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EFFECTS OF ECONOMIC PARTNERSHIP AGREEMENTS ON AGRICULTURAL TRADE BETWEEN SMALL AND LARGE ECOWAS ECONOMIES AND THE EU

EFFECTS OF ECONOMIC PARTNERSHIP AGREEMENTS ON AGRICULTURAL TRADE BETWEEN SMALL AND LARGE ECOWAS ECONOMIES AND THE EU

 

TABLE OF CONTENTS

Title page                                                                                                                                i

Certification                                                                                                                            ii

Dedication                                                                                                                              iii

Acknowledgment                                                                                                                   iv

Table of contents                                                                                                                    v

List of tables                                                                                                                           vii

List of figures                                                                                                                         viii

Abstract                                                                                                                                  ix

CHAPTER ONE: INTRODUCTION                                                                                1

1.1       Background of the Study                                                                                           1

1.2       Problem Statement                                                                                                      5

1.3       Objectives of the Study                                                                                              7

1.4       Study Hypotheses                                                                                                       7

1.5       Justification of the Study                                                                                           7

1.6       Limitations of the Study                                                                                             8

CHAPTER TWO: LITERATURE REVIEW                                                                  9

2.1      The Status of Economic Partnership Agreements (EPAs) Negotiations                     9

2.2       Trade Effects (Creation or Diversion)                                                                        10

2.3       Revenue Effects                                                                                                         13

2.4       Welfare Effects                                                                                                           14

2.5       ECOWAS Regional Block and Trade Policies                                                           16

2.6      Importance of International Agricultural Trade                                                          18

2.7       Empirical Literature                                                                                                    19

2.8       Theoretical Framework                                                                                               22

2.8.1    Heckscher–Ohlin theorem (HO)                                                                                 23

2.9       Analytical Framework                                                                                                24

2.9.1    Smart Model for Partial Equilibrium Simulation Analysis                                         27

CHAPTER THREE: RESEARCH METHODOLOGY                                                  32

3.1       The Study Area                                                                                                           32

3.2       Sampling Procedure                                                                                                    33

3.3       Data Collection                                                                                                           33

3.4       Data Analysis                                                                                                              34

3.4.1    Model Specification for Objective 2                                                                          34

3.4.2    Model Specification for Objective 3                                                                          36

3.4.3   Model Specification for Objective 4                                                                          37

CHAPTER FOUR: RESULTS AND DISCUSSION                                                       38

4.1       Patterns of Imports of Sample of small and large economies of

ECOWAS Countries (the Gambia and Nigeria).                                                        39

4.2:      Potential trade effect of EPAs between ECOWAS (the Gambia and

Nigeria) and EU on Agricultural products.                                                                41

4.3:      Potential Revenue Effect of EPAs between ECOWAS (The Gambia and

Nigeria) and the EU                                                                                                    44

4.4:      Potential Welfare Effect of EPAs between ECOWAS (The Gambia and

Nigeria) and the EU                                                                                                   46

4.5       Agricultural Sensitive Products for the Selected Small and Large

ECOWAS Economies (the Gambia and Nigeria).                                                     48

CHAPTER FIVE: SUMMARY, CONCLUSIONS AND POLICY

                                 IMPLICATIONS                                                                                 50

5.1       Summary                                                                                                                     50

5.2       Conclusion                                                                                                                  51

5.3       Recommendations                                                                                                      53

5.4       Contributions to Knowledge                                                                                      53

5.5       Areas for Future Research                                                                                          54

REFERENCES                                                                                                                    55

APPENDIX

 

Abstract

Smart Simulation Partial Equilibrium Methodology was employed in this study to determine Effects of Economic Partnership Agreements on Agricultural trade between small and large ECOWAS economies and the EU. Specifically, the study looked at the patterns of imports of sample of two ECOWAS countries the Gambia and Nigeria; the potential trade effects on the selected countries embarking on free trade under economic partnership agreement scenario; the potential revenue effects on the selected countries under the same platform; the potential welfare effects on the selected countries under the same platform; the sensitive products based on source and volume of import criteria. WITS provided access to international trade and protection related data and offered built-in-analytical tools for the study. Results of the analysis on patterns of import of the selected ECOWAS countries showed that the Gambia’s highest ($62158.328 million) proportion of imports came from ROW, followed by imports from the EU ($ 13071.561 million) and least ($1372.053 million) imports from ECOWAS region. However, it was observed that the highest ($28493.34 million) product group imported by the Gambia was product group 10 (cereals) at 45.840% from ROW. The results on patterns of agricultural imports of Nigeria showed that Nigeria’s highest ($1817981.912 million) imports on agricultural products came from ROW; followed by imports from EU ($982718.781 million) and least ($45635.089 million) imports from ECOWAS region. It was further observed that product group 10(cereals) was the highest ($699,878.321million) product group Nigeria imports which came from ROW at 38.50%. Result on Potential Trade Effect of EPAs between economies of ECOWAS countries studied and the EU, showed that the EU beneficiary countries (ECOWAS) were seen to gain $35926.855 million in “Trade Creation” and $15081.5191 million in “Trade Diversion”, while Total Trade Effect amounts to $20845.0309 million in Product groups studied as obtained from SMART Simulation Partial Equilibrium 2014. Result on Potential Revenue Effect of the two sample ECOWAS countries going into EPAs, showed total likely revenue losses (-$17223.665 million) for the two sampled countries on the  product  groups studied, with Nigeria recording higher ( -$16666.638 million) loss and Gambia recording least ( -$557.027). Result on Potential welfare effect of EPAs between the economies of ECOWAS countries studied and EU showed likely welfare gain ($2326.905 million) for the consumers in all the agricultural products studied. With Nigeria recording higher welfare gain ($2238.793million) than the Gambia ($88.112 million) in all the product groups studied. Result on sensitive products based on source and volume import criteria, showed that product group 3, 4 and 15 were identified to contain the potential sensitive products for the ECOWAS countries studied and should be exempted from EPAs as identified by the study. Base on the findings of this study, the following recommendations were made: The trade effect showed that ECOWAS countries are likely to record greater trade creation effect than trade diversion effect in favour ECOWAS countries. The on-going Economic partnership Agreements (EPAs) negotiations between ECOWAS and the EU need to be concluded and implemented based on this ground but measures should be taken to guide the infant industries to protect them from fazing off from production due to cheaper goods flooding ECOWAS markets from EU market.There is need for fiscal reforms to replace EPAs induced tariff revenue losses. The fiscal reforms should entail shifting revenue from trade to non-trade tax sources and improving the efficiency of fiscal revenue collecting policies. Examples of non-tariff instruments that may assume greater importance in revenue generation include value-added tax (VAT) and excise taxes charged on imports from the EU. If  ECOWAS countries can adapt this measure, EPAs should be signed since the lost revenue can be reclaimed via these means. Agricultural product groups 3, 4 and 15 should be the likely sensitive products for the ECOWAS countries and should be exempted from EPAs as identified in this study.

 

CHAPTER ONE

INTRODUCTION

 

  • Background of the Study

The Economic Partnership Agreements (EPAs) between Economic Community of West African States (ECOWAS) and the European Union (EU) are aimed at promoting trade between the two groupings. The expectations are that through trade deepened integration, development in addition to sustainable growth and poverty reduction would evolve in ECOWAS sub region. The EPAs are set out to help West African countries integrate and as well into the world economy and share in the opportunities offered within and outside the sub-region by globalization. Also, it hopes to provide scope for wide-ranging trade co-operation on areas such that services, and standards acting as drivers of change to kick-start reform and help to strengthen rule of law in the economic field, thereby attracting foreign direct investment (FDI), to help create a “virtuous circle” of growth  (ECOWAS Statistical Bulletin,2013).

However, with the exception of about 15 Caribbean states that signed a regional economic partnership agreement (EPA), negotiations with all the other countries have continued. To preserve their access to the EU market after 2007, about 20 countries concluded interim trade agreements. This light version of the original EPAs has not put an end to the negotiations as some of these countries would like to see the terms of the trade agreement revised, or their scope extended, and concluded at regional levels, to preserve their regional integration process (ECDPM, 2012). In this regards, one wonders how Ivory Coast and Ghana each could have a bilateral free trade agreement with the EU. This is because opening their domestic market to European products, while their West African partners, with whom they form a customs union, keep protecting their market from the EU would, very logical lead to EU goods flooding the whole regional markets via these two countries, rendering the West African customs union and further integration process totally ineffective. This scenario which seems to be unique to West Africa is the same in several other African regions (Stevens, 2006).

Recently, Europe threatened to withdraw the special trade preferences by 2014 to countries not showing commitment to proceed with their interim EPA. Europe’s objective hopefully is to press for the conclusion of broader trade deals at regional level that would replace these awkward and controversial interim EPAs. In an apparently generous move, the European parliament’s trade committee called on decision-makers to extend this deadline to 2016. The identification of regionally traded products in a bid to sustaining them through joint and diversified action plan by the region is very necessary in aiding the negotiations through listing of products where trade exist among ECOWAS for which the EU are suppliers. These should be exempted from tariff removal (McKay, Milner & Morrissey, 2005).

EPAs date back to the signing of Cotonou Agreements in 2000 and are “tailor-made” to suit specific regional circumstances. In 2002 when the EU opened free trade negotiation with 78  African, Caribbean and Pacific countries, it promised to go beyond conventional free-trade agreements, focusing on ECOWAS among other ACP countries’ development and taking into account their socio-economic circumstances included co-operation and assistance to aid ECOWAS implement the Agreements. The opening up of the EU markets fully and immediately (unilaterally by the EU since 1st January 2008), and allowing ECOWAS 15 to 25 years to open up to EU imports while providing protection for the sensitive 20% of imports are also major aspects of EPAs ( Busse & Grossman ,2007).

However, Chris, Morrissey and Evious (2008) stated that the introduction of reciprocity under an EPA will tend to threaten intra-regional trade in ECOWAS region for a number of reasons. There is a direct displacement threat to the traded products existing among regional suppliers by the elimination of the external tariff protection vis-a-vis European exporters. There is also an indirect threat associated with the displacement of domestic production by European exporters in domestic markets, which may thereby reduce regional production capacity and future prospects for intra-regional exporting. These threats to ECOWAS regional trade development can be offset in a number of ways. Most obviously, as negotiations allow for the exclusion of sensitive products and for phased introduction of the tariff reductions, ECOWAS regions in general may benefit by treating products traded within the region as sensitive for EPAs, hence avoiding or postponing any reductions on tariffs on imports from the EU. If EPAs promote increased ECOWAS exports to the EU there is potential to benefit from spill-over (Onogwu, & Arene, 2013).

The results reported and discussed in many studies are based on a number of ex ante studies of the trade effects of EPAs on various ACP groupings or countries undertaken by the authors thus: – McKay, Milner and Morrissey (2005) analyzed the welfare impacts on the East African Community (EAC);Greenaway and Milner (2006) covered CARICOM and Milner, Morrissey and Zgovu (2008) considered aspects of impact and adjustment costs for the EAC and. Morrissey and Zgovu (2011) focused on agriculture and total respective imports for a large sample of ECOWAS countries to compare the welfare effects of a full liberalization with a scenario that excluded products traded intra-regionally. These studies measured the regional trade displacement effects of the liberalization of tariffs on imports from the EU given their areas of study.

