THE PROFITABILITY ANALYSIS OF YAM PRODUCTION IN KWALI WARD, KWALI AREA COUNCIL OF FEDERAL

ABSTRACT

The study examined the Profitability Analysis Of Yam Production In Kwali Ward, Kwali Area Council Of Federal capital Teritory (Fct) Abuja. Data was  collected from 264 yam farmers selected using simple random sampling technique. The data from 2019 cropping season were collected with the aid of structured questionnaire. Data collected were analyzed using stochastic frontier production function. The maximum likelihood estimate (MLE) of the stochastic frontier model production function revealed that the inputs were under-utilized. The technical efficiency score of each respondent revealed that the most efficient farmer operated at 98% efficiency, the least was found to operate at 68% efficiency level, while the average was 90%, indicating that yam farmers still have the potential to increase the efficiency in their farming activities by 10% in the study area. The predicted allocative efficiencies differ substantially among the farmers ranging between value 0.411 and 0.979 with the mean allocative efficiency of 0.893. The yam farmer with the best and least practice had economic efficiency of 0.952 and 0.325 respectively. The mean economic efficiency was 0.807. The determinants of technical efficiency revealed that age, farm size, farming experience, extension contact and household size affect technical efficiency of the farmers. The variance parameters of the frontier production model were Sigma-squared (δ²) and Gamma (γ) and their estimated coefficients in the study area were 0.0385 and 0.9617 respectively. The return per ₦1 invested was estimated to be ₦1.67. Hence, yam production was profitable in the study area. The major constraints were inadequate access to credit facilities, poor transportation network, pests and diseases, poor storage facility and high cost of labour. The study recommended that farmers should limit the use of agrochemicals while yam sett, fertilizer and labour that significantly affect production should be increase alongside with intensive use of farm size to boost more production.

CHAPTER ONE

INTRODUCTION

1.1    Background of the Study

Agriculture, a major resource based activity in terms of capital and labour utilization has the potential of increasing Nigeria‟s food self sufficiency (Bamire and Amujoyegbe, 2010). Statistical evidences however show that food sufficiency ratio of Nigeria has for sometime especially from (1997-2010) been less than one. Actual yield of major food crops are lower than their potential yields (Rahji, 2012). The productive yield efficiency of yam in particular was 54.1% in 1991(FOS, 1997).

Yam is, however, one of the principal root crops in Nigeria both in terms of land under cultivation and in volume and value of production. It‟s one of the carbohydrate foods that is nutritionally superior to most roots and tubers in terms of digestible proteins and minerals (Calcium, Magnesium and Potassium) Ebewore et al., 2013. Tuber crops, such as yam has high relative value per unit of land used in its cultivation when compared with other crops particularly, the cereals (Mbah, 2010). As a food crop, yam has inherent characteristics. Firstly, it is rich in carbohydrates especially starch and has a multiplicity of end use. Secondly, it is more resistant to drought, pest and disease and tolerates different climatic and edaphic conditions (Ugwumba and Omojola, 2012).

Yam is an important source of income for all value chain participants. Yam comprised

32% of farmers‟ gross income from crops for farmers in eastern Nigeria. The share of the value of yam farm gate sales (31%) was second only to cassava (37%) out of the nine major food crops compared in Nigeria in 2004 (Sanusi and Salmonu, 2010). The higher nutritional quality and market value commanded by yam when compared with other crops like cassava, have encouraged greater investment by the Nigerian government and foreign donors to increase production and improve yam marketing efficiencies to enhance income and food security levels for smallholders. Main initiatives include: Yam Improvement for Income and Food Security in West Africa project and the National Root and Tuber Expansion Programme (Agbaje et al., 2010).

