Evaluation of the Production Efficiency and Profitability of Groundnut Production in Bwari and Gwagwalada Area Councils of Abuja, Nigeria
Abstract
This study assessed the production efficiency and profitability of groundnut farmers in Bwari and Gwagwalada Area Councils of Abuja, Nigeria. Using a multistage sampling technique, 200 respondents were surveyed through structured questionnaires. Descriptive statistics, stochastic frontier production function, and net farm income models were applied for analysis. Results showed that 55.0% of farmers were aged 31–50 years, while 57.55% had 5–15 years of farming experience, reflecting an active and knowledgeable farming population. Education was moderate, with 40.0% having secondary education, and household sizes were large, with 57.5% reporting 6 and above members. The stochastic frontier production function indicated that farm size (0.298, t = 4.14***), seed (0.215, t = 3.16***), and labour (0.176, t = 2.98**) significantly influenced economic efficiency, while fertilizer and capital were not significant. Inefficiency variables indicated that age (–0.112, t = – 2.43**), farming experience (–0.158, t = –3.04***), education (–0.092, t = –2.42**), extension contact (–0.185, t = –2.98***), and cooperative membership (–0.132, t = –2.69***) significantly reduced inefficiency, while household size and access to credit were not significant. Profitability analysis confirmed viability, with a gross income of ₦145,500/ha, total cost of ₦52,790.00, and net farm income of ₦92,710.00. The return per naira invested (RNI) was 1.76. Key constraints included high input costs (81.0%), limited credit (74.0%), pest infestation (67.5%), and inadequate extension services (60.0%). Based on the findings, the study recommended the 81.0% of farmers identified high input costs as a major constraint, policies should focus on input subsidies, group purchasing schemes, or improved distribution systems to ensure farmers can access quality seeds, fertilizer, and agrochemicals at lower prices.
Keywords
Download Options
Introduction
Groundnut (Arachis hypogaea L.)is one of the most important leguminous crops in Nigeria, valued both for domestic consumption and its role in trade. Nigeria ranks among the leading producers of groundnut in Africa, with cultivation concentrated instates such as Kano, Kaduna, Katsina, Bauchi, and Jigawa. The crop provides edible oil, protein-rich food, and serves as a key raw material for confectionery, feed, and vegetable oil industries (FAO, 2021). For rural households, groundnut is a major source of livelihood, ensuring both food security and income generation (Amare et al., 2019; Idu et al., 2025).Beyond nutrition, its economic relevance is evident in its contribution to Nigeria’sagricultural GDP and its role in rural employment. Historically, Nigeria was a dominant player in global groundnut exports during the 1960s, though this position weakened with the oil boom, policy neglect, and structural changes in agriculture (Okonkwo & Umeh, 2020; Yunus et al., 2025).Even so, groundnut remains a crop of strategic importance for industrial growth and poverty reduction.Agronomically, it improves soil fertility through nitrogen fixation, making it crucial in sustaining productivity in semi-arid regions. This dual nutritional, economic, and ecological significance underscores why groundnut continues to receive attention in agricultural development and food security strategies in Nigeria (Adeyemi et al., 2025).
Despite its significance, groundnut production in Nigeria faces persistent challenges that undermine efficiency and profitability. The majority of farmers operate on a small scale, using traditional methods with limited access to improved seeds, fertilizers, and mechanization (Abu et al., 2021; Joel et al., 2025).As a result, yields remain far below global averages. Pest and disease infestations, especially groundnut rosette virus, along with drought and erratic rainfall, further reduce output (Olorunfemi et al., 2018).Weak infrastructure and poor access to storage and markets increase post-harvest losses, while financial and institutional barriers—such as inadequate credit and limited extension services—restrict adoption of modern technologies. Market volatility adds to these problems, as smallholders often lack bargaining power and must sell at unfavourable farm-gate prices (Ogunlela & Ogunlade, 2019; Maisule et al., 2025).The combined effect of these constraints is a productivity– profitability gap: farmers struggle not only to maximize efficient resource use but also to earn sustainable returns. Groundnut’spotential for supporting rural incomes and national agricultural growth therefore remains underutilized, and its full economic impact is not being realized.
Although there is growing interest in agricultural efficiency and profitability research in Nigeria, studies that integrate both dimensions for groundnut farming remain scarce. Much of the existing work examines profitability using gross margin or net income analysis, or efficiency using approaches such as Stochastic Frontier Analysis (SFA) and Data Envelopment Analysis (DEA). However, few combine the two to provide a complete picture of farm performance (Shehu et al., 2020; Tanko & Jirgi, 2020). Profitability alone cannot explain how effectively resources are utilized, while efficiency measures without profitability do not reveal the actual economic sustainability of farming activities. Moreover, many studies are region-specific, limiting generalization across Nigeria’sdiverse agro-ecological zones. Important socio-economic factors such as education, household size, farm experience, and access to creditor extension services are often overlooked, even though they significantly influence both efficiency and profitability outcomes. Given Nigeria’spersistent food security challenges and rural poverty, there is a pressing need for a comprehensive evaluation that integrates production efficiency with profitability analysis. By filling this gap, the present study contributes both to the academic literature and to practical discussions on Nigeria’sagricultural economy (Olaitan. et al., 2025; Oyediji et al., 2025).