By far, one of the studies closer to this   research intention was the study by Busse, et al (2004). Though their study was on’ agricultural products it was silent over trade classification and product details. Again, their study was silent at product sections levels hence on the listing of products traded among ECOWAS member nations within the region for which EU are suppliers (sensitive products) requiring sustenance. This can be used as a strong bargaining factor in EPAs between ECOWAS and the EU. Besides, other authors have not, however, explored in many details the associated trade, tariff  revenue and welfare effects of EPAs on neither intra-ECOWAS trade, nor have they explicitly considered the source and volume of imports of traded products as a measure for sensitive products listing and criterion in designing a reduction of adverse intra-ECOWAS trade development effects. This proposal aims at filling these gaps.

The ECOWAS countries are involved in trade with countries within and outside the region. Intra-ECOWAS trade (as percent of total export and import value, 2007-2013) is represented in figure 1. While figure 2 shows the ECOWAS trade with outside the region and they include   the EU, NAFTA, SADC ,APEC, and OECD .they  account for an average of 12.8,18.1,6.3,21.4 and 35.8   per cent within the same period respectively,  as the value of total exports; while for imports the SADC,NAFTA, EU, APEC and OECD  account for 1.7,5.8,22.6,28.1 and 38.2 per cent, respectively

Effect of Credit Acquisition and Repayment on Agricultural Production in Cross River State, Nigeria

Effect of Credit Acquisition and Repayment on Agricultural Production in Cross River State, Nigeria

 

ABSTRACT

This research was designed to study the effect of credit acquisition and repayment on Agricultural production in Cross River State. The major objective is to study the effect of credit acquisition and repayment on agricultural production in the state. Specific objectives included: determination of credit disbursement and recovery strategies of agricultural credit institutions, determining and comparing agricultural production among beneficiaries and non-beneficiaries of credit schemes, identifying factors that affect credit acquisition and repayment and to compare agricultural production among credit defaulters and non-defaulters.

The analysis was done with sample drawn from 120 farmers, 60 beneficiaries and 60 non-beneficiaries and credit officers in Cross River State, by the use of a multistage sampling technique and structured questionnaire, which felicitated information on farmers credit use, repayment rate, agricultural production of credit beneficiaries and non-beneficiaries, credits administration etc. Analytical tools used were descriptive statistics such as percentages, mean, frequencies, etc. to show the socio economic factors influencing credit acquisition and repayment in the state, multiple regression analysis was used to estimate the production function of both credit beneficiaries and non-beneficiaries and the chow test to determine the magnitude of the coefficient obtained from the two samples.

Cassava was used for the analysis of the production output of beneficiaries and non beneficiaries of credit because it is cultivated in the 3 agricultural zones and a staple food of the people. The mean output of the crop for both farmers taken from 3ha of land is 1520kg and 967.50kg respectively. The chow test result was 8.920 showing that the marginal effects of the regressors on the regressants vary. Findings showed that agricultural production is still of minimal output. Among other factors, the socio-economic characteristics of credit beneficiaries influence rate of repayment and for non-beneficiaries influence the acquisition of credit.

The study recommended among others that credit should be released to farmers during planting or stocking, Credit officers should reduce bureaucratic processes to encourage farmers to borrow credit and my key recommendations based on the study were:

–    Reduction of interest rate to at most 5 percent to get more farmers to borrow.

  • Long gestation periods of up to two years should be given to allow the farmers prepare for repayment.

CHAPTER ONE

INTRODUCTION

 

1.1 Background Information

In spite of the fact that oil still accounts for our major revenue (gearing toward 80percent) and almost 100percent of our export earnings (C.B.N,2003), agriculture especially farming, forestry, livestock and fishing is shown to be the major activity of Nigerians (Chigbu, 2004). Regrettably, the trend performance has declined over the years. The sector growth remained at 5.8percent between 1990-1993, falling to 3.5percent between1997-1998 and worse still declining to an abysmal 1.8percent during the 1999-2001 periods (C.B.N, 2003). The agricultural sector is expected to have a growth rate of between 7percnt to 10percent, in order to have any meaningful effect on poverty reduction (Ekpo, 2004).

 

This ugly situation is attributed to poor and less resources utilization, as a result of lack of financial supportive measures like loans, subsidies, grants, etc toward agriculture (Chigbu, 2004). The contribution of agriculture to the gross domestic product (G.D.P.) shows an average growth rate of 2.6percent (C.B.N, 2003), a development not good enough for a sector employing about 70percent to 80percnt of Nigerians. Food supply situation is not favorable equally; it has been reported by the food and agricultural organization (FAO, 1994), that there is an average food deficit of 1.2percent, while the demand and supply of food stand at 3.7percent and 5percent respectively. This is why the World Bank (2003) data showed that more than 70percent of Nigerians live below poverty line, a situation that can be reversed through agricultural development.

 

The World Bank’s statement about Nigeria’s poverty level has not gone down well for a nation with abundant agricultural resources: different varieties of livestock and wildlife, an agricultural friendly climate, coastal and marine resources of over 960m shoreline and a large consumer market.

In Nigeria, agriculture is not practiced in a purposeful and enterprising manner. It is practiced more as a survival strategy, rather than as a business venture. This is attributed to low-income status of farmers, which makes them seldom able to accumulate capital goods required for purposeful and sustainable agriculture, causing their level of capacity utilization to be very low.

Availability of credit to farmers has been observed as one sure way of increasing agricultural output, through the improvement of efficiency and the expansion of production. Credit to farmers according to Olatumbode (1990) would assist in the following ways:

Procure new improved technology in agriculture, purchase high yielding and disease resistant crops, put more land into cultivation and organize the farm better and more purposeful.

Insufficient extension of production credit to farmers according to Meyer (1986), is the more critical factor responsible for the declining agricultural production. There is a big gap between the demand for and supply of credit to farmers for agricultural activities. Problems faced by farmers in raising money for agricultural production is colossal, because according to Chidebelu (1983), commercial and merchant banks are reluctant to give money for agricultural production. The reluctance is due largely to the fact that agriculture is biological in nature, hence prone to risk.

The establishment of several credit schemes in Nigeria is intended to solve the problem of lack of credit to the agricultural sector. Efforts to encourage farmers in Nigeria with credit and other agricultural incentives have only given individuals with political loyalty to the reigning government access to exploiting the ordinary farmers. Such incentives usually get to the false farmers who use it for other non-agricultural activities.

Repayment of credit by farmers is a pathetic story; there is a general tendency of farmers not to repay credit. F.A.O (1994) asserted that the inability of small-scale farmers in developing countries to repay credit could be traced to imperfection of the delivery system, a host of institutional factors and to the farmers themselves. Some of these factors include: inadequate supervision and quality of supervisory staff, poor market outlets, poor management ability of the borrowers, poor selling prices, unsuitable disbursement procedures, wrong attitude of farmers towards credit (regarded as gift from government), natural disasters, etc. Problems of repayment also stifle further credit to farmers, since most agricultural credit recycles.

Small-scale farmers are supposedly potential beneficiaries of agricultural credit in Nigeria, but are hampered by their small peasant holdings found over wide remote areas which makes supervision by credit officers difficult (Eze, 1997). To reap the benefits of credit, information relating to sources of credit is required by farmers. Such information may include names of lenders, location and types of existing credit. They also need information on the terms of credit such as interest rate, credit amount and mode of repayment.

Credit institutions are the major source through which small-scale farmers can gain access to formal credit (Klonner, 2003); but the farmers are constrained by high interest rate and collateral. This development has informed successive Nigeria governments to initiate programmes and policies that would ensure adequate transfer of cheap credit to small-scale farmers (Nweze, 2001).   These programmes and policies have over the years given rise to.

  • The Agriculture Credit Guarantee Scheme Fund (A.C.G.S.F) in April, 1978.
  • The community Bank of Nigeria (C.B.N) in 1990
  • The Family Economic Advancement Programme (F.E.A.P) 1997
  • Nigeria Agricultural, Co-operative and Rural Development Bank (NACRDB), which is the most recent.

 

 1.2 Statement of Problem

The performance of the agricultural sector in Nigeria, as in most other developing countries is low. According to Oliseh (1990) the problem of productivity in agriculture is majorly the unavailability of credit to farmers, which would have enhanced production. This is as a result of inaccessibility to credit facilities by small-scale farmers, who form the bulk of farmers in the country. The Cross River State government has over the years had as a policy thrust financial intermediation in agriculture. This has given rise to medium and soft loans, subsidies, grants, etc to farmers in the state, to aid farmers boost agricultural production (C.R.S News Bulletin, 2005). But the result of these financial intermediations is poor as agricultural production in the state is still marked by low output. How can farmers avail themselves of agricultural credit to facilitate taking advantage of developing entrepreneurship in farming?. Nwanna (2002) noted non-provision of financial services as one of the major constraints to small-scale enterprise development, particularly to increasing investment, production activities, etc.

Where financial institutions are found, there are always remotely located to the rural/small-scale farmers. The extension of credit facilities to farmers can only be done on provision of adequate and acceptable security. Farmers are constrained using their farmlands as security, because the land does not belong to a single individual, by the nature of land tenure system practiced, but by the whole community.

Repayment patterns by previous beneficiaries constitute another problem to credit acquisition. Problems of credit repayment are rampant among individual smallholder borrowers. This situation is exacerbated by the fact that government policies often exempt small credits from collateral (Arene, 1992). Low credit acquisition by farmers can also be attributable to high interest rate. Berger (1989) noted that high interest rate charged by formal and informal sources of finance scare farmers. A good lending policy of government is that which is capable of giving sufficient credit for the need of farmers and at affordable rates, for increased agricultural production. High interest rates often make farmers to divert credit to other non-agricultural uses, which they believe would give quick returns to investment.

Red-tapism in acquiring credit discourages small-scale farmers. Credit application forms are expected to pass through many tables and stages before final approval is given. Farmers are expected to provide guarantors, tax clearance receipts, passports initial deposit, etc, as well as the inspection of the security and claims by the credit officer, before the form is finally sent to the headquarters for approval. The process is rather cumbersome to the rural farmers, who may not be patient enough to wait for all these stages.

Repayment when due or non-repayment as a whole, causes lenders net returns to be low, hence affecting institutional growth, which often causes financial distress of such institutions. The result is that further credit disbursement to these institutions becomes discouraging.

Many research works have been carried out over the years about credit and farmers: Eneh (1996) worked on credit use, access and repayment. Credit needs, sources and uses was done by Ozougwu (2001), Ochai (2003) studied loan repayment and technical aid among farmers, etc. in all these works and many others related to this research problem, the aspect of how credit can be obtained and used efficiently, so that agreed repayment can be met for increased agricultural production, is either omitted or poorly stressed. The research study is prompted by these gaps, which it hopes to fill.

1.3 Research Objectives

The broad objective of this research is to study the effect of credit acquisition and repayment on agricultural production.

Specifically the study is designed to:

  1. Determine credit disbursement and recovery strategies of agricultural credit institutions.
  2. Access and compare agricultural production among beneficiaries and non beneficiaries of credit schemes.
  • Identify the factors that affect loan acquisition by farmers.
  1. Identify the factors that affect loan repayment by farmers.
  2. Compare agricultural production among loan defaulters and non-defaulters.
  3. Make policy recommendations based on the result of the findings.

