Kolawole Ogundari:
Crop Diversification and the Technical Efficiency of Smallholder Farms in Nigeria


Georg-August-Universität Göttingen, Department of Agricultural Economics and Rural Development, Germany

The literature not only identifies crop diversification as a stage at which many developing agriculture currently operates, but also suggests that the impact of the diversification phenomenon on the livelihood of agricultural producers and their efficiency appeared mixed. In Nigeria for instance, there is evidence that the majority of farmers embrace a cropping pattern that is characterised by growing a wide variety of crop mixes under multiple cropping systems adapted to various agro-ecological zones across the country. Based on this background, it is important to investigate the development of crop diversification in Nigeria over time and its impact on the efficiency of smallholder farmers in the country. However this study examines the relationship between crop diversification and the technical efficiency of smallholder croppers in Southwestern Nigeria. We employed Herfindahl and Ogive indices to compute the crop diversification indices across the farms while a heteroskedasticity corrected stochastic frontier production model is used to compute the efficiency of the farms. The study used unbalanced panel data covering 3 farming seasons (2006/07 to 2008/09) with a total of 846 observations. The surveyed farm households were observed to have portfolios consisting of a maximum of 5 activities (or enterprises). These activities include: cassava, yam, maize, potatoes, and cocoyam. The result of both the computed Herfindahl and Ogive indices showed that cropping pattern increased significantly with the intensification of crop diversification in the region. Additionally, the results demonstrate evidence of decreasing returns"=to-scale and technical progress in food crop production in region. Education, extension, and crop diversification are identified as efficiency increasing policy variables. Furthermore, an average technical efficiency level of about 81%, which implies that an inefficiency level of about 24%, is observed from the study. The correlation between the computed technical efficiency and Herfindahl and Ogive indices of crop diversification support the earlier observation that diversification enhances the efficiency of the farmers. This observation however, highlights the potential possibility of crop diversification as a strategy to increase food production/food security in the country as erstwhile in Asia in the 90s.

Keywords: Diversification, Nigeria, smallholder, technical efficiency


Contact Address: Kolawole Ogundari, Georg-August-Universität Göttingen, Department of Agricultural Economics and Rural DevelopmentPlatz der Goettinger Sieben 5, 37073 Göttingen, Germany, e-mail: kogunda@gwdg.de
Andreas Deininger, October 2010