Bridging Gaps in Profit Efficiency: A Study of Medium-Scale Grain Milling Businesses in Abuja, Nigeria.
Publication Date: 10/10/2024
Author(s): A. M. Kabir, Musa Usman.
Volume/Issue: Volume 7 , Issue 4 (2024)
Abstract:
The broad objective of this study was to examine the profit efficiency of medium scale grain milling enterprises in Bwari Area Council, Abuja. Out of a sample frame of fifty seven, 50 respondents were randomly selected. The data collected was analyzed by the use of descriptive statistics, profit model and transcendental logarithmic stochastic profit frontier function. The results on socioeconomic analysis revealed that the mean age was 41 years, while 68% had primary education as their highest level of education. The mean household sizes and milling experience were 5 persons and 5 years respectively. Finally, almost all the respondents (98%) used both self financing and credit as the source of their capital. The result of the profit analysis revealed that an average medium scale grain mill in the study area recorded total revenue of N12, 842,080 per year with a net profit of N4, 522,161 per year. The coefficient of gamma () is large (0.81) and not significant implying that 81% of deviation from the profit obtained was not due to profit inefficiency effects. The coefficient of the cost of labour throughput (-69.28) was negative and statistically significant at 1%. The estimated coefficient of cost of machinery throughput (3.60) and cost of fuel throughput (8.07) were positive and statistically significant at 1%. All the interaction terms where statistically significant with three of the variables (cost of labour by cost of labour, cost of fuel by cost of fuel and cost of labour by cost of machinery) being positive, while the other three (cost of machinery by cost of machinery, cost of labour by cost of fuel and cost of machinery by cost of fuel) being negative. The mean profit efficiency was 69.8. It can be concluded that medium scale grain milling enterprises in the study area are profitable but not yet fully profit efficient. It is therefore recommended that training on better management practices be conducted by relevant agencies to improve profit efficiency.
Keywords:
Profit Efficiency, medium-Scale, Grain Milling business, Transcendental Logarithmic, Stochastic Frontier.