 

    1.4 Research Hypotheses

Based on the study objectives, the following null hypotheses will be tested.

  1. Loan disbursement and recovery strategies do not affect loan
  2. There is no significant difference in output between farmers who use agricultural loan and those who do not use agricultural loan.
  3. Factors that affect credit acquisition do not affect agricultural production.
  4. There is no significance difference in output between credit defaulters and non-defaulters.
  5. Socio-economic factors do not significantly affect credit acquisition and repayment.

 

  • Significance of The Study

Credit to farmers in Nigeria where it is available for the purpose of increasing their agricultural output is a very difficult task. Eboh (1998) asserted that financial market failure also causes impediment in credit disbursement.

Credit repayment is the most important index of a credit scheme. This is because it ensures the continuity of the scheme. Credit repayment problems have significantly affected credit acquisition. Diversion of credit to non-agricultural activities and the biological nature of farming activities are identified by Murray (1994) as responsible for the default in credit repayment.

Research conducted to study the effect of credit acquisition and repayment on agricultural production in Cross River State, Nigeria would help formal and informal lenders know how and to whom credit should be disbursed. Farmers would also benefit from the study on how best to utilize agricultural credit.

Finally, the findings of this study will form a source of reference to students and researchers and a basis for further studies on related subjects

ECONOMICS OF SOIL CONSERVATION PRACTICES AMONG SMALL SCALE FARMERS

ECONOMICS OF SOIL CONSERVATION PRACTICES AMONG SMALL SCALE FARMERS

 

ABSTRACT

The study investigated the economics of soil conservation practices among small-scale farmers in Enugu State. The study used multi-stage random probability sampling method and the primary data were collected form 120 farmers using structured questionnaire. Data on the socio-economic status of the farmers, forms of land/soil degradation in the study area, methods/ technologies used in combating them, intensity of adoption of selected soil conservation practices, costs and benefits of selected methods of conserving the soil and constraints to adoption of soil conservation practices were obtained. Data obtained were analyzed using percentages, cost-benefit analysis and multiple regression analysis. Based on the 2007/2008 cropping season, it was noted that male (70%) were more involved in soil conservation practices than female (30%). Most of the farmers (61%) had no formal education. Land acquisition was mostly through inheritance (77%). Fifty three percent of the farmers have been in active farming for about 21 – 30 years. Membership of farm organization by farmers was still low (16%). It is noted that 60% of the farmers had never been visited by the extension agents. The major form of soil/land degradation identified in the study area is reduced soil fertility (41%) Majority (43%) of the farmers said that the methods of soil conservation used are indigenous to them. The prevalent soil/land management forms in the study area  are inorganic fertilizer, livestock  manuring, intercropping, cover cropping and leaving crop residue. The study showed the guiding factors to adoption of soil conservation technologies/ methods by respondents as improved yield (return), access to credit, concern for soil erosion and other related soil problems, ownership of land, climatic change, and capital access. The study indicated that out of the thirteen  (13) methods of soil conservation mostly used, 77% of the farmers adopted between 1-6 methods. This showed that the intensity of adoption is relatively low. The farmers that used intercropping, inorganic fertilizer, cover cropping, leaving crop residue an livestock manure combination as method of soil conservation have the highest gross margin of N36750 and benefit-cost of 2.18. The effect/ relationship between farmers’ socio-economic characteristics and intensity of adoption of soil conservation practices showed a coefficient of determination, R2 of 63.2% which was a good fit. The test of influence of the socio-economic characteristics of on farmer’s adoption intensity shows that these characteristics have significant influence on adoption intensity at 5%. There is a significant correlation between the benefits and the cost of soil conservation practices(r-0.936, p<0.05). Access to credit, small farm size, and lack of trainings, poor infrastructure and poor returns were the major constraints to adoption of soil conservation practices by farmers. It was recommended that land should be well defined and property right to land well enforced. Finally, farmers were encouraged to form farm co-operatives fro easy training and access to farm assistance.

ECONOMICS OF FISH MARKETING IN AKWA IBOM STATE, NIGERIA

ABSTRACT

The study investigated the economics of fish marketing in Akwa Ibom State, Nigeria using primary data. Purposive and multistage random sampling technique was used to collect the data from 105 respondents using well-structured and pre-tested questionnaire. These data were analysed using descriptive statistics, concentration ratio, price spread, net profit margins, marketing margins analyses and multinomial logit (MNL) models. Tests of significant differences and effects were carried out using analysis of variance (ANOVA) and t-test techniques. Research results showed that average age for the fish marketers were 38years for producers, 42years for wholesalers and 46years for retailers, and also that majority of them were married. The results further showed that majority of the fish producers and retailers had West African Senior School Certificate while most wholesalers had First School Leaving Certificate. Also, the all marketers had average household size of 5 members with 18years marketing experience for the producers, and 15years for the wholesalers and retailers, respectively. Furthermore, the study found that the marketers made use of referrals, price discount and home delivery to attract customers. The results showed that the market was under weak oligopoly at concentration ratio of  47%. This implies that the activities of the largest four fish marketers affected the price and demand for fish in the market. Further results showed that fish marketing was profitable with channel 2 having the highest net margin of N141,095 per annum per processing firm compared to channel 1 (N127,850) and channel 3 (N137,030) while channel 1 had the highest marketing efficiency of 342% relative to channels 2 and 3 with marketing efficiencies of 144% and 97%, respectively. The results indicated that these differences in marketing efficiency among the channels were significant at P<0.01. This implied that the longer the chain of distribution, the higher the marketing cost and hence,  the lower the marketing efficiency. Furthermore, the study found that smoke-drying was the predominant method of processing fish at frequencies of 64% for the producers, 90% for the wholesalers and 92% for the retailers. Use of hangovers was the dominant method of storing fish at frequencies of 40% for the producers, 76% for the wholesalers and 83% for the retailers. Also, motor-cycle was the dominant method of transportation of fish for the producers and wholesalers at frequencies of 73% and 61%, respectively, while use of bus/taxi was dominant for the retailers at frequency of 76%. Further results showed that there were challenges facing fish marketing at an average of 2.74 on a 4-Point Likert rating scale. Lack of capital, seasonality of fish business, lack of government assistance, produce deterioration, lack of storage facilities, poor extension services and debt were the factors indicted for challenging fish marketing. More so, the results showed that socioeconomic characteristics accounted for the vertical differentiation of fish marketing into channels 1, 2 and 3 by 68%, 87% and 92%, respectively. Marital status, household size, value of fish and membership of cooperative unions were the factors that significantly drove vertical differentiation of fish marketing positively at P<0.05 while the effects of age and sex were significant and negative at P<0.05. Firewood splitting, fish transportation, loading/off-loading of fish, fish packaging, fish processing and fish smoking were the activities that both males and females participated in. This implied that the participation of both males and females will enhance the marketing of fish. The study recommended policies that will enhance that profitability and efficiency of fish marketing.

 

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Agriculture is the major economic activity of developing economies. In Nigeria, agriculture provides food for the increasing population; supplies adequate raw materials to growing industrial sector; is a major source of employment; generates foreign exchange earnings; and provides market for the products of the industrial sector (Okumadewa, 1997; World Bank, 1998; Winters, Janvry, Sadoulet and Stamoulis, 1998; Food and Agriculture Organization, FAO (2006) as cited in Eze, Lemchi, Ugochukwu, Eze, Awulonu and Okon 2010).

Fish is a very important agricultural product in the country as it occupies a prime place in the economy of the country. The term fish is a diverse group of animal that live and breathe in water by means of gill. Fish is one of the most diverse groups of animals known to man with over two thousand five hundred species. There are more species of fish than all other vertebrate (Eyo, 1992). The fishery sector is estimated  to contribute about 3.5% to Nigeria’s  Gross Domestic Product (GDP), and also provides direct and indirect employment to over six million people (Kwara State Government, 2010). The employment opportunities come from different fishing activities such as production, processing, preservation and transportation (Ali, Gaya and Jampada, 2008). The Central Bank of Nigeria, CBN (2005) report shows that the contribution of the fishery sector to the GDP of Nigeria rose from  N76.76 billion in 2001 to N162.61 billion in 2005.

Fish is a very important agricultural product in Nigeria, and is largely consumed in the country especially due to its rich nutritional and medicinal values. More so, the large coastal area and continental shelf available in the country makes diverse varieties available in different areas at affordable prices. Despite these rich coastal and continental resource base of the country, demand for fish far exceeds production, resulting in the importation of over 800,000 metric tonnes of fish annually (FBS, 2007). This trend may not change in the nearby future considering the rising population of the country and the increasing distance between fish producers and consumers. This therefore calls for efficiency in fish marketing. Furthermore, fish is the most important animal protein food available in the tropics, and this could account for its large consumption in the country. In Nigeria, fish constitutes 40% of protein intake (Eyo,1992: Federal Department of Fishery, FDF, 2000), while, according to Adekoya and Miller (2004), fish and fish products contribute more than 60% of total protein intake in adults especially in rural areas. Amiengheme (2005) asserts that nutrient from fish is superior to all terrestrial meats such as beef, mutton, pork and chicken being a rich source of high quality animal protein and also contains highly digestible energy. More so, it is a good source of sulphur and essential amino acids such as lysine, leucine, valine and arginie. Fish is a good source of thiamine and polyunsaturated fatty acids, fat soluble vitamins such as vitamins A, D E and K, and water soluble vitamins for example, B complex, and minerals, such as,  calcium, phosphorous, iron, iodine and selenium. According to Ovie and Raji (2006), Fish contains omega 111 fatty acids that are known to reduce cardiovascular diseases, hypertension and arteriosclerosis, thus becoming a preferred source of protein for those nearing 50years and above. These fatty acids are also known to enhance good brain cell development in developing foetus,(thus vital diet for pregnant women) and intelligent quotient (IQ) in developing children (FDF,2005). Hence it is evident that fish and fisheries are crucial to the economy and health of the nation.

The geography and biodiversity of Nigeria supports fishing activities. Nigerian coastal fishery sector is characterized by a rich resource base with a water area of 140,000km2 and about 42,000km2 continental shelf areas, adjacent to the country’s 853km coastline (FAO, 2007). The huge Niger Delta inland waters associated with River Niger and River Benue, their tributaries and flood plains, natural lakes and wetlands, reservoirs and purpose-built ponds, constitute the total water area in the country. Furthermore, one quarter of Nigerian States are located at the coastal zone, including Akwa Ibom. The other states include Lagos, Ogun, Ondo, Delta, Edo, Bayelsa, Rivers and Cross River state ( Bako,  Atala, and Kudi, 2008).

According to Federal Bureau of Statistics, FBS (2007), annual fish production in the country in 2006 was about 700,000 metric tonnes, mainly through artisanal fishery, less than 1.5 million metric tonnes annual demand of the country. Artisanal fishery is a small scale fishery activity that involves the use of relatively little capital, dugout canoes and other simple fishing facilities such as gears, nets, hooks and traps around streams, rivers and within five nautical miles in the seas. Some of the fish species found in Nigerian waters include sole, sharks, rays, catfish, bonga fish, mud fish and tilapia. In Nigeria, agriculture has failed to meet the food needs of the growing population. One of the possible reasons for this failure, as asserted by Ayinde, Adewumi and Ojehomon (2009), is the malfunctioning of marketing chain of major food leading to high rate of spoilage, constant food shortage, rising farm products prices and huge importation costs. The role of marketing cannot be over emphasized as production centres are fragmented and mostly in small scale. (FAO, 2009).

