Economic Analysis of Maize Production in Mangu Local Government Area of Plateau State, Nigeria

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1 PAT June, 2010; 6 (1): 1-11 ISSN: Online copy available at Publication of Nasarawa State University, Keffi Economic Analysis of Maize Production in Mangu Local Government Area of Plateau State, Nigeria Onuk E. G 1., Ogara I. M 1, Yahaya H 1 and Nannim N Faculty of Agriculture, Shabu Lafia Campus, Nasarawa State University, Keffi. 2. Agric. Departmen, Mangu Local Government, Plateau State. Received 11 th January, 2010, Accepted 29 th May, 2010 Abstract The study assessed the economics of maize production among farmers in Mangu Local Government Area of Plateau State, Nigeria. The instrument used for the research was the questionnaire. A random sampling technique was adopted and a sample size of ninety (90) respondents was used. While descriptive statistics, gross margin analysis and production function analysis were used as tools for analyzing data. The study revealed that maize seed has established itself as a very significant component in maize farming system, and determines the cropping pattern of the predominantly peasant farmers. The result of the production function analysis shows that the double log functional form had the best fit to the data, that is R 2 = 0.65, meaning that 65% of the variation in the output of maize was accounted for by the variables in the model. All the variables in the model had positive regression coefficients indicating direct relationship between each of them and output of maize. The result of the survey also indicated that men had more access to land than women, thus making them to be more involved in maize production in the study area. However, both men and women have experience in maize production and obtained planting materials mostly from previous harvest. Finally, the study concluded by advocating adequate market with good stable prices for maize farmers products that would enhance maize production in the study area and the country at large. Keywords: Maize Production, Economic Analysis, peasant farmers. INTRODUCTION Maize (Zea mays, L.) is one of the main cereal crops of West Africa, and the most important cereal food crops in Nigeria. It comes after wheat and rice in terms of world importance. Maize is not only a major cereal crop in the present day world but it was also one of the basic foods in America before the arrival of Christopher Columbus at the end of the 15 th Century, and among the Indians in Mexico and Guatemala, and also among the Incus in Peru, Bolivia and Equator (Rouannent, 1987). Maize is becoming the miracle seed for Nigeria s agricultural and economic development. It has established itself as a very significant component of the farming system and determines the cropping pattern of the predominantly peasant farmers,

2 PAT 2010; 6 (1): 1-11: ISSN: ; Onuk et al: Economic Analysis of Maize Production. 2 especially in the Northern States (Ahmed, 1996). Maize has been of great importance in providing food for man, feed for livestock and raw materials for some agro-based industries. Maize constitutes a stable food in many regions of the world. It is a basic stable for large population groups particularly in developing countries (FAO and ILO, 1997). Wikipedia (2006), reported that maize is hydrolyzed and enzymatically treated to produce syrups, particularly high fructose corn syrup, a sweetener and in some cases fermented and distilled to produce grain alcohol which is traditionally the source of bourbon whisky. Sweet corn is a genetic variation that is high in sugars and low in starch that is served like a vegetable. Another common food made from maize is corn flakes. Maize is used as meal pap in Africa, corn bread is made from maize. Maize is still an important model organism for genetic and develops mental biology to date. Doebley (1994), reported that maize can be boiled or roasted on the cob, the grains can be cooked fresh or dry and the dry grain can be made into pop corn (guguru) and eaten with roasted groundnuts. Maize is one of the most abundant food crops in Nigeria. About 80% is consumed by man and animals while 20% is utilized in variety of industries processes for production of starch, oil high fructose, corn sweetener, ethanol, cereal and alkaline. Maize consists of 71% starch, 9% protein and 4% oil on a dry weight basis. Despite the economic importance of maize to the teeming populace in Nigeria, it has not been produced to meet food and industrial needs of the country. This could be attributed to low productivity from maize farms or that farmers have not adopted improved technologies for maize production. These factors play a major role in the adoption process. Now the question is: what are the factors influencing maize production? The general objective of the study is to examine the economics of maize production in Mangu Local Government Area, Plateau State, Nigeria. Specific objectives are to: (i) describe the socio-economic characteristics of maize farmers in the study area (ii) determine the inputs and outputs level in maize production in the study area. (iii) estimate the costs and returns associated with maize production in the study area. (iv) determine resource-use effience in maize production (v) identify the constraints to maize production in the study area.

