THE EFFECTS OF OFF-FARM INCOME ON SMALLHOLDERS’ RICEPRODUCTION IN EBONYI STATE  NIGERIA

ABSTRACT

The basis of this study was to investigate the effects of off-farm income on smallholders’ rice production in Ebonyi State, Nigeria. To achieve this, the study specifically described the socio-economic characteristics of the smallholder rice farmers, described the off-farm activities of rice farmers, estimated the factors determining participation in off-farm activities among the smallholder rice farmers, determined the effects of off-farm income on the output of rice  farmers and identified factors limiting farmers’ participation in off-farm activities in the study area. The study was carried out in Ebonyi State, Nigeria. The research employed a multistage sampling technique in the selection of respondents for the study. One hundred and twenty (120) farmers were selected using random sampling procedure. Data were collected using well-structured questionnaires as an interview guide. Descriptive statistics like frequency, percentage, mean and inferential statistics like regression model were used in data analysis. Results of the study showed that half (50%) of the respondents were males among whom 42.50% were married. The highest age bracket is between the ages of 21 to 30 years representing 55.83% of the entire respondents. The average household size was approximately five persons. Four of the respondent interviewed constituting 3.3% of them had no formal education, 24 of them constituting 20% had primary education. Forty-three respondents constituting 35.83% had post-primary education while 33 of the respondents constituting 27.50% acquired tertiary education. Majority of the respondents (74.17%) participated in off farm activities. The average farming experience was above 12 years, and half of the respondents had access to extension services delivery. Results of the findings showed that Gender, Farm size and Access to credit by the farmers were the major determinants of off farm activities’ participation among other factors that could influence it. More so, off-farm income significantly influenced the output of rice produced by the farmers. The identified constraints/factor limiting farmers participation in off farm income in the study area include: lack of education, Farm size, Age of the farmer, Health status, limited time, poor access to credit, poor assess to extension services, among others. The hypothesis tested confirmed that off-farm income of the rice farmers had significant effects on their output. The second hypothesis tested confirmed that socio-economics characteristics of the rice farmers influenced their participation in off-farm activities in the study area. Recommendations were made based on the findings to encourage the farmers’ participation in off farm income in order to diversify their economics aiming at improving their overall standard of living.

1.1Background of the Study

CHAPTER ONE

INTRODUCTION

Agriculture is a major base of the world’s economy. The sector plays important roles in  the  development  process  of  any  nation  by  supplying  food  items,  industrial  inputs, generating foreign exchange, creating employment opportunities, contributing to gross domestic product (GDP) and expanding markets for industrial outputs(Abebe,2014). World Bank (2007) revealed that agriculture is the major source of income and employment for about 70 percent of the world’s rural poor societies and 32 percent in the growth of GDP in these countries. The struggle for food is desperate for the 240 million people of West Africa: one of every three of who is a Nigerian (West Africa Rice Development Association (WARDA), (2002).

Rice  (Oryza  sativa)  is  the  staple  food  of  approximately  half  of  the  world’s population (International Rice Research Institute (IRRI), 1997). It has traditionally been an important basic food commodity for certain populations in sub-Saharan Africa (SSA), and West Africa. Recent important and major changes have led to a structural increase in rice consumption in the sub-region. Since 1973, regional demand has grown at an annual rate of 6%, driven by a combination of population growth and substitution away from traditional coarse grains (WARDA, 2001). The consumption of traditional cereals, mainly sorghum and millet, has fallen by 12 kg per capita, and their share in cereals used as food decreased from

61% in the early 1970s to 49% in the early 1990s. In contrast, the share of rice in cereals consumed has grown from 15% to 26% over the same period (Akpokodje, Lancon and Erenstein, 2001). Also, it was observed that between 1961and 2005, the annual increase in rice consumption was 4.52% in SSA (WARDA, 2007). Growth in regional rice consumption remains high. The demand for rice has been increasing at a much faster rate in Nigeria than in

other West African countries since the mid 1970s (WARDA, 2001). For example, during the

1960’s  Nigeria had  the  lowest  per capita annual  consumption  of rice  in  the sub-region (average of 3 kg). Since then, Nigeria’s per capita consumption levels have grown significantly at 7.3% per annum (Ogundele and Okoruwa, 2006). Consequently, per-capita consumption during the 1980s averaged 18  kg  and  reached  22 kg in  1995-1999.  In an apparent move to respond to the increased per capita consumption of rice in Nigeria, local production boomed, averaging 9.3% per annum (Ogundele and Okoruwa, 2006). These increase in local production have been traced to vast expansion of rice area at an annual average of 7.9% and to a lesser extent to increase in rice yield of 1.4% per annum.

