Abstract
The study analysed off-farm income and farm capital accumulation among small-scale farmers at farm level in North Central Nigeria. Multistage sampling technique was used to select 360 respondents, comprising participants and non-participants in off-farm work. The participants were disaggregated into three main typology namely, agricultural wage, non-agricultural wage, and self-employments. Data for the study were obtained from primary source with the aid of standard questionnaire and analysed using descriptive and inferential statistics. Self-employment was the dominant (42.78%) off-farm work. Full-time participants were mainly (38.50%) in non-agricultural wage employment. Participants with off-farm work experience of 14–19 years were mostly (55.20%) in self-employment, while 61.50% of the farmers with off-farm work experience of 26–33 years were in agricultural wage employment. Off-farm income constituted 50.28% of total household income. The strongest and weakest predictors of enterprise diversification were funds for farm investment (0.65) and crop failure (0.36), respectively. The mean entropy of diversification was 0.67. Farm income (p < 0.01, t = –10.237) and off-farm income (p < 0.01, t = 2.536) significantly affected market labour supply. Self-employed participants had the highest average off-farm income (N266,680.78). Farm capital differed significantly (p < 0.05) among off-farm work typology. Farm capital was unequally distributed among the respondents (G = 0.56). Causality ran from farm capital to off-farm income. Participants had significantly (p < 0.01) less total farm liabilities, debt-asset-ratio, and loan for farm production than non-participants. Participants significantly (p < 0.01) incurred more yam production costs and total variable costs than non-participants. Participants had significantly (p < 0.01) higher average technical efficiency estimates in yam and cowpea enterprises but less average profit efficiency estimates than non-participants. It was concluded that small-scale farmers had average reliance on off-farm income for the purposes of generating funds for farm investment and increasing farm capital. Although, self-employment generated higher off-farm income, farm capital was highest among farmers in agricultural wage employment. Thus, off-farm income was diverted to non-farm enterprises, signaling a gradual drift from core farm production. It was recommended that small-scale farm households should increase off-farm income’s share invested in farming so as to raise production level, farm capital and obtain higher returns so that they could take full part in agribusiness; that IFAD and other stakeholders in rural development should encourage farmers in non-agricultural and self-employments to re-invest off-farm income in farming; and the Federal Government and IFAD should train farmers on the management of additional income from off-farm work. These measures would facilitate the development of the agribusiness sector and forestall dual farm structure from adversely affecting food production by small-scale farmers.
TABLE OF CONTENTS
| Title Page | i | |
| Approval Page | ii | |
| Dedication | iii | |
| Acknowledgement | iv | |
| Abstract | vi | |
| Table of Content | vii | |
| List of Tables | xii | |
| List of Appendix | xv | |
| List of Figure | xvi | |
| CHAPTER ONE: INTRODUCTION | ||
| 1.1 | Background of the Study | 1 |
| 1.2 | Problem Statement | 6 |
| 1.3 | Objectives of the Study | 10 |
| 1.4 | Hypotheses for the Study | 11 |
| 1.5 | Justification of the Study | 12 |
| 1.6 | Limitations of the Study | 14 |
| CHAPTER TWO: REVIEW OF RELATED LITERATURE | 15 | |
