Analysis of Profitability, Technical Efficiency and Allocative Efficiency of Watermelon Production in Federal Capital Territory, Nigeria

Abstract

This study evaluated analysis of profitability, technical efficiency and allocative efficiency of watermelon production in Federal Capital Territory Abuja, Nigeria. Multistage sampling technique was used. Data were collected through the use of well-structured questionnaire administered to 120 sampled Watermelon farmers in the study area, one questionnaire was not retrieved therefore the analysis was don based on the 119 retrieved questionnaire from the sampled respondents. The following tools of analysis were used to achieve the stated specific objectives of the study. Descriptive statistics, gross margin analysis stochastic production frontier function and stochastic cost frontier function. The results of the socioeconomic characteristics revealed that majority (95%) of sampled respondents were male while only 5% of the sampled respondents were female. The gross margin obtained was N97,652.12 with an operating ratio and rate of return on investment of 0.67 and 2.29 respectively. The significant factors influencing total output of watermelon were Seed (P<0.05), fertilizer NPK (P<0.1), fertilizer urea P<0.1) and Chemical (P<0.01). The technical inefficiency component shows that the factors influencing technical inefficiency are Sex (P<0.01), Marital Status (P<0.01), Educational Level (P<0.01), Occupation and Household Size (P<0.01). The mean estimated value of the allocative efficiency for the farmers was (0.46870 or 47%). The allocative inefficiency model revealed that the factors influencing allocative inefficiency includes age of the farmers (P<0.01), sex (P<0.01), educational level (P<0.05) and the household size (P<0.1). The watermelon farmers encountered the following constraints in the cause of production inadequate capital, lack of land availability, unavailability of improved seed, Government policy on land use, high costs of farm inputs and affordability, poor information network and bad roads. Therefore, the study recommends that female farmers should be encouraged to participate in watermelon production, however, government and non-governmental organizations should create more avenue for women and youth to have access to credit to enable them have a means of livelihood and financial freedom. Extension officers should be made available to train farmers and to expose farmers to the importance of watermelon farming which will help them have more access to production inputs like improved seeds, fertilizers, chemical and credit facilities. Farmers should be encouraged to increase the size of their production in order to increase total output to minimize cost and improve efficiency, improved seed, capital, chemical and fertilizer should be provided to farmers at subsidized rate. Farmers should be encouraged to form and join cooperatives organizations to enable them have access to good market price.

Keywords

• Profitability
• Efficiency
• Stochastic frontier
• Watermelon
• Nigeria

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