The marketing of fish has steadily changed due to urbanization. Thus, as the process of urbanization progresses in Nigeria, an increasing share of national fish consumption takes place at locations other than where fish is produced. Before increasing urbanization, fish produced were locally and domestically consumed. With increasing urbanisation and development, which has further increased the distance between fish producers and consumers, fish marketing has become very important. Fish marketing involves all activities undertaken in conveying fish from producer to consumers. It includes processing, storage, preservation, transportation, wholesaling and retailing. The process of fish marketing is a very delicate one, if the quality and nutrition of fish is to be maintained to the highest possible value.

Efficiency in fish marketing system is essential for the growth and development of the fishery sector. Marketing efficiency involved the movement of products from the producers to the consumers at the lowest cost consistent with the provision of the services consumers’ desire. It involves technical efficiency and economic efficiency. While technical efficiency measures the effectiveness or competence with which the physical aspects of marketing (such as storing, transportation and other activities meant to reduce wastes and prevent deterioration) are performed, economic efficiency, measures the realization of maximum possible output in money terms with a given resource input, or a given level of output from the minimum possible resource input (Adegeye and Dittoh, 1985).

The use of wholesalers and retailers (intermediaries) between producers and consumers improves marketing efficiency tremendously and, also, reduces distribution costs to all market participants (Coughlan, Anderson, Stern and El-Ansary, 2001). The marketing system must develop well to provide necessary services as producers sell in markets distant from where consumers buy their fish. According to Enete (2008), the efficiency of marketing system gets better as the number of intermediaries increases and vertically differentiate with specialized functions like wholesale and retail. This is in line with the earlier assertion of Adegeye and Dittoh (1985) that the overall objective of marketing efficiency is to provide goods to consumers in the required form at the required time and place with the lowest possible marketing costs consistent with the interests of the producers.

1.2 Problem Statement

Agricultural marketing is central to agricultural development and the overall growth and development of the economy. Previous studies have shown that efficient marketing system stimulates agricultural production (Awoyinka and Ikpi, 2005; Adescope, Ajiebefun, and Akeremale 2005 as cited in Awoyinka, 2009). In Nigeria, the annual demand for fish far exceeds local production such that according to the Federal Bureau of Statistics, over 800,000 metric tonnes of fish are imported. This high level of fish importation is absurd considering nutritional and other economic importance of fish, and rich coastal heritage and endowment of the country.  As important as marketing is, most of the studies on fish have concentrated on production (Inoni, 2007: Kudi , 2008: Dagtekin, 2009: Zabbey, 2010). Available information shows that few of the studies on fish marketing did not investigate the efficiency or otherwise of the process (Ali, Gaya, and Japada 2008: Gaya, Mohamed and Bawa 2010). Efficiency in fish marketing has the potentials of stimulating fish production in the country in view of the huge deficit between local consumption and production. This will have a downward effect on the price of fish and thereby induce more consumption of fish by consumers. The importance of this development cannot be over-emphasized in country like Nigeria whose economy, life and wellbeing are immersed in agriculture, and fish alone constituted more than 40% of total protein intake in the country (Eyo, 1992: Federal Department of Fishery, FDF, 2000), Fish and fish products contribute more than 60% of total protein intake in adults especially in rural areas (Adekoya and Miller 2004).

Major components of fish marketing efficiency are profitability and marketing margins of the various participants (i.e. wholesalers and retailers).Research has shown that there is continuous increase in the number of people involved in fish marketing as a result of growing population of the country (Ali et al., 2008). This is an inkling of the profitability of the enterprise as only profitable activities could be attracting increasing number of participants. Similarly, market margin is a pointer to the level of market performance (Olukosi and Isitor, 1990). The middlemen involved in marketing are accused of earning higher profits in the marketing system (Bryceson, 1993).     Vertical differentiation, according to Dijkstra (1999), has the capacity to reduce the transaction costs of marketing especially for producing households. Unfortunately, studies have not been carried out to determine the profitability of fish marketing as well as the marketing margins of the participants, especially, in Akwa Ibom State, which is one of the nine costal States in the country. Thus there is a huge dearth in knowledge.

Furthermore, the economy of Nigeria, just like other sub-Saharan African countries, is still developing. This has imposed a lot of challenges on marketing of goods and services in the country, especially agricultural products like fish. It has been argued that agricultural marketing is inefficient resulting in high rate of food spoilage, poverty and unaffordable food prices by consumers. However, not many studies have empirically evaluated the validity of these hypotheses in fish marketing. This study seeks to analyze economics of fish marketing and in so doing address questions affecting marketability of fish. According to Adekanye (1988) and Abdullai (1983), as cited in Awoyinka (2009), marketing of food in Nigeria is characterized by multitudes of deficiencies and problems. These problems cut across processing, preservation, packaging, distribution and transportation (Rural Sector Enhancement Programme, RUSEP, 2002). In fish marketing, problems of shortage of supply, price fluctuations due to drying up of sources of water, and spoilage in transit, have been identified in the country (Tomek and Robinson, 1981, as cited in Ali et al., 2008). Eze, Onwubuya and Ezeh (2010), identified inadequate processing skills, produce deterioration and lack of storage facilities as the major constraints perceived by women marketers. However, this may not be exhaustive bearing in mind the paucity of research in fish marketing, and also the rural nature of participants in fish marketing. Therefore, the economics of fish marketing evaluates the structure, conduct and performance of fish marketing system as indicators of the overall efficiency of the system. It is of essence in the determination of both consumers’ living cost and producers’ income and hence, the overall wellbeing and development of the country.

Furthermore, the level of gender participation in fish marketing has not been empirically evaluated. It is a common knowledge that agricultural activities in developing countries like Nigeria are predominantly carried out by women. According to the Federal Bureau of Statistics, over 70 per cent of agricultural activities are carried out by women in Nigeria (FBS, 2010). However, results from different studies on fish marketing differ from the Federal Bureau of Statistics report. Ali et al (2008) reported that majority of fish marketers in Maiduguri were males while a similar study carried out in Adamawa State showed that majority of the marketers were females (Gaya et al., 2010).

From the foregoing therefore, the following fundamental issues become expedient:

  1. what are the socioeconomics characteristics of fish marketers?
  2. what is the structure of fish marketing?
  3. is fish marketing profitable or not, and to what extent;
  4. what is the level of differentiation of the channels involved in fish marketing?
  5. how efficient is the process, and what is the marketing margins of the various participants; and
  6. what are the factors influencing the efficiency or otherwise of fish marketing, as well as the problems facing fish marketers.
  7. what proportion of males to females are involved in fish marketing;

These are the many issues that this study will investigate with hope of bridging the gap in knowledge.

1.3 Objectives of the Study

The broad objective of this study is to conduct an economic study of fish marketing in Akwa Ibom State.

The specific objectives are to:

  1. describe the socio-economic characteristics of fish marketers;
  2. determine the structure of fish marketing;
  • determine the factors that drive vertical differentiation of fish marketing channels;
  1. determine the efficiency of the fish marketing channels;
  2. evaluate the various methods used in fish processing, storage and transportation;
  3. identify the challenges facing fish marketing; and
  • assess the level of gender participation in fish marketing.

1.4 Research Hypotheses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

The following null hypotheses were  tested:

H01:      there is no significant difference in efficiency among the fish marketing channels and

H02:      socioeconomic factors do not affect the vertical differentiation of fish marketing channels.

1.5 Justification of the Study

According to the United Nations estimate about 2.33 per cent of the world population live in Nigeria thereby making the country the 7th most populous in the world with a population of 162,471,000 in July 2011 (United Nations, 2011). Meeting the food and Agricultural needs of current and future generation present daunting challenges. The need for increased and more efficient agricultural production a sustainable basis therefore cannot be over-emphasised.

To ensure continuous availability of fish for human consumption, nutrition, and wellbeing, the Nigerian economy requires effective and efficient marketing systems. Fish marketing serves as a medium for bridging the gap between producers and consumers of fish. This is very imperative in view of the growing human population and hence, demand for fish globally and Nigeria in particular, compared to supply, and more so, the increasing distance between producers and consumers (FAO, 2004; Ayo-Olalusi, et.al., 2010). The availability of fish to consumers at the right time and place requires an effective marketing system. The marketing of fish passes through various market participants and exchange points before they reach the final consumers (Ali, et. al., 2008). As such, the marketing system must develop well to provide the necessary services. To ensure that machineries for enhancing marketing efficiency are put in place, a study of this nature is required as it would enable the country to be self-sufficient in fish production, overcome food crises and mitigate the effects of various dimensions of food insecurity. The efficiency of fish marketing therefore is derived from these variables. As such their determination will pave way for better and improved planning and organization by fish producers, fish consumers, fish marketers, government, policy makers and indeed, every participant in the fishery sector. This will fast tract increased production and consumption of fish in the country with attendant positive impact on the nutrition, health, gross domestic product and overall wellbeing of the country. It is hoped that the findings of this work will provide the necessary framework that would improve the capacity of producers and middlemen to be more efficient in all aspects of fish distribution. The result of this study will not only be useful to students, the private sector and policy makers but also to all participants in production, processing, marketing of fish and will provide basis for more studies in the area.

ECONOMICS OF FARM-GATE RICE MARKETING IN ENUGU STATE, NIGERIA

ABSTRACT

Rice has become a staple food, just like yam, garri and beans.  As a result, the marketing of rice has become very important due to increasing demand of the product.  The study examined the economics of farm-gate rice marketing in Enugu State, Nigeria.  Five objectives and one hypothesis guided the study.  The study covered all the communities in the local government areas in the three Agricultural Zones that produce rice in the study area.   The population of the study consisted of rice farmers/assemblers, rice wholesalers and retailers.  Purposive sampling technique was adopted in drawing the sample.  Data for the study were collected from both primary and secondary sources through the use of pre-tested structured questionnaire, oral interview, personal observations, journals, texts and other publications.  Data collected were analysed using means, frequencies, percentages, marketing margin, gross margin and profit functions.  The major findings were: Majority of the farmers (77.1%) completed at least primary education while all the marketing participants, namely wholesalers and retailers passed through formal education, some up to degree level.  The average hectarage cultivated was 2.77ha, while average rice yield was 1.4 tons, with Nsukka Agricultural Zone having the highest yield.  Uniform measuring unit was found to be lacking among the farmers and the marketing participants.  The marketing margin of the middlemen was found to be 14.3 percent while 85.7 percent was the consumers’ spending that accrued to the producer as his own share of the profit.  The gross margin analysis showed that the farmers/assemblers had the highest gross margin of N34,992.9.  Output, fertilizer and labour were found to influence profit at significant level of 0.05.  They explained 88.3 percent of variation in profit.  Out of this, output alone explained 85.7 percent; fertilizer explained 1.8 percent while labour explained 0.8 percent.  The Farmers were found to be profiteering at the rational areas of the profit functions.  Factors such as low-level productivity, poor market infrastructures, financial constraints were found to be militating against rice enterprise.  Some recommendations were made to help improve the productivity of rice enterprise.  These include the provision of better storage facilities and improved seeds, establishment of uniform measuring units and provision of adequate machineries as well as maintaining the existing ones, provision of chemical inputs such as fertilizers and herbicides at a subsidized rate, provision of loans and credits to farmers with little or no stringent measures to help them expand their scope of operations.   Above all, adequate extension services to our rice farmers on up-to-date scientific rice enterprise should be ensured and the rehabilitations of our rural roads for easy evacuation of farm produce.

