There has been a remarkable reduction in the contribution of groundnut to Nigeria’s
foreign exchange earnings since the discovery of petroleum resources. There is need
to re-position this valuable crop to assume its rightfull position in the nation’s
economy. Thus, this study assessed the profitability of groundnut production and level
of technical and allocative efficiencies of the farmers using Benue State as a case
study. Multi-stage sampling technique, which involves purposive selection of two
Local Government Areas (Makurdi and Ogbadigbo) and subsequent random selection
of groundnut farmers from the selected three communities was adopted in collecting
cross-sectional data from 270 groundnut farmers using structured questionnaire and
oral interview. Descriptive statistics, gross margin analysis and Stochastic Frontier
Model were used to analyse the data. The study found that the mean gross margin per
hectare of groundnut was N1,897.86 per month while the profitability test shows that
it is profitable (t= 6.87; P = 0.01). However, the key variables that influence
profitability are hired labour, cost of seed, agrochemical and cost of fertilizer.
Meanwhile, the mean technical efficiency estimate of groundnut farmers in the study
area was found to be as low as 4%. This could be attributed to high demand for
labour, land and agrochemicals which are the critical factors that play a significant
role in groundnut production. The socio-economic factors that affect groundnut
production in the study area include farmers’ age, household size and annual income.
Similarly, an average farmer spent about 28% above the minimum frontier cost.
Furthermore, the elasticity of cost of production with respect to cost of hired labour
and cost of seed was found to be relatively high indicating their importance in
groundnut production. More land should be put into groundnut production and
farmers should be given essential agricultural inputs that will enhance the productivity
of this cash crop. The study further recommends the development and dissemination
of simple machines that can facilitate the stages involved in the production of
groundnut.