An investigation of production risk and economic efficiency of rice farmer in Kwara State, Nigeria

This study investigates production risk and economic efficiency using Data Envelopment Analysis to estimate economic efficiency of 120 rice farmers in Kwara State, Nigeria. Data were generated mainly from primary source with the aid of well structured questionnaire. The collected data were analyzed using descriptive statistics, safety first model of risk determination, multiple regression, DEA and Tobit regression analysis. Result of multiple regressions showed that fertilizer, farm size and labour are the factors that significantly influence rice output in the study area. Furthermore, the study revealed that using the safety first model of assessing farmers risk attitudes, 75.5% of the farmers were intermediate risk averse, 12.5% were low risk averse, 8.3% were risk preferring while only 1.7% was high risk averse. Result of Tobit regressions also showed that household size, educational level, experience and farm size were significant determinants of risk attitudes. The empirical results show that the mean level of economic efficiency is 37.3 percent. The estimated economic efficiencies of the farmers ranged between 1 percent and 100 percent indicating that there is scope for increasing economic efficiency by 62.7 percent with the present technology. Farm size and fertilizer used were factors that significantly influence the level of economic efficiency.