| 2.1 | Characteristics of Off-farm Work | 15 |
| 2.2 | Off-farm Income and Household Incomes | 17 |
| 2.3 | Enterprise Diversification | 21 |
| 2.4 | Farm and Off-farm Income and Market Labour Supply | 27 |
| 2.5 | Farm Capital | 31 |
| 2.6 | Off-farm Income and Farm Capital Accumulation | 33 |
| 2.7 | Farm Financial Characteristics | 39 |
| 2.8 | Off-farm Income and Farm Efficiency | 41 |
| 2.9 | Theoretical Framework | 43 |
| 2.9.1 | Labour supply theory | 43 |
| 2.9.2 | Theory of wage determination | 45 |
| 2.9.3 | Human capital theory | 47 |
| 2.9.4 | Theory of optimal time allocation | 49 |
| 2.10 | Analytical Framework | 52 |
| 2.10.1 | Heckman’s two-stage selection model | 52 |
| 2.10.2 | Econometric representation of human capital model | 55 |
| 2.10.3 | Discriminant function analysis | 56 |
| 2.10.4 | Entropy measure of diversification | 57 |
| 2.10.5 | One-way analysis of variance | 58 |
| 2.10.6 | Multiple regression | 59 |
| 2.10.7 | Kruskal-Wallis (H) | 59 |
| 2.10.8 | The Gini index | 60 |
| 2.10.9 | Farm efficiency | 62 |
| 2.10.10 | Simultaneous equation | 67 |
| CHAPTER THREE: METHODOLOGY | 68 | |
| 3.1 | Study Area | 68 |
| 3.2 | Sampling Technique and Sample Size | 69 |
| 3.3 | Data Collection | 69 |
| 3.3.1 | Validity and reliability of instrument | 71 |
| 3.4 | Data Analysis | 71 |
| 3.4.1 | Descriptive statistics | 71 |
| 3.4.2 | Multiple discriminant function analysis | 71 |
| 3.4.3 | Entropy measure | 73 |
| 3.4.4 | Multiple regression | 74 |
| 3.4.5 | One-way analysis of variance | 74 |
| 3.4.6 | Gini coefficient | 75 |
| 3.4.7 | Causality test | 75 |
| 3.4.8 | Test of means’ difference | 76 |
| 3.4.9 | Financial measures and ratios | 76 |
| 3.4.10 | Stochastic frontier analysis | 77 |
| 3.4.11 | Heckman’s two-stage selection model | 80 |
| 3.4.12 | F-statistic | 82 |
| 3.4.13 | One-way analysis of variance | 83 |
| 3.4.14 | Pearson’s product moment correlation | 83 |
| 3.4.15 | Kruskal-Wallis (H) | 84 |
| 3.4.16 | Test of means’ difference | 84 |
| CHAPTER FOUR: RESULTS AND DISCUSSION | 86 | |
| 4.1 | Characteristics of Off-farm Work in relation to Off-farm Work Typology | 86 |
| 4.2 | Off-farm Income’s Share and Household Income | 89 |
| 4.3 | Factors affecting Enterprise Diversification among Small-scale Farmers | 90 |
| 4.4 | Degree of Off-farm Diversification | 96 |
| 4.5 | Effect of Farm and Off-farm Income on Market Labour Supply | 97 |
| 4.6 | Disaggregation of Farm Income into main Typology | 99 |
| 4.7 | Level of Farm Capital among Off-farm Work Typology | 101 |
| 4.8 | Inequality of Farm Capital | 102 |
| 4.9 | Causality between Off-farm Income and Farm Capital | 104 |
| 4.10 | Difference in Farm Capital between Participants and Non-participants | 106 |
| 4.11 | Farm Financial Characteristics of Respondents | 107 |
| 4.12 | Farm Efficiency of Small-scale Farmers | 109 |
| 4.13 | Participation in Off-farm Work and amount of Off-farm Income’s Share invested in Farming | 137 |
| 4.14 | Effect of Socioeconomic Characteristics on Off-farm Diversification | 142 |
| 4.15 | Difference in Farm Capital among categories of Off-farm Work | 147 |
| 4.16 | Relationship between Off-farm Income’s Share of Household Income and Farm Capital | 148 |
| 4.17 | Difference in the Decision to Participate in Off-farm Work | 149 |
| 4.18 | Difference in Farm Capital between Male and Female-headed Farm households | 150 |
| 4.19 | Difference in Farm Efficiency Estimates between Participants and Non-participants | 150 |
| CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS | 152 | |
| 5.1 | Summary | 152 |
| 5.2 | Conclusion | 154 |
| 5.3 | Recommendations | 155 |
| 5.4 | Contributions to Knowledge | 157 |
