Economic efficiency of onion production and price trend in Kebbi State, Nigeria: a stochastic frontier cost function approach

Abstract

The research looks at the economic efficiency of onion production in Kebbi State. A structure questionnaire was used to collect primary data. Data from 210 sole onion producers were collected using a multistage sampling technique. The obtained data were analyzed using descriptive statistics, trend analysis, and a stochastic frontier cost function. The results revealed that respondents had an average farm size of 0.8 hectares, with the majority (44.2%) cultivating ≤ 0.5 hectares and the majority (81.4%) owning farmland by inheritance. The onion price pattern recorded a minimum average price of around ₦5,000.00 during the on-season (March to May) and a maximum of ≥ ₦30,000 between November and December. The estimated coefficients of labour cost (0.3453), seed (0.1673), inorganic fertilizer (0.2639), and so on are positive, indicating an increase in total cost of onion production, whereas inefficiency variables such as farming experience, level of education, and household size are negative, with education and farming experience having significant levels at 5%. Maximum likelihood estimates of the specified economic model revealed that the producers’ cost efficiencies ranged from 20.00 % to 91.10 %, with a mean of 70.30%, implying that an estimated 26.8% of the return is lost due to a combination of technical and allocative inefficiencies in onion production. It is recommended that onion producers be linked with financial/insurance institutions for soft loans and insurance to further augment exhibited cost efficiency, and that they be encouraged to improve proper staggered planting of suitable varieties to bridge the gap between the offseason and on-season for sustained supply, better/stable prices, and good quality produced.