JORIND 12 (2) December, ISSN

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1 EFFICIENCY OF RESOURCE USE UNDER DIFFERENT ARABLE CROPS PRODUCTION SYSTEMS IN OGUN AND LAGOS STATE, NIGERIA T. A.Okeowo Department of Agricultural Extension and Management,Lagos State Polytechnic, Ikorodu A. A. Salako Department of Agricultural Economics & Farm Management, Olabisi Onabanjo University, Yewa Abstract Sustainable food production can be achieved by effective and efficient harnessing of rainfall and irrigation infrastructures for optimal arable crops production. River Basin and Rural Development were established to effect production of arable crops in the rainy season and dry season and also to provide insurance for crops during the period of inadequate rainfall through provision of irrigation infrastructure. This study has therefore, set out to compare the economics of irrigated and rainfed arable crops production in Ogun-Oshun River Basin Development Authority (OORBDA) project areas. Mokoloki and Itoikin OORBDA project sites were purposely selected based on the prevalence of rainfed and irrigated farming practices relative to other project areas. Fifty respondents practising irrigated/rainfed arable crops farming (OORBDA beneficiaries) were randomly selected from each of the project sites also fifty farmers in the neighborhood (non-oorbda beneficiaries) of each of the project sites practising rainfed farming were randomly selected. Input and output of the various arable crops were converted to kg. grain equivalent. The data were analysed using descriptive statistics and regression analysis. Chow s test of significance was also applied to determine if there is any structural shift in production function between rainfed and irrigated farms. Statistical hypotheses were testedon efficiency differences between irrigated and rainfed farming. There are significant differences in the parameters of the production functions of rainfed farms and irrigated farms. Relatively rainfed farms in the study area are not as technically efficient in the use of available resources as irrigated farms and total factor productivity was higher in irrigated farms than in rainfed farms. Farm size, labour, seed, fertilizer and working capital were under-utilized. Keywords: Irrigated, rainfed, arable crops, resource-use efficiency, comparative analysis, profitability Introduction Of the 6.3 billion people in the world today, over a billion live on less than a dollar a day. Almost 850 million (or one in seven people) suffer from hunger (Ndungane, 2005). The importance of poverty is underscored by the fact that 75 to 80 percent of national populations live in rural areas in most developing countries (Akinbode, 1988). Nigeria s poverty situation is precarious not only in terms of income poverty but also in terms of food poverty. The increase in the proportion of underweight children, from 31 percent in 2000 to 36 percent in 2002 (UNDP, 2001, 2004b), evidently confirms food poverty situation in Nigeria. Most families spend about two-thirds of the household income on food alone, and the poorest households spend up to 90 percent of their income on food (FOS, 1999). Food needs vary dramatically from region to region and among countries within regions of the world. The inability of Nigeria to adequately feed her teeming population is, however, worrisome and especially so for the poor whose population rose from 35 million in 1992 to 44 million in 1995 (Momoh, 2006).The total population of Nigeria is about 140,003,542 (NPC, 2006) which is projected to increase to about 150 million in There has been remarkable improvement and progress in agricultural production in Nigeria due to government efforts geared towards ensuring food security. This is reflected in the contribution of crop production in the agricultural sector to the gross domestic production (GDP), which increased annually from percent in 1981 to percent in 2004 at 1984 constant factor cost (CBN, 2005). 306

