RESOURCE USE EFFICIENCY AMONG FADAMA CROP FARMERS IN IBADAN/IBARAPA AGRICULTURAL ZONE OF OYO STATE, NIGERIA

RESOURCE USE EFFICIENCY AMONG FADAMA CROP FARMERS IN IBADAN/IBARAPA AGRICULTURAL ZONE OF OYO STATE, NIGERIA

Abstract

This study investigated the resource use efficiency among Fadama crop farmers in the Ibadan/Ibarapa Agricultural Zone of Oyo State, Nigeria. The specific objectives were to describe the socio-economic characteristics of Fadama farmers; analyze the costs and returns associated with Fadama crop production; determine the technical, allocative, and economic efficiency of the farmers; identify the factors influencing the efficiency of resource use; and identify the constraints faced by the farmers in their production activities. A multi-stage sampling technique was used to select 180 Fadama crop farmers from the zone. Primary data were collected using a structured questionnaire and analyzed using descriptive statistics, gross margin analysis, the Stochastic Frontier Production Function (SFPF), and a Likert-type scale for constraints. The findings revealed that the majority of the farmers were male, married, and middle-aged, with a mean farm size of 0.8 hectares. The gross margin analysis showed that Fadama crop production is a profitable enterprise, with an average gross margin of ₦285,000 per hectare. The stochastic frontier analysis revealed that farm size, quantity of seed, fertilizer, and labor were significant determinants of output. The mean technical efficiency was 0.81, allocative efficiency was 0.72, and economic efficiency was 0.58, indicating that there is considerable room for improvement, particularly in the area of allocative efficiency. The inefficiency model showed that age, education, access to credit, and extension contact were significant determinants of technical inefficiency. The major constraints identified were high cost of inputs, inadequate access to credit, poor irrigation infrastructure, and pest and disease infestations. The study concluded that while Fadama farming is profitable, farmers are not using their resources optimally, particularly in terms of cost minimization. It was recommended that the government and development partners should improve farmers’ access to affordable credit and quality extension services, invest in irrigation infrastructure, and promote the use of improved, high-yielding crop varieties to enhance efficiency.

Chapter One – Introduction

1.1 Background of the Study

Agriculture remains the backbone of the Nigerian economy, providing employment for a significant majority of the population and contributing substantially to the nation’s Gross Domestic Product (GDP). The sector is critical for ensuring food security, reducing poverty, and supplying raw materials to industries. Enhancing agricultural productivity is therefore a central policy objective for the government. However, productivity growth in the sector has been constrained by several factors, including the over-reliance on rain-fed agriculture, which is subject to the vagaries of weather. (Food and Agriculture Organization [FAO], 2021).

In Nigeria, agricultural production is broadly categorized into rain-fed and irrigated systems. Rain-fed agriculture, which is the dominant system, is highly vulnerable to the increasingly erratic rainfall patterns associated with climate change. Droughts, floods, and unpredictable seasons lead to crop failures and significant income losses for farmers. This vulnerability has prompted a search for more resilient and productive agricultural practices, with irrigation being a key solution. (World Bank, 2022).

The term “Fadama” is a Hausa word that refers to the low-lying, seasonally flooded or floodable plains that are found along major river systems in Nigeria. These areas have high water tables and are rich in alluvial soils, making them highly suitable for agricultural production, especially during the dry season. Fadama lands are a valuable national resource, covering an estimated 3 million hectares across the country. Their development has been a major focus of government agricultural policy for decades. (National Fadama Development Office [NFDO], 2020).

Fadama farming, therefore, refers to agricultural production activities carried out on these low-lying floodplains. It is a form of small-scale, informal irrigation that allows farmers to cultivate crops during the dry season when rain-fed agriculture is impossible. This extends the growing season and provides a crucial source of income and food during the “hunger gap.” The main crops grown in Fadama areas include vegetables (like tomatoes, peppers, and onions), maize, rice, and sugarcane. The profitability of Fadama farming has made it an attractive enterprise for many rural households. (Adegbite, Olajide, & Amao, 2019).

