Determinants of Farm Profit among Cassava-based Farming Households in Osun State Nigeria: Robust Estimation Approach

Abstract

Despite its high tendency to produce misleading estimates particularly when one or more basic inherent assumptions are violated, most studies estimating net profit generation among farmers continue to adopt Ordinary Least Square (OLS) regression approaches. This study examined the determinants of farm income among smallholder cassava farmers in Osun State, Nigeria correcting for various assumptions violations of the classical regression model. Aside from the usual regression model of the OLS, we employed Two-Stage Robust Ridge methods based on M, MM, and S estimators and addressed other violated regression assumptions. A total of 101 smallholder farmers in Osun state were randomly selected for the study. Analyses revealed that the major socioeconomic factors affecting farming household profit were credit access, tenure security, and household size. On average, the return on investment (ROI) among cassava-based farming households was found to be ₦1.82 per naira invested. The research findings indicated that the cultivation of cassava is a profitable venture within the investigated area and recommended that future analysis should be based unbiased methodology for effectiveness and accurate information. JEL Classifications: C25, D13, H31, O13