2 Despite the increase in agricultural production, the target of meeting household food requirement with the country s population growth rate, which is estimated at 2.9 percent per annum (FAO, 1997), is far from being reached. There is a distinct gap between food demand by the population and actual production. To fill the gap government resorted to importation of food from other countries, which is evident in the food import bill, which has been on the increase. The poor performance of the agricultural sector became worrisome in the decade when the country s food import bills rose from $175 million in 1970 to $872 million in 1982 (FMAWR & RD, 1988). However, Abubakar (1998) reported that despite the apparent improvement in food supply, household food insecurity and inadequate access to food are still evident in the country. The food self-sufficiency ratio of the country which was about 98 percent in the early 1950s dropped to less than 64 percent in 1986 and less than 40 percent in 1992 (Olanrewaju, 1997). The progressive decline in average yield of major food crops is also of great concern as Nigeria would be unable to feed its teeming population based on rainfed agriculture alone. Demographic growth coupled with rising income has substantially increased the demand for food in the country. Rapid increases in food production needed to feed the population will have to come from increased yield per hectare from both rainfed and irrigated agriculture. It is however realized that irrigation holds greater potentials for growth and intensification (Ogunniyi, 2003). FAO (1996), for instance, has estimated that 60 percent of the extra food required to feed increasing global population must come from irrigation. Nigeria has a total land area of 923,768 sq km or 98.3 million hectares, out of which 73.7 million hectares or 75 percent is arable land. Out of this arable land, 29.6 million hectares or 40 percent of the total is cultivated leaving 60 percent of arable land idle (UNDP, 2004a). Various projects have been launched by government towards achieving sustainable food production with the primary aim of improving the lots of farmers and rural communities in general. Prominent among the projects are River Basins Development Authority (RBDA), Agricultural Development Project (ADP), Directorate of Foods, Roads and Rural Infrastructure (DFRI), National Agricultural Land Development Authority (NALDA), Operation Feed the Nation, Green Revolution. However, because of inconsistency, administrative overlap, and improper implementation, among other things, these programmes could not yield the much acclaimed goal and objectives of food security for Nigerians and households (Momoh, 2006). Furthermore, the introduction of FADAMA I and II to complement the activities of these projects, and in particular the River Basins and Rural Development Authority, is another effort aimed at producing adequate food for the populace through agricultural production in the rainy season and the dry season. The River Basin and Rural Development Authorities were established in Nigeria by Decree 25 of 1976 to ensure sustainable irrigated agriculture in order to achieve food security for the entire nation. The erratic nature of rainfall and its non-availability during the dry season make irrigation inevitable in both the southern and northern parts of Nigeria (Adekalu and Ogunjimi, 2003). Productivity improves when irrigation is applied to supplement rainfall in the rainy season. Moreover, farmers tend to earn more when they utilize the irrigation infrastructures to produce crops in the dry season. Thus, irrigation has been seen in terms of the possible benefits it provides through enabling the expansion and intensification of agriculture (Urama, 2005). Climate and weather are the most determinant factors in agricultural productivity. The water resource base of the earth is enormous. Seventy percent of the earth s surface is covered with it. Most of it is salty, only one percent is fresh water; and 99 percent of the fresh water is underground (Shoji, 1997). Global resources of fresh water approximate 17 million cubic meters (Ambroggi, 1980). Agriculture depends mainly on water. It is the key resource for future agricultural development in many parts of the world, including Nigeria. However, agriculture is very sensitive to variations in the water supply. The need for irrigation is necessitated by the production of food crops in the dry season and inadequate rain at the right time particularly in the 307

