Rural Economics and Development

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1 J o u r n a l o f E c o n o m c s a n d R u r a l D e v e l o p m e n t v o l. 1 7 N o. 1 Rural Economcs and Development Techncal, Economc and Allocatve Effcences of Pepper Producton n South-West Ngera: A Stoc hastc Fronter Approac h Dpeolu A. O. 1 * and S.O. Aknbode 2 1 D epart m ent of Agr cult u r al E conom cs a nd Fa r m M a n ag ement, Un vers t y of A g r cul t ur e, A b eokut a, N g era 2 D epart m ent of Econom cs, L ag o s St a t e Un verst y, L a go s, N g era A bs tract D es p t e ncr ea s es n t h e cult va t o n of p ep p er a mo n g fa r mer s n S ou t h -W es t N g er a, ma s s v e t ra ns p or tat on of p ep p er fr om t h e N or t her n p a rts of t he cou nt r y and s ea s ona l f lu ct u a t on n p r c es a r e s t l l v er y commo n. G v en a g o od kn o w l edg e of t h e eff c ency l ev els of va r ou s pr odu ct o n u nt s (fa r ms ), ou tp u t ca n b e ncr ea s ed n t h e s hor t -ter m b y mp r o v n g p r odu ct on e f fc enc y. T hs s t u dy ex a m n ed t ec hn c a l, a lloca t v e a nd economc effc enc es n p ep p er p r odu ct o n n s ou t h - w es t N g er a. D a ta wer e coll ect ed fr o m t hr ee hu n dr ed p ep p er far mer s w ho w er e s a mp l ed t hr ou g h a mu lt -stage s a mp l n g p r ocedu r e. D ata wer e a na ly z ed u s ng t h e s t oc ha s t c fr ont er a p pr oa ch. T he r es u lt s r ev ea l ed a v er age t echnca l, a lloca t v e a n d ec o no m c eff c enc es of , a nd r es p ect v el y. T hes e mp l y t ha t g v en t h e p r es ent eff c en c es l evels, t her e s r oo m for t he a v er a ge fa r mer t o ncr ea s e p ep p er ou t p u t or sa ve c os t s wt h ou t t he n eed t o cha n g e ex s t n g t echnol o g y. E x t ens o n cont a ct, g end er, nd g enes h p s t a t us, a ge a nd h ou s eh o ld s z e ha v e s g n fca nt eff ect on t echnca l n effc enc y. T he s t u dy r ec o mmended a mo n g ot h er s, nt ens v e ex t ens on s er vc es w hc h f ocus mor e o n na t v e, ol d er a nd f ema l e fa r mer s a nd ar e g ea red t owa r ds r a s ng t ec h nca l k n o wl edge of p ep p er far mer s n or d er t o mp r ov e ou t p u t s g nf ca nt l y. K ey w o r ds : P ep p er, T echnca l eff c en cy, E con o mc eff c enc y, Al l oca t v e eff c enc y * C o rr espon d ence E -mal : wa l edpe@gm a l. com; T el ep h o n e n u mb er: I ntroducto n P ep p er s on e of t h e mos t va r ed a n d w d el y u s ed foods n t h e w or ld. Vr t u a lly a ll c ou nt r es of t h e wor l d p r o du c e p ep p er a t dffer ent l evels. Ac cor d n g t o B os ela n d a nd V ot a va (2000), p ep p er pr odu ct on ha s ncr ea s ed n r ec ent y ea r s wor ld w d e a n d t hs c ou l d b e a s cr b ed p a r t ly t o t s h g h nu t r t ona l va lu e. P ep p er s a r ch s ou r ce of v t a mns A a nd E a nd c o nt a ns mor e vt a m n C t o p r event f lu -colds t ha n a n y ot h er v eget a b le cr op. In N g er a, t hr ee ma j or t yp es of p ep p er s ar e commo n. T h e la r ge fr u t ed s w eet p ep p er (tatash e ), t he medu m c or ruga t ed fr u t ed h ot p ep p er (rodo) a nd t h e s ma l l fr u t ed c h l l/ r ed p ep p er (shombo) (Ad o, ). In N g er a, n ea r ly a ll mea ls p r ep ar ed a t hou s ehol d l ev el c o nt a n s o me fr a ct ons of p ep p er h enc e t h e mp or t a nce o f p ep p er n t h e mea l of a n a v er a ge N g er a n. P ep p er s p r odu ced n la r ger qu a nt t es n t h e 24

2 J o u r n a l o f E c o n o m c s a n d R u r a l D e v e l o p m e n t v o l. 1 7 N o. 1 nor t h er n p a r t of t h e c ou nt r y a n d t h e nor t h s u p p les t h e b u l k of t h e p ep p er n eeds of t he s ou t h er n p ar t s wh os e p r odu ct o n s s t ll a t s ma ll s ca le. D es p t e ncr ea s n g cult va t o n of p ep p er n t h e s ou t h -wes t er n p ar t of t he c ou nt r y s ea s o na l p r ce flu ct u a t on a nd s car ct y s st ll commo n. S t u des o n t h e p r o du ct v t y a n d eff c ency of a gr cult u r a l pr odu ct o n n N g er a ha v e n ot focus ed o n p ep p er d es p t e t s