Technical efficiency and risk preferences of cropping systems in Kebbi State, Nigeria
The research investigated the risk attitude, risk sources and management strategies, and the technical and cost efficiencies of farmers in Kebbi State, Nigeria, with the aim of generating reliable information on the influence of risk attitudes of the decision-making behaviour of farmers and determinants of efficiency. Various techniques were applied in order to achieve the objectives of the study. They include: the Experimental Gambling Approach, Factor Analysis, Logit regression, Data Envelopment Analysis, Double Bootstrapping procedure and the Metatechnology Approach. Data to conduct the research was obtained mainly from primary sources through a questionnaire survey of 256 farmers, comprising 98 monocroppers and 158 intercroppers. Some of the important findings from the research are: · All the farmers exhibit some level of risk aversion. The intercroppers were statistically significantly more risk-averse than the monocroppers. Risk attitude influences the decisions farmers make in the production process and should be considered when formulating agricultural policies. · The most important sources of risk for both monocroppers and intercroppers are diseases, erratic rainfall, changes in government policy, changes in climatic conditions, price fluctuation (of inputs and outputs) and floods/storms. The most important risk management strategies for monocroppers are spraying for diseases and pests, spreading sales, borrowing (cash or grains) and fadama cultivation. These factors should be considered when designing extension programmes and insurance schemes. The intercrop farmers perceived family members working off-farm, spreading sales, intercropping and borrowing (cash or grains) as the most important coping strategies. · The main findings from the factor analysis for the sources of risk for the monocroppers and intercroppers are that the factors “social”, “rainfall” and “uncertainties” are important to both groups of farmers. Since farmers do not have control over the rainfall factor as a source of risk, there is, inter alia, a need to have an effective agricultural insurance scheme for the farmers in the study area. Farming experience, asset value, risk aversion and land degradation were found to have statistical significant influences on the choice of cropping systems in Kebbi State. · The results from the technical efficiency analysis suggest that there is scope for increasing the technical efficiency levels of both monocrop and intercrop farmers and hence their ability to increase output levels at current input levels and within the existing technology set. · Based on the metatechnology ratio, the millet/cowpea group were the more technically efficient, followed by the sorghum/cowpea group. The sorghum group were less technically efficient. This suggests that crop diversification, in order to manage risk sources, has the potential for improving crop productivity in Kebbi State. Crop combinations, however, prove to play an important role. Care should be taken to select the optimal combination of crops to include in the intercropping system. · In terms of cost efficiency, farmers in the study area were relatively cost-inefficient. The metatechnology ratio for cost efficiency depicts that the sorghum/cowpea group were more cost efficient than their counterpart sorghum, and millet/cowpea group. Selection of farm inputs at minimum cost will help to reduce production cost and hence improve profitability of the farmers. · Low levels of technical and cost efficiency suggest that major scope exists to increase performance of the farmers, even at their current output levels and within their existing technology set. Support services, such as subsidies on farm inputs, provision of credit and extension services of the new Agricultural Transformation Agenda Programme (ATAP), should be properly implemented and targeted at the small-scale farmers. · The determinants of efficiency differ between the monocroppers and intercroppers, and also differ between the intercrop groups. This suggests that different groups of farmers operate under different technology sets. · The results also suggest that the existing knowledge on the various factors that influence both technical and cost efficiency is not exhaustive and accordingly that there is a need to explore other characteristics that influence the farmers’ decision process within their technology set.