Profitability And Technical Efficiency Analysis Of Rice Production In Esan Central And North East Local Government Area Of Edo State

1.1 BACKGROUND TO THE STUDY

Rice is a staple food for more than 60 percent of the world’s population (Richardson and Stubbs, 1978). Rice has become a staple food crop of considerable strategic importance in many rapidly growing African countries where consumption among the urban poor household has increased substantially (WARDA, 1993). Cultivated rice is designated as either oryza sativa or oryza glabberima, oryza sativa is the predominant species. “Oryza glabbenma is grown only in Africa” on a limited scale. The rapid rise in rice production in the years, following world was 11, mainly in Asia, stemmed from expanded irrigation areas, the increased use of fertilizers, effective control of pests, double rice cropping, and the widespread adoption of improved genetic materials. The combined use of nitrogen fertilizers and use of high-yielding varieties has made possible the expression of high yield in irrigated areas. Varieties of short growth duration which are insensitive to the photoperiod have allowed year round planting and multiple cropping.

According to FAO (2010), the Nigerian rice sub-sector witnessed a remarkable increase  in output from 2.5 million metric tonnes in 1990 to about 4.2 million metric tonnes in 2008. This increase in output of rice over the years was as a result of increase  in hectarage cultivated. However, there has been falling yield of rice in Nigeria from 2069.54kg per hectare in 1990 to 1754.40kg per hectare in 2008 (FAO, 2010). This  falling yield of rice led to supply deficit situation in the country.

In response to the prevailing rice supply deficit situation in the country, successive Nigerian governments have intervened in the rice sub-sector by increasing tariff on rice importation so that local production could be encouraged. This was  expected  to  widen the home market for the nation local rice (Bamidele et al., 2010). The Federal  Government of Nigeria has also established research institutions and programmes which were geared toward increasing rice production and other crops. These are; Federal Rice Research Station (FRRS) in 1970, National Cereal Research Institute (NCRI) in1974, National Seed Service (NSS) in 1975, and Operation Feed the Nation (OFN)  in1976. Other programmes were the River Basin Development Authority (RBDA) in 1977,Agricultural Development Project(ADP) in 1975,  Structural  Adjustment Programme (SAP) in 1986 and the presidential initiatives on increased rice production, processing and export in 2002 (Bamidele et al., 2010). These agricultural programmes have common objectives of increasing production and productivity in the rice sub-sector thereby achieving food self sufficiency. It is important to state that most of these programmes were terminated without achieving the set objectives. The result of this failure is the persistent demand-supply gap for rice

Rice is a staple food for about 2.6 billion people in the world (CTA, 2005).The global output shows that the Asian continent account for about 92 percent,  while America and the Caribbean account for 5 percent and 3 percent for Africa (CTA, 2005). Rice as  a cereal grain is the most important staple food for large part of the world human  population. It is also the second highest worldwide production after maize (FAO, 2010). Since a large portion of maize crops are grown for purposes other than human consumption, rice is the most important grain with regard to human nutrition and calorie intake. Rice provides more than one fifth of the calorie consumed worldwide by human beings (Smith, 1998).

The Nigerian food sub-sector parades a range of crops, but of all these, rice gained prominence (Akande, 2001). Nigeria plays a vital role in rice production in the West African sub-region with increasing production over the years.  The  production  of rice rose from 2.5 million tonnes in 1990 to about 4.2 million tonnes in 2008, representing about 37 percent rise in domestic production (FAO, 2010). However, despite the numerous government policies and programmes on rice and rise in domestic production, the demand/consumption exceeds the local production resulting in rice importation.

It is on record that, Nigeria has become one of the largest importers of rice, second to Indonesia. Its importation bill of rice has increased from one  million  United  States Dollar in 1970s to as high as 800million United States Dollar in 2005 (WARDA, 2007). The short fall in supply of rice in Nigeria has been attributed to continuous rise in per capita consumption brought about by increased population and rapid urbanization (Akande, 2001., Fabusoro and Agbonlahor, 2002).

1.2 PROBLEM STATEMENT

In Nigeria, rice has become a major staple food crop in most homes today and unfortunately the domestic production of the product has not been met with the demand for it. Which has expressed itself in the food shortages experienced in the country recently? (CBN, 2003).

