Determinants of Capacity Utilization among Agribusiness Firms in Nigeria

For agribusinesses in developing economies to realize their potential, enhancing their overall performance in terms of capacity utilisation is essential. The objective of thiepaper is to provide information on the determinants of capacity utilization among agribusinesses in Nigeria. Providing this information is necessary to deliver good policies and strategic support from governments as well as providing a favourable business environment that will help agribusinesses reach their potential. This study adopted the survey design. Data were collected from 2014 the World Bank Enterprise survey. Purposive sampling technique was used to select all the agribusiness enterprise categories included in the World Bank data. These categories include food, tobacco, textiles, garments, leather, wood, and paper industries. The data were analyzed with instrumental variable estimation technique. Result from the analysis showed that size of enterprise and legal status were statistically significantly different from zero at 1% level of significance while Experience of top manager was found to be significant at 5% per cent level of significance. The result, therefore, revealed the existence of significant effects of firm characteristics on capacity utilization of agribusiness firms. Among other things, effort must be made to harness the potential of women agribusiness leaders, as well as small agribusinesses in the country as they appeared to be the most efficient and performing entity in the country. No previous study in the country has been carried out to uncover these determinants and how they can be improved to deliver a robust agribusiness sector.