This study aims to evaluate the production efficiency and profitability of Groundnut production in Bwari and Gwagwalada Area Councils of Abuja, Nigeria. To accomplish this, the following objectives are put forward: a) Describe the socio-economic characteristics of groundnut farmers in the study areas. b) Estimate the economic efficiency of groundnut production. c) Determine the determinants of efficiency in groundnut production. d) Estimate the profitability of groundnut production. e) Identify the major challenges associated with the production of groundnut in the study areas.
Conclusion
This study examined the production efficiency and profitability of groundnut farmers in the study area, using socio-economic characteristics, stochastic frontier analysis, profitability estimates, and constraints assessment. The socio-economic profile of the 200 respondents showed that 55.0% were aged 31–50 years, reflecting an active farming population, while 57.5% had 5– 15 years of farming experience, indicating accumulated knowledge of groundnut cultivation. Education levels were modest, with 40.0% having secondary education and 27.5% primary education, both enhancing adoption of improved practices. Household sizes were large, as 42.5% reported 1-5 members, ensuring limited access to family labour. Institutional support was weak, with only 45.0% having regular extension contact, and 57.5% accessing credit within ₦50,000–₦100,000. The stochastic frontier production function showed varying levels of efficiency among farmers. Significant production factors were farm size (0.298, t = 4.14***), seed (0.215, t = 3.16***), and labour (0.176, t = 2.98**), while fertilizer and capital were not significant. Diagnostic statistics revealed a gamma (γ) of 0.82, showing that inefficiency explained 82% of output variation. The mean efficiency score of 0.71 indicated that farmers achieved 71% of potential output, leaving a 29% gap that could be closed through better resource use.The inefficiency model revealed that age (–0.112, t = –2.43**), farming experience (–0.158, t = –3.04***), education (–0.092, t = –2.42**), extension contacts (–0.185, t = –2.98***), and cooperative membership (– 0.132, t = –2.69***) significantly reduced inefficiency, emphasizing the importance of demographic and institutional factors. However, household size (0.025, t = 0.93ns) and access to credit (–0.038, t = –0.93ns) were not significant, suggesting that these did not strongly influence efficiency differences among farmers.
Profitability analysis confirmed the economic viability of groundnut production. Farmers earned a gross income of ₦145,500 per hectare against a total production cost of ₦52,040.92, generating a net farm income of ₦93,459.08. The return per naira invested (RNI) was 1.80, showing that every ₦1 invested yielded ₦1.80 in returns. Labour dominated production costs (66.77%), followed by seed (11.32%) and fertilizer (10.22%), highlighting the labour-intensive nature of groundnut farming.Despite profitability, constraints remained. High input costs (81.0%), limited credit access (74.0%), pest and disease infestation (67.5%), and inadequate extension services (60.0%) were the most severe, while other challenges included poor market prices (57.5%), climate variability (51.0%), lack of storage (47.5%), high labour costs (42.5%), land tenure issues (31.5%), and weak road infrastructure (29.5%).
Based on the findings of the study, here are recommendations, derived from the data and analysis: 1. Since 81.0% of farmers identified high input costs as a major constraint, policies should focus on input subsidies, group purchasing schemes, or improved distribution systems to ensure farmers can access quality seeds, fertilizer, and agrochemicals at lower prices. 2. With 74.0% of respondents citing limited credit as a barrier, there is a clear need for farmer-friendly credit schemes with flexible repayment plans. Targeted microfinance tailored to smallholder groundnut farmers could enable timely purchase of inputs and adoption of efficiency-enhancing technologies. 3. Inadequate extension contact (60.0%) significantly influenced inefficiency. Investment in extension networks, training programs, and ICT-driven platfos will provide farmers with timely knowledge on modern production practices, pest management, and resource use. 4. Cooperative participation was shown to significantly reduce inefficiency. Encouraging farmers to join or form groundnut cooperatives can improve bargaining power, facilitate bulk input purchases, and enhance access to markets and credit.
Labour accounted for 65.79% of production costs, and 42.5% of farmers reported high labour expenses as a constraint. Mechanization support through affordable tools or farmer cooperatives can reduce labour intensity and enhance efficiency in groundnut farming.
