ABSTRACT

The study examined economic analysis of grasscutter farming in South East Nigeria. A multistage and purposive sampling procedure were employed to select 81 grasscutter enterprises in South East, Nigeria. Data analyses were carried out using descriptive analytical tools such as mean, frequencies, percentage, standard deviation as well as inferential statistics such as multiple regression analysis, stochastic frontier model, profitability indicators, investment function, sustainability index, Tobit regression and exploratory factor analysis. The result showed that the mean age was 48.4 years with majority (86.4%) of the enterprises in the study area operated by males. Mean household size was 7 persons. On average, the enterprises had spent about 7 years in business. Performance analysis showed that the average revenue realized per family per annnum was N325,200.00 and the net return per family per annum was N138,041.09. Regression results for determinants of profit for the grasscutter enterprise in the 11 study area showed the value of R2 as 0.7168 with age of business (1%), amount of credit used (1%), value of asset (1%), price of mature grasscutter (1%), number of competitors (5%) and other cost (1%) as the significant variable (p<0.01) influencing profit. The maximum likelihood estimates using stochastic frontier parameters for grasscutters enterprises showed the coefficient of feed and labour were statistically significant at 1% level and positively related to total output for production factors. Also the coefficient of medication was negative and significant at 1% level of probability. Furthermore, the result showed that there is a positive relationship between the inefficiency variables (number of employees, amount of credit, cooperative membership) included in the model. While a negative relationship existed between age of business and number of competitors. The estimated parameters for the stochastic frontier cost function for grasscutter farming business showed that cost of feed, labour and stocking density were the significant variables influencing the total cost of production of the grasscutter enterprise. The average technical, allocative and economic efficiency level of the grasscutter enterprise were 0.567, 0.513 and 0.501 respectively. The result of the Tobit regression on determinants of economic efficiency showed that the estimated coefficients were significant for age of business, amount of credit, stocking density, price of mature grasscutter, number of competitors, technology adoption and cooperative membership. The estimated determinants of farm investment of grasscutter enterprises showed the value of R2 as 0.8424, while the coefficient of profit (10%), sales from grasscutter business (5%), amount of money borrowed (5%), business location (5%) and working capital ratio (1%) were positive with level of investment. The average sustainable index was 0.748 and Tobit regression analysis on the factors associated with sustainability level showed that the estimated coefficients of age of business, firm’s operation risk, number of worker, productivity, high concentration of industrial activity, taxes and number of grasscutter stolen were the significant variables. Furthermore, it is observed that Instability in government policy, bush burning, barrier to adoption of techniques, lack of organized market, hunting, lack of good roads and social facilities and dwindling income were significant and responsible factors influencing grasscutter enterprise in the southEast Nigeria. The study therefore recommended that concerted efforts should be geared towards increased production of grasscutter in order to meet the demands of grasscutter for food security in both the study area and the country (Nigeria) in general.