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Estimation of technical efficiency in the translog stochastic frontier production function model: An application to the oil palm produce mills industry in Nigeria

Amaechi E. C. C., J. E. Ewuziem and M. U. Agunanna

This study estimated the technical efficiency of the small/semi-mechanized oil palm produce millers in Nigeria using the translog stochastic frontier production function model. A multi-stage sampling method was used to select 30 mills in the study area and cost route approach used in data collection. The estimates for the mills showed firm level technical efficiency mean of 70.62 with range of 37.48% to 93.46%. This wide variation in oil palm produce output of millers from the frontier output was found to have arisen from differences in miller’s management practices rather than random variability. This also implies that even under the existing technology, potentials exist for improving productive efficiency with proper utilization of available resources. Education, processing experience, membership of cooperative society, credit, capital, fruits throughput, petroleum energy and water were significant and positive determinants of technical efficiency while age, household size and interest on loans were negatively related to technical efficiency. Policies geared towards the enhancement of productive efficiency of this category of producers should appropriately address such issues as education, cooperativeness, and access to credit/capital, oil palms plantation rehabilitation, sustainable petroleum energy and supply of other necessary facilities