bring down the cost of food imports as well as have wider economic benefits, stimulating rural incomes and provide raw materials for African industries. The main thrust of Nigeria’s agricultural development efforts, therefore has been to enhance and sustain the capacity of the sector to play this assigned role, with particular emphasis on the attainment of sustainable level in the production of basic food commodities, especially those in which the country has comparative advantage. It also involve developing the capability to increase the production of agricultural raw materials to meet the growing needs of an expanding industrial sector, as well as the production and processing of exportable cash crops to boost the nation’s non oil foreign exchange earning capacity. This process of transformation from a predominantly subsistence agriculture to a highly mechanized farming to enhance agricultural production as well as ensure its sustainability has been

undermined by the disincentives induced by the macroeconomic environment (CBN,2003). For instance the realignment of the Naira exchange rate, which resulted in the depreciation of the Naira, has increased the prices of imported agricultural inputs such as fertilizers, agro-chemicals, tractors and vaccines among others. In 1997, subsidies on fertilizers were removed completely but re-introduced in 1999 (CBN, 2003).The potential of these high external input technologies (e.g. inorganic fertilizer, agrochemicals, pesticides tractors etc.) in improving agricultural productivity in Imo state in particular and Nigeria in general is not in doubt. The small-holder farmer in Imo state appears to be in dilemma on the need to increase agricultural productivity in a harsh macroeconomic environment. In the face of the apparent scarcity and expensiveness of the high external input agricultural technologies , it becomes compelling to re-examine the low external input agricultural technologies, (e.g. organic manure, compost, animal manure, etc.) with a view to determining which of the two offers the farmer higher productivities and why.

1.2 Statement of the Problem

Analysis of food production in Nigeria shows that a large part (80- 90 %) is derived from small-scale farmers operating at or near the subsistence level with only modest excess production to supply the rapidly growing urban centres (Ajayi, 2001). Productivity growth appears to be the main determinant of income growth and poverty reduction. Government view increasing and sustaining agricultural productivity as a means of over all growth, poverty reduction and promotion of food security. In particular, it has been shown that agricultural productivity growth is more poverty alleviating than non agricultural productivity led growth (Nomaan, 2004).

On the other hand, Graves et al., (2004) observed that the significant reduction in the total number of the undernourished in the world in the past was as a result of the use of high external input agricultural technologies (HEIT) i.e. high yielding cereal varieties, together with high levels of inputs such as water from irrigation system, fertilizer to provide the nutrients needed by the varieties and pesticides to control any associated weeds, pests and diseases. These technologies according to him generally need a relatively high capital investment and a well functioning economic and physical infrastructure for effective implementation.

In order to increase farm level productivity, some scholars (Pretty, 1995,

Snapp et al., 1998) propose labour intensive low external input technology (LEIT) while others argue that food security cannot be achieved without widespread adoption of HEIT. Proponents of LEIT often claim that the reliance on local sources of inputs is more sustainable, but the analysis of De Jager et – al., (2001) suggests there is little difference between HEIT and LEIT in this respect. However, the disincentives induced by the macroeconomic environment on HEIT utilization such as removal of subsidy on fertilizer and re-alignment of the Naira exchange rate and consequent increase in the prices of imported agricultural inputs ( such as fertilizer, agro-chemicals , tractor etc) have narrowed down its use.

Despite the continuing debate on the relative performance of the two approaches, Graves et al., (2004) noted that there are few studies that compare yields and production under the same soil and climatic conditions and over wide areas. Furthermore, both Tripp (2006a) and Graves et al., (2004) argued that there is little in the literature on the issues that need to be faced in scaling up production in LEIT.

Apart from the findings of Graves et al., (2004) and Tripp (2006a), previous studies on relative production efficiencies and agricultural productivities among small-holder farmers in the study area (Onyenweaku et – al 2000; Ohajianya and Onyenweaku, 2001, 2002; Olagoke 1991; Onyenweaku et – al; 1996, Anyanwu, 1993, 2005; Onyenweaku and Nwaru; 2005) appear to have been silent on the comparative analysis, productivity and efficiency in the HEIT and LEIT farm types. The gap in knowledge is what this study

intends to fill.

1.3   Objectives of the Study

The broad objective of the study is the comparative analysis of productivity and efficiency in the low and high external input technology farming in Imo state. The specific objectives are to:

estimate and compare the socio-economic characteristics of the two groups of farmers in the state;

determine and compare productivity of resources in the HEIT and LEIT farms in the state;

determine and compare the factors influencing aggregate agricultural productivity in the HEIT and LEIT farms in the state;

determine and compare the factors influencing individual resource productivities in       the     HEIT and    LEIT farms in       the     state;

determine and compare the production efficiency of HEIT and LEIT farmers in the state, and

estimate and compare the returns to scale among the two groups of farms in the state.

1.4    Hypotheses of the Study

The following null hypotheses were tested:

Aggregate agricultural productivity among LEIT and HEIT farms in Imo state are not significantly influenced by farm size, expenditure on planting materials, non farm income, crop mixture, level of education of household head, labour input, capital input, age of household head, household size, farming experience and distance to the nearest market.

There is no significant difference between aggregate agricultural productivities of LEIT and HEIT farmers in the state.

The HEIT and LEIT farmers are not equally technically, and

economically efficient in the use of resource inputs.

1.5    Significance of the Study

Previous studies (Olagoke (1991), Obasi, (1995), Onyenweaku, et al.,

(2000), Nweke et al., (1992, 1994, 1995, 1999), Nweke (1996), Okorji

(1983), Anyanwu (2005, 1993,2003), Ohajianya and Onyenweaku (2001, 2002), have examined different aspects of productivity and efficiency in the study area but none of them  addressed the problems of high and low external input technology agriculture. This study intends to bridge the gap in knowledge. The studies also pointed to the low resource productivity and efficiency in Nigerian agriculture but were silent on whether they are obtainable in the high external or low external input agricultural technological divide. This study intends to fill this vacuum.

At the global level, Graves et al., (2004) argued that despite the continuing debate on the relative performance of HEIT and LEIT, that there are few studies that compare yields and production under the same soil and climatic condition. This is a challenge which the study addresses. Above all these, this study will also enrich current literature on the issues that need to be faced in scaling up production in these two farm types.

A comparative analysis of these two farm types in terms of their productivities will enable the farmers to make rational choice in order to increase productivity of farm output in a depressed economy.

In addition, a critical examination of resource use efficiency on both the high external and low external input technology agriculture will indicate for instance; where resource adjustments are needed for the purpose of increasing output per given unit of input.

1.6 Plan of the Study

This thesis is organized as follows:

Chapter one contains background to the study, statement of the problem, objectives of the study, hypotheses of the study, significance of the study and plan of the work.

Chapter two presents literature review.

Chapter three discuses the methodology used in this research work. Here, the study area, processes of sample selection, data collection and analytical tools were discussed.

The analysis of some socio-economic characteristics of the sampled farmers, results of empirical data analysis and discussion of findings are presented in chapter four.

Chapter five summarizes the work, highlights the policy implications of the findings and conclusion reached.

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