mp or t a nt r ol e n t h e mea l of t he p eop l e. I n or d er t o a ch eve s elf - s u ffc enc y n p ep p er p r odu ct o n n t h e s ou t h-wes t er n p a rt of t h e c ou nt r y, t her e s a n ur gent n eed t o a s s es s t he eff c ency of p r odu ct o n n p ep p er far m n g. Acc or d n g t o B elb a s e a n d G r a b ows k (1985) a n mp or ta nt p ol c y mp l ca t o n s t emm n g fr om s gn fca nt l evel o f n eff c ency s t ha t t m g ht b e mor e cos t eff ect v e t o a ch eve s h or t t er m ncr ea s es n fa r m ou t p u t, a nd t hu s nc o me b y c onc ent r a t ng on mp r o v n g effc enc y r a t her t ha n o n t he nt r odu ct on of n ew t ec hn o lo g y. T hs s t u dy d et er m n ed t h e effc enc y l evels of p ep p er far mer s a nd d ent f ed s oc o ec o no m c fa ct or s a ffect n g eff c enc y l evels. T hs s ex p ect ed t o d ent f y s s u es w hc h a r e g er ma n e t o for mu la t n g p o l c es a med a t ncr ea s n g p ep p er pr odu ct o n a t lea s t n t he r eg o n. 2. T heoret c al frame w o r k T he ea r l es t of t h e effc enc y t h eor es s t h e p r odu ct o n t h eor y a nd t h e conc ep t of s o qu a nt s cent er s on t h e r ela t ons hp s b et w een np u t a nd ou t p u t. T he s o qu a nt s r ep r es ent t he b ou n da r es of np u t s s et s w h l e t h e p r odu ct o n p os s b l t y cur v es (fr ont er s ) a r e t h e bou n da r y of t h e ou t p u t s s et s. T he ou t p u t a nd np u t funct o n a r e oft en u s ed t o c ha ra ct er ze t h e p r odu ct o n funct on. T hs s er v es a s b a s s for T echnca l E ff c ency (T E ) mea s ur ement. T he p r odu ct o n funct o n ha s b een ex t en d ed o v er t he y ea r s t o a ccommo da t e dff er ent cr cu ms t a nces ( A g n er et a l., , a nd M eeu s en a n d va n d en Br o ec k, , J ondr o w et a l., a nd Ba t t es e a nd C oell, ). M od er n s t u dy of eff c ency ca n b e t ra ced t o F a rr el (1957) p a p er on eff c ency w h c h nt r odu c ed a met h od o l og y t o mea s u r e ec o no m c, t ec hn ca l, a nd a ll oca t v e ef fc enc y. In t hs met h o d ol o gy, E conomc E ffc enc y (EE) s equ a l t o t h e p r odu ct of T ec hn ca l E ffc enc y (T E ) a nd Al l oa ct v e E ffc enc y (AE ). Acc or d n g t o F a rr ell, T E s a s s oca t ed wt h t h e a b lt y t o p r odu c e o n t he fr o nt er s o qu a nt, w h l e AE r ef er s t o t he a b l t y t o p r o du c e a t a gv en l ev el of ou t p u t u s ng t h e c os t - m n mz n g np u t ra t os. E E s d ef n ed a s t he ca p a ct y of a fr m t o p r odu c e a p r ed et er mn ed qu a nt t y of ou t p u t at m n mu m cos t for a gv en l ev el of t echnol o g y (K op p a nd D ewer t ). Acc or d n g t o O gu n da r (2007), a n np u t -or ent ed a p p r oa ch t o mea s u r e E E y el ds t hr ee s et s of np u t s : (1) t h e ob s er v ed s et, X o, (2) t he t echnca ll y eff c ent s et, X t e, a nd (3) ec o n o mca ll y eff c ent s et X e e. T he gr os s p r odu ct s of t hes e np u t s s et s t he p r c e v ect or wh c h y el ds t h e c os t s of t h e ob s er v ed t ec hn ca ll y eff c ent a nd ec o n o mca ll y eff c ent np u t s et r es p ect v el y. T hes e cos t s ca n b e u s ed t o d evs e mea s u r es of T E, AE a nd E E a s s how n h er eb y: T E = P X t e / P X o. (1) E E = P X e e / PX o (2) AE = P X e e / P X t e (. e., E E/T E ) (3) Wher e P X t e a nd P X e e ar e cor r es p on d n g t ec hn ca ll y a n d economca ll y eff c ent cos t of p r odu ct o n r es p ect v el y wh l e P X o s t he a ct u a l cos t of p r odu ct o n for a ny p ar t cular fr m s ob s er v ed l ev el of ou t p u t. A g n er et a l., ( ), M eeu s en a n d Va n d e Br o ec k (1977) a nd Ba t t es e a n d C orra (1977 ) nd ep endent l y d evel op ed t h e s t ocha s t c fr ont er p r odu ct o n funct o n t o p r ov d e b a s s for es t ma t n g p r odu ct v e 25