3 rainy season. According to Adekalu and Ogunjimi (2003), the rainy season in the southern part of Nigeria extends from April to November and the rainfall is about 1,500mm. In the north, the rainy season is from May to October and the rainfall is about 900mm. Different crops require different volumes of water for growth and production. If water is inadequately supplied and gets to critical level, there will be water stress and stunted growth consequently, leading to low or no yield. In 1973, Nigeria was hit by drought and thus food production drastically reduced. According to Oguntona and Akinyosoye (1986), the drought of 1973/74 crop season in the dry savanna zone of Nigeria and its attendant effects on livestock and human population led to a large reduction in the food producing capacity of the northern part of the country and became a major cause of food supply shortage in 1974 and thereafter. Akinyemi et al (2004) further stated that over the years, agricultural sector in Nigeria has been handicapped by insufficient or erratic supply of water by rainfall coupled with drought occurrences. Obviously, the much desired national self-sufficiency in food production can only be achieved if there is expansion of hectarage under cultivation and less dependence on rainfall for food production. Irrigation can allow production of crops in the dry season and should eliminate the effect of inadequate water availability for plant growth in the rainy season. Despite the creation of eleven River Basins and Rural Development Authorities, and various agricultural / agriculture-related programmes and projects, the country is still a notable importer of consumer and capital goods as well as industrial materials in order to meet the needs of her populace and industries. There have been only slight changes in the arable crops output in Nigeria since The effects of the irrigation projects and infrastructures deployed particularly in arable crops production appear unencouraging in terms of their contribution to yield, growth and total food production, curtailment of food price increases, and improvement in farm families standards of living. Ibrahim (1991) and Yahaya (1992) asserted that despite the huge investment in irrigation infrastructure, many farmers in their areas of operations are yet to feel their impact. In the light of the fore-going, thus, there is a need to empirically analyse the conditions that surround the production systems of farmers. This is with the view to evaluating the economic outcomes and efficiency of irrigation and rainfed practices in arable crops production with a special focus on the Ogun-Oshun River Basin Development Authority irrigation project areas in Ogun and Lagos States. The aims of this paper are to determine the efficiency of resource use in irrigated and rainfed arable crops production systems in the project areas and to test the differences in efficiency between them. Research methodology This study was conducted in Mokoloki and Itoikin project areas of Ogun-Oshun River Basin Development Authority (OORBDA). Mokoloki is one of the rural areas in Obafemi Owode Local Government, Ogun State. Itoikin is a rural community in Epe Local Government, Lagos State. Ogun-Oshun River Basin Development Authority (OORBDA) has its headquarters in Abeokuta, Ogun State. Its activities cover Ogun, Lagos, Oyo and Oshun States. Ogun-Oshun River Basin is one of the two river basins authorities in southwestern Nigeria. OORBDA performs two operations: water services and non-water services related. The authority has agricultural department in which extension service is rendered to farmers in the project sites. This unit allocates land to the farmers annually, on rental basis. Farmers pay for the rent, land preparation and irrigation water supply, which covers management charges, and fuel consumption. Farmers acquire independently, inputs required for production including seeds, fertilizer, herbicides and insecticides, and own the proceeds from cultivation of the irrigated farm plots. Crops grown are mainly annual crops suitable for irrigation. Such crops are rice, maize, watermelon, and cucumber. Other crops grown are golden melon, cotton, garden egg, tomato, pepper, cowpea, soybeans, and groundnut. Root and tuber crops are also planted in areas under rainfed production. This study was based on primary data, obtained through the use of well-structured questionnaire and cross-sectional survey of beneficiaries and 308

