Optimum Enterprise Mix Under Risk and Limited Resource Conditions Among Smallholder Livestock Farmers in Kwara State, Nigeria

Abstract

The study developed optimum and a set of risk efficient livestock enterprise mix for smallholder farmers in Kwara State, Nigeria. Multi-stage sampling procedure was used to select 127 smallholder livestock farmers. A structured questionnaire complimented with interview schedule was used to obtain cross-sectional data from the farmers. Data were analyzed using descriptive statistics, farm budgeting technique, LP (linear programming) and T-MOTAD (Target minimization of total absolute deviation) models. The LP result prescribed 0.25TLU of cattle/goat/sheep, 0.37TLU of broiler and 0.47TLU of broiler/layer for optimum gross margin in plan I; and 0.29TLU of cattle/goat/sheep, 0.37TLU of broiler and 0.47TLU of broiler/layer were prescribed in plan II under the limited resource condition. A set of feasible risk efficient farm plans I, II and III were obtained with the T-MOTAD model. The plan I prescribed 0.25TLU of cattle/goat/sheep, 0.37TLU of broiler and 0.47TLU of broiler/layer. Plan II prescribed 0.07TLU of cattle/goat/sheep, 0.28TLU of broiler and 0.79TLU of broiler/layer; and plan III prescribed 0.36TLU of cattle/goat/sheep, 0.05TLU of broiler, 0.48TLU of cockerel and 0.23TLU of broiler/layer. Gross margin increased from ₦218,170.75/TLU in the existing plan to ₦242,662.30/TLU and ₦247,676.00/TLU in optimum plans I and II, respectively, and to ₦242,670.60/TLU, ₦235,065.60/TLU and ₦222,897.90/TLU in risk efficient plans I, II and III, respectively. Gross margin was more sensitive to variation in the prices of output than other variables. Labour and capital were the major limiting resource across all the plans for the livestock enterprises. It was concluded that the livestock farmers had the potential to maximize gross margins per unit enterprise in the optimum and risk efficient farm plans as resources were not optimally allocated in the existing plan for livestock activities. Farmers should therefore adopt the prescribed optimum and risk efficient farm plans.