The World Bank-assisted National Fadama Development Project (NFDP) has been a key driver of Fadama development in Nigeria. The project, which has gone through several phases (Fadama I, II, and III), aims to increase the incomes of rural households by improving their access to land, water, and technology. The project has provided support for irrigation infrastructure, rural roads, and capacity building, and has promoted the formation of Fadama User Groups (FUGs) to facilitate collective action. The Ibadan/Ibarapa zone of Oyo State has been a major beneficiary of these projects. (NFDO, 2020).

The Ibadan/Ibarapa Agricultural Zone is one of the four agricultural zones in Oyo State, located in the southwestern part of Nigeria. The zone is characterized by a tropical climate with distinct wet and dry seasons. It is endowed with several rivers and streams that create extensive Fadama lands. The presence of these Fadama areas, coupled with the proximity to the large urban markets of Ibadan, makes the zone a hub for the production of high-value horticultural crops. This provides a unique economic opportunity for farmers in the area. (Oyo State Agricultural Development Programme [OYSADEP], 2021).

The concept of efficiency is central to the study of agricultural economics. Efficiency refers to the ability of a producer to obtain the maximum possible output from a given set of inputs (technical efficiency) or to produce a given level of output at the minimum possible cost (allocative efficiency). The combination of technical and allocative efficiency yields economic efficiency, which is the overall measure of a firm’s success in optimizing its production process. An efficient farmer is one who operates on the production frontier, wasting no resources. (Coelli, Rao, O’Donnell, & Battese, 2018).

Resource use efficiency is of paramount importance for Fadama farmers. These farmers typically operate on small plots of land with limited capital and must make the most of their scarce resources. The efficient use of inputs like land, water, labor, fertilizer, and seeds determines whether a farmer makes a profit or a loss. In the context of Fadama farming, where inputs like water and fertilizer can be costly, the ability to combine them in an optimal way is a key determinant of the enterprise’s economic viability and sustainability. (Adenuga, Muhammad-Lawal, & Rotimi, 2018).

The choice of analytical technique is crucial for measuring efficiency. The Stochastic Frontier Production Function (SFPF) is the most widely used econometric method for estimating technical efficiency. Its primary advantage is its ability to separate the error term into two components: a random error term that accounts for statistical noise (like weather variability) and a non-negative term that captures technical inefficiency. This allows for a more accurate and unbiased estimate of a farm’s true efficiency compared to other methods. (Battese & Coelli, 1995).

The SFPF can also be extended to analyze the determinants of inefficiency. This is done through an inefficiency model, which is a separate equation that attempts to explain the variation in efficiency scores among farms. This model typically includes socio-economic characteristics of the farmer, such as age, education, farming experience, and access to credit, as well as institutional factors like extension contact. This allows the researcher to not only measure efficiency but also to understand the reasons for inefficiency. (Kumbhakar & Lovell, 2018).

Previous studies on the efficiency of Fadama farmers in Nigeria have generally found moderate levels of technical efficiency, suggesting that there is room for improvement. The estimated efficiency scores often vary between studies, depending on the specific crop, the region, and the methodology used. These studies have identified a range of factors that influence efficiency, including farm size, access to credit, education, and the quality of irrigation infrastructure. The specific context of the Ibadan/Ibarapa zone, however, requires its own investigation. (Adegbite et al., 2019).

The profitability of Fadama farming is closely linked to efficiency. The production of high-value crops like vegetables requires significant investment in inputs, particularly fertilizers and agrochemicals. A farmer who is technically inefficient will obtain lower yields for a given level of investment, reducing their profit. A farmer who is allocatively inefficient will be spending too much on some inputs relative to others, also reducing their profit. Therefore, improving efficiency is a direct pathway to improving the income and livelihoods of Fadama farmers. (Adenuga et al., 2018).

The issue of the sustainability of Fadama farming is also relevant. The intensive use of land and water in Fadama areas can lead to environmental problems, such as soil degradation and water pollution from agrochemicals, if not managed carefully. An efficient farmer is also often a more sustainable farmer, as they are able to obtain more output from fewer inputs, reducing waste and the pressure on the environment. Promoting efficiency is therefore a win-win strategy for both productivity and environmental sustainability. (World Bank, 2022).

This study is therefore designed to provide a comprehensive analysis of resource use efficiency among Fadama crop farmers in the Ibadan/Ibarapa Agricultural Zone of Oyo State. It will estimate the technical, allocative, and economic efficiency of a sample of farmers, and it will identify the key factors that explain the variation in efficiency levels. The study will also analyze the profitability of the enterprise and the constraints that farmers face. This will provide a holistic picture of the economics of Fadama farming in the zone. (OYSADEP, 2021).