CHAPTER ONE

INTRODUCTION

1.1   Background Information

Consumption is the sole end and purpose of all production and the interest of the producer is to be attended to, only in so far as it may be necessary for promoting that of the consumer (Smith, 1990).  Production and marketing are interrelated that any defects in one would readily affect the performance of the other.  Every effort should therefore be made to ensure that both farm and industrial products are well distributed to the ultimate consumers (Kohl & Downey, 1972).

The marketing of any commodity is a specialized technique and demands proper organisation.  In case of agriculture and particularly rice products, the marketing aspect is even more important and demands a proper organisation, considering the increasing demand of the products (Ikeme, 1990).  Efficient marketing system creates and activates new demand by improving and transforming production and by seeking and stimulating customer’s links.  It guides farmers to production opportunities and encourages innovation and improvement in response to demand and price (Kohl & Downey, 1972).

Olukosi & Isitor (1990) remarked that it is within the marketing system that price allocation of resources, income distribution and capital formation are determined.  Care (2004) described marketing as a machine that directs production along the line most suited to the consumer requirement.  Thus, production is limited by the extent of marketing.  Where the local markets are too small to absorb the increased output of the farmers and the prospects for moving the local gluts to areas of scarcity are poor, then the producer incentives to production are likely to be dampened.  Where the local market with poor absorptive capacity is the only outlet, the farmers will be constrained to make their production decision or plan with the local market in view.  Ikisan (2004) highlighted the contributions of agriculture and food marketing towards an attempt to improve rural income in developing countries.  According to him, the inequality of income between the rural and urban areas draws people away from agricultural production and places greater stress upon the infrastructure and social services of a country’s towns and cities.  According to Crawford (1997), marketing is a leading sector in development.  It stimulates and sustains the transition from traditional to marketing oriented economy.

Mame (2006) also asserted that a guaranteed market for farmer’s produce was a ready invitation to produce more.  He further stressed that the marketing arrangement in a community must ensure that what was produced was sold or stored.  Kohls & Uhl (1972) suggested that products should not even be produced at all unless it has a market.  Marketing therefore begins with production on the farm.  Hays & McCoy (1978) in their study of grains marketing in northern Nigeria emphasized that an effective agricultural marketing system facilitated optimum allocation of resources in agricultural production and contributed directly to the total product as it increased price, time and form utility.

Rice is the world’s most important staple food crop.  More than four-fifths of the world’s rice is produced and consumed by small-scale farmers in low-income and developing countries.  More than half of the world’s population relies on rice as their major daily source of calories and protein (FAO, 2003).  Rice is the most important and extensively grown food crop in the world (USDA, 2004).  In fact rice has become a staple food in Nigeria, just like garri, yams, cassava, millet and probably the most important food grain, permeating states, religion, tribes and cultures (Arene, 1995).  It commands a prime position among other cereals grown in Nigeria.  Among other grains, it was second to wheat in terms of total world production with 34 million tones recorded in 1975 (FAO, 2002).

Rice is the main source of food energy and an important source of protein providing substantial amounts of the recommended nutrient uptake of zinc and niacin.  It is very low in calcium, iron, thiamin and riboflavin and nearly with no beta-carotene (FAO, 2003).  The major part of rice consists of carbohydrate in the form of starch, which is about 72-75 percent of the total grain composition.  The protein content of rice is around 7 percent.  The protein of rice contains glutelin, which is also known as oryzenin.  The nutritive value of rice protein (biological value = 80) is much higher than that of wheat (biological value = 60) and maize (biological value = 50) or other cereals.  Rice contains most of the minerals mainly located in the pericarp and germ and about 4 percent phosphorus.  Rice also contains some enzymes (USDA, 2004).

 

Table 1:  Nutritional Value of Edible Portion of Rice Per 100 Gram

Type of Rice Energy (Cal) Protein (g) Fat

(g)

Ca

(mg)

Fe

(mg)

Thiamin

(mg)

Riboflavin

(mg)

Niacin

(mg)

Raw (milled) 345 6.8 0.5 10 3.1 0.06 0.06 1.9
Parboiled (milled) 346 6.4 0.4 9 4.0 0.21 0.05 3.8
Flakes 346 6.6 1.2 20 20.0 0.21 0.05 4.0
Puffed 325 7.5 0.1 20 6.6 0.21 0.01 4.1

Source:  USDA (2004)

Over the years, greater percentage of rice output in Nigeria has been from the rural small-holder farmers.  It has been observed that Nigeria was virtually self-sufficient in rice enterprise up to the mid 70’s (WARDA, 2004).  The self-sufficiency level fluctuated between 96.3 percent and 99.8 percent between 1963 and 1975.

However, since 1976, the level has dropped drastically to 41.46 percent in 1978 following sharp increase in the quantities of rice imported.  The major reason for the decline in self-sufficiency is the dramatic increase in aggregate per capital income following the oil boom, urbanization and changes in consumption patterns and the effects of government food importation policy which aimed at increasing the availability of food at reasonable prices under the National Supply Company (WARDA, 1981).

With the ban on importation of rice in 1986, as a structural adjustment measure, Nigerian government both at the state and federal levels stepped up effort to promote the local production and marketing of rice through incentive schemes and programmes (Mbanasor, 1999).  These agencies and programmes, such as Nigerian Agricultural Land Development Authority (NALDA) established in 1992, the Community Banks established in 1990, the Rice Production Stabilization Programme (RPSP) of 1988 and the various states’ Grains Boards among others, were introduced to assist in the production, marketing and distribution of rice.

Considering the importance of rice to man and in national development, the Nigerian government as well as individuals have made several attempts to increase commercial rice enterprise but their efforts have been beset with a lot of constraints, such as infrastructural and marketing problems and very high and rising costs of labour and equipment.  Thus, a progressive and chronologically receptive marketing system can help promote economic growth since increasing the marketability of rice will stimulate production.  So, the ever-increasing demand for rice products makes the marketing of rice a significant area to investigate.

1.2   Problem Statement

The demand for rice in Nigeria is growing at a faster rate than domestic supply.  The domestic supply is 3 million metric tons per annum, while the demand is 5 million metric tons per annum.  This leaves a wide gap of 2 million metric tons which is the highest in Africa (FAO, 2002).  In order to make up for the inadequacy in domestic supply of rice, imports have increased steadily accounting for up to 60 percent of the total supply, a situation which has continued to drain the country’s foreign exchange (Momoh, 2007).  This has led to increased poverty, declining growth and competitiveness.  It has also led to decrease in domestic production of rice and over dependence on rice importation.

Central to the issue of inadequate domestic supply of rice is the problem of efficiency of agricultural marketing system.  Inadequate marketing of agricultural produce has been one major problem limiting agricultural expansion (Care, 2004).  Rice farmers and domestic traders are constrained by a number of factors such as infrastructural and market facilities, costs of equipment, price differentials and the structure of the market.

Most of our roads, especially the rural roads where these foods are produced are not accessible and communication network is inadequate, making it more expensive for the food to reach the market.  Market facilities – such as transportation, already existing market, warehousing – are factors that are likely to influence the efficiency of the marketing system.  This is because without a niche market, farmers will not produce crops (Ikisan, 2004).  Also, the wide gap between rural and urban prices weakens the farmers’ morale thereby reducing productivity and in some cases stoppage of production (Care, 2004).  High rising cost of labour and equipment also constitutes a major hindrance to rice marketing, especially these days that family labour is not readily available.

Most studies on rice dwelt on production.  These include the works of Nwoye (1997) and Onoja (2008). Nwoye (1997) worked on the economics of rice production by small-holder farmers in Anambra state, while Onoja (2008) studied the efficiency of rice production under traditional small-scale farmer-managed irrigation schemes and rainfed systems in Kogi state.  There are some works in the area of marketing of rice such as the works of Orjiekwe (1995), Ogbuakanne (1998) and Maduchie (2003).  The study by Orjiekwe (1995) focused on the prospects and problems of rice marketing without considering the marketing channels as well as the marketing margins; the study by Ogbuakanne (1998) had its main thrust on the difference between the producers and the middlemen margin; while Maduchie (2003) determined only the influence of socio-economic characteristics of the marketers on profitability of rice.

All these works dealt with gross margin of rice marketing without considering the influence of producer and farm input prices on the farmers’ profit.  In the light of the above, this study attempts to focus more on producer profit by determining the effects of producer and farm input prices on the profitability of farm-gate rice marketing in Enugu State.  This is with a view to identifying the variable factors that influence the profitability of farm-gate rice marketing and drawing implications on farmers’ income and welfare.

1.3   Objectives of the Study

The broad objective of this research is to study the economics of farmgate rice marketing in Enugu State.  The specific objectives are to

  • examine the existing market structure and marketing channels for rice in the state;
  • estimate the profitability of farm-gate, wholesale and retail rice enterprises in the state;
  • analyse the factors that affect the profitability of farm-gate rice enterprise in the state;
  • identify and describe the problems of the participants in rice marketing activities;
  • suggest ways of improving the marketing of rice in Enugu State.

1.4   Research Hypothesis

The null hypothesis that was tested was that profitability of rice marketing at farm-gate level was not affected by producer and farm input prices.

1.5   Justification of the Study

The ever-increasing importance of rice as food crop in Nigeria calls for effort to increase its enterprise.  This is more so when improved marketing technologies for rice enterprise are available.  Small-holder farmers have been constrained from increasing their enterprise, despite increasing demand for the product.  It is important therefore that the practices adopted by the farmers are evaluated and the profitability or otherwise of the rice enterprise as well as its constraints to increasing rice marketing be examined.

The study could hopefully provide clearer insight into the economics of rice marketing and be useful in assisting agricultural policy makers and national development planners in their formulation of national policies especially as it affects rice marketing in the country.

The findings would also be useful to research scholars interested in this or related topics as information and data would be made available to them.

