Poverty and Efficiency among the Farming Households in Nigeria: A Guide for Poverty Reduction Policy

This study analysed the relationship between poverty and efficiency among the farming households in Nigeria using farm level data from Benue State. The P-alpha measure of poverty and the Food Energy Intake (FEI) method were used for the measurement of poverty gap among the respondents, whereas Stochastic Frontier was used to obtain the efficiency estimates. Correlation analysis was used to achieve the objective of the study. The study showed that average level of technical, allocative and economic efficiency was estimated at 30, 12 and 36%, respectively. Allocative inefficiency was worse than technical inefficiency, implying that the low level of overall economic efficiency was the result of higher cost inefficiency. The study further showed an inverse relationship between poverty gap and technical efficiency estimates among the respondents, implying that as average productivity increases poverty decrease. Furthermore, the study showed a direct relationship between poverty gap and allocative efficiency estimates, implying that as the cost of technical efficiency increases poverty increases. The study also showed a direct relationship between poverty gap and economic efficiency estimates among the respondents, implying that as the cost of maximizing output increases poverty increases. Overall economic efficiency and hence poverty reduction among the respondents resulted more from technical efficiency than allocative efficiency. The policy implication is that poverty reduction among the farming households is linked with improving farm efficiency. If poverty is to be eradicated among the farming households, farming activities must be efficient.