3 J o u r n a l o f E c o n o m c s a n d R u r a l D e v e l o p m e n t v o l. 1 7 N o. 1 eff c ency of fr ms. T her mo d el ca n b e s u mma r z ed a s : y = f(x; β) + (4 ) Wher e y s s ca lar ou t pu t, X s a vect or of np u t s a nd β s a v ect or of t ec hn o lo g y p ara met er s. H er e = v-u w hc h s t h e d ec o mp os ed er r or t er m ( A g n er et a l., ). T he t w o c o mp on ent s v a nd u a r e a s su med t o b e nd ep endent o f ea ch ot h er, w h er e v s t h e t w o-sded n or ma ll y ds t r b u t ed r a nd o m er r or (v ~ N (0, v 2 ), a nd u s o n e-sded eff c enc y c o mp on ent w t h a ha lf -nor ma l ds t r b u t on (u ~ N (0, u 2 ). T he M a x mu m L k el ho o d E s t ma t o n (MLE) of ( equ a t on 4 ) y el ds es t ma t es for β a n d. J on dr ow et a l., (1982 ) ha v e d emo ns t ra t ed t ha t t he fa r m s p ecf c mea s u r e of t ec hn ca l n eff c ency ca n b e d et er m n ed fr o m t h e condt o na l ex p ect a t on of u g v en a s : E (U ε )= u v f ( / ) 1 f ( / ).... (5) h er e λ=σ u / σ v, σ 2 = σ 2 u+σ 2 v, wh l e ƒ a n d F r ep r es ent s t he s t a nda r d nor ma l d ens t y a nd cu mu la t v e d s t r b u t on funct o n r es p ect v ely eva lu a t ed a t ε λ/σ. Bat t es e a nd C or ra (1977 ) def n ed = σ 2 u / σ 2 s u ch t ha t 0 1 a nd r ep r es ent t h e t ot a l va r at on n ou t p u t fr om t h e fr ont er a ttr b u ta b le t o dff er enc es n eff c ency. T he fa r m s p ecf c t ec hn ca l eff c enc y s d ef n ed n t er ms of ob s er v ed ou t p u t (Y ) t o t h e c or r es p on d n g fr ont er ou t p u t (Y *) u s ng t h e a va la b l e t echnol o g y d er v ed fr om t h e r es u lt of equ a t on (5) a b ove a s : Y E( Y u, X ) T E = Y E( Y u 0, X ) =. (6) = E exp( U / ) T her ef or e, T E = ex p ( -U )T E t a kes va lu es wt h n t h e nt er va l z er o a nd o n e w h er e 1 n d ca t es a fully eff c ent far m. Acc or d n g t o Br a vo- Ur et a a nd P nh er o (1997), a s su me t ha t t he p r odu ct o n fr ont er n equ a t on (4) s s elf -du a l ( e. g. C ob b -Dou gla s s ) a nd t ha t t he c or r es p on d n g c os t fr ont er ca n b e ex p r es s ed a s : C = h(p, Y; ). (7) w h er e C s t h e m n mu m c os t t o p r odu c e ou t p u t Y, P s a vect or of np u t p r ces, a nd α s a v ect or of p a ra met er s. Ap p ly n g S hep ha r d s lemma, t he s ys t em of m n mu m c os t np u t d ema n d equ a t o ns ca n b e ob t a n ed b y d ff er ent a t n g t h e c os t fr ont er w t h r es p ect t o ea ch np u t p r ce. T hs d ema n d equ a t o n f or t he t h np u t (Xd) s equ a l t o:: C / P = Xd = f (P, Y; ),. (8) w h er e s a v ect or of p a r a met er s. Fr om t he np u t de ma n d equ a t o ns w e ca n ob t a n t he ec o no m ca ll y eff c ent np u t qu a nt t es, X e, b y s ub s t t ut ng t h e f r m s np u t p r ces P a n d ou t p u t qu a nt t y Y nt o equ a t on (8). F ur t her mor e, t h e fa r m s p ecf c E E s d ef n ed a s t he r at o of m n mu m ob s er v ed t ot a l p r odu ct o n c os t (C *) t o a ct ua l t ot a l p r odu ct o n c os t (C ) u s ng t h e r es u lt of equ a t on 5 a b ove. T hat s : C E( C u 0, Y P ) E E = C = E( Y u, Y P) = E exp( U ). (9) H er e E E ta kes va lu es b et w een 0 a nd 1. H enc e, a mea s ur e of fa r m s p ec fc AE s t hu s ob t a n ed fr o m t ec hn ca l a n d ec o n o mc eff c enc es es t ma t ed a s : 26

4 J o u r n a l o f E c o n o m c s a n d R u r a l D e v e l o p m e n t v o l. 1 7 N o. 1 EE AE = TE 3. Met ho do lo g y 3. 1 S tu d y a r ea (1 0 ) T he s t u dy wa s carr ed ou t n O d eda a nd O b a fem/ O w od e L oca l G o v er n ment Ar ea s of O gu n S t a t e, S ou t h-wes t N g er a. T he s t a t e w h ch s lo ca t ed n t h e S ou t h - Wes t cor n er of t he c ou nt r y l es wt h n la t t u des 'N 'N a nd l o ng t u d es 'E 'E a nd c ov er s a la nd a r ea of 1 6, 76 2 s qu ar e k l o met er s w t h a p op u la t on o f 3, 7 2 8, (200 6 p op u la t on cens u s ). T he p eop l e o f t h e s t at e a r e p r edo m na nt of Yor u b a tr b e a nd a t lea s t 3 5 p er cent of t h e p op u la ce a r e p ea s a nt far mer s D a t a P ep p er far mer s w er e s a mp l ed t hr ou g h a mu lt -stage s a mp l ng p r oc edu r e. T wo L oca l G o v er n ment s (Obafem -O wo d e a n d O d eda ) w er e r a ndo ml y s el e ct ed fr o m s even L oca l G ov er n ment Ar ea