Contents

ECONOMICS OF CATFISH (Clarias gariepinus) PRODUCTION IN BAYELSA STATE, NIGERIA

ECONOMICS OF CATFISH (Clarias gariepinus) PRODUCTION IN BAYELSA STATE, NIGERIA

 

ABSTRACT

The study investigated the economics of catfish (Clarias gariepinus) production in Bayelsa State, Nigeria. The broad objective of the study was to examine the economics of Catfish production in Bayelsa State, Nigeria. The specific objectives were to: (i) describe the socio-economic characteristics of catfish farming; (ii) determine the technical efficiency of catfish farming; (iii) identify factors that influence technical efficiency of catfish farming; (iv) analyze the costs and returns associated with catfish farming; and (v) examine the problems associated with catfish farming. A multi-stage sampling technique was used to select three (3) Local Government Areas (Yenagoa, Ogbia and Kolokuma-Opokuma) purposively based on their predominance in commercial catfish farming and randomly five (5) communities each from the 3 LGAs. Furthermore nine (9) catfish farmers in each community were randomly selected making a total number of one hundred and thirty five (135) catfish farmers. One hundred and twenty (120) copies questionnaires were retrieved out of one hundred and thirty five (135) copies and used for the analysis. Structured questionnaire was used to elicit the required information from the selected respondents. The result indicates that 75.0% of the respondents fall between age ranged of 31-50 with the mean age of 42 years. Majority of the catfish farmers were married (79.2%), males (83.3%) dominated catfish production in the study area, 91.7% had family size of 1-10 people in their households with the mean of 7 people, 92.5% had one form of education or the other. The result further shows that 87.5% had 1-10 years of farming experience, 83.3% were part-time farmers, 43.4% had farm size of 1-1.5 hectares, 66.7% used family labour while 58.3% had one month contact with extension agent. Feeds, capital, labour and pond size have significant relationship with catfish production at various probability levels. The mean technical efficiency was 0.92 with minimum and maximum efficiencies of 0.68 and 0.99. The inefficiency model revealed that farming experience, sex, pond type and number of ponds were the variables that increased the technical efficiency of the respondents. Total Fixed Cost (TFC) was ₦881,500.00 while Total Variable Cost (TVC) was ₦3,956,025.01with Net Farm Income (NFI) of ₦3,113,183.32 during production period of six months. Return on investment was ₦0.64 which implies profitability of catfish production in the study area. The study also identified high cost of feed, inadequate finance, inadequate seed supply, lack of land, lack of organized market, high cost of transportation, lack of modern technologies, and high cost of labour were the major problems faced by catfish farmers. It is therefore recommended that farmers need for government and non –government support in terms of improves feed research that will help to reduce the cost of catfish feeds without reducing the efficacy of the feeds.Furthermore, there is need to be given proper orientation and/or basic training in major farm management techniques most especially participation in programmes that address efficient allocation of production resources. This will help increase their level of profitability, hence, be more efficient.

 

TABLE OF CONTENTS

Pages

Title page                                                                                                                                i

Certification                                                                                                                            ii

Dedication                                                                                                                              iii

Acknowledgement                                                                                                                  iv

Abstract                                                                                                                                  vi

Table of content                                                                                                                      vii

List of table                                                                                                                             x

List of figure                                                                                                                           xi

CHAPTER ONE: INTRODUCTION

  • Background of the study 1

1.2       Problem of the statement                                                                                            4

1.3       Objectives of the study                                                                                               6

1.4       Hypotheses of the study                                                                                             6

  • Justification of the study 6

CHAPTER TWO: REVIEW OF RELATED LITERATURE

2.1       Concept of fish farming                                                                                              8

2.2       General background of Nigerian fisheries                                                                  9

  • Productive efficiencies and their determinants                                                          12

2.4       Efficiency                                                                                                                   14

2.4.1    Technical efficiency                                                                                                    15

2.4.2    Profit efficiency                                                                                                          15

2.4.3    Cost efficiency                                                                                                            16

2.5       Production system of catfish in Nigeria                                                                     17

2.5.1    Pond construction methods                                                                                        17

2.6       The production cycle of catfish                                                                                  20

2.6.1   Seed supply, hatchery production and nursery                                                           20

2.6.2    Feed supply                                                                                                                 21

2.6.3    Harvesting techniques                                                                                                 22

2.6.4    Handling and processing                                                                                            23

2.6.5    Markets                                                                                                                       23

2.6.6    Production costs                                                                                                         24

2.6.7    Diseases and control measures                                                                                    24

2.6.8    Basic fish disease treatment                                                                                        25

2.7       Role of fisheries in national economy                                                             26

2.8       Economic importance of fish                                                                                      26

2.9       Problems of fish farming                                                                                            29

2.10     Prospect of fish farming                                                                                             30

2.11     Theoretical framework                                                                                                31

2.12     Concept of profitability                                                                                              31

2.13     Theory of production                                                                                                  34

2.13.1  Production function                                                                                                    35

2.14     Analytical framework                                                                                                 36

2.14.1  Translog stochastic frontier production model (SEPM)                                             36

2.14.2  Budgetary model                                                                                                        39

CHAPTER THREE: METHODOLOGY

3.1       The study area                                                                                                             41

3.2       Sampling procedure                                                                                                    41

3.3       Validity and reliability of instrument                                                                         42

3.4       Data collection                                                                                                            42

3.5       Data analysis                                                                                                               42

3.5.1    The stochastic frontier production function                                                               42

3.5.2    Inefficiency model                                                                                                      43

3.5.3    Budgetary model                                                                                                        43

 

CHAPTER FOUR: RESULTS AND DISCUSSION

4.1       Socio-economic characteristics of catfish farmers                                          45

4.2       Technical efficiency of catfish farmers                                               51

4.3       Factors that influence technical efficiency of catfish farmers                                    52

4.4       Costs and returns of catfish farmers                                                               55

4.5       Problems associated with catfish farmers                                          56

CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1       Summary                                                                                                                     58

5.2       Conclusion                                                                                                      59

5.3       Recommendations                                                                                                      59

REFERENCES

APPENDICES

CHAPTER ONE/ INTRODUCTION

  • Background of the Study

Fish farming is the sub-set of aquaculture that focuses on rearing of fish under controlled or semi-controlled conditions for economic and social benefits. Aquaculture is the rearing of aquatic organisms under controlled or semi-controlled conditions for economic and social benefits. Aquatic organisms include fishes, molluscs, crustaceans and aquatic plants. Culture implies some forms of intervention in the rearing process to enhance production such as regular stocking, feeding, protection from predators etc Food and Agricultural Organization (FAO, 2006).

In Nigeria, the production of food has not increased at the rate that can meet the increasing population. While food production increases at a rate of 2.5%, food demand increases at a rate of more than 3.5% due to high rate of population growth of 2.83% (Ojo & Fagbenro, 2010). The apparent disparity between the rate of food production and demand for food in Nigeria has led to a food demand supply gap thus leading to a widening gap between domestic food production and total requirement, an increase resort to food importation and high rates of increase in food prices and as a result, wide spread hunger and malnutrition are evident in the country (Ugwumba & Chukwuji, 2010).

1

The growth of a country’s population is usually accompanied by increase in the demand for the basic necessities of life including water, food and shelter. This is the case with the unrestricted increase in the demand for protein rich food items of animal origin especially. FAO(1991), recommended that an individual takes 35 grams per caput of animal protein per day for sustainable growth and development. However, the animal protein consumption in Nigeria is less than 10 grams per person per day, which is a far cry from the FAO minimum recommendation (Onoja & Achike, 2011). The major animal protein sources in the country include cattle, goat, sheep, poultry and fish. Out of these sources fish and fish products provide more than 60% of the total protein intake in adults especially in the rural areas (Adekoya, 2004). Therefore, the importance of the fishing industry to the sustainability of animal protein supply in the country cannot be over-emphasized (Ugwumba & Chukwuji, 2010). Regrettably, the supply of food fish has been on the decline. This is due to consistent declines from the country’s major source of food fish, the artisanal fisheries, from 90% in 1990 (Tobor, 1990) down to 40% in 2006 resulting to about 300,000 metric tonnes Global Agriculture Information Network (GAIN, 2007). Because aquaculture is capital intensive and financing is generally needed to feeds and labour in the production of catfish and other aquatic species, thus available resources needed to be efficiently utilized to maximize profit. According to (Eyoh & Igben, 2002), knowledge of efficiency of resource use is vital to farmers in agricultural productivity. That, the utilization of land resources is closely guided by the concept of highest and best use for maximum agricultural productivity. Furthermore, profitability analysis could guide investors and would attract investors in committing available funds into catfish production due to its high rate of profitability shown in recent studies such as (Kainga & Adeyemo, 2013; Onoja & Achike, 2011; Ugwumba & Chukwuji, 2010; Esu, Asa & Iniedu, 2009). Currently, domestic fish production is put at 551,700 metric tonnes as against the present national demand of about 1.5 million metric tonnes estimated for 2007 (Osawe, 2007; Nwosu, & Onyeneke, 2013). An underlying premise behind most of the work of efficiency is that if farmers are not  making efficient use of existing technologies, then efforts designed to improve efficiency would be more cost effective than introducing new technologies as a means of increasing agricultural output (Effiong, 2005; Ike,  2008).

The shortfall is said to be bridged by the importation of 680,000 metric tonnes annually consuming about N50 billion in foreign exchange (Odukwe, 2007). It has been asserted by (Amaefula, Onyekweaku & Asumugha, 2010; Ugwumba & Chukwuji, 2010) that the only way of boosting fish production and thereby move the country towards self- sufficiency in fish production is by embarking on fish farming (aquaculture) especially catfish farming. Fisheries occupy a unique position in the agricultural sector of the Nigerian economy. In terms of Gross Domestic Product (GDP), the fishery sub-sector has recorded the fastest growth rate in agriculture to the GDP. The contribution of the fishery sub-sector to GDP at 2001 current factor cost rose from N76.76 billion to N162.61 billion in 2005 Central Bank of Nigeria (CBN, 2005). Fish is an important source of protein to large teaming population of Nigeria and fish contributes about 40 – 50% of protein intake of average Nigerian from animal sources (Adeniji, 1987; Ugwumba & Ugwumba, 2003). According to Adekoya (2004), fish and fish products constitute more than 60% of the total protein intake in adults especially in rural areas. Hence, the role of the fishing industries in sustaining animal protein supply in Nigeria cannot be overemphasized (Ugwumba & Chukwuji, 2010). Amiengheme (2005) enumerated the importance of fish in Human Nutrition as follows:

  1. Food fish has a nutrient profile superior to all terrestrial meats (beef, pork and chicken, etc) source of high quality animal protein and highly digestible energy.
  2. Fish is a good source of sulphur and essential amino acids such as lysine, leucine, valine and arginine. It is therefore suitable for supplementing diets of high carbohydrate contents.
  • Fish is also a good source of thiamine as well as an extremely rich source of Omega iii poly-saturated fatty acids, fat soluble vitamins (A, D and E) and water soluble vitamins (B complex) and minerals (Calcium, Phosphorus, Iron, Iodine and Selenium).
  1. It has a high content of Polyunsaturated (Omega iii) fatty acids which are important in lowering blood cholesterol level and high blood pressure. It is able to mitigate to alleviate platelet of (cholesterol) aggregation and various arteriosclerosis conditions in adult populations.
  2. It reduces the risk of sudden death from heart attacks and reduces rheumatoid arthritis.
  3. Omega iii fatty acids also lower the risk of age related muscular degeneration and vision impairment.
  • It decreases the risk of bowel cancer: and reduces insulin resistance in skeletal muscles.

It is known that economics is an important concept which is the main focus of this study, because it relates to the financial feasibility of expansion, or indeed starting up of an enterprise and contains information of the efficiency of the technical and managerial process. Profitability in common usage means the ability to earn profit. The profitability of any enterprise is measured in relation to the size of the business (Kainga & Seiyabo, 2012). Different forms of business produce goods and services for sale in other to earn income. If the income earned does not exceed cost of production in turn, the firm cannot stay in business for a long time therefore the aim of any enterprise is to minimize cost and maximize output in other to maximize net revenue.

