ABSTRACTThe study determined the production efficiency of poultry feed industries in Nigeria. It specifically examined the characteristics of poultry feed industries; the level and efficiency of input used; the level of production; the profitability level; technical, allocative and economic efficiency levels and the constraints to profitable feed production. Primary data were collected using a set of structured questionnaire from a sample of 279 mills from 12 states across the 6 geo-political zones of Nigeria. The data collected were analysed using descriptive statistics, Net Income Analysis and the stochastic frontier analysis. The findings indicated that the poultry feed industry was characterized by the presence of commercial, toll and on farm mills with an average of 15 years milling experience, with an average capacity 10 tonnes per day operating on average of 5days/week using 1-2shifts in a day. The mills produced mainly feed in mash form for broilers (starter and finisher), pullets, layers and cockerels (chick, grower and layer). The commercial mills made an average profit of N16, 855.98, the toll mills made N14, 277.07 profit, while the on farm had N13, 082.11and the pooled data for all the mills showed an average profit ofN14, 090.75 from the production of 1000Kg of poultry feed. The test of hypothesis on profitability confirmed that all the mill categories were making profit, with a return to Naira invested ranging from N0.15 to N0.28 for the three category of mills. The feed mills were found to be technical and cost inefficient. The mean technical efficiency of the commercial mills was 0.88; the toll mills had 0.82; while the on farm mills had 0.79 and 0.82 for the pooled data. All the mean technical efficiency values were below the ones specified by the frontier. To attain full technical efficiency, the average mills have to increase their output by 11% with the current level of resources or reduce costs by 11% at the current level of output. The mean allocative efficiency for the commercial mills was 1.145, for the toll mills it was 1.132, while the on farm mills had 1.152 and 1.143 was the mean for all the mills pooled together. All the allocative efficiency values were above the ones specified by the frontier. To attain full cost efficiency, an average mill has to reduce cost of production by about 14% at the current level of output. The test of hypothesis for the presence of technical and cost inefficiency further confirmed the presence of inefficiency at 1% level. The variables that were found to increase technical and cost inefficiency include, distance to ingredient sources, source of power, number of months ingredients are available, access to credit, mill size. Some of the constraints to more efficient and profitable poultry feed production identified include: adulteration of feed ingredients, fluctuation in prices and seasonal nature of the ingredients. There was also inadequacy of electricity and high cost of diesel to power generators. Taxes were equally high and multiple in nature. Based on the findings it can be concluded that feed production was profitable despite the technical and cost inefficiency of the mills. It was therefore, recommended that the mills should have access to more credit facilities as this will ensure expansion of the business and reduction of costs through bulk purchase and storage of feed ingredients, adulteration of ingredients could be checked through enforced regulations in the sector, adequate supply of electricity to the industries can reduce costs and improve cost efficiency.
