Economic Efficiency of Resource Use in Groundnut Production

(A REVIEW)

BY

HARUNA BAWA
 Abstract

Groundnut is the 13th most important food crop of the world. It is the world’s 4th most important
source of edible oil and 3rd most important source of vegetable protein. The review study the economic
efficiency of resource use in groundnut production in dereferences area. It focuses on the relationship
between groundnut out and the various inputs used by groundnut farmers. Economic efficiency of
resource used in production of groundnut. Primary data were basically used with the aid of structured
questionnaires administered on farmers using a simple random technique. The regression analysis
indicated that the cobb- Douglas function gave the best fit. The R2 value sokoto ,Zamafara and
Adamawa was highly significant at 1% level with the value of0.75,0.56 and 0.784%. This implies that
75%,56% and 78.84% of the total variations in groundnut yield is explained by combine influence of all
the explanatory variables (farm inputs) in the regression equation. Economic efficiency of resource used
showed in sokoto All resources such as size of farm, seed, fertilizer, hired and family
labour were inefficiently utilized based on the MVP/MFC ratio criteria, size of farm and
seed have MVP/MPC ratio greater than one, which implies under–utilization of such
resources,Zamfara state Farm size (X1), fertilizer (X2) and labour (X4) had their
MVP/MFC ratio greater than unity, implying that these inputs were underutilized.
seed (X2) and agro-chemical (X5) had MVP/MFC ratio of less than unity, implying that
these inputs were over utilized.Adamawa Comparison of the ratio of the MVP to MFC shows
that two resulting ratio were greater than unity; labour and and seed, indicating that the inputs were
under used or being underutilized fertilizer and agrochemical indicating that the inputs were excessively
used or over utilized. The resources were not efficiently utilized; therefore, decreasing the
quantity of those over utilized input would increase the profit level. Increasing the
quantity of those underutilized inputs would increase the profit level.
Hogendorns, J.S., 1978. Nigeria Groundnut Exports:
Origin and Early Development. ABU press Zaria,
pp: 36.
Hommons, R.O., 1994. The Origin and History of
Groundnut, In: J. Smatt, (ed), The Groundnut Crop.A
Scientific Basis for Improvement. New York,
Chapman Hall, pp: 56-78.
Misari, S.M., C. Harkness and M. Fowler, 1980.
Groundnut Production, Utilization, Research Problems and Further research needs in Nigeria. International Workshop on
Groundnuts, Patancheru, India, pp: 264-273.

Larinde, M., 1999. Groundnut Seed Multiplication and Constraints: FAO’s experience, In: Aliyu, A. and G.O. Nwafor
(Eds.). Restoring the status of groundnut in National economy. Proceedings of the national Workshop on groundnut
rehabilitation in Nigeria. FAO/FDA Kano, Nigeria. 11-12 May pp: 23-34.
INTRODUCTION
Groundnut Arachis hypogea originated from Latin America and was introduced
into west Africa by Portuguese traders in the 16th century (Hogendorns, 1978).
The origin of this crop dates back to 350 BC (Hommons, 1994.). Who also
reported that, the first probable domestication of groundnut took place in the valley
of the panama and Paraguay River systems in the grain Chaco area of South
America and then moves to the North America through slave trade. Groundnut, is
one of the most popular commercial crop in Nigeria which accounted for 70% of
the total Nigeria export earning between 1956 and 1967 but declined between 1955
and mid 1980s due to combine effect of drought and disease (Misari e tal,1980).
During this period, groundnut area in Nigeria declined to almost half of the
existing level of 1.7 million hectares. Groundnut production in Nigeria in 2002 was
23390000mt (Larinde, 1999).