3 PAT 2010; 6 (1): 1-11: ISSN: ; Onuk et al: Economic Analysis of Maize Production. 3 METHODOLOGY The study was conducted in Mangu Local Government Area of Plateau State, Nigeria. Mangu Local Government Area has nine (9) districts namely; Mangu, Panyam, Gindiri, Langai, Mangun, Kerang, Ampang, Kombum, and Pushit. Majority of the inhabitants are peasant farmers. The climate and soil conditions of the area are suitable for growing cereal crops such as maize, guinea corn, millet, wheat, acha, rice and tuber crops such as Irish Potatoes, yams, cassava, sweet potatoes, etc. Mangu Local Government Area is located within the Northern Guinea Savannah and the climate is near temperate and could be compared to the weather found in Jos, Barakin Ladi, Bokkos and Pankshin (Nannim, 2009). The population for the study was maize farmers in Mangu Local Government Area. Data were collected with the aid of a structured questionnaire that was administered to the respondents. Double stage sampling technique was adopted. First stage involved the random selection of one village from each of the nine administrative districts. Thus, nine (9) villages were selected for the study. The second stage involved the purposive selection of 10 maize farmers from each of the selected villages to give a total of ninety (90) respondents. Descriptive statistics such as percentages, frequency distribution were used to achieve objectives (i), (ii) and (v) of the study. Gross margin which was used to satisfy objective iii is expressed as follows: GM = GI TVC Where: GM = Gross Margin (N/ha). GI = Gross income (N/ha) i.e. The product of the total output and the unit cost of output. TVC = Total Variable Cost (N/ha) i.e. Cost of inputs such as fertilizer, seed, hired labour, chemicals, etc. The production function analysis was used to satisfy objective (iv) of the study. The model is expressed in its general form as follows: Y = F (X 1, X 2, X 3, X 4, X 5, X 6, U) Where: Y = Quantity of maize output (Kg) X 1 = Fertilizer (Kg) X 2 = Labour (man hours) X 3 = Herbicides (litre) X 4 = Quantity of maize seed used (Kg) X 5 = Farm size (ha) X 6 = Capital (N) U = Error term

4 PAT 2010; 6 (1): 1-11: ISSN: ; Onuk et al: Economic Analysis of Maize Production. 4 The double log function was selected for result discussion and the selection of lead equation was based on the magnitude of the coefficient of multiple determinations (R 2 ), the signs of the estimated regression coefficients and the level of significance of the t statistics. RESULTS AND DISCUSSIONS The study revealed that majority (73.30%) of the respondents were males. This can be attributed to the fact that men always have right to land as a productive resource than women. Quisumbing (1994), reported that there has been a great disparity between women and men in the size of landholdings. That the mode of women participation in agricultural production varies with the land-owning status of households. The study further revealed that most of the respondents were adults and had several years of experience in farming. The mode of land acquisition is mostly rented (35.60%), while source of labour is mostly from family members (42.20%). The result also indicated that majority (84.4%) of the respondents are not cooperative members of any society (Table 1). The implication here is that only a few farmers would have access to credit facilities, since lending agencies will prefer to give credit to cooperatives rather than individuals. Furthermore, groups play a significant role in boosting agriculture and fast to grab modern farming technologies. The study further revealed that majority (54.4%) of the respondents got their planting materials (maize seeds) from their previous harvest. This might limit their maize production capacity, because improved maize seeds would have overcome this problem if farmers had access to them.

5 PAT 2010; 6 (1): 1-11: ISSN: ; Onuk et al: Economic Analysis of Maize Production. 5 TABLE 1: Socio-Economic characteristics of respondents Characteristics Frequency Percentage Gender: Male Female Marital Status: Married Single Educational level: Adult education Primary education Secondary Education Higher education Age: and above Years of experience in farming Above Years of experience in farming Household size: Above Mode of land acquisition: Inherited Purchased Communal Rented Family Lease Labour source: Family labour Hired labour Family and hire labour All of the above Cooperative participation: Yes No Source of planting Materials ADP Market Previous harvest Source: Field survey, 2008