The findings of this study are expected to be of significant value to a wide range of stakeholders. For policymakers, the study will provide evidence on the factors that constrain efficiency, which can inform the design of targeted interventions, such as improving access to credit or strengthening extension services. For the farmers themselves, the study will provide insights into how they can improve their own efficiency and profitability. For researchers, the study will contribute to the academic literature on agricultural efficiency in Nigeria. (FAO, 2021).

1.2 Statement of the Problem

Fadama farming is a critical component of the agricultural economy of Oyo State, providing a vital source of income and food, particularly during the dry season. The core problem is that despite the significant investments made in Fadama development projects and the inherent potential of these lands, the productivity and profitability of many Fadama farms remain below their potential. This underperformance is often attributed to the inefficient use of scarce resources. (NFDO, 2020).

A fundamental problem is the existence of a significant gap between the actual output of Fadama farmers and the potential output that could be achieved with optimal use of resources. This technical inefficiency means that farmers are getting less for their investment in land, labor, seed, and fertilizer than they could. The problem is that the specific magnitude of this inefficiency and its underlying causes in the Ibadan/Ibarapa zone are not well-documented. Without this knowledge, it is difficult to design interventions to help farmers improve. (Coelli et al., 2018).

The problem of allocative inefficiency, where farmers use the wrong combination of inputs, is particularly acute. For example, a farmer may be using too much fertilizer and not enough labor, or vice versa, given the relative prices of these inputs. The problem is that this misallocation of resources leads to higher production costs than necessary, which directly reduces the farmer’s profit. A farmer can be technically efficient (getting the maximum yield) but still be economically inefficient if they are wasting money on the wrong inputs. (Adenuga et al., 2018).

There is a significant problem with the high cost of inputs for Fadama farmers. The cost of improved seeds, fertilizers, and agrochemicals has been rising steadily, squeezing profit margins. The problem is that many farmers, unable to afford the recommended quantities of these inputs, apply them sub-optimally. This low input use, in turn, results in low yields, trapping farmers in a cycle of low investment and low output. The high cost of pumping water for irrigation further adds to the financial burden. (Adegbite et al., 2019).

The issue of limited access to credit is a major barrier to efficient resource use. To use resources efficiently, a farmer needs the capital to purchase the right quantity and quality of inputs at the right time. The problem is that many Fadama farmers lack access to formal credit due to the absence of collateral and the perceived high risk of agriculture. They are therefore forced to rely on their own limited savings or high-interest informal lenders, which constrains their ability to operate at an optimal scale. (Armendáriz & Morduch, 2018).

The problem of inadequate irrigation infrastructure is a key constraint. While Fadama lands have high water tables, farmers often rely on rudimentary methods of water lifting and conveyance, such as buckets and watering cans, or small, inefficient pumps. The problem is that these methods are labor-intensive, time-consuming, and do not allow for the precise control of water application. The lack of reliable and affordable irrigation infrastructure is a major source of inefficiency, limiting the area that can be cultivated and the yields that can be achieved. (World Bank, 2022).

There is a significant problem with the lack of access to improved technology and technical information. Many Fadama farmers continue to use traditional crop varieties and outdated agronomic practices. The problem is that they lack access to extension services that could provide them with information on improved varieties, recommended fertilizer rates, and integrated pest management. The contact between extension agents and Fadama farmers is often infrequent, and the information provided may not be tailored to the specific needs of this unique production system. (OYSADEP, 2021).

The problem of pest and disease infestations is a major threat to Fadama crop production. The warm, humid conditions of the Fadama environment are conducive to the proliferation of various pests and diseases that can decimate crops. The problem is that many farmers lack the knowledge and resources to manage these outbreaks effectively. Crop losses due to pests and diseases represent a significant source of inefficiency, as the farmer’s investments in land, labor, and inputs are lost. (Adenuga et al., 2018).

The issue of environmental degradation is a growing concern. The intensive cultivation of Fadama lands without adequate soil conservation measures can lead to a decline in soil fertility and structure. The problem is that this degradation reduces the long-term productivity of the land, making it even more difficult for farmers to operate efficiently. The overuse of chemical fertilizers and pesticides can also lead to water pollution, harming aquatic ecosystems and potentially human health. (FAO, 2021).