1.2    Problem Statement

Over the years, the farm hectarage of yam production has been increasing with corresponding increases in the usage of inputs. Unfortunately, the increase in output seems not to have been commensurable with those in input usage (Jonathan and Anthony, 2012). However, the Nigerian Government made concerted efforts to encourage larger investment in the agricultural sector including product such as yam for export. In 1998, the Nigerian Government initiated an Export Promotion Incentive Scheme. Under this scheme, some staple foods including yam were delisted from the export prohibition list. In 2001, the Nigerian Government initiated the Root and Tuber

Expansion Program (RTEP) to improve farmers‟ productivity and profits from root and tuber crops. In 2003, an export subsidy of 10% on agricultural commodities was introduced and remains in place till date (Akande and Ogundele, 2009).

Despite the government initiatives, Bamire and Amijoyegbe (2010) noted, in South Western Nigeria, that there is an increasing gap between the levels of supply and demand for yam. Also, Oladeebo and Okanlawon (2010) noted that the absolute level of yam production has remained static over a decade. This static trend may not be unconnected with production resources which are not being efficiently utilized. In order to meet the level of demand, there is need to assess the level of technical efficiency and its determinants in yam production. Previous studies carried out on food crop production in Nigeria have shown that food crop farmers have low productivity because of inefficiency in resource use (Idiong et al., 2010).

High cost of seed yam was the major problem of yam production in the study area. According to Spore (2011) about 35-50% of the total cost was constituted by planting material. Consequently, there has been a decline in production over the years with area under cultivation and yam output declining (Ayanwuyi et al., 2011).

It was against these problems that this study was undertaken to empirically ascertain the efficiency and profitability analysis of yam production  in the study area. In view of this, the following research questions were addressed:

1. What are the socioeconomic characteristics of yam farmers in the study area?
2. What are the technical, allocative and economic efficiency of yam production?

• What are the determinants of technical efficiency in yam production?

1. What are the costs and return in yam production?
2. What are the constraints to yam production?

1.3    Objectives of the Study

The broad objective of the study was to examine the profitability analysis of yam production among yam farmers in Kwali ward, Kwali Area Council of Federal Capital Territory (FCT), Abuja. The specific objectives were to:

1. describe socio-economic characteristics of smallholder yam farmers in the study area; ii. estimate technical, allocative and economic efficiency of yam production; iii. estimate the determinants of technical efficiency in yam production;  iv. determine the costs and return in yam production;
2. identify and describe the constraints to yam production.

1.4    Justification for the Study

As the campaign for household food security gains momentum all over the world that extreme hunger and poverty must be eradicated by year 2015, yam is one of the food crop whose production has got to be emphasized (Michael, 2011). Yam being an important food crop for at least 60 million people in West Africa, it is therefore necessary to lower its production cost and scale up its production through an efficient use of its production resources (Babaleye, 2009).

As a food crop, the place of yam in the diet of people in West Africa and in Nigeria in particular cannot be overemphasized. According to Reuben and Barau (2012) yam  contributes  more  than 200  dietary  calories  per  capita  daily  for  more  than 150  million  people  in  West  Africa  and also an  important  source  of  income generation and trade. It is thus important that the profitability of its production be assessed. It is obvious that there is a potential for the increase in its production and much can be done to derive foreign exchange from its export (Ebewore et al., 2013). In spite of this, little or no study has been conducted to assess the profitability of yam production among farmers in Nigeria.

Boosting yam production could lead to an improvement in the food production level of the nation. This, however, requires that resources be used efficiently to achieve optimum production. Thus, it is expected that the finding of this research would help in providing information and, probably, solution to the declining productivity and yield of yam by identifying problems associated with yam production, prospects and potential areas of improvement. It is also expected that the research work will serve as a guide to farmers currently engaged in yam production to determine the actual level of their profitability and performance. Similarly the research work will be valuable to Government on the basis of rational and empirical policy formulation with respect to yam production. Finally, it is hoped that this research work will be of assistance to researchers who will identify other areas for further improvement in yam production.

1.5    Research Hypotheses

The hypotheses tested in this study are:

1. There is no significant relationship between socio-economic characteristics and technical efficiency of yam producers.
2. There is no significant difference between the cost of production and revenue of yam producers in the study area.

THE PROFITABILITY ANALYSIS OF YAM PRODUCTION IN KWALI WARD, KWALI AREA COUNCIL OF FEDERAL