6 PAT 2010; 6 (1): 1-11: ISSN: ; Onuk et al: Economic Analysis of Maize Production. 6 INPUT OUTPUT LEVEL IN MAIZE PRODUCTION Table 2 revealed the inputs used for maize production such as seeds, land, labour, fertilizer and agro-chemicals. The result shows that maize farmers in the study area had 2kg as the minimum of seeds used with 100kg as the maximum. Labor cost constitute over 60% of the total cost of operation as indicated by its share of the total cost of production. Labour costs consist of hired and family labour (which was computed based on the opportunity cost principle) input in man-labour. The wage rate varied depending on the operation performed. However, an averaged rate of N120 per man-hour was computed, and consequently the average cost was N5, per hectare. Fertilizer and agro-chemicals were used by most of the respondents through, the high prices coupled with the technicalities involved in their usage had an effect on the quantities utilized. The total cost of agro-chemicals was N19, per hectare of maize. The variable costs of production include cost of land, fertilizers, seeds and labour. It also indicated that minimum farm land size of 1ha with the maximum of 20ha were used for maize production, this gives an average value of Also other average values for input and output are computed respectively. The survey also shows that 80 man hrs had been used as minimum with 280 man hrs as the maximum in the production. The result also shows that the minimum of fertilizer that were used is 500kg with 3000kg as the maximum, 50litres of agro-chemicals were used as minimum and 250litres as maximum. While the minimum output had 10,000kg with 80,000kg as the maximum output in the maize production. Table 2: Summary of Input Output level in maize production in Mangu Local Government Area of Plateau State. Input and Output Minimum Maximum Average Seed (kg) Land (ha) Labour (man hours) Fertilizer (kg) Agro-chemicals (lt) Output (kg) 10,000 80, Source: Field survey, 2008 COSTS AND RETURNS Table 3 shows that returns on maize yield was N85,425/ha though yields were observed to vary from one farmer to another on the average, while the total variable cost (TVC) of the farmers was N51,481/ha. Gross margin observed was N33,946.82/ha. Fertilizer cost was for N22,424/ha as part of the total variable cost and cost of agro-

7 PAT 2010; 6 (1): 1-11: ISSN: ; Onuk et al: Economic Analysis of Maize Production. 7 chemicals was for N19,242/ha. This implies that farmers in the study area used fertilizer and agro-chemicals intensively. The average rate of returns, which is a measure of financial success or failure was This signified that on average a gross margin of 66kobo was gained for every one naira invested in maize production in the study area. Table 3: Average costs and returns per hectare for maize production. Variables Unit/ha Unit price (N/ha) Total Cost (N/ha) A. Returns: Maize yield (Kg/ha) kg 85, B. Variable Costs:Seed(Kg/ha) kg 4, Labour (Man/ha) man hrs 5, Fertilizer(kg/ha) kg 22, Chemical (lit/ha) (lt) 19, C. Total Variable Cost (TVC) 51,481.2 Gross Margin (A B) 85,428-51,481.2 =33,946.8 D. Average rate of return on 0.66 Gross Margin =66 Kobo Source: Field survey, 2008 Table 4 revealed that the result of the double log functional form had the best fit to the data. All the variables in the model had positive regression coefficients indicating direct relationship between the inputs and maize output. The coefficient of multiple determinations (R 2 ) is 0.65 which implies that 65% of the variation in the output of maize was accounted for by the variable inputs in the model. This indicates that an increase in each of them will result to an increase in the output of maize. However, only fertilizer, agro-chemicals, and labour were statistically significant at 10 per cent level. Table 4: Result of the double log production function analysis for maize production in Mangu Local Government Area of Plateau State. Variable Regression efficient Standard Error T-values Constant NS Fertilizer (X 1 ) * Labour (X 2 ) * Agro-chemicals (X 3 ) ** Seed (X 4 ) NS Farm size (X 5 ) NS Capital (X 6 ) NS R 2 = 0.65 F. Value = 2.149** ** = Significant at 5% level of probability * = Significant at 10% level of probability NS = Not significant

8 PAT 2010; 6 (1): 1-11: ISSN: ; Onuk et al: Economic Analysis of Maize Production. 8 Table 5 revealed that inadequate transportation facility is the major problem (54.4%) in the study area. This is followed by inadequate storage/processing facilities (20%). Inadequate credit and inadequate rainfall had the same frequency (7.8%). Poor quality material had 5.6%, while the least is pests and diseases (4.43%). This revealed that farmers in the study area are faced with constraints that can limit maize production. Table 5: Distribution of maize farmers according to constraints (multiple choices were not allowed). Constraints Frequency Percentage (%) Inadequate credit Poor quality planting materials Pests and diseases Inadequate rainfall Inadequate transport facilities Inadequate storage/processing Facilities Source: Field survey, 2008 Table 6 shows resource-use efficiency of maize production of the peasant farmers in the study area. The resource efficiency indices for the maize farmer is presented in Table 6. Deriving from the economic theory which stipulates that point of perfect allocative efficiency exists where the marginal value product (MVP) of resource input is at equilibrium, parity or unit, with its marginal factor cost (MFC). Farmers with these ratios closer to one (unity) or one were adjudged to be more efficient in the utilization of that particular inputs. Based on the result in Table 6, to estimate the resource-use efficiencies of the farmers, the b-values derived from the regression results were used to estimate the ratio of the marginal value product (MVP) of each input to the factor price or marginal factor cost (MFC) of the factor input for maize farmers, thus: r = MVP MFC = 1. Where:- r = Efficiency of resource use. MVP = Marginal Value Product of the Resource Input MFC = Marginal Factor Cost of the Resource Input

