PROFITABILITY AND RESOURCE USE EFFICIENCY AMONG CASSAVA FARMERS IN THE VALUE CHAIN DEVELOPMENT PROGRAM ADDITIONAL FINANCING (VCDP-AF) IN KOGI STATE, NIGERIA

Abstract

This study evaluates the gross margin, efficiency, and profitability of cassava production under the International Fund for Agricultural Development (IFAD) Value Chain Development Program (VCDP) in the study area. Analysis revealed a total revenue of N335,375.93 per hectare, with a total variable cost of N132,123.54, resulting in a gross margin of N203,252.39 per hectare. The total fixed cost was N18,581, leading to a net farm income of N184,671.39 per hectare. The return on investment was 0.606, indicating profitability. Cost components showed that labor (48.1%) was the largest variable expense, followed by land preparation (11.9%) and pesticides (11.7%). Subsidizing these costs could enhance profitability. Elasticity of production analysis indicated positive but decreasing returns to scale for land, cuttings, labor, and pesticides, with a return to scale of 1.587 suggesting potential for increased efficiency with better resource use. Stochastic frontier analysis highlighted a significant profit inefficiency, attributed mainly to variations in farming practices and farmer characteristics, with 89% of profit variability linked to inefficiencies. Factors such as age, family size, experience, and extension visits were significant determinants of profit inefficiency. The average profit efficiency index of 55.85% reflects room for improvement in resource utilization to achieve higher efficiency. Allocative efficiency results showed under-utilization of key inputs such as land, seeds, and labor, while herbicides were over-utilized. Access to extension services, financial resources, and technology was generally high, contributing positively to farming practices and profitability. Cassava production under the IFAD VCDP demonstrates substantial profitability, with room for improving efficiency and resource allocation. Recommendations include better resource management and enhanced support in extension services to boost overall productivity and profitability.