Analysis of the Allocative Efficiency of Rice Farming in Kano State: A Case Study of Beneficiaries of Commercial Agriculture Credit Scheme

The purpose of this study is to empirically investigate the influence of commercial agriculture credit scheme on efficiency of rice farming in Kano State, Nigeria. Cross sectional Survey was used and primary data was sourced from 394 beneficiary farmers of commercial agriculture credit scheme (CACS) through survey method in the period 2009–2020. Multi-stage sampling technique was used for the study across the existing agricultural zones. The study employed the stochastic frontier model by using the stochastic cost finction. The model specified was estimated by likelihood estimates of stochastic frontier cost function of rice farming using STATA 14. The findings revealed that before CACS, the regression of the stochastic cost function estimates of allocative efficiency revealed that 93.3% of the farmers had allocative efficiency (AE) between 0.75 and 1.00. The mean allocative efficiency of farmers is 95%. After CACS The findings reveal that 92.1% of the farmers had allocative efficiency level was between 0.75 and 1.00. while the mean allocative efficiency indicate a 93% level of price efficiency in rice production of farmers. This means that most of the farmers were allocative efficient. The implication is that, after accessing CACS, the loan contributed to efficiency of rice farmers. There is need to have sustained and improved allocative efficiency of rice farming systems in the study area. The paper recommends that monitoring of rice farmers that benefitted from the credit and measures should be put in place towards mitigating the factors that affect efficiency The findings was able to establish that commercial agriculture credit scheme enabled rice farmers to be price efficient in the study area. Keywords: Commercial Agriculture Credit Scheme, Efficiency, Allocative Efficiency, Stochastic Frontier Model, Stochastic Cost Function