The reality is  that Nigeria has not been  able to  attain self-sufficiency  in rice production despite increasing hectares put into production annually (CBN, 2000). Consequently, Nigeria has depended heavily on imported rice to meet her consumption needs and has become the World’s largest importer of rice (WARDA, 2003). According to Okorji and Onwuka (1994) the rice import bill for Nigeria was N123.61 million in 1980 and has since continued to rise. Meanwhile, CBN (2017), confirmed that Nigeria spent about $3.5 billion on rice importation between 2014 and 2016. This is indicative of the declining self- sufficiency in rice production which constitutes a huge drain on Nigeria’s foreign reserve and a major bottleneck in the balance of payments (Egbuna, 2003).

In a bid to address the demand-supply gap for rice, governments have at various times come up with policies and programmes. However, these policies according to WARDA (2001)  have  not  been  consistent  due  mostly  to  oscillating  import  tariffs  and  import restrictions. For instance, from 1986 to the mid-1990s imports were illegal. In 1995 imports were allowed at a 100% tariff. In 1996 the tariff was reduced to 50% but increased to 85% in2001. Presently, there is a total ban on rice importation in the country.  The erratic rice import policy  reflects  the  dilemma  of  securing  cheap  rice  for  consumers  and  a  fair  price  for

producers. Notwithstanding the various policy measures, domestic rice production has not increased sufficiently to meet the increased demand. Even during the rice import ban period, Nigeria was still importing several hundred thousand tons of rice per year through illegal trade. With the removal of the rice import ban, consumption resumed its rapid growth taking advantage of the downward trends of rice price on the world market.

This fluctuation and limited capacity of the Nigerian rice economy to match the domestic demand has raised a number of pertinent questions both in the policy circle and amongst researchers. Such questions include:  what are the factors explaining the lag in domestic rice production vis-a-vis demand for the commodity in Nigeria? Which strategy could lead to a sustainable contribution of the Nigerian rice economy to the national food security within a competitive and open economy? Central to this explanation is the issue of off- farm income and efficiency of the rice farmers in the use of resources.

West African Rice Development Association (WARDA) in collaboration with the Nigerian Institute for Social and Economic Research (NISER) suggested the strategy of increasing off-farm income and efficiency at producer level as one of the key components to revitalize the rice sector in Nigeria (WARDA, 2003).

In spite of its great importance to the country’s economy, agricultural productions are however, subsistence-based and dominated by smallholder farm households that operate on farms of less than one hectare (Ume, Ezeano, Onunka, &Nwaneri, 2015).  Even though the immediate past and the present governments have given higher priority to the agricultural sector through their programmes; Agricultural Transformation Agenda (ATA) and Green Alternatives (GA) respectively.  Its productivity is however at its lowest level. This may be because of different interrelated socio-economic and climatic problems such as inappropriate use of farmland, over grazing, over cultivation, population growth, tenure insecurity, weak extension services, inadequacy of infrastructure, low access to agricultural inputs such as

fertilizer, herbicides, pesticides, seeds and seedlings among others (Oseni and Winter, 2009). According  to  Rahman  (2007),  smallholder  production  is  generally  characterized  by  low access to improved technologies, financial services, modern inputs, agricultural markets and irrigation services that attributed to variability of earnings from the farming sector. This engrossed the rural areas, where majority rely on agriculture for their livelihood.

In order to improve the rural livelihoods, Haagablade (2010) noted that households’ diversification  into  portfolio  of  income  activities  of  which  off-farm  income  stand  tall becomes a measure. However, farmers are forced to participate in off-farm activities to overcome these obstacles. Philip, Nkonya, Pender and Oni (2009) explained off- farm income to include all income generated outside own farm and are diverse, partly seasonal and often performed around the family compound in most developing countries.

