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Credit Use and Production Efficiency of Cocoa Farms in Ondo State Nigeria

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  • Oladapo, A.
  • Shittu, A.M.
  • Agbonlahor, M.U.
  • Fapojuwo, O.E.

Abstract

This study analyzed credit use and its effect on production efficiency of cocoa farms in Ondo State. Primary data were collected in a crosssectional survey of 183 randomly selected cocoa farms. These were drawn in a multi-stage sampling process that covered the five dominant cocoa producing Local Government Areas of Ondo State Nigeria. Data collected were analyzed using descriptive statistics and stochastic frontier. The study found that most (95.1%) of the cocoa farms were operated by males, with a mean age of 49.8years. The mean cocoa farm size was 1.28 hectares. Only 58.5% cocoa farmer’s procured credit during the 2009/2010 production season, of which (83.2%) procured credit mainly from produce merchants. The mean credit request was N238,738.30, only N113,321.50 (47.5%) were granted. Farmers that used credit had significantly (p<0.01) higher farm size (1.44Ha) and recorded significantly (p<0.01) higher net farm income (N292, 107.23/ Ha) than those that could not secure credit (1.05Ha and N183, 046.83/ Ha respectively). The empirical results revealed that cocoa farmers were operating at a point of decreasing return as depicted by the return to scale of 0.153 with mean technical efficiency of 0.44. Hire labour has positive and significant effect on output at p<0.01. Increase in credit use brings about significant reduction in technical inefficiency among the cocoa farms. The result revealed a direct relationship between access to credit and technical efficiency level. The study recommended that government and other stakeholders should support farmers to form virile farmer’s organization that will improve credit delivery through the produce merchant.

Suggested Citation

  • Oladapo, A. & Shittu, A.M. & Agbonlahor, M.U. & Fapojuwo, O.E., 2012. "Credit Use and Production Efficiency of Cocoa Farms in Ondo State Nigeria," 2012 Eighth AFMA Congress, November 25-29, 2012, Nairobi, Kenya 159420, African Farm Management Association (AFMA).
    • Handle: RePEc:ags:afma12:159420
    DOI: 10.22004/ag.econ.159420
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    References listed on IDEAS

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    3. Clay, Karen, 1997. "Trade without Law: Private-Order Institutions in Mexican California," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 13(1), pages 202-231, April.
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    Cited by:

    1. Andras Tothmihaly, & Verina Ingram., 2017. "How can the productivity of Indonesian cocoa farms be increased?," GlobalFood Discussion Papers 258588, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.

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