Productivity and technical efficiency of palm oil extraction mills in Nigeria

Author: S. O. Ojo

Received 22 September 2004, accepted 11 December 2004.

Abstract

The productivity and technical efficiency (T.E) of intermediate technology palm oil extraction mills were studied in Nigeria. One hundred mill operators were randomly selected from Okitipupa, Irele and Ese Odo Local Government Areas of Ondo State using a set of structured questionnaire. Data were analysed using descriptive statistics and stochastic frontier production function. The performance evaluation of the intermediate mills revealed that the mills had low capacity utilization (38.25%), averagely high extraction ratio (15%) and high extraction efficiency (83.33%). The stochastic frontier analysis revealed the presence of technical inefficiency effects as shown by the large gamma value (γ= 0.85). The study showed that the variables, namely, fresh fruit bunches (FFB) milled, labour and operating expenses were efficiently used. The variables of age and household size of mill operators led to decrease in T.E., but the other two variables, namely, experience and years of education led to increase in T.E. The predicted T.E. ranged between 0.32 and 0.95 with a mean of 0.75, indicating that the T.E. varied among the various mills and that they were relatively efficient.