s not ed f or p ep p er pr odu ct o n n t h e s t at e. V lla g es a nd fa r mer s w er e r a nd o ml y s el ect ed fr o m t he off c a l l s t of t h e S t a t e A gr cult u ra l D evelop ment P r oj ect. Far mer s n t h es e ar ea s mos t l y cult va t e t h e medu m cor r u gat ed fr u t ed h ot p ep p er ( r o d o ). A t ot a l of far mer s w er e s a mp l ed b u t w er e u s ed f or a na lys es a s ot h er s w er e ds ca r ded du e t o nc o mp l et e da t a. R el eva nt da t a wer e collect ed u s n g s tr u ct ur ed qu es t on na r e a n d da t a w er e col l ect ed on s oc o ec o n o mc cha ra ct er s t cs of p ep p er far mer s s u ch a s a ge, edu ca t ona l l evel, h ou s eh o l d s z e, y ea r s of p ep p er far m n g ex p er enc e, ex t ens o n cont a ct, a cces s t o cr ed t, np u t s, ou t pu t, pr ces nc lu d n g ot h er da t a of nt er es t E mp r cal mo d el T he economet r c s p ec fca t o n n t hs s t u dy foll o ws t h e C ob b -Dou g la s funct ona l f or m b eca u s e of t s w d e a p p lca t on n fa r m effc enc y for t h e d evel op n g a nd d evel op ed cou nt r es. F or t he p ep p er far mer s n t h e s t u dy a r ea, t he s p ecf ca t o n s : InY = βo + β 1 I nx β 6 InX 6 + V -U (11) Wher e: Y = O u t p u t of p ep p er for t he ent r e s ea s o n (kg) X 1 = Far m S ze n h ect a r es X 2 = Fa m ly la b ou r n wor k da ys X 3 = H r ed la b ou r n wor k da ys X 4 = P ep p er S eedl ng ( n nu mb er of b u nd l es u s ed. A b u n dl e s a b ou t 6 0 sta nds ) X 5 = F er t lz er n K g X 6 = P es t cd es n lt r es V a nd U a r e a s des cr b ed ea r ler. T he n eff c enc y mo d el s s p ecf ed t hu s : μ = δ 0 + δ 1 W 1 + δ 2 W 2 + δ 3 W 3 + z + δ 8 W 8. (12) Wher e, W 1 = Ag e of fa r mer n y ea r s W 2 = E du ca t ona l l evel of fa r mer (nu mb er of y ea r s s p ent n s cho o l) W 3 = H ou s eh ol d S z e W 4 = Y ea r s of R ce fa r m n g ex p er en c e W 5 = E x t ens o n cont a ct (1 f t he far mer ha s ex t ens o n cont a ct, 0 f ot her w s e) W 6 = Acc es s t o cr edt (1 f fa r mer ha s a cces s t o cr ed t, 0 f ot h er w s e) W 7 = G ender of fa r mer (1 f ma l e, 0 f ot her w s e) W 8 = I n d g enes h p s t a t us (1 f far mer s a n n d g ene, 0 f ot h er w s e) 27

5 J o u r n a l o f E c o n o m c s a n d R u r a l D e v e l o p m e n t v o l. 1 7 N o. 1 C ob b -Dou gla s cos t fr ont er funct o n for p ep p er far ms n t h e s t u dy a r ea wa s s p ecf ed a s : InC = α 0 + α 1 I np 1 + α 2 I np 2 + α 4 InP 4 + α 5 InP 5 + V + U.. (13 ) H er e C s t ot a l p r odu ct o n c os t of p ep p er p er far mer for t he s ea s o n; P 1 s t h e r ent a l va lu e o f la nd p er h ect a r e for t he s ea s on, P 2 s t he wa g e r at e of la b ou r / wor kda y, P 3 s t h e p r c e of s eedl n g/ b u n dl e; P 4 s t he p r ce of f er t lz er / k g; P 5 s t h e p r c e of p es t c d e / lt r e; α s w er e p a ra met er s es t ma t ed. T he fr ont er c os t funct o n wa s es t ma t ed u s ng M L E met h ods. T he comp u t er p r ogra mme F R O N T IER ver s o n 4. 1 wa s us ed a n d t s hou l d b e n ot ed t ha t t hs p r ogr a mme es t ma t es t h e c os t eff c ency (C E ), w h ch s comp u t ed or g na l l y a s t he n v er s e of equ a t o n (9). H enc e, fa r m l evel E E wa s ob t a n ed u s n g t he r ela t ons hp : E E = 1 / CE (C oell et a l., ). (14) 4. R esults and ds c us s o n T he mea n a g e of p ep p er far mer s n t he s t u dy a r ea wa s 4 7 yea r s mos t l y edu ca t ed u p t o p r ma r y s cho o l l evel. T h e a ver a ge p ep p er far mer cult va t ed a far m s z e of ha, u t lz ed 7 2 ma n- da ys of la b ou r, kg of f er t l z er a nd lt r es of ns ect c d es a n d r ea lz ed a n ou t p u t of kg of p ep p er. T a b le 1 s hows t h e s u mma r y s t at s t cs of t echnca l np u t s a nd s o me s oc o economc va r a b les of p ep p er far mer s n t he s t u dy ar ea. T a b l e 1 : S u mma r y s ta t s t c s of va r a bl e s n t he pr od uc t on f un c t on V a r a bl e s M e a n M n mum M a x mum S t a n d ar d De v at on O u t pu t ( Kg ) H r e d L a bou r F a m l y L a bou r H ou s e h ol d S z e E x p er en c e ( yea r s) F a r m S z e (h a ) 0. 