There is a lack of empirical evidence on the specific levels of technical, allocative, and economic efficiency of Fadama farmers in the Ibadan/Ibarapa zone. Most existing research is either from a different region or does not provide a comprehensive analysis of all three dimensions of efficiency. The problem is that this lack of local, disaggregated data makes it difficult for policymakers and extension agents to provide sound, evidence-based advice. The specific constraints and opportunities in this zone may differ from those elsewhere. (Emmanuel & Okafor, 2022).

The problem of the gender dimension of efficiency is often overlooked. Women are actively involved in Fadama farming, particularly in the production of vegetables, but they often face greater constraints than men in accessing key resources like land, water, and credit. The problem is that their efficiency may be lower due to these systemic disadvantages, not due to a lack of skill or effort. Understanding these gender-specific constraints is crucial for designing equitable and effective policies. (Doss, 2018).

This study is designed to address these problems by providing a comprehensive, empirical analysis of resource use efficiency among Fadama crop farmers in the Ibadan/Ibarapa Agricultural Zone. It will use the Stochastic Frontier Production Function to estimate technical, allocative, and economic efficiency, and it will identify the key determinants of inefficiency. The core problem this research aims to solve is the lack of credible, localized evidence needed to guide interventions that can unlock the full potential of Fadama farming as a driver of rural prosperity. (Coelli et al., 2018).

1.3 Aim of the Study

The aim of this study is to analyze the resource use efficiency among Fadama crop farmers in the Ibadan/Ibarapa Agricultural Zone of Oyo State, Nigeria.

1.4 Objectives of the Study

The specific objectives of this study are to:

1. Describe the socio-economic characteristics of Fadama crop farmers in the study area.
2. Analyze the costs and returns associated with Fadama crop production in the zone.
3. Determine the technical, allocative, and economic efficiency of the Fadama crop farmers.
4. Identify the factors influencing the technical inefficiency of the Fadama farmers.
5. Identify the constraints faced by Fadama crop farmers in their production activities.

1.5 Research Questions

The following research questions were formulated to guide this study:

1. What are the socio-economic characteristics of Fadama crop farmers in the Ibadan/Ibarapa Agricultural Zone?
2. What are the costs and returns associated with Fadama crop production in the study area?
3. What are the levels of technical, allocative, and economic efficiency of the Fadama crop farmers?
4. What factors significantly influence the technical inefficiency of the Fadama farmers?
5. What are the major constraints faced by Fadama crop farmers in their production activities?

1.6 Research Hypotheses

The following null (H₀) and alternative (H₁) hypotheses were tested in this study:

1. H₀: The socio-economic characteristics of the farmers (age, education, experience) do not have a significant influence on the technical inefficiency of Fadama crop production.
   H₁: The socio-economic characteristics of the farmers (age, education, experience) have a significant influence on the technical inefficiency of Fadama crop production.
2. H₀: Access to credit does not have a significant influence on the technical efficiency of Fadama crop farmers.
   H₁: Access to credit has a significant influence on the technical efficiency of Fadama crop farmers.
3. H₀: The size of the Fadama farm does not have a significant effect on the output of Fadama crops.
   H₁: The size of the Fadama farm has a significant effect on the output of Fadama crops.
4. H₀: The quantity of fertilizer used does not have a significant effect on the output of Fadama crops.
   H₁: The quantity of fertilizer used has a significant effect on the output of Fadama crops.
5. H₀: Contact with extension services does not have a significant influence on the technical efficiency of Fadama crop farmers.
   H₁: Contact with extension services has a significant influence on the technical efficiency of Fadama crop farmers.

1.7 Significance of the Study

This study holds significant value for a wide range of stakeholders. For policymakers at the Federal and State Ministries of Agriculture and the National Fadama Development Office, the findings will provide crucial evidence on the efficiency of resource use in Fadama farming. This will inform the design of future phases of the Fadama project and other agricultural development programs. The study will highlight the specific areas where intervention is most needed, such as improving access to credit, strengthening extension services, or investing in irrigation infrastructure, to maximize the impact of public spending on rural livelihoods.

