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’ choice over cash or food crops and whether their crop choice affects technical efficiency and poverty using the national household panel data in Nigeria. As the crop choice is 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 choice and find that smallholders are generally efficient in their resource allocations. A treatment effects model is employed to estimate farmers’ crop choice in the first stage and the impact of their choices on technical efficiency 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 adoption of cash crops by food-crop producing households will not generally reduce poverty, although it will improve technical efficiency marginally. However, if cash crops are commercialised, poverty tends to decline.

Keywords

Technical Efficiency; 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