75h a F e r t l z er ( kg ) S e e d l n g bu n dl e s P e s t c d e (l t r e ) A g e o f fa r m er ( yr s ) E d u ca t on ( yr s ) R esul ts o f t he s t o cha st c p ro du ct o n a nd cost fu nct o ns T he r es u lt s of t h e M a x mu m L k el h o od E s t ma t o n of t h e p r odu ct o n funct on (T a b le 2 ) r ev ea l ed t ha t a ll t h e ex p la na t or y va r ables ha v e p os t v e eff ect o n p ep p er ou t p u t ex c ep t fa ml y la b ou r. It wa s further s h o wn t ha t far m s z e, s eedl n g b u nd l es, fer t lz er a nd p es t c d es s gn f ca nt l y a ffect t h e qu a nt t y of p ep p er p r odu c ed b y t h e far mer s. F ar m s z e a nd f er t lz er w er e s g nf ca nt a t 5 p er cent - l evel w h l e s eedl ng a nd p es t c d e w er e s g n fca nt a t 10 p er cent - l ev el. T he n o n- s g nf ca nc e of la b ou r, t hou g h v er y r ar e, 28

6 J o u r n a l o f E c o n o m c s a n d R u r a l D e v e l o p m e n t v o l. 1 7 N o. 1 s n l n e wt h K a n e (2011) fn d n g n a s t u dy of t ec h nca l effc enc y of Akp u p r oces s or s n D elt a S ta t e, s ou t h -sou t h N g er a. T he ga mma va lu e of w hc h wa s s gn f ca nt a t 1 p er cent mea ns t ha t neff c ent eff ect ex s t ed n p ep p er p r odu ct o n n t h e s t u dy a r ea. T he R et u r n t o S ca le va lu e ob t a n ed b y t h e s u mma t o n of t h e es t ma t ed c o eff c ent s of t h e p r odu ct o n funct o n va lu e of mea ns t ha t far mer s ar e op er a t ng n s t a ge II of t h e p r o du ct o n s u r fa ce. T hs s a s ta ge of p os t v e d m ns h n g r et u r n t o s ca le a n d t s t h e s t a g e of p r odu ct o n for r at ona l p r odu c er s. In t hs s t a ge, r es ou r ces a n d p r odu ct o n w er e b el eved t o b e eff c ent. H enc e, t s a dv s a b le t ha t t he p r o du ct on u n t s s hou l d ma nt a n t h e l evel of np u t u t lza t o n a t t hs s t a g e a s t hs w l l ens u r e ma x mu m ou t p u t fr om a g v en l ev el of np u t cet ers par b us. T he n effc enc y mo d el nc lu d ed n t he s t oc ha s t c p r odu ct o n funct o n (Ta b le 2 ) s ho ws t ha t a ge of fa r mer s, hou s ehol d s z e; ex t ens o n cont a ct, g end er a nd nd g enes h p s t at u s s g nf ca nt l y a ffect effc enc y. T he p os t v e s gn of a g e mp l es t ha t ncr ea s es n a g e ca u s e ncr ea s e n n effc enc y (r edu ct o n n t ec hn ca l eff c ency). T he mp l ca t o n s t ha t ol d er far mer s ma y t end t o b e l es s t echnca ll y eff c ent wh en c o mp a r ed w t h ot h er far mer s. T her e w er e s g nf ca nt a nd n ega t v e s g ns of h ou s eh o ld s z e, ex t ens o n cont a ct, gender a nd Ind g enes h p s t at u s. T he mp lca t o ns s t ha t far mer s w t h la r ge h ou s ehol d s z e w er e mor e t ec h n ca ll y eff c ent t ha n far mer s wt h f ewer p eop l e n t h er hou s ehol ds p er ha p s du e t o t h e fa ct t ha t la r ge h ou s ehol d s z e s er v es a s a r ea dl y a va la b le s ou r c e of la b ou r for t he far mer s gv en t h e la b ou r nt ens v e na t ur e of p ep p er far m ma nt ena nc e a n d fr equ enc y of ha r v es t n g. Far mer s wh o cla med t o ha v e fr equ ent cont a ct wt h ex t ens o n a g ent s t end t o b e mor e t ec hn ca ll y eff c ent t ha n t hos e w h o cla med ot h er ws e u n d er s cor n g t h e mp or ta nce of ex t ens o n t ra n n g n p ep p er far m n g. F ur t her mor e, ma l e far mer s w er e mor e eff c ent t ha n f ema l e far mer s a nd fa r mer s w h o w er e mm gr a nt s n t he s t u dy a r ea s w er e g ener a lly mor e effc ent t ha n n d g enes (t s hou l d b e r eca l l ed t ha t nd g enes w er e s cor ed o n e w h l e no n e n d g enes w er e s c or ed z er o n t h e qu a nt fca t o n of t he du mmy va r a b le nd g enes h p ). T hs ma y b e du e t o la r g e h ou s eh o ld s z e k ep t b y ma jor t y of t h e mm gr a nt far mer s w h o a r e mos t l y Igedes fr o m B enu e s t at e. Ba s hn (2002) r ep or t ed t ha t far mer s l ev el of edu ca t o n, t h e d s t a nce of fa r ms t o t h e