Technical and allocative efficiency of Palm Oil processing in Benue State
No Thumbnail Available
Date
2013
Authors
Lawal, W.L.
Igele, E.O.
Ali, O.
Journal Title
Journal ISSN
Volume Title
Publisher
Clarion University of Pennsylvania, Clarion, Pennsylvania
Abstract
This study investigated the technical and cost efficiency of palm oil processing in Benue State, Nigeria. Primary data were collected randomly from 120 palm-oil processors, during the 2006/2007 cropping season, using structured questionnaire. The collected data were analyzed using descriptive statistics and stochastic production frontier model. Results of the technical inefficiency show that capital, labour and quantity of palm- fruit with coefficients 0.44,0.84 and 0.15 respectively, had significant effect on the quantity of palm oil processed in the study area and that, the producers were producing at an increasing return to scale (1.98). Age and household size with the coefficients of 4.78, and 9.43 respectively, significantly and positively affect the technical efficiency of the palm oil processors while education with coefficient -1.93 had negative significant effect . The result reveals an average technical efficiency of 91 percent showing that the processors actually operate with a level of inefficiency (9%). Moreover, the results show that the cost of palm fruit and labour with coefficients 0.33 and, 0.51 respectively, significantly and positively affect the total cost of palm oil production. Household size and years of processing experience with coefficients of 0.60 and -0.15 respectively, affect the allocative efficiency which varied widely (1.02-1.99) among the palm oil processors in the study area. This suggests that a considerable palm oil production potential remains to be exploited through better use of available resources. The study, therefore, recommends that better access to labour, palm fruits and farm-specific efficiency factors, which include enhanced education will sustain the production of palm oil.
Description
Scholarly articles
Keywords
Technical efficiency , Stochastic production frontier , Random variability , Allocative efficiency , Research Subject Categories::SOCIAL SCIENCES::Social sciences::Education
Citation
Lawal, W.L., Igele, E.O. & Ali,O. (2013). Technical and allocative efficiency of Palm Oil processing in Benue State. Journal of Sustainable Development in Africa, Vol.15(6)