| 5.5 | Suggestions for Further Research | 157 |
REFERENCES 159
LIST OF TABLES
| Table No. | Title | Page |
| 3.1 | Sampling Plan and Sample Size | 70 |
| 4.1 | Characteristics of Off-farm Work according to main Typology | 87 |
| 4.2 | Off-farm Income’s Share and Household Income | 90 |
| 4.3 | Group Statistics of Factors affecting Enterprise Diversification | 91 |
| 4.4 | Tests of Equality of Group Means | 92 |
| 4.5 | Log Determinants of off-farm work typology | 93 |
| 4.6 | Box’s M test results table | 93 |
| 4.7 | Eigenvalues | 94 |
| 4.8 | Wilks’ Lambda | 94 |
| 4.9 | Structure Matrix | 95 |
| 4.10 | Off-farm Work Typology Classification | 96 |
| 4.11 | Degree of Off-farm Diversification | 97 |
| 4.12 | Effect of Farm and Off-farm Income on Market Labour Supply | 98 |
| 4.13 | Descriptive Statistics of Off-farm Income by Main Categories | 100 |
| 4.14 | Difference in Off-farm Income among Off-farm Work Categories | 100 |
| 4.15 | Duncan Multiple Range Test of Off-farm Income | 101 |
| 4.16 | Descriptive Statistics of Farm Capital by Off-farm Work Typology | 101 |
| 4.17 | Inequality of Farm Capital | 102 |
| 4.18 | Inequality of Farm Capital for Participants | 103 |
| 4.19 | Inequality of Farm Capital for Non-participants | 104 |
| 4.20 | Farm Capital Model | 105 |
| 4.21 | Off-farm Income Model | 106 |
| 4.22 | Difference in Farm Capital between Participants and Non-participants | 107 |
| 4.23 | Farm Financial Characteristics of Respondents | 108 |
| 4.24 | Summary Statistics of the Descriptive variables for Yam | 111 |
| 4.25 | Summary Statistics of the Descriptive variables for Cowpea | 112 |
| 4.26 | Summary Statistics of the Descriptive variables for Rice | 113 |
| 4.27 | Summary statistics of the Descriptive variables for Cost Efficiency | 114 |
| 4.28 | Summary Statistics of the Descriptive variables for Profit Efficiency | 115 |
| 4.29 | Maximum Likelihood Estimates of the Stochastic Frontier Yam Production Function | 116 |
| 4.30 | Maximum Likelihood Estimates of the Stochastic Frontier Cowpea Production Function | 121 |
| 4.31 | Maximum Likelihood Estimates of the Stochastic Frontier Rice Production Function | 124 |
| 4.32 | Maximum Likelihood Estimates of the Stochastic Frontier Cost Function | 128 |
| 4.33 | Maximum Likelihood Estimates of the Stochastic Frontier Profit Function | 131 |
| 4.34 | Frequency Distribution of Yam Farmer Specific Efficiency Estimates | 134 |
| 4.35 | Frequency Distribution of Cowpea Farmer Specific Efficiency Estimates | 135 |
| 4.36 | Frequency Distribution of Rice Farmer Specific Efficiency Estimates | 135 |
| 4.37 | Frequency Distribution of Farmer Specific Cost Efficiency Estimates | 136 |
| 4.38 | Frequency Distribution of Farmer Specific Profit Efficiency Estimates | 137 |
| 4.39 | Participation in Off-farm Work and amount of Off-farm Income’s Share invested in Farming | 138 |
| 4.40 | Effect of Socioeconomic Characteristics on Farm Diversification | 144 |
| 4.41 | Difference in Farm Capital among Categories of Off-farm Work | 147 |
| 4.42 | Least Square Difference in Farm Capital among Off-Farm Work Categories | 147 |
| 4.43 | Duncan multiple range test of mean capital among off-farm work categories | 148 |
| 4.44 | Relationship between Off-farm Income’s Share of Household Income and Farm Capital | 149 |
| 4.45 | Difference in the Decision to Participate in Off-farm Work | 149 |
| 4.46 | Difference in Farm Capital between Male and Female-headed Households | 150 |
| 4.47 | Difference in Farm Efficiency Estimates between Participants and Non-participants | 151 |
LIST OF APPENDIX
| Appendix No. | Title | Page |
| 1 | Questionnaire Used | 180 |