ma r k et a nd ex t ens on s er v c es ha v e s g nf ca nt p os t v e eff ect on t h e t ec hn ca l effc enc y of gr een p ep p er far mer s n t h e Up p er Ea s t R eg on of G ha na. It was further r ep or t ed t ha t t he a ge of t h e fa r mer, hs level of edu ca t o n, ds t a nc e of t h e fa r m t o fa r mer s hou s e a nd met h o ds a p p led t o n cr ea s e p r odu ct v t y of t h e la n d w er e eff ect v e n t er ms of t o ma t o effc enc y. F or on o n p r odu ct o n, t wa s r ep or t ed t ha t far m n g ex p er en c e, d s t a nce t o ma r ket a n d ex t ens o n s er v c es ha d s g n fca nt p os t v e eff ect on t ec h n ca l effc enc y. T he s g nf ca nt p os t v e eff ect of a g e a nd h ou s eh o ld s z e o n t ec hn ca l n effc enc y n t h s s t u dy s n l n e w t h t he f n d n gs of A jb efu n (2002). T he s t u dy r ep or t ed a mea n t ec hn ca l eff c ency of (wh ch s l o w er t ha n r ep or t ed n t hs s t u d y) w h l e edu ca t o n a nd ex p er enc e ha v e s g nf ca nt n ega t v e eff ect o n t ec hn ca l n effc enc y. O gu n da r a nd O jo (2007) r ep or t ed s g nf ca nt n ega t v e r ela t o ns h p b et w een a g e, edu ca t o n, far m n g ex p er en c e a nd cr edt a va la b lt y a n d t ec hn ca l n effc enc y 29

7 J o u r n a l o f E c o n o m c s a n d R u r a l D e v e l o p m e n t v o l. 1 7 N o. 1 a mo n g s ma l l s ca l e cr op fa r mer s n O n d o s ta t e N g er a. T he r es u lt of t h e s t oc ha s t c cos t funct on (T a b le 3 ) r ev ea l ed t ha t a ll t h e ex p la na t or y va r a b les ca rr ed p os t v e va lu es n c o nf or mt y w t h t h e a p r o r ex p ect a t on. R ent a l va lu e of la n d, wa g e a nd p r ce of s eedl n gs w er e s g n fca nt a t 1 p er cent -level w h l e p r c es of fer t l z er a nd p es t c d e w er e not s g nf ca nt. T hs mp l es t ha t s g n fca nt ncr ea s es n t h e p r ces w h ch w er e s g nf ca nt ncr ea s e c os t of p r odu ct o n s g nf ca nt l y w h l e c ha n g es n t h e p r c es of f er t lz er a nd p es t c d e d d not s g nf ca nt l y ncr ea s e t ot a l cos t of p r odu ct o n. T hs ns gn f ca nc e ma y b e du e t o t h e l o w l evel of u s e of t h e t w o np u t s (T a b le 2 ) D s tr bu t o n o f effc enc es amo ng p epper fa r mers T he M L E es t ma t o ns of equ a t o n (11) a ls o r ev ea l ed a n a v er a ge T E of p er cent a n d u s ng t h e r ela t o ns h p s n equ a t ons 9, 1 0 a nd 1 4, t wa s a ls o s h o w n t ha t t he a v er a ge AE a nd E E w er e a nd p er cent s r es p ect v el y. T hes e mp l y t ha t ncr ea s es n ou t p u t ca n b e a ch eved f c er t a n cor r ect v e mea s u r es (such a s nt ens f ca t on of ex t ens o n Table 2: Producton functon parameter estmates for pepper farms V a r a bl e P a r a met e r C oe f f c e n t t - r a t o C on st a n t β ** * F a r m s z e β ** F a m l y l a bou r β H r e d l a bou r β S e e d β * F e r t l z er β ** * In s e c t c d e β * I n e f f c e n c y mod e l A g e δ ** * E d u ca t on δ H ou s e h ol d s z e δ * * E x p er en c e δ E xt. c on t a c t (= 1 ) δ * Cr e d t ( A c c e s s = 1 ) δ G e n d er (ma l e= 1 ) δ * In d g en e sh p (= 1 ) δ ** * S gm a - s q uar e d 2 = 2 2 u + v ** * G a m m a = 2 u / ** * L og L k e l h ood fu n c t on L L F * * * S g nf c an t at 1 pe rc e n t ; ** S g n f c a nt at 5 pe rc e n t ; * S g n f c a nt a t 10 pe r c e nt 30

8 J o u r n a l o f E c o n o m c s a n d R u r a l D e v e l o p m e n t v o l. 1 7 N o. 1 T able 3 : C o s t funct o n par a met er estma tes fo r pepper far ms V ar ab le P arame ter C o effce nt t-rat o C ons t a nt α ** L a nd p r ce α ** * L a b our pr ce α *** S eed l n g p r ce α ** * F er t lz er pr ce α Ins ect c d e p r c e α S g ma -squ a r ed ** * G a mma ** * T able 4 : E ffc e ncy ds tr b ut o n o f pepp er fa r mers T e c hn c a l E c o no mc A l l oc at ve E ffc e nc e s fr e q ue nc y Pe rc e nt fr e q ue nc y Pe r c e nt fr e q ue nc y Pe r c e nt > M e a n M n mu m M a x mu m eff or t s ) ar e t a ken wt hou t t h e n eed t o cha n g e ex s t n g t echnol o g y. F ur t her mor e, f