9 PAT 2010; 6 (1): 1-11: ISSN: ; Onuk et al: Economic Analysis of Maize Production. 9 The result presented in the table shows that maize farmers in Mangu Local Government Area were more efficient in the utilization of maize seeds, fertilizers and agro-chemicals. However, the ratio of the marginal value product (MVP) to the marginal factor cost (MFC) of the various farm inputs revealed that the farmers underutilized land, while labour and capital were over-utilized. The implication from this study is an indication that the maize farmers in the area of study do not achieve absolute efficiency because they (farmers) under-utilized some inputs, while other inputs were over-utilized. Similar cases of under-utilization and over-utilization of variable inputs were reported by Onyenweaku (1994), Nwakpu (2008). Olagoke (1991) and Iheke et al (2008). To achieve optimal allocative efficiency of variable inputs, policies and programmes should be directed to maize farmers in order to increase their level of use of farm land, labour, capital and other miscellaneous inputs. Table 6: Resource-use Efficiency Resource inputs MVP MFC Efficiency ratio Fertilizer (X 1 ) Labour (X 2 ) Agro-chemicals (X 3 ) Maize seed (X 4 ) Land (X 5 ) Capital (X 6 ) Source: Derived from Field survey, 2008 CONCLUSION The study revealed that maize farmers in the study area did not achieve absolute efficiency in the use of variable inputs. However, the study showed that maize production among farmers was profitable, thus yield and profit were being maximized due to certain efficiencies in the use of some variable inputs. Based on the findings, the followings are recommended. 1. Government should supply inputs to maize farmers at subsidized rate and at appropriate time. 2. As mechanization leads to lower cost of production, government should make tractors available to maize farmers at subsidized rate. 3. Government should provide good roads linking maize production areas to ease farmers evacuate their produce. 4. There is need for adequate market with good stable prices for maize farmers products coupled with good storage facilities to further boost maize production.

10 PAT 2010; 6 (1): 1-11: ISSN: ; Onuk et al: Economic Analysis of Maize Production Government should provide irrigation facilities, though expensive project, to overcome drought and to also enable maize production in dry season. 6. Finally, maize farmers should be encouraged to join cooperative societies so that they can pool their productive resources for large scale farming. References: Ahmed, B. (1996): Economic analysis of fertilizer used in maize production in the Northern Guinea Savannah of Nigeria. Unpublished Ph.D Thesis, Department of Agric. Economics and Rural Sociology, Ahmadu Bello University, Zaria: Nigeria. Doebley J.F. (1994): Morphology, Molecules and Maize corn and culture in the prehistoric new world, Geneva, Switzerland. FAO. and ILO (1997): Maize in human nutrition intermediate level handbook. FAO and ILO Publication, Rome, Italy. Iheke O.R; (2006). Gender and Resource use Efficiency in Rice Production System in Abia State of Nigeria. Unpublished M.Sc. Thesis Department of Agric. Economics and Extension, Michael Okpara University of Agriculture, Umadike Iheke O.R, O.I. Obasi and J.C. Nwankwo (2008): Socio-economics Determinants and Allocative Efficiency of Arable Crop Farmers in Ikwuano Local Government Area of Abia State, Nigeria. Proceedings of the 42 nd Annual Conference of the Agricultural Society of Nigeria (ASN), (eds) Pp Nannim N. (2009): The Economic Importance of Maize production in Mangu L.G.A. Plateau State, Nigeria. Unpublished PGD Thesis Faculty of Agriculture, Shabu Lafia Campus, Nasarawa State University, Keffi. Nwakpu C.C. (2008). Factor productivity and resource-use efficiency of some recommended rice technology in Ebonyi State Nigeria. Proceedings of the 42 nd Annual Conference of the Agricultural Society of Nigeria (ASN), (eds) Pp Olagoke, A.M (1991). Efficiency of Resource-use in rice production systems in Anambra State, Nigeria. In: Issues in Africa Rural Development, 1991, Doss, C.R. and C. Olson (eds). African Rural Social Science Research Networks. Pp Onyenweaku, C.E. (1994). Economics of Irrigation in Crop Production in Nigeria. African Social Science Research Networks. Issues in African Rural Development 2. Winrock International Institute for Agricultural Development Pp Quisumbing A. (1994): Gender differences in Agricultural Productivity: A survey of empirical evidence. Discussion paper series No.36, Education and Social Policy Department, World Bank Washington D.C.

11 PAT 2010; 6 (1): 1-11: ISSN: ; Onuk et al: Economic Analysis of Maize Production. 11 Rouannent G. (1987): The Tropical Agriculturist Ed: Rent caste, Macmillan Publisher Ltd, Malaysia, 102p. Wikipedia (2006): Corn Maize Wikipedia The free encyclopedia. org/maize access on the 16 th December, 2006.

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