Technical Efficiency of Agribusiness Firms in Southwestern Nigeria

Abstract

This study evaluates the technical efficiency level of Agribusiness firms. Specifically, the objectives where to; identify socio-economic characteristics that influence technical efficiency, determine levels of technical efficiency, identify and analyse determinant of efficiency. Primary data used for this study were obtained from a representative sample of 120 Agribusiness firms which were selected using purposive random sampling.Frequency table and Stochastic frontier production function was used to analyse the data, Technical efficiency levels of Agribusiness firms showed that majority of the firms were operating above 70%. Age of decision maker (manager) was a major determinant that influence technical efficiency at 5%, educational level of decision maker and level of investment were significant at 1% and 10% respectively but level of investment was negatively significant. The study revealed that the Agribusiness firms were technically inefficient and there is room for efficiency growth.

Keywords: Agribusiness, efficiency, technical efficiency, firms, stochastic frontier, Maximum Likelihood Estimate