a n a v er a g e fa r mer wa s t o a ch eve t h e T E of hs mos t eff c ent cou nt er p ar t, he c ou l d r ea l z e p er cent cos t s a vn g (. e. 1 (0.737/ 0.916) or ncr ea s e n ou t p u t. T a b le 4 s ho ws t h e ds t r b u t on of p ep p er fa r mer s b y va r ou s effc enc y mea s u r es Es t ma t o n o f t he d et erm na nt s o f a l l o cat ve a nd econo m c effc enc es As eff c ency g ener a lly r a ng es b et w een c er t a n l mt s (. e z er o a nd on e), fa ct ors a ffect ng a ll oca t v e a n d ec o n o mc effc enc es w er e d et er m n ed u s ng t h e T ob t mo d el a s u s ed b y Bra vo - Ur et a a nd P nh er o (1997), a nd A k nb o d e (2010). T he r es u lt s of t h e ma x mu m l k el h oo d es t ma t o n of t h e t ob t mo d el (Ta b le 5 ) r evea l ed t ha t E du ca t on (α=0.01) a nd ex t ens on c o nt a ct (α= ) 31

9 J o u r n a l o f E c o n o m c s a n d R u r a l D e v e l o p m e n t v o l. 1 7 N o. 1 ha v e s g n fca nt p os t v e eff ect o n Al l oca t v e E ffc enc y. T hs mp ly t ha t mor e edu ca t ed fa r mer s a nd fa r mer s w h o cla med t o ha v e fr equ ent cont a ct wt h ex t ens o n a g ent s ha v e a b l t y t o a ll oca t e np u t b u n dl e or p r odu c e a g v en l evel of ou t p u t n t h e c os t m n mz n g wa y. T he n ega t v e b u t s g n fca nt c o eff c ent of g end er (α=0.05) mp l es t ha t fema l e p ep p er far mer s wer e mor e a ll oca t v el y eff c ent t ha n t her ma l e c ou nt er p ar t. T he mp l ca t on s t ha t fema l e fa r mer s t a ke b et t er d ec s ons n r ela t o n t o np u t p r ce d ff er enc es a n d qu a nt t y t o b e u t lz ed o n t h e far m. F ur t her mor e, t h e T ob t mo d el es t ma t o n r evea l ed t ha t on ly edu ca t o n (α=0.01) a nd ex t ens on c o nt a ct (α= ) ha v e s gn f ca nt eff ect o n t h e ov er a ll ec o n o mc eff c enc y of p ep p er far mer s n t h e s t u d y a r ea. T he p os t v e s g ns of t hes e s g nf ca nt va r ables mp l ed t ha t mor e edu ca t ed a n d fa r mer s w h o ha v e cont a ct wt h ex t ens o n s er vc es w er e mor e ca p a b le of p r odu c n g p r ed et er m n ed qu a nt t y of ou t p u t a t m n mu m c os t f or a gv en l evel of t ec hn o lo g y. Ak nb o d e (2010) a ls o r ep or t ed t ha t ex t ens on c ont a ct a nd edu ca t o n a mo ng ot h er va r a b les ex er t s g nf ca nt p os t v e eff ect s on b ot h a lloca t v e a n d economc eff c enc es a mo n g r c e fa r mer s O gu n S t at e wh c h nc lu d ed t h e s t u dy a r ea s el ect ed f or t hs s t u dy. Bra vo- Ur et a a nd P n h er o (1997) n t h e s a me v e n fou n d t ha t edu ca t o n ha d s gn f ca nt p os t v e eff ect o n a lloca t v e a n d economc eff c enc es a mo n g p ea s a nt fa r mer s n t h e D o m n ca n R ep u b lc. T able 5 : P arame ters estma tes o f de ter m na nts o f a llo c atv e a nd eco no mc effc e nc es of peppe r far mers E cono mc A llo c atv e V ar ab les coeffc e nt t-rato coeffc e nt t-rat o A g e E du ca t on ** * ** * H ou s ehol ds s z e E x p er enc e E x t ens o n ** ** * Cr ed t G ender ** Ind g n es hp s t at u s L og- l k el h o o d funct on S g ma -squ a r ed * * * Sgn f cant at 1 p er cent; * * S g n f cant at 5 p ercent ; *S gn f cant at 1 0p ercent 5. S umma ry and co ncl us o n T he s t u dy a s s es s ed t echnca l, a lloca t v e a nd economc effc enc es n p ep p er p r odu ct o n n s ou t h- w es t N g er a. T he s t u d y r evea l ed a n a v er a ge t echnca l, a lloca t v e a n d ec o n o mc effc enc es of , a nd r es p ect v el y. It s hou l d b e n ot ed t ha t t a pp ea r ed t ha t AE cont r b u t e mor e t o ga ns n E E t ha n T E. T hs mea ns fa r mer s g ener a lly t a k e go o d d ec s ons a s r ela t e t o r es ou r ce a ll oca t o n n cos t mn mza t o n s t r at eg es. 32

