RIEB Discussion Paper Series No.2021-17

RIEB Discussion Paper Series No.2021-17

Title

Are Farmers “Efficient but Poor”? The Impact of Crop Choices on Agricultural Productivity and Poverty in Nigeria

Abstract

This paper aims to test the “efficient-but-poor” hypothesis” by estimating the determinants of smallholders’ crop choices and whether their crop choices affect productivity and poverty using the national household panel data in Nigeria. As crop choices are endogenous in the sense that the farmers’ crop choice is also influenced by resulting revenue from the crop, we carry out stochastic frontier analyses with the Greene (2010) correction for sample selection about farmers’ crop choices and find that smallholders are generally efficient in their resource allocations. However, they are not necessarily rational in making their crop choices - defined in terms of the degree of crop’s exportability or commercialization. This is because, even when some crops are found to be more productive than others, the “less productive” crop is often chosen for production. To figure out why, a treatment effects model is employed to estimate farmers’ selection into the choice of a type of crop in the first stage and the impact of their choices on productivity and poverty outcomes in the second. The results show that farmers’ access to free inputs, non-farm income and the use of seeds from the previous growing season are important determinants of crop choice. The choice of tuber and root crops is found to improve productivity and reduce poverty, while choosing highly commercialised crops reduces poverty but does not improve productivity.

Keywords

Agricultural productivity; Poverty; Crop choice; Stochastic frontier analysis; Treatment effects model; Nigeria

JEL Classification

D24, I32, N57, O13, O33

Inquiries

Chisom UBABUKOH
Economics School of Social Science, The University of Manchester, UK
and
Jindal Global Law School, O. P. Jindal Global University, India

Katsushi S. IMAI
Department of Economics, The University of Manchester, UK
and
Research Institute for Economics and Business Administration
Kobe University
Rokkodai-cho, Nada-ku, Kobe
657-8501 Japan
Phone: +81-78-803-7036
FAX: +81-78-803-7059
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