Agricultural sector has the mainstay of Nigeria’s economy employing 70% of the
active labour force and contribution significantly to the country’s GDP and foreign
earnings. In 1960, 1970 and 1980, it contributed 55.20, 440.70 and 18% to GDP
respectively. Despite the factors that continuous to constrain agricultural activities
such as poor rural infrastructure, poor fertilizer distribution and high cost of farm
inputs, the sector, still remain important in the economy. Its contribution to GDP in
1996, 1997 and 1999 stood at 39%, 339.4% and 40.40%,respectively [ NPC and
UNDP,1999], Groundnut had relied primarily on export of agricultural commodities as
source of both internal and foreign exchange before the oil boom era. Before the
world war 11, Nigeria’s groundnut figured prominently in world trade accounting
for 29% of Africa export and 12% of the world export. In the 1950s, Nigeria
contributed 50% of the African export and 30% of the world export. Nigeria
produces 41% of the total groundnut production in West Africa (Adesinmi, 1973).

The review work focus on Economic Efficiency of Resource Use in

Groundnut Production. Several of research work on the subject area were source
and reviewed.

The result were presented as follows :-

Table 1: Results of the Cobb – Douglas Regression Model for Groundnut

production. (SOKOTO STATE)

VARIABLE REGRESSION STANDARD T–VALUE

COEFFICIENT ERROR

Constant 2.9810 1.720 1.734ns

Size of farm 0.1980 0.405 0.489ns

Family labour 0.0019 0.170 0.14ns

Hired labour 0.1050 0.220 0.478ns

Seed 0.4690 0.197 2.387**

Fertilizer 0.2980 0.131 2.268**

Family size –0.129 0.201 0.043ns

F–value 39.880***

R2/Adjusted R2 0.759/0.74

***Significant at 1% level
**Significant at 5% level

Table 2: Evaluation of Resources Use Efficiency of Groundnut Farmers Using

Cobb–Douglas Function (SOKOTO STATE)
Variable MVP MFC MVP/MFC

Size of Farm (ha) 10853.10 3000 3.62

Seed (kg) 540.66 45 12.02

Fertilizer (kg) 14.75 50 0.30

Hired labour (mandays) 123.15 300 0.41

Family labour (mandays) 4.81 300 0.02

Source: Field Survey, 2004.

Table 3: Result of Cobb–Douglas Production Function for

Groundnut Production in the Study Area.(KAURAN NAMODA ZAMFARA

STATE)

Variable Regression Standard Error T– Value F–Value

Coefficient

Constant (a) 4.707 1.460 3.223 7.40***

Farm size (X1) 0.976 0.456 2.141**

Seeds (X2) –0.316 0.314 –1.005

Fertilizer (X3) 0.248 0.202 1.230

Labour (X4) 0.590 0.368 1.604

Agro–chemical (X5) –0.565 0.239 –2.36

R2 = 0.569

*** Significant at 1% level.

** Significant at 5%level

Table 4: Resource use efficiency for groundnut production among respondents

(Kaura Namoda Local Government Area, Zamfara State).
Variable MVP MFC MVP/MFC

Farm size X1 34,540.39 1,643.00 21.02

Seed X2 - 668.85 78.06 -8.57

Fertilizer X3 157.88 38.52 4.1

Labour X4 582.59 266.14 2.19

Agro-chemical X5 -19,449.84 1,109.04 -17.54

Source: Field Survey, 2004.

Table 1: Cobb-douglas regression estimates for groundnut production (Adamawa State)

Variables Coefficients T - value

Age 0.291 90.43

Family size 0.0453 -0.81
Farm size 0.185 2.82
Farming experience 0.084 - 1.21
Seed 0.203 2.88
Fertilizer 0.018 0.76
Agrochemicals 0.025 0.52
Labour 0.529 6.39
R2 0.784
Standard error 0.358
Constant 3.421

Source: Field survey, 2006

*** = Significance @ 1% level
Figure in parenthesis are t-ratios

Table 2: Resource-use efficiency in groundnut production (Adamawa State)

Inputs MVP MFC MVP/MFC (Px)

Seeds 5022.68 71 7.08

Fertilizer 5022.68 66 0.38
Agrochemical 664 800 0.83
Labour 834.61 400 2.09

Source: Field survey, 2006

Conclusion and Recommendations

Findings of the studies clearly indicated that all resources were not
efficiently utilized; therefore, decreasing the quantity of those over
utilized input would increase the profit level. Increasing the
quantity of those underutilized inputs would increase the profit
level.