The term efficiency can be described as the use of the lowest amount of inputs to produce greatest amount of output. Thus efficiency simply means reducing the amount of wasted inputs. The modern theory of efficiency dates back to the pioneering work of  Farell (1977)  who proposed that the efficiency of a farm consists of technical and allocative component and the combination of these two components provide a measure of total economic efficiency (overall efficiency). The crucial role of efficiency in increasing agricultural output has been widely recognized by researchers and policy makers like (Nwaru, 2005; Onoja & Achike, 2011). Indeed, considerable efforts have been devoted to the analysis of farm level efficiency in developing countries.

Therefore, greater improvement in catfish production can be achieved with a proper analysis that will lead to knowledge of the level of profitability of catfish farming and technical efficiency to production which constitute the basis for this study.

  • Problem of the Statement

Nigerians are large consumers of fish with demand estimated at 1.4 million metric tons. However, a demand supply gap of at least 0.7 million metric tons exist nationally with import making up the short fall at a cost of almost 0.5 billion US dollar per year. While domestic fish production of about 500,000 metric tons is supplied by artisan fisher – folk (85%), despite over fishing in many water bodies across the country (Adekoya, 2004 . Moreover, fish supply from artisanal fisheries has been consistently on the decline (Tobor, 1990; GAIN, 2007). Therefore, the industry needs further investment such as improving aquaculture development in order to meet the demand-supply gap with proper farm management skills demonstrating its profitability and efficient use of resources.

Nigeria has a vast network of inland waters like rivers, flood plains, natural and man-made lakes and reservoirs (Shimang, 2005). The inland water mass was estimated to be about 12.5 million hectares of inland waters capable of producing 512,000 metric tons of fish annually (Ita, 1984; Shimang, 2005). Bayelsa State has a fair share of the vast fishery resources with 180km coastline that holds a lot of potentials for investors in fisheries. These include rivers, lake and ponds where many fishing activities take place. Yet local fish production in Bayelsa State remains around 30,000 tonnes per year,Bayelsa State Investment Promotion Agency(BIPA, 2013). This is insufficient for local consumption with significant unmet demand in Bayelsa and neighboring states. The findings of Kainga and Adeyemo (2013) stated that 77.8% were part-time farmers while 22.2% were full-time which implies that they augment the business with other sources of fund, in the most parts of Bayelsa State. This could not be out of place due to discovery of crude oil which may have in no little way occasioned production drift of fish production as well as to bridge the gap between the daily per caput animal protein intake which is estimated at less than 10 grams compared to the FAO recommended minimum requirement of 35 grams (Onoja & Achike, 2011). Hence, protein obtained from catfish is needed for the growth and development of the entire populace, thus increases the standard of living and income of the fish farmers.

Presently, two major constraints to the establishment of fish culture enterprises in Nigeria are lack of initial capital input and the acquisition and ownership of land (Onoja & Achike, 2011; Afolabi & Fagbenro, 1998), including Bayelsa State.  Most importantly, the value of rental price of land that satisfies the technical requirements of modern and conventional pond fish culture varies with its quality and alternative uses. It becomes prohibitive and unaffordable especially in urban centres where competing and uses with earthen pond fish culture exists.Also lack of proper management and information to efficiently utilize their limited fisheries resources for profit maximization. This has partly hampered aquaculture development in the country, especially, Bayelsa State leading to ‘potential’ farmers avoiding going into fish farming and others becoming ‘inactive’ because aquaculture profitability has not been demonstrated to them in the study area. Likewise financing institutions and banks are not keen to lend money to farmers whose enterprises cannot be feasibly appraised.

Despite these considerably high potentials, local fish production has failed to meet the county’s domestic demand (FAO, 1995). The fish industry remains the most virgin investment in Nigeria compared with the importation of frozen fish in the domestic market (Ndu, 2006). A sure means of substantially solving the demand – supply gap is by embarking on widespread homestead and small scale fish and through proper analysis that will lead to knowledge of efficient utilization of fish farmer’s limited resources for maximum production.

Although available literature shows that many studies have been done on catfish production, but the attention was more on either profitability (e.g. Ugwumba & Chukwuji 2010; Kainga & Adeyemo, 2013; Kudi, Bako & Atala, 2008; Esu, Asa & Iniedu, 2009; Ohen & Abang 2009; Anyanwu, Mkpado & Ohaka, 2009; John, 2012; Kassali & Mariama, 2011) or technical efficiency of catfish production (e.g. Onoja & Achike, 2011; Emokaro & Ekunwe, 2009).  Little or nothing has been done to look at profitability and technical efficiency of catfish production especially in Bayelsa State. This could be due to poor information dissemination on efficiency and profitability of catfish production.

Hence the study seeks to determine the technical efficiency of catfish farmers, identify factors that influence technical efficiency of catfish farmers,analyze the costs and returns associated with catfish and examine the problems associated with catfish farmers in Bayelsa State, Nigeria.

1.3       Objectives of the Study

The broad objective of the study is to examine the economics of Catfish production in Bayelsa State, Nigeria.

The specific objectives are to:

  1. describe the socio-economic characteristics of catfish farmers in Bayelsa State, Nigeria;
  2. determine the technical efficiency of catfish farming;
  • identify factors that influence technical efficiency of catfish farming;
  1. analyze the costs and returns associated with catfish farming;
  2. examine the problems associated with catfish farming; and
  3. make recommendations based on the findings.

1.4       Hypotheses of the Study

The following null hypotheses were tested in the course of the study:

  1. There is no significant influence of socio-economic characteristics on output of Catfish farmers in Bayelsa State.
  2. Catfish farmers are not technically efficient.

1.5       Justification of the Study

The study aimed at examining the economics of catfish farmers in Bayelsa State. The reason is because presently catfish farming activity is not run as a business in comparison with other agriculture or livestock based industries in the state. If catfish farming can be demonstrated to be profitable at the small scale level, entrepreneurs may take it up at the commercial level and produce for large scale markets and export.

The findings of the study will provide necessary and important information to various stakeholders in the fishing industry, these include – potential fish farmers, policy makers, researchers, extension agents etc. Since the study will enable the efficient utilization of limited resources to maximum profitability and pond management practice by the farmers.

It will also help the government on policy formulation as it affects fish farming, and to the researchers it can be a part of reference material and open areas for the extension agents and all these will lead to increase in fish production with its benefits of increasing the protein intake of Nigerians.

 

ECONOMIC STUDY OF CASSAVA PRODUCTION IN NIGERIA

ECONOMIC STUDY OF CASSAVA PRODUCTION IN NIGERIA

 

 

.

TABLE OF CONTENTS

Page

TITLE                                                                                                                         i

CERTIFICATION                                                                                                     ii

ABSTRACT                                                                                                               iii

DEDICATION                                                                                                           iv

ACKNOWLEDGEMENT                                                                                         v

TABLE OF CONTENTS                                                                                           vii

LIST OF TABLES                                                                                                     xi

LIST OF FIGURES                                                                                                   xiii

LIST OF APPENDICES                                                                                           xiv

CHAPTER ONE: INTRODUCTION                                                                                   1

  • Background Information of the Study 1
  • Problem Statement 4
  • Objectives of the Study 8
  • Research Hypothesis 9
  • Justification of the Study 9
  • Limitations of the Study 12
  • Plan of the Report 13

CHAPTER TWO: LITERATURE REVIEW                                                                        15

  • Morphological Description of Cassava 16
  • Cassava Production in the World 17
  • Advances in Root and Tuber Crop Production Technology 19
  • The Potential Economic Importance of Cassava 23
  • Farming Systems Adopted in Cassava Production 28
  • Farming Conditions of the Small-Holder Farmer 30
  • Efficiency of Resource Use by Cassava Farmers 31
  • Economics of Cassava Production and Marketing 36
  • Conceptual and Empirical Framework 38

2.10 Theoretical and Analytical Framework                                                               42

2.10.1 Tobit Model                                                                                         47

  • Efficiency Measures 49
    • Allocative Efficiency 50
    • Economic Efficiency 50
    • Profit Frontiers 51
    • Stochastic Frontier Production Function 51

CHAPTER THREE: RESEARCH METHODOLOGY                                           54

  • Description of the Study Area 54
  • Sampling Procedure 58
  • Data Collection 59
  • Data Analysis 59
  • Model Specification 60
  1. Technical Efficiency             60
  2. Inefficiency Model                                                                         61
  3. Tobit Model 63
  4. Normalized Profit Function 66

CHAPTER FOUR: RESULTS AND DISCUSSION                                                           68

  • Socio-Economic Characteristics of Respondents 68
    • Age of the Farmers 68
    • Gender Participation 70
    • Household Size 71
    • Farming Experience 73
    • Level of Educational Attainment of Respondents 74
    • Occupational Distribution of the Respondents                                 75
  • Farming Systems and Cassava Production in Abia state 77
    • Cropping System 77
    • Calendar of Farm Operations 78
    • Household Farm Holdings 81
    • Livestock Production in Abia state 82
    • Size of Cassava Farm 83
  • Cost Implications and Returns to Cassava Enterprise 84
    • Analysis of Costs and Returns ( Profitability Index ) 87
  • Estimation of Technical Efficiency 89
    • Determinants of Technical Efficiency 94
    • Elasticity of Production and Returns to Scale 97
    • Technical Efficiency Estimate of Cassava Farmers in Abia-State 98
  • Estimation of Economic Efficiency 99
    • Determinants of Economic Efficiency (Profitability) for Cassava

Production in Abia-State                                                                    103

  • Economic Efficiency Estimate of Cassava Farmers in Abia-State                                                                                                             105
  • Test of Hypothesis for Technical and Economic Efficiency of Cassava

Farmers in Abia-State using Generalized Likelihood Ratio (LR)          106

 

  • Estimation of the Factors that Influence Technology Adoption Rate and Use

Intensity                                                                                                          107

  • Constraints to Increased Cassava Production in the Study Area 110

CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS  113

  • Summary 113
  • Conclusion 115
  • Recommendations 117
  • Suggestions for Further Research 119

REFERENCES                                                                                                          121

APPENDICES                                                                                                           133

 

LIST OF TABLES

Table:                                                                                                                                      Page

4.1   Frequency Distribution of Respondents According to Age                                           68

4.2   Frequency Distribution of Respondents According to Gender                                      70

4.3   Frequency Distribution of Respondents According to Household Size                                    72

4.4   Frequency Distribution of Respondents According to Farming Experience                  73

4.5   Frequency Distribution of Respondents According to Level of Formal

Education Attained                                                                                                         74

4.6   Frequency Distribution of Respondents According to their Primary Occupation         76

4.7   Frequency Distribution of Respondents According to their Total Farm Holding          82

4.8   Frequency Distribution of Respondents According to their Cassava Farm Size           83

4.9   Results of Budgetary Analysis per Hectare of Cassava Enterprise                                86

4.10 Maximum Likelihood Estimates of the Cobb-Douglas Stochastic Production

Function   (Technical)                                                                                                     91

4.11 Maximum Likelihood Estimate of the Translog Stochastic Production Function

(Technical)                                                                                                                      92

4.12 Elasticity and Returns to Scale for Cassava Production (Technical)                              97

4.13 Frequency Distribution of Technical Efficiency Indices                                                98

4.14 Maximum Likelihood Estimate of the Stochastic Cobb-Douglas Cost function for

Cassava Farmers                                                                                                             100

4.15 Maximum Likelihood Estimate of the Translog Stochastic Cost Function for

Cassava Farmers                                                                                                             101

