Empirical Analysis of the Allocative Efficiency of Cashew Production in Oyo State, Nigeria

Abstract

This study was carried out in Oyo State, Nigeria to determine the allocative efficiency
of cashew production in the study area to solve the problem usually encountered by the
cashew farmers on the allocation of farm inputs on the cashew farms. Therefore, in order
to increase cashew production and farmers’ income, efficient allocation of the farm
inputs at the farmers’ disposal is of necessity, hence this study. Multi-stage sampling
procedure was used to sample sixty respondents. The first stage was the purposive
selection of Ogbomoso zone, the second stage was the purposive selection of two local
government areas due to their level of cashew production and the last stage involved the
random selection of thirty cashew farmers from each of the local government areas. Data
analysis was carried out using descriptive statistics and stochastic Frontier Production
Function. The result showed that cost of fertilizer (₦9.05), cost of harvesting (₦0.03)
and the cost of bagging (₦0.03) have significant effects (p >0.01) on the productivity of
cashew farmers. The marginal analysis result showed that all the input variable costs are
under-utilized given the fact that all the marginal value products are greater than the
marginal factor cost of inputs considered. The study recommends that in order to
improve efficiency in resource allocation in cashew production, more of the variable
inputs needs to be allocated to bring about an increase in output of cashew and to
generate more revenue for the cashew farmers in the study area.