Profitability Analysis and Resource Use Efficiency of Smallholder Palm Oil Production in Delta State

Oil palm is an important crop whose products (oil and kernel) are used for food and non-food purposes. Palm oil is a commodity which is in high demand in Nigeria based on its food and non-food uses. The study examines the profitability level and resource utilization efficiency of small holder palm oil production across the agricultural zones in Delta State. A multistage random sampling technique was used in selecting respondents for the study. Primary data were collected with the aid of well-structured questionnaire and interview schedule. Data were analyzed using descriptive statistics; mode, frequencies and corresponding percentages and gross margin model and profitability techniques. The result of the analysis revealed that, the small-holder palm oil agribusiness is dominated by people from 50 years and above (32.5%) mainly married (76.8%). About 37% and 29% of the farmers possess West Africa School Certificate and Primary School Leaving Certificates respectively as their educational qualification. About 50% of the farmers have 16-20 years’ experience in oil palm business. The resource use efficiency showed that family labour, hired labour and processing method cost were over-utilized while number of fresh fruit bunches were underutilized. The profitability indices indicated that palm oil production was profitable in all the three agricultural zones but comparatively, it was most profitable in the Delta Central zone, followed by the Delta North zone with the least being the Delta South agricultural zone. The study concluded that with efficient use of resources, the small holder palm oil production is a profitable and viable agribusiness in Delta State.