ANALYSIS OF FARM ENTERPRISE COMBINATIONS UNDER RISK AND LIMITED RESOURCE CONDITIONS AMONG SMALLHOLDER FARMERS IN KWARA STATE, NIGERIA

Abstract

Optimal combination of farm enterprises through efficient allocation of existing resources in smallholder agricultural production in Nigeria has remained evasive occasioned by low literacy levels and production inefficiencies. This study derived optimum farm enterprise combination patterns under risk and limited resource conditions among smallholder farmers in Kwara State, Nigeria. Multi-stage sampling procedure was used to select a total of 384 smallholder farmers involved in crop, livestock and/or fishery enterprises from the four Agricultural Zones in the state. Data were collected through limited cost-route approach with interview schedules and structured questionnaire. Data were analyzed using descriptive statistics, farm budgeting technique, LP and T-MOTAD models and Kendall’s non-parametric test statistics. A total of 91% of the respondents were males, 89% married, 78% had formal education and only 14% had access to agricultural credit. A typical farmer in the study area was 50 years old, had household size of 9 persons and had 18 years farming experience. The study identified 31 crop enterprises, 3 fishery enterprises and 14 livestock enterprises giving a total of 48 farm enterprises in the area. Results show that cassava/maize/okra with gross ratio of 0.20 for crop enterprises; catfish/fingerlings with gross ratio of 0.35 for fishery enterprises; and sheep and cattle/sheep with gross ratios of 0.31 and 0.31 for livestock enterprises were the most profitable. LP results prescribed enterprise combination of millet on 1.1420ha, maize/cowpea on 0.1587ha, maize/groundnut on 0.0718ha, maize/soybean on 0.3331ha, cassava/sorghum/groundnut on 1.1957ha, maize/sorghum/soybean on 0.8317ha, 0.6037TLU of broiler, 0.0137TLU of cockerel, 0.0064TLU of broiler/layer and 0.2782TLU of goat respectively in the optimum plans, while 1.1420ha of millet, 0.2406ha of maize/groundnut, 0.0613ha of sorghum/groundnut, 1.0000ha of maize/sorghum/soybean, 0.6028TLU of broiler, 0.3121TLU of cockerel and 0.1282TLU of cattle respectively were prescribed under the limited resource condition plan. A set of feasible risk efficient farm plans I, II and III were obtained with the T-MOTAD model. The plan I prescribed millet on 1.1288ha, rice on 0.2969ha, maize/cowpea on 0.0010ha, cassava/sorghum/groundnut on 0.1241ha, maize/sorghum/soybean on 1.0097ha, 0.0555units of catfish, 0.0983units of catfish/fingerlings, 0.1266TLU of layers, 0.5029TLU of cockerel and 0.2597TLU of cattle respectively. Plan II prescribed 1.0980ha of millet, 0.0408ha of rice, 0.1014ha of maize/cowpea, 0.0619ha of sorghum/yam, 0.1927ha of cassava/sorghum/groundnut, 0.4267ha of maize/sorghum/soybean, 0.5998TLU of broilers, 0.4838TLU of cockerel, 0.0353TLU of cattle, 0.0296TLU of goat and 0.0121TLU of sheep, while plan III prescribed millet on 1.1420ha, rice on 0.0719ha, maize/groundnut on 0.6545ha, maize/sorghum/soybean on 0.2436ha, 0.0013units of catfish, 0.6025TLU of broiler, 0.0004TLU of layer, 0.5482TLU of cockerel, 0.0005TLU of cattle and 0.0020TLU of sheep. Capital was the major limiting resource across all the plans for the farm enterprises. Gross margin increased from ₦228,597.90 in the existing plan to ₦582,711.40 and ₦516,863.10 in optimum plans I and II respectively and to ₦547,169.80, ₦478,763.40 and ₦412,647.10 in risk efficient plans I, II and III respectively. Farm enterprise gross margin was more sensitive to variation in the prices of output than other variables. Mixed farm enterprises were in a better competitive position than sole farm enterprises in the optimum and risk minimized plans. A typical smallholder farmer in the study area has the potential to realize more profit per unit enterprise in the optimum and risk efficient farm plans. Limited capital, facilities, high cost of credit and farm inputs, low and unattractive prices for farm produce, inadequate cooperative support were the major constraints faced by the smallholder farmers. The study concluded that farm enterprises were profitable in Kwara State but farmers were not efficient in their level of resource allocation. The study recommends that farmers should reallocate resources at their disposal in line with the derived optimum and risk efficient farm plans towards attaining maximized farm profit.