For Fadama farmers themselves and their User Groups (FUGs) , the study will provide valuable insights into how they can improve their own profitability. By understanding the key determinants of efficiency, they can make more informed decisions about their input use and management practices. The study’s analysis of constraints will also empower them to advocate for the support they need from the government and other partners. It will help them to see the gap between their current performance and their potential, and to understand the steps they can take to close that gap.

For agricultural extension service providers (e.g., OYSADEP) , this study will offer practical insights into the specific knowledge gaps and constraints faced by Fadama farmers. The findings can inform the content and targeting of extension messages. For example, if the study shows that allocative efficiency is low, extension services can focus on teaching farmers about optimal input combinations and cost minimization. The study will also help extension agents to understand the unique challenges of the Fadama production system, enabling them to provide more relevant and effective advice.

For researchers and academics, this study will contribute to the empirical literature on agricultural efficiency in Nigeria. The application of the Stochastic Frontier Production Function to the specific context of Fadama farming provides a valuable case study. The study’s comprehensive analysis of technical, allocative, and economic efficiency is a significant contribution, as many studies focus only on technical efficiency. The findings will serve as a benchmark for future research and may generate new hypotheses for further investigation into the economics of small-scale irrigation in Nigeria.

1.8 Scope of the Study

This study is focused on the resource use efficiency of Fadama crop farmers in the Ibadan/Ibarapa Agricultural Zone of Oyo State, Nigeria. The geographical scope covers the local government areas within this zone, including Ibadan North, Ibadan South-West, Ibadan North-East, Ibarapa Central, Ibarapa East, Ibarapa North, and Ido. The study involves farmers who cultivate crops on Fadama lands, either under rain-fed conditions during the wet season or using irrigation during the dry season. The analysis is based on primary data collected for the 2022/2023 production season. The crops included in the analysis are the major Fadama crops, such as vegetables (tomatoes, peppers, okra), maize, and rice.

1.9 Limitation of the Study

This study is subject to certain limitations. The primary limitation is the reliance on self-reported, recall data from farmers, which can be subject to inaccuracies in the reporting of input quantities and costs. The cross-sectional design of the study provides a snapshot of efficiency at a single point in time and does not capture the dynamic changes in efficiency that may occur over multiple seasons. The study is also limited to a specific agricultural zone in one state, which may not be fully representative of the diverse Fadama systems across Nigeria. Furthermore, the measurement of allocative efficiency relies on the accurate calculation of input prices, which can vary considerably between farmers and over time. Finally, the study does not account for the specific production practices for each individual crop, but rather analyzes the production system as a whole.

1.10 Definition of Terms

For the purpose of clarity, the following terms are defined as they are used in this study:

1. Fadama: Low-lying, seasonally flooded or floodable plains along major river systems in Nigeria, characterized by high water tables and alluvial soils, suitable for dry-season farming.
2. Fadama Farming: Agricultural production activities carried out on Fadama lands, often involving small-scale irrigation to cultivate crops during the dry season.
3. Resource Use Efficiency: The ability of a farmer to obtain the maximum possible output from a given set of inputs (technical efficiency) or to produce a given output at the minimum cost (allocative efficiency).
4. Technical Efficiency: The ability of a farmer to produce the maximum possible output from a given set of inputs and technology, given the current state of technology.
5. Allocative Efficiency: The ability of a farmer to combine inputs in the optimal proportions, given their relative prices, to minimize the cost of producing a given level of output.
6. Economic Efficiency: The overall efficiency of a firm, which is the product of technical and allocative efficiency. It measures the ability to produce a given output at the absolute minimum possible cost.
7. Stochastic Frontier Production Function: An econometric model used to estimate technical efficiency that decomposes the error term into a random error (statistical noise) and a non-negative term representing technical inefficiency.
8. Fadama User Group (FUG): A community-based organization of farmers who collectively manage and utilize a specific Fadama area, often formed with support from the National Fadama Development Project.
9. Gross Margin: The difference between the total revenue and the total variable cost of an enterprise. It is a measure of profitability before accounting for fixed costs.
10. Marginal Value Product (MVP): The additional revenue generated from employing one more unit of a given input, holding all other inputs constant. In allocative efficiency analysis, it is compared to the input’s price (Marginal Factor Cost).