4 non-beneficiaries in the two project sites. Specifically, data were collected on prices and quantities of inputs and outputs during 2009 production season. Simple random sampling technique was used to draw the 200 study respondents. Initially, a purposive selection of the project sites was done. These project sites were chosen because of the prevalence of the irrigated and rainfed farming activities relative to their availability in other OORBDA project areas in Ogun and Lagos States. Thereafter, a random selection of fifty arable crop farmers (participants) that operate within the area covered by OORBDA irrigation facilities in each of the project sites and another set of fifty arable crop farmers (nonparticipants) that operated under rainfed crop production practices in the non-irrigated neighborhoods within the project sites. The inputs and outputs of crops were measured in kilogramme and were adjusted to kg. grain equivalent for homogeneity. Output aggregation was thus achieved by using grain equivalent conversion factors worked out by FAO (1984). This made it possible to estimate production function for crop mixtures. Specifically, grain equivalent conversion was used to allow for output aggregation as well as to allow for the estimation of a technical relationship between inputs and outputs for crop mixtures. Analytical procedure In determining the relative efficiency of resource use in the arable crops production systems; first, the Cobb-Douglas production function was specified and employed to determine resource use efficiency in irrigated farms as well as rainfed farms. Second, the profit function was expressed and estimated to determine the effects of irrigation on the profitability of arable crops production. Cobb-Douglas production function The function can be specified as follows: Q = b 0 X 1i b1 X 2i b2. X 6i b6 e.. (1) In the log-linear form, LnQ = b 0 +b 1i lnx 1i +b 2i lnx 2i +b 3i lnx 3i +b 4i lnx 4i + b 5ilnX 5i +b 6i lnx 6i + lne (2) Where: Q i = Output of the ith farmer estimated in grain equivalent (Kg) X 1i = land hectatage cultivated by the ith farmer (Ha) X 2i = Labour used (man-days) X 3i = Quantity of seed planted by the ith farmer (Kg. grain equivalent) X 4i = Quantity of fertilizer applied by the ith farmer (Kg) X 5i = Amount of working capital used by the ith farmer (N) X 6i = Worth of fixed capital used by the ith farmer (N) The measurement of efficiency in agricultural production has received considerable attention in the literature. In this study, the efficiency of resource use was determined by comparing the value of marginal product (MVP) of the various inputs with their marginal costs or unit prices (P x ). That is, MVPs = P Q MPPs (3). Thus: If MVP = P x there is optimal or efficient level of use of resources If VMP < P x there is over utilization of resources If VMP > P x there is underutilization of resources The sum of the regression coefficients, b i gives the estimates of the returns to scale for factor use. b i s are thus elasticities coefficients. b i = 1; implying that if all inputs are increased by a certain percentage, output also will increase by that same percentage (that is, constant returns to scale). However, if the sum of the regression coefficient is less than 1, it is decreasing returns to scale. If it is greater than 1, it is increasing returns to scale. Ordinary least square technique was used to estimate the above functions. The average physical product (APP) and marginal physical product (MPP) obtained from the estimated function are expressed algebraically as follows: Marginal Physical Product (MPP xi ) of factor X i is, MPP xi = b i Y / X i.. (4) Where: b i = slope parameter associated with the factor (X i ) Y = Geometric mean of output X i = Geometric mean value of variable 309

5 Also, Average Physical Product (APP xi ) of factor X i is, APP = Y / X i (5) The results obtained were compared across farming systems. Results and discussion Resource use efficiency of rainfed and irrigated arable crops production Marginal physical product (MPP) was determined for each variable input used in rainfed farms (nonparticipants) and irrigated farms (participants) as well as for all farms using geometric mean of inputs and output (Table 1). Farm size recorded highest value of MPP for rainfed farming by nonproject participants ( ) and irrigated farming by project participants (4.5285) and pooled regression (without intercept dummy) (6.7140). This implies that increase in land by one hectare would result to extra tonnes grainequivalent and tonnes grain-equivalent of rainfed farming (non-projects beneficiaries) and irrigated farming (project beneficiaries) respectively. Table 1: Resource use efficiency of rainfed and irrigated arable crops production Resources Estimated parameter Rainfed Participants) Farm size Geometric mean MPP MVP 488, MFC 2, MVP/MFC Labour Geometric mean MPP MVP 2, MFC MVP/MFC 3.80 Seed Geometric mean MPP MVP 2, MFC MVP/MFC Working Geometric mean capital MPP MVP 131, MFC MVP/MFC Fixed capital Geometric mean 4, MPP MVP MFC MVP/MFC Fertilizer Geometric mean MPP MVP 72, MFC MVP/MFC Source: Estimated from field survey data, 2009 (non- Irrigated (Participants) , , , , , , , , All farms , , , , , , ,