4.16 Frequency Distribution of Economic Efficiency Indices                                               105

4.17 Test of Hypothesis that Cassava Farmers in Abia-State are Fully Technically and

Economically Efficient                                                                                                  106

4.18 Tobit Model Estimates of Factors Affecting Adoption Rate and Use Intensity of

Cassava Production Technologies                                                                                 107

4.19 Frequency Distribution of the Respondents According to the Constraints they faced

in the Survey Year                                                                                                          111

 

 

LIST OF FIGURES

Figure:                                                                                                                       Page

  • Location of Abia State in Nigeria                                                                     56

3.2     Map of Abia State showing all the 17 Local Government Areas                     57

4.1     Calendar of Farm Operations for Cassava Enterprise in Abia-State                78

 

 

 

 

 

 

 

 

 

LIST OF APPENDICES

Appendix:                                                                                                                              Page

  1. Letter to the Sampled Farmers / Respondents            133
  2. Questionnaire Design for the Cassava Farmers 134
  • Computer print-out of Output from the Program Frontier 4.1c (Technical)             148
  1. Computer print-out of Output from the Program Frontier 4.1c (Economic)             161
  2. Computer print-out of Tobit Estimate with Stata 8.2 (Statistics/Data Analysis) 173

 

CHAPTER ONE

INTRODUCTION

  • Background Information of the Study

Cassava, (Manihot esculentum crantz), belongs to the family of euphorbiaceae. It is believed that the crop originated from Brazil and was introduced to West Africa by the Portuguese traders. It exists in many cultivars which can be distinguished by size, colour, shape of the leaf, branching habit, plant height, colour of the stem, root shape, size and colour, maturity time of the root and level of hydrocyanic content (Anyanwu, 2006). Cassava is Africa’s food insurance crop with stable yield, even with low rainfall, low fertility and low inputs (FAO, 2008). Cassava is becoming an important industrial raw material and a foreign exchange earner. Cassava’s role as food security crop as well as a cash crop is receiving high attention for poverty alleviation by the developing world and partners (FAO, 2008).

Cassava is ranked the 6th most important crop in the world in terms of area planted and production (FAO, 1986). Africa is the highest cassava producer in the world, and more than 100 million people in tropical Africa depend on it as their dietary staple (FAO, 2008). Globally, among the world’s producing regions, West Africa is known to have the greatest share of the world’s production of cassava (FAO, 2008). Interestingly, Nigeria is the largest world producer of cassava with yearly production of fresh tubers estimated at 10-13 million tons on a land area of 1.2-1.4 million hectares (NAQAS, 2002). Nigeria’s lead on cassava production in the world has been achieved through expansion of land areas devoted to cassava cultivation (Ano, 2003). Of Africa’s 72.7 million tons of cassava output in 1990, 26 million tons were produced in Nigeria (Ezedinma, 2003). Cassava is widely grown in Nigeria. For decades, cassava has been cultivated as a subsistence crop in Nigeria. Currently, cassava cultivation has become an income generating activity. This “enhanced” status is as a result of increased demand for cassava and cassava products outside the rural communities (Ikpi et al 1986), as well as the realization of the potentials it has for contributing to the attainment of self-sufficiency in food production (Kwatia, 1980).

Cassava plays a major role in Nigeria’s food security and 80% of the inhabitants in the rural areas eat cassava meal at least once a day (Ezedinma, 2003). The crop is also a good source of raw materials involved in the production of confectioneries, animal feed, alcohol, adhesives, flour starch, etc. The growth of cassava as a major economic and food security crop over the last two decades has generated significant research interest at both the National and International levels. For instance, the International Institute for Tropical Agriculture (IITA), Ibadan and the National Root Crops Research Institute, (NRCRI), Umudike have developed the Tropical Manihot Selection (TMS) 30555, 30572, 30211, 50395, 60506 and Umudike (U) 41044 varieties in the early 1970’s and 1980’s. Most recently, new varieties of cassava were developed and they include, TMS 90257, 84537M, 82/00661, 30001, 81/00110, 91934, 4(2)1425, nr 41044, nr 8212, 8082, 8083, 8208, nr 83107, TMS 419, TMS 98/0581 and TMS 98/0510 (Ezulike et-al,2006). These varieties are not only high yielding, but also are resistant to pests and diseases such as Cassava Mosaic Disease, Cassava Bacteria Blight, Cassava Mealy Bug and Cassava Green Spider Mite (Ezedinma, 2003).

Cassava’s combined abilities to produce high yields under poor conditions and store its harvestable portion underground up to nine months make it a classic “food security crop. In recent years, this has proved of critical importance to many people in Africa caught up in civil conflicts and unable to cultivate the normal range of annual crops. Displaced groups of people in Mozambique during that country’s 16 years’ war often survived on abandoned cassava fields (Ezedinma, 2003). Because, it is a vegetative propagated crop, such plantings can also serve as a ready supply of planting materials during rehabilitations following conflict or drought.

Cassava is well-known for being able to grow and produce food even in very poor soils. For that reason, it is often grown at the margins of farms where the better land has been reserved for the production of grain crops. In addition, once established, cassava is relatively drought tolerant and when matured can survive up to six months without rains. Cassava’s productive capacity in low-input conditions comes at a certain cost in terms of carbohydrate quality and protein concentrations. Cassava’s ability to produce food under marginal conditions has made it a popular crop of Africa’s poor farmers who are unable to invest in fertilizer or pesticides to protect the crop against environmental stresses and biotic constraints (Ezedinma, 2006).

Although still a subject of some debate, the center of origin of cassava is generally believed to be the Southern border of the Amazon basin. Cassava was introduced in Africa in the Congo River Delta by the Portuguese in the 15th century and spread rapidly to many agro-ecologies of the continent; however, cassava is most important in farming systems of the humid forest regions where the productivity of grain crops is reduced by sunlight, foliar pests and diseases and grain storage is more difficult. Cassava has very high yield potential, making it a viable alternative to grain crops where population pressures have led to trade-off between good quality and quantity (NAQAS 2002).

Commercial cassava yields as high as 20 metric tons per hectare have been registered under experimental conditions. Nigeria is presently the largest cassava producing country in the world (FAO, 2008).

Presently, cassava production is in the hands of small-holder farmers who rely predominantly on simple tools like the hoe and cutlass powered by human effort. In 2002, the Government of Nigeria launched a presidential initiative on cassava. The aim of the initiative was to develop cassava as the engine of growth and diversify Nigeria’s economic base away from its principal export-crude oil. If investments in the downstream sector of the cassava industry are made more effective, cassava can be used to improve rural and urban income and employment in Nigeria (Ezedinma and Okechukwu, 2007). But the initiative will be threatened if no substantial effort is made to improve the current production systems. The requirements of consistent supply of large volumes of fresh roots by cassava-based industries cannot be supported by the current production systems. The critical constraints, however under such production systems is labour cost which lies between 70 and 90% of total variable cost of production (Ezedinma, 2000 and Okorji , 1985) in small holder farming.

  • Problem Statement

Cassava is one of the major root crops in Abia state and following the presidential initiative on cassava in 2002, there has been an increased awareness and demand for the crop in the state till date (ABSG, 2006). This pre-supposes that increased land area will be put into cultivation. Onyenweaku and Okoye (2005), noted that cassava production in Abia state no longer keep pace with demand, in spite of the high potential for increasing its production by expanding the area under cultivation. Ezebuiro et al (2008) observed that Abia cassava farmers are peasants and are poorly endowed in terms of resources; yet they account for the production of up to 95% or more of food produced for consumption in the state. The inadequate use of improved inputs consequent upon the low resource endowment of the Abia cassava peasant farmers has made Abia agriculture to remain at the rudimentary and traditional level. The implication is increased drudgery and reduction in output. This might not be unconnected with the level of cassava farmer’s efficiencies (technical, economic and allocative). A fundamental requirement for correcting this problem is only through improvement in productivity of cassava farmer’s. In this context, technical and economic efficiency in the production of the crop is of paramount importance.

Available statistics show that despite increases in awareness and demand for cassava in Abia state consequent upon the presidential initiative, the objectives of sustainability has remained a mirage as its production has not kept pace with demand (Onyenweaku and Okoye, 2005). Given that cassava is an important staple food in Abia state, any attempt to increase its production and the farmers’ productivity would be a right step towards the resolution of the food crisis. Considering the recent increasing trend of demand for cassava cuttings (Onyenweaku and Okoye, 2005) it is envisaged that farmers may have adopted improved varieties and other technologies to strengthen their economic base. Furthermore, their adoption could depend on the yields realized by the farmers. Actually, farmers place a high value on maximum food security, psychological and/or cultural satisfaction. It is a known fact that it is primarily because of the poor resource base that the small-scale farmers are slower in adoption than the large-scale farmers.

Again, most studies on adoption of cassava technologies in Abia-state are based on potential adopter’s decision about whether or not to adopt an innovation and where the adoption variable is specified in binary form; 1, if he or she adopts, O, otherwise (Akinola and Young, 1991). The implication is that the chosen methodology provided no information on the intensity of use after adoption. It is therefore imperative to specify a model that permits a discrete and continuous dependent variable which will capture the simultaneous nature of the decision making process of potential adopters using the Tobit model instead of the usual probit and/or Logit models.

Most studies also show that aggregate food production in Nigeria has been growing at about 2.5% per annum in recent years. But the annual rate of population has been as high as 2.9% (Olayemi, 1998). The reality is that Nigeria has not been able to attain self-sufficiency in food production; more especially with regards to cassava production despite increasing land area put into food production annually. With recent presidential initiative on increased cassava production with a view to exporting garri and the realization that cassava could be used in bread production, Abia-state has witnessed an increase in hectares of land devoted to cassava cultivation (Abia brief, 2006).

Global cassava production reached over 160 million tons in 1991 and FAO (2003) forecast that production will rise to nearly 210 million tons by 2005. On average, farmers produce less than 10 tons of cassava per hectare in Nigeria; but high yielding varieties, improved pest and disease control and better processing methods could increase production by 150% (FAO, 2006). Traditionally, cassava has been a crop of the poor and expanding its production and market can bring direct economic benefits to farmers. It has been observed that peasant farmers in Africa usually control fewer productive resources compared with their counterparts in Europe and North America, with attendant low output of cassava (Johnson, 1982).

McNamara (1990), reported that although Sub-Saharan Africa’s food production has grown over the last three decades by about 2% a year, it has not actually kept pace with a population growth rate of about 2.8%. According to him, the current population which is estimated at 540 million is expanding at a rate of about 3.1% per year and that the region’s population could reach 1.6 billion by the year 2020. More still, as the region’s population has grown, the amount of arable land available per person has declined from an average of 0.5ha in 1965 to 0.3ha in 1987, he concluded. Ugboaja (2008), reported also that available land for cassava production in Abia state has consistently declined as a result of increased population growth. The implication is reduction in output. This low output, in spite of increasing trend of demand for cassava and availability of resources, improved varieties and technologies could be related to the profitability of cassava enterprise.

It is essential to understand the socio-economic and demographic factors that play leading role in the production process of cassava in order to achieve maximum outputs in Abia state. Generation of such information is critical in focusing programmes, in developing long term research policies and in understanding the subsistence farming situation. Therefore based on the aforementioned, this study would examine the economics of cassava production in Abia state. This would be with a view to identifying and quantifying social and economic factors affecting production; evaluating how resources could be deployed