Bayes Approach to the Estimation of Technical Efficiency and Returns to Scale in Agriculture: A Case of Nigeria

Most studies in Nigeria have focused on the classical approach to estimating technical efficiency. In this paper, we examine technical efficiency of small farms by estimating a stochastic production frontier model using the Bayesian methodology. The model is applied to farm household data from Nigeria. The results obtained show that farm size, fertilizer, hired and family labour are positive and significant at 5%. The estimated stochastic frontier function indicates that farms are technically inefficient. Efficiency was found to be positively influenced by the age, gender, education, extension visits and participation in off-farm activities. We also found that the farms in our sample exhibited increasing Returns to Scale. Our findings have significant policy implications as it draws attention to increasing agricultural productivity through improving the existing level of efficiency of small farmers.