6 The ratio of the marginal value product (MVP) to marginal factor cost (MFC) was computed for every input in rainfed (non-project beneficiaries), irrigated farms (project beneficiaries) and pooled regression (without intercept dummy) to determine whether the resources were efficiently used or not (Table 1). It was observed that farm land, labour, seed and fertilizer were under-utilized. Working capital was also under-utilized except in irrigated farms while fixed capital was over-utilized. Profit can be maximized if farmers who irrigated their farms increase their levels of utilization of land, labour, seed and fertilizer. Levels of utilization of working and fixed capital can also be reduced to improve production performance and profitability in irrigation farming. Analysis of efficiency differences between irrigated and rainfed farming systems Statistical hypotheses were tested based on unrestricted seemingly unrelated regression estimation (SURE). Table 2 shows the results of the hypotheses tested. Hypothesis one (H 1 ) states that there is no difference in relative economic efficiency (technical and price or allocative) of irrigated and rainfed farming systems. This hypothesis is rejected at one percent level. This means that there is significant difference in relative economic efficiency between irrigated and rainfed farming systems. However, it is concluded that irrigated farming is relatively more economic efficient than rainfed farming system. Hypothesis two (H 2 ) states that there is no difference in both the technical and allocative (price) efficiency of irrigated and rainfed farming systems. This hypothesis is rejected at one percent level. This means that there is significant difference in technical and allocative efficiency between irrigated and rainfed farming systems. Hypothesis three (H 3 ) states that there is no difference in allocative efficiency of irrigated and rainfed farming systems. This hypothesis is rejected at one percent level meaning that there are differences in the relative price efficiency between irrigated and rainfed farming systems. This hypothesis is also the equality of the elasticities of the variable inputs of irrigated and rainfed farming systems. Hypothesis four (H 4 ) states that irrigated farms have absolute allocative or price efficiency. This means profit maximization by equating the value of each factor s marginal product to the respective factor price. This hypothesis is rejected at one percent level meaning that absolute price efficiency does not exist in irrigated farming system. Hypothesis five (H 5 ), states that rainfed farms have absolute allocative or price efficiency. This hypothesis is rejected at one percent level. This means that there is no absolute price efficiency in rainfed farming system. Hypothesis six (H 6 ), states that there are constant returns to scale in the use of fixed inputs. The hypothesis is not rejected indicating that there is a constant return to scale in the use of fixed inputs. 311

7 Table 2: Tests of statistical hypotheses on efficiency differences between irrigated and rainfed farming Systems Maintained Tested χ 2 Critical P-value Hypotheses Hypotheses Value χ 2 Value H 1 δ G = H 2 δ G = 0 1 G = 1 G 2 = 2 G 3 = 3 G 4 = 4 G 5 = 5 H 3 1 G = 1 2 G = 2 3 G = 3 4 G = 4 5 G = 5 H 4 1 = 1 2 = 2 3 = 3 4 = 4 5 = 5 H 5 1 = 1 2 = 2 3 = = 4 = H 6 G 1 = 1 G 2 = 2 G 3 = 3 G 4 = 4 G 5 = 5 β 1 + β 1 = Hypotheses testing under imposed constant returns to scale Table 3 further shows the result of the hypotheses tested under imposed constant returns to scale to confirm the existence of constant returns to scale. Hypothesis one (H 1 ) states that the relative economic efficiency (technical and price or allocative) of irrigated and rainfed farming systems 312

8 are equal. This hypothesis is rejected at one percent level. This means that there is significant difference in relative economic efficiency between irrigated and rainfed farming systems. However, it is concluded that irrigated farming is relatively more economic efficient than rainfed farming system. Hypothesis two (H 2 ), states that there is equal technical and allocative (price) efficiency between irrigated and rainfed farming systems. This hypothesis is rejected at one percent level. This means that there is significant difference in technical and allocative efficiency between irrigated and rainfed farming systems. Hypothesis three (H 3 ) states that the relative allocative efficiency of irrigated and rainfed farming systems is equal. This hypothesis is rejected at one percent level meaning that there are differences in the relative price efficiency between irrigated and rainfed farming systems. This hypothesis is also the equality of the elasticities of the variable inputs of irrigated and rainfed farming systems. Hypothesis four (H 4 ) states that irrigated farms have absolute allocative or price efficiency. This means profit maximization by equating the value of each factor s marginal product to the respective factor price. This hypothesis is rejected at one percent level meaning that absolute price efficiency does not exist in irrigated farming system. Hypothesis five (H 5 ), states that rainfed farms have absolute allocative or price efficiency. This hypothesis is rejected at one percent level. This means that there is no absolute price efficiency in rainfed farming system. 313

9 Table 3: Tests of statistical hypotheses on efficiency differences between irrigated and rainfed farming systems under imposed constant returns to scale Maintained Tested χ 2 Critical P-value Hypotheses Hypotheses Value χ 2 Value H 1 δ G = H 2 δ G = 0 1 G = 1 G 2 = 2 G 3 = 3 G 4 = 4 G 5 = 5 H 3 1 G = 1 2 G = 2 3 G = 3 4 G = 4 5 G = H 4 1 = 1 2 = 2 3 = 3 4 = 4 5 = 5 H 5 1 = 1 2 = 2 3 = = 4 = Conclusion It is sustainably possible to achieve efficient arable food crop production by harnessing rainfall and irrigation infrastructures for optimality. River Basin and Rural Development Authorities by their mandate were put in place to effect production of arable crops in both the rainy and dry seasons through provision of irrigation infrastructure. This study has therefore revealed that arable crops production under the rainfed farms in the study area were not as technically efficient in the use of available resources as irrigated farms and total factor productivity was higher in irrigated farms than in rainfed farms. Significant variables that were under-utilized included farm size, labour, seed, fertilizer and working capital were underutilized. Recommendations Based on the findings of the study, the following recommendations are made: The Federal and State governments should consider the establishment of more irrigation infrastructures under the OORBDA and expansion of the existing project activities to accommodate 314

10 more farmers and to ensure expansion of both rainfed and irrigated farm operations in project locations; Improved technology through the introduction of genetically adapted high yielding variety (HYV) of planting materials and the imperative of continuous cropping on a particular farmland due to inadequate land access and insufficient provision of various types of fertilizer at affordable prices have been found to impact positively on output, therefore public and private sector involvement in setting up fertilizer and agrochemical sales points at the OORBDA intervention sites to eliminate scarcity and thus ensuring timely application of agrochemicals and other inputs should be considered; Power supply and in steady state is imperative to drive the various equipment on the projects sites. The irrigation machineries should be connected to electricity supply, and powered by alternative energy source such as the solar energy to reduce cost (and hence, the subsidy level) of water supply in OORBDA sites. References Abubakar M. M. (1998). Utilisation of unconventional feed stuffs for sustainable livestock production. 9 th Inaugural lecture, Abubakar Tafawa Balewa University, Bauchi, Nigeria 44pp. Adeleke, O.A., Matanmi, H.M., and Ogunniyi, L.T. (2008) Application of the normalized profit function in the estimation of the profit efficiency among small holder farmers in Atiba Local government of Oyo State. Journal of Economic Theory 2 (3): Adekalu, K.O. and Ogunjimi, L.A.O. (2003). Cost recovery strategy for large scale irrigation projects in Nigeria. Technovation 23 (2003) Adesina, A.A., K.K. Djato (1996). Farm size, relative efficiency and agrarian policy in Cote d ivoire: profit function analysis of rice farms. Agricultural Economics 14: Agbamu, J.U. (1993): Analysis of farmers characteristics associated with adoption of soil management innovations in Ikorodu Local Government Area of Lagos State, Nigeria. Ahmed, A.U. and Sampath, R.K. (1992). Effects of irrigation-induced technological change in Bangladesh Rice Production. American Journal of Agricultural Economics. 74, (1)144. Aihonsu, J.O.Y., Shittu, M.A., Bamiro, O.M., Idowu, A.O. and Onajole, A.L. (2003): Effects of small and fragmented landholdings on productivity in African agriculture: some evidence from Ogun state, Nigeria. Unpublished Research Work. Akinbode, I.A. (1988). The conceptual framework for rural development in developing countries, Research for Development (NISER) 5: Akinyemi, J.O., Oworu, O.O., Oludimu, O.O. and Olaleye, A.O. (2004): Improving small holders productivity through irrigated agriculture in Ijebu Zone of Ogun State, Nigeria. The Ogun Journal of Agricultural Science...( 3) Alene, A. D., Manyong, V.M., Omanya, G.O., Mignouna, H.D.,Bokanga, M.and Odhiambo, G.D. (2008) Economic efficiency and supply response of women as farm managers: Comparative evidence from Western Kenya. World Development,. 36. (7): Ambrogi, R.P. (1980). Water. Scientific American. 243 (3):

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