PROFITABILITY AND EFFICIENCY ANALYSIS OF TOMATO PRODUCTION IN OYO STATE, NIGERIA

Abstract

ABSTRACT Tomato production is a vital agricultural activity that contributes significantly to food security, income generation, and employment opportunities for smallholder farmers in many regions. However, despite its importance, low production efficiency remains a persistent challenge faced by tomato farmers, hindering their ability to maximize yields and profitability. This study examined key factors influencing productivity and resource use in the production of tomato in Oyo state, Nigeria. A multi-stage sampling procedure was used to select 200 respondents for the study. The first stage involved the purposive selection of Ogbomosho Agricultural Development Programme (ADP) zone as a major tomato-producing area while the last stage is the random selection of 20 tomato farmers from each cell. Primary data were collected on the respondents’ socio-economics characteristics, inputs used, yield and revenue from tomato production using a structured questionnaire. The data were analyzed using descriptive statistics, budgetary analysis, and stochastic frontier. The results reveal that 80.0% of the respondents were male, 88.0% of were married and 57.0% had secondary education with a mean age, household size and farming experience of 44 years, 6 persons and 14 years respectively. Most (72.0%) of the respondents have access to credit and had an average tomato farm size of 1.87 hectares. The results of the budgetary analysis reveal that tomato production is profitable with the mean gross margin of ₦229,377.34, benefit cost ratio of 1.52, operating ratio of 0.63 and the rate of return on investment of 52.3%. Furthermore, the average costs of agrochemicals, labour and NPK fertilizer are ₦74,877.58, ₦71,700.00 and ₦160,464.11/ha respectively while the mean seed quantity was 1.261kg/ha. The mean technical, allocative and economic efficiencies are 0.80, 0.66 and 0.85 respectively. The results of the stochastic production frontier analysis reveal that labour (β = 0.2764, p < 0.01), agrochemicals (β = 0.3150, p < 0.05) and seed quantity (β = 0.3364, p < 0.01) significantly affect technical efficiency while educational level (β = -3.2804, p < 0.05), farming experience (β = -1.3965, p < 0.01) access to credit (β = -3.5496, p < 0.01) and marital status (β = 3.0924, p < 0.01) affect inefficiency of the respondents. The results of the stochastic cost function analysis reveal that NPK (β = 0.0133, p < 0.01), labour (β = 05860, p < 0.01), agrochemicals (β = 0.2098, p < 0.01) and seed quantity (β = 0.0630, p < 0.05) significantly affect the allocative efficiency while the age (β = -0.2018, p < 0.05), farming experience (β = -0.6770, p < 0.05) and household size (β = 1.5774, p < 0.05) affect allocative inefficiency of the respondents. The study concluded that tomato production in Oyo State is a profitable enterprise. Therefore, the study recommended that credit and other farm inputs should be made available, accessible and affordable to the farmers to increase their production efficiency.