However, Studies suggested that participation in off-farm activities are initiated by two conventional factors, viz; pull and push factors. The “push” factors as explained by Reardon, Stamoulis, Balisacan, Cruz, Berdegue and Banks (1998) are mandatory factors that force farmers to participate in off-farm activities to manage income risk and in this case, off-farm income  is  used  as  a  coping  strategy.  These  factors  include  shortfalls  of  agricultural production resulting from temporary failures due to unexpected drought or long-term factors such as shortages of farm land, absence of crop insurance, failures in input and credit markets and others. On the other hand Barrett, Reardon, & Webb (2001) explained the “pull” factors as the incentives that attract households to non-farming sectors when non- farm activities offer higher return than the farm activities.

Chavas, Chambers and Pope (2010) on their own study recognized the influence of the nonfarm sector as a primary force in shaping farm structure. In addition, Schmitz, Moss, and Schmitz (2010) reported that it is widely acknowledged that general economic growth and off

farm work opportunities have played a central role in resolving the equity issues that motivated farm policies in their inception. Likewise, Woldehanna (2000) in his study in northern part of Ethiopia indicated that off-farm income constitutes about 35 percent in the total income of households in the area. Similarly, Bedemo,   Getnet, Kassa,   &Chaurasia (2013) reported that  about 73.5 percent of households  participate in off-farm activities in their  studies  in  three  districts  of     Ethiopia;  GutoGida,  GidaAyana  and  Jima  Arjo. Woldehanna, (2002) listed off-farm activities in the country to include Unskilled wage works in  others’  farm,  unskilled  non-farm  works,  skilled  and  professional  works  as  teaching, clerical works, government and health works, trading, driving, weaving, tailoring and paid developmental works (for instance, food-for-work).

In Nigeria, off-farm activities are more common among Southern Nigeria households than in Northern part of the country (Babatunde, 2013). These non-farm economic activities which are common in rural Nigeria as observed by Alimba (1995), are petty trading (food stuff sales, fruit sales, provision sales), dress making, palm wine tapping, craft making (wood and calabash carving, carpentry, pot making, leather work and weaving). In general, farm households participate in one or more types of these activities to diversify their sources of income. According to Eboh (2009), these non-farm activities provide employment options outside   the   farm   reduce   rural-urban   migration,   promote   income   distribution   and diversification and intersectional linkages, which are capable of leading to a vibrant rural economy.

Yue & Sonoda (2012) reported that even though households’ participation in off- farm  activities  have  considerable  effects  on  the  productivity  of  the  farming  sector,  the possible link is not clear. These effects can be positive or negative or nil depending on where income from off-farm activities are invested. Babatunde, (2013) stated that if incomes generated from off-farm activities are spent as investment in the farming sector in the form of

purchase of modern inputs and adoption of new technology, then the sector’s production will be enhanced. On the other hand, the absence of labor in the agricultural sector negatively affect the productivity of the sector if incomes generated in the off-farm activities are spent for consumption or used to leave the agricultural sector.

1.2 Statement of the Problem

Rice is an important food crop in Nigeria dominated by smallholder farmers and its consumption is growing particularly among urban dwellers. Domestic production of this commodity has been inadequate and unable to bridge the increasing demand-supply gap. These farmers have limited access to modern improved technologies and their general circumstance does not always merit tangible investments in capital, inputs and labour (Mgbenka and Mbah,2016). Certain factors are responsible for these inefficiencies in smallholder farming in Nigeria. These farmers lack agriculture information and this is a factor that promotes ignorance of modern farm technologies and income diversification. These farmers also operate under high costs of production that affects both the commercial and smallholder farmers. Smallholder farmers in Nigeria have limited access to credit facilities, which reduces their productivity largely. Great percentage of Nigerian cultivable lands is being converted to other uses than agriculture. Other factors that hinder productivity in smallholder farming are lack of market, high cost of input and lack of extension services that impoverishes and discourages them from production. In addition to these challenges, Obiechina (2012) points out that the main reason for poor performances of smallholder farmers is due to lack of commitment by all tiers of governments to implement the right policies, hence the constraints require more attention than it now gets.