10 J o u r n a l o f E c o n o m c s a n d R u r a l D e v e l o p m e n t v o l. 1 7 N o. 1 M ea n wh l e, d ec s o ns n t h e t ra ns for ma t on of p h ys ca l np u t s t o ou t p u t s a p p ear ed mp er fect. G v en t h e s g nf ca nc e of ex t ens on c o nt a ct as a n mp or ta nt fa ct or a ffect n g t h e t hr ee t yp es o f effc enc es cons d er ed n t hs s t u dy, t s r ecommended nt ens v e ex t ens o n t r a n n g w hc h ma y mp r o v e t ec hn ca l kn o w l edg e of p ep p er far mer s a nd p os s b l y t h er p r ce- qu a nt t y d ec s on kn o w l edg e. T he ex t ens o n s er vc e s h ou l d focus mor e o n na t v e, ol d er a nd fema l e fa r mer s. R e fe r e nc e s A d o, S. G. ( ). P e pp e r p r o du c t o n G u de. E xt en s on Pu bl ca t on of t h e H or t c ul t ur a l Cr op s Resea r ch Pr ogr a m m e. I. A. R. S a m a r u, N g er a. p p: 1 2. A gn er, D. J, L ovel l, C. A. K a n d S ch m d t, P. ( ). F or m ul a t on a n d E s t m a t on of s t och a s t c fr on t er pr od u ct on m od e l s. J o u rn al o f E c o n om e t r c s 6: A k n bod e S O ( ) : E c on om c Bu r d en of D s e a s e s a n d Pr od u c t on E ff c e n c y a m on g R c e F a r m n g Hou s e h ol d s n Og un a n d N g er St a t e s, N g er a. Ph D T h e s s, D e p a r t m en t of A g r c ul t ur a l E c on om c s, Un ver s t y of A g r c ul t ur e, A beok u t a, N g er a. Bh a s n, V. K., ( ). A gr c ul t ur a l P r od u ct vt y, E ff c e n c y a n d S o l F e r t l t y M a n a g em en t Pr a c t c e s of V e g e t a bl e Gr owe r s n t h e Up p e r E a s t Reg on of Gh a n a, Sa da oc F oun da t on Resea r ch Pu bl ca t on, Gh a n a. Ba t t e s e, G. E. a n d C or r a, G. S. ( ). E s t m a t on of a pr od u ct on fun c t on m od e l : w t h a p pl ca t on t o t h e pa s t or a l z on e of E a st er n A u st r a l a. A u s t ra l a n J o u rn al o f A g r c u l t u r al E c on o m c s 2 1 : Ba t t e s e, G. E. a n d C oel l, T. J ( ). F r on t er pr odu c t on fun c t on s, t e ch n ca l e f f c e n c y a n d p a n el dat a : w t h a p pl c a t on t o p a d d y fa r m er s n In da. J o u rn al o f P r od uc t v t y A na l y s s, 3 : Bel ba s e, Kr sh n a a n d R ch a r d Gr a bo ws k ( ): T e c h n c a l E ff c en c y n N e p a l e s e A gr c ult ur e. J o u rn al o f D e v e l o p me nt A r e a s 1 9, N o 4: Bos e l a n d, P. W. a n d E. J. V ot a va ( ). P e p p e r : V e g e t a bl e a n d Sp c e Ca p s c um. C A BI P u bl sh n g, N e w Y or k. pp Br a vo- Ur e t a, Bor s E. a n d E. An t on o P n h e r o ( ) : T e ch n c a l, E c on om c a n d a l l ocat ve E ff c e n c y n P ea s a n t F a r m n g: E v d en c e fr om t h e D omn c a n Rep u bl c. Th e De v e l op n g E c o n o m c s, 3 5 ( 1) : C oel l, T. J; Pr a sa da Ra o, D. S, Ba t t e s e, G. E. ( ): An In t r odu c t on t o E ff c e n c y a n d Pr od u c t vt y A n a l ys s. K l u we r A c a d e m c Pu bl sh er s, Bos t on / D or dr e ch t F a r r el l, J. M. ( ) : T h e M e a sur e m en t of P r od u ct ve E ff c e n c y J o u r na l R oy al s t a t st c s V ol um e 1 2 0, P a r t I I I p p J on dr ow, J., C. A K L ovel l., I, Ma s t er ov a n d P. S ch m dt ( ) : On t h e E s t m a t on of T e c h n ca l E ff c e n c y n t h e st och a s t c F r on t er Pr od u c t on Fun c t on M od e l. J o u rn al o f E c on o me t r c s 1 9n o.2/3: K a n e A. I. N ( ): In vest gat on of F a c t or s A ffe c t n g T e ch n c a l In e ff c e n c y of A k p u P r ocess n g n D e l t a St a t e, N g er a. K op p, R. J a n d W. E. D e we r t, , T h e d e c om p os t on of fr on t er c os t fun c t on d e v a t on s n t o m e a sur e s of t e c h n c a l a n d a l l oca t ve e f f c e n c y, J o u r na l o f E c o n o me t c s. 1 9: M e e u s e n, W. a n d van d en Br oeck, J. ( ). E ff c e n c y E s t m a t on fr om C obb - D ou g l a s P r od u ct on F un ct on s w t h C om p os e d E r r or. I nt e rn at o n al E c on o m c R e v e w 1 8: O g un dar K ( ): T e ch n c a l, Al l ocat ve a n d E c on om c E ff c en c y o f Up l a n d R c e F a r m er s n N g er a : A St och a s t c F r on t er A p pr oa ch. T he E mp r c a l E c o n o m c s Le t t e r s. 6 ( 6) : O g un dar K a n d O j o S. O ( ): E c on om c E ff c e n c y of S m a l l S c a l e F ood Cr op P r od u ct on n N g er a : A St och a s t c F r on t er A ppr oa ch. J ou r n al o f S oc al S c e n c e. V ol. 14, N o.2, pp