Sunday B. Akpan, Obasi O. Ukoha, C. E. Onyenweaku and Daniel E. John
The study estimated and analyzes technical efficiency indices in the sugar industry in Nigeria in the period 1970 to 2010. Secondary data were obtained from the sugar firms, Food and Agricultural Organization, Central Bank of Nigeria, National Bureau of Statistics and Federal Ministry of Finance. Unit root tests were conducted on the specified data to ascertain their stationarity and order of integration. Stochastic Cobb-Douglas production function for the sugar industry was estimated from which indices of technical efficiency were obtained by using frontier 4.1 software. Trend in the technical efficiency indices showed relatively unstable and fairly downward fluctuations with an average index of 50.80% and excess technical efficiency rate of 49.20%. Multiple-regression of various forms based on the ordinary least squares technique was used to determine the factors that influence technical efficiency in the industry. Empirical result revealed that technical efficiency in the sugar industry was influenced by the industry?s sales growth, capital-labour ratio, official tariff rate on sugar import, real exchange rate and the liberalization policy period. To increase the technical efficiency of resource use in the sugar industry, restrictive policy measure on sugar imports through periodic review of tariff rate and quantity restriction on sugar import is strongly advocated. Also, capital intensive method of production should be adopted as a means of promoting efficiency of resource use in the industry. Furthermore, effective marketing policy on the industry manufactures is strongly recommended. Finally, the industrial policy package for the industry during import substitution period should be promoted in the sugar sub-sector in Nigeria.
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