In Ebonyi State, the past and present administrations have been working assiduously by ensuring that more land are put into rice production by making policy of “one man one hectare of land” and establishing ultra-modern rice milling industries in each of the three

Agricultural Zones of the state . The government also gives incentives to farmers such as soft loan, grants and subsidized agricultural inputs (improved rice seed varieties and agrochemicals).  These concerted efforts of the state government have helped the farmers to improve their standard of living because of their engagement in off- farm activities

Besides,  in  Nigeria  due  to  the  smaller  farm  size  and  low  return  from  farming activities, majority of rural households are exposed to food insecurity and chronic poverty (Food and Agriculture Organization, FAO, 1996). Farm households usually participate in off- farm activities to supplement their agricultural income (Beyene, 2008). Participation in off- farm activities could attract extra income to a farmer which if invested in rice farming would increase production. It is expected that off-farm income generated would be used to enhance productivity in farming.

Several related studies have been carried out on effect of off-farm income on the agricultural  productivity  of  smallholder  farmers  in  Nigeria  and  worldwide.    Babatunde (2013), examined the effects of off-farm diversification on agricultural production in Kwara State, he used cross sectional survey data to analyze effect of off-farm income on purchased input  and  technical  efficiency.  Babatunde  (2015)  also  worked  on  on-farm  and  off-farm works: complement or substitute in Nigeria?  Mezid &Bekele (2014) researched on the Effect of off Farm Employment on Agricultural Production and Productivity in Southern Ethiopia. Abebe (2014) equally researched on off-farm income and technical efficiency of smallholder farmers in Ethiopia.   Barrett, Reardon and Webb (2001) studied non-farm income diversification and household livelihood strategies in rural Africa.   Based on these aforementioned topics, to my best knowledge, little or no study has been done on the effects of off-farm income on the rice production of smallholder farmers in Ebonyi state, hence the need for this study.

Based on all this pending research gaps, this research calls for the need to investigate the following research questions.

i.      what were the off-farm activities involved by the rice farmers?

ii.       what were the effects of the off-farm income on their production output?

iii.    what were the determinants of farmers’ participation in off-farm activities?

iv.     What were the factors limiting farmers’ participation in off-farm activities in the study area?

1.3 Objectives of the Study

The broad objective of the study was to evaluate the effects of off-farm income on

smallholders’ rice production in Ebonyi State, Nigeria. Specifically, the objectives were to:

i.      describe the socio-economic characteristics of the smallholder rice farmers;

ii.     describe the off-farm activities of rice farmers in the study area;

iii.     estimate the factors determining participation in off-farm activities among the smallholder rice farmers;

iv.    determine the effects of off-farm income on the output of rice farmers

v.      identify factors limiting farmers’ participation in off-farm activities in the study area.

1.4 Hypotheses of the Study

HO1: Off-farm income has no significant relationship with rice output in the study area.

HO2: Socio-economics characteristics of the rice farmers have no significant influence on their participation in off-farm activities.

1.5. Justification for the Study

It is now widely accepted that we should address the challenges of future agricultural policy design, we should understand farm household behaviour in a more complex policy context that recognizes the diverse nature of farms with respect to farm size, farm production and business organization. We must also recognize the increasing interconnection between decisions made by farm businesses and farm households, and their effects on the well-being of farm families (Kuhn and Offutt 1999; Offutt, 2002). Recommendations suggested from such would boost the effectiveness and  success  of policies and programmes targeted at increasing production. Given the increasing number of farm families taking up off-farm work, the increasing rice demand-supply gap and the risk associated with rice production, the need for this study is justified.

The  recommendations  from  this  study  are  expected  to  give  direction  to  policy makers in designing appropriate policies to increase rice production in Ebonyi State and Nigeria. This is because more knowledge about whether farm production is affected by off- farm income could help policy makers introduce better rural development policies.

In addition, farmers will find this work very useful as it will help increase their production as they gain understanding of the interconnection between off-farm income and rice production. Thus, results from this study will provide information for stakeholders in government and extension services on how to increase the production of the farming and non- farming sector. Besides, it will add to the existing literature in rice production and off-farm income.

Furthermore, through identification of problems limiting farmers’ participation in off – farm activities, policy options could be instituted by government and researchers on how best to overcome the constraints to boost food security especially now that credit access from lending agencies are becoming difficult as result of the conditionality attached, which in
many a times beyond the affordability of smallholder farmers is he area. The study could serve as teaching tool for students and reference for further research work.

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