Non-Farm Activity and Production Efficiency of Farm Households in Egbeda Local Government Area, Oyo State

Abstract

This study analyzes the production efficiency of farm households exhibiting significant non-farm earnings in Egbeda Local Government Area of Oyo State. The data for the study were collected from 120 farm households selected through multistage random sampling. Data envelope analysis (DEA), which reveals production inefficiencies, was used to estimate the production efficiency of the farm households (DMUs) via the input-output bundle of each farm household (technical efficiency and scale efficiency) and the output price information (allocative efficiency). A follow-up, censored regression (tobit model) analysis was carried out to determine factors affecting production efficiency indices and discern possible sources of inefficiency. The study revealed that majority of the household heads (farmers) were relatively old, had formal education, and had relatively large household size (7-9). Their farm size and farming income was, however, relatively small. Participation in non-farm activities was active, with a large proportion engaged in regular employment. About 22.1 percent of the farm households involved in non-farm activities invested their non-farm earnings into agriculture. The DEA revealed that the mean technical, allocative, and scale efficiencies for the total sample population were 0.5802, 0.5960 and 0.9250, respectively. The tobit analysis revealed the existence of dependency ratio, high ratio of female adults to male adults, high proportion of total household income coming from non-farm earning, male-headed household, access to credit facilities, and founding family status, had positive impact 2 O. A. Oni et al. on production efficiency whereas tenure insecurity contributed to inefficiency in farm household production.

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