In this study, we investigate the profitability of cocoa enterprise, the
technical efficiency, and drivers of efficiency among cocoa farmers, in
southwest Nigeria. Data were collected through the use of well structured
questionnaires administered to farmers in selected cocoa producing states. For
enterprise profitability, the gross margin analysis was used while the Data
Envelopment Analysis (DEA), a non-parametric approach, was used to analyse
technical efficiency and the OLS regression to profile socio-economic variables
that affect technical efficiency. A majority of farmers were male with a mean
age of 55.01±16.74 years, mean household size of about 7.28±3.79 members
and about thirty-five percent without any formal education. Over eighty
percent had more than 10 years of cocoa farming experience with the average
age of cocoa trees being 30.38 ±17.92 years. Cocoa was found to be a profitable
enterprise, although returns in Ekiti state were higher. The majority of cocoa
farmers were relatively technically efficient in their use of resources, with a
mean technical efficiency of 0.8126. Farmers in Ekiti state are most technically
efficient with a mean of 0.8922 followed by Ondo state with a mean of 0.8132
while Osun state has the least mean of 0.7323. Education was positively and
significantly associated with efficiency, while area of land and age of cocoa
trees negatively affects technical efficiency. This indicates that public
investments in education have complementary and synergistic effects on
improved cocoa technical efficiency, and younger cocoa trees should be planted
by farmers in southwest Nigeria.