Developing Country Studies www.iiste.org ISSN 2224-607X (Paper) ISSN 2225-0565 (Online) Vol.3, No.10, 2013 122 Allocative Efficiency and Returns to Scale among Fadama II Broiler Farmers in Imo State, Nigeria Eze, C. C; J.C. Okere; A.I. Maduike* and G.N. Ben-Chendo Department of Agricultural Economics Federal University of Technology Owerri * E-mail of the corresponding author: *ia.maduike@yahoo.com Abstract This study investigated the efficiency of resource use and Returns to Scale among broiler farmers in Imo State. Data were collected through a multi-stage sampling from 50 broiler farmers in the State with the aid of structured questionnaire. Data collected were analyzed using descriptive statistics, Efficiency Index, Elasticity of Production technique and the Ordinary Least Square Regression model. The results from this study showed that 68% of the respondents engaged in farming as their primary occupation with mean age of 47.1 years and mean farm size of 563 birds. The farmers made an average Net Revenue of N291,192.10 with 66Kobo Return on Investment. Medication (significant at 1%), farm size (significant at 5%), feed and other inputs (significant at 1%) were the major factors affecting broiler output. The farmers operated at increasing Returns to Scale with 1.1408 Elasticity of Production (EP). It was concluded that broiler enterprise among the Fadama II farmers in Imo State is profitable but there is inefficiency in resource allocation. It was therefore recommended that the farmers either keep labour constant and increase their farm size or keep the farm size constant and decrease their use of labour input for increased profitability of their enterprises. Keywords: Allocative efficiency, Returns to Scale, broiler production, Fadama II farmers 1. Introduction The objective of resource management is to ensure efficient use of resource and to maximize resource productivity (Onyebinama, 2000). The main aim is to find ways of increasing output per unit of input and obtaining desirable inter-firm, intra-firm and inter-sector transfer of production resource in order to provide the means of raising our economic level (Awoke, 2003). There are distinctly two types of efficiency; technical and allocative. Markovits (2008) defines allocative efficiency as the type of economic efficiency in which the economy or producers produce only that type of goods and services which are more desirable in the society and also in high demand. Sullivan and Sheffrin (2003) defines technical efficiency as a means in which natural resources are transformed into goods and services without waste, that producers are doing the best job possible of combining resources to make goods and services. Technical efficiency is just one component of overall economic efficiency. In economics, the term economic efficiency refers to the use of resources so as to maximize the production of goods and services. An economic system is said to be more efficient than another (in relative terms) if it can provide more goods and services for the society without using more resources (Barr, 2004). A more recent effort towards boosting production and enhancement of farmers’ welfare is the introduction of the second National Fadama Development Project. This Fadama II project is a follow up to the phase I (one) equally funded by the World Bank between 1993 and 1999. The National Fadama Development Project (NFDP) was established to ensure all year round growing of crops in all the states of the federation through the exploitation of shallow aquifers and surface water potentials in each state using tubewells, wash bores and petrol-driven pumps technology (World Bank, 1992). The NFDP II came with a lot of innovations which include that the participation in the project was not limited to Fadama crop farmers, but extended to all users of Fadama resource pastoralists, fishers folks, hunters, gatherers, poultry farmers, service providers as well as vulnerable and marginalized groups (Imo State Fadama Development Project, 2007) Optimum resource allocation for profit maximization is a major challenge facing farmers in Nigeria and in Imo State. According to Awoke and Okorji (2004), resource use in developing countries such as Nigeria is said to be faced with the problem of under-utilization of capacity which is associated with low returns. Ogunfowora et al. (1974) had earlier reported that resources were not efficiently allocated in small-scale farms because of traditional style of production. Okon (2005) blamed such inefficiency of resource use on the dominance of elderly men and women in our farms. High cost of labour, gender discrimination and emigration are factors which militate against efficient use of labour while non-availability of improved inputs, high cost of loan and rigorous processes of obtaining loans hamper efficient utilization of capital. This also conforms to the research