Esan Central and North East Local Government Area of Edo State is one of the areas where rice is grown in Edo State, Nigeria. The area is blessed with natural requirements (in terms of soil, rainfall and other factors) for rice production which when properly tapped can lead to an increase in rice production and source of employment to the unemployed. Rice farmers in Esan Central and North East are mainly peasant farmers who depend entirely on traditional farming techniques for the production and their standard of living not present as through the enterprise is viable.

Although various studies (e.g. Amaza and Maurice, 2005; Idiong et al., 2007) that have been carried out on rice production in Nigeria, (dwelling mostly on either technical efficiency, or determinant of technical efficiency, or profitability of swamp rice production). To bridge this gap in knowledge, this study seeks to answer the following research questions:

1. What are  the  socio-economic characteristics of  rice farmers?

2. What are the levels of technical efficiency of rice farmers?

3. What are the determinants of technical efficiency in rice production?

4. Is rice production profitable?

1.3 OBJECTIVES OF THE STUDY

The broad objective of the study is to estimate the portability and cost efficiency of rice production in Esan Central and North East Local Government Areas of Edo State. The specific objectives are to:

1. Describe the socio-economic characteristics of swamp rice farmers in Niger State, Nigeria.

2. Estimate technical efficiency in the swamp rice production.

3. Identify the determinants of technical efficiency in swamp rice production.

4. Determine the profitability in swamp rice production.

1.4 RESEARCH HYPOTHESES

The hypotheses tested include:

Hypotheses One

Hi: There is no significant relationship between the input and output in swamp rice production

Ho: There is significant relationship between the input and output in swamp rice production

Hypotheses Two

Hi: Socio-economic variables have significant effect on the technical efficiency of swamp rice farmers

Ho: Socio-economic variables have no significant effect on the technical efficiency of swamp rice farmers.

1.5 JUSTIFICATION OF THE STUDY

Rice is cultivated in virtually all the agro-ecological zone in Nigeria, despite this; the area under cultivation to rice is still small. Consequently, Nigeria is not  among  lead world rice producers (NGADP, 2003) In 2009, out of about 30.7million hectares of land cultivated to various crops, only about 7.82 percent was cultivated to rice ( FAO, 2010). Niger State is one of the leading rice producers in Nigeria and the study area has a favourable climatic condition for rice production There is need  to  investigate efficiency status of rice farming  for purpose of expanding  its production. The efficiency study is very important for provision of  information on  how to improve swamp rice output and  enhance productivity of resources on farms. In  the economy, where resources are scarce and opportunities are lacking, the efficiency study can show whether it is possible to raise the productivity without increasing the resource base of the farmers in the study area. The findings of this study would provide additional empirical evidence on technical efficiency in rice production  in  the  study area. The information from this study would also contribute to knowledge relevant to policy formulation that would create enabling environment for sustainable  rice production in Nigeria.

1.7 SCOPE AND LIMITATIONS OF STUDY

This research sets out to assess the profitability and technical efficiency of swamp rice production in in Esan Central and North East Local Government Areas of Edo State Nigeria. The researcher encountered some constraints, which limited the scope of the study. These constraints include but are not limited to the following.

a) AVAILABILITY OF RESEARCH MATERIAL: The research material available to the researcher is insufficient, thereby limiting the study

b) TIME: The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.

1.8 DEFINITION OF OPERATIONAL TERMS

PROFITABILITY: This is the ability of a business to earn a profit. A profit is what is left of the revenue a business generates after it pays all expenses directly related to the generation of the revenue, such as producing a product, and other expenses related to the conduct of the business activities.

EFFICIENCY: Efficiency is about making the best possible use of resources. Efficient firms maximise outputs from given inputs, and so minimise their costs. By improving efficiency a business can reduce its costs and improve its competitiveness.

FINANCIAL INTERMEDIARIES: Rice production is the amount of rice paddy produced in a given country each calendar year. Production includes the quantities of the commodity sold in the market (marketed production) and the quantities consumed or used by the producers (auto-consumption).

1.9 ORGANIZATION OF THE STUDY

This research work is organized in five chapters, for easy understanding, as follows Chapter one is concerned with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study. Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature. Chapter three deals on the research design and methodology adopted in the study. Chapter four concentrate on the data collection and analysis and presentation of finding.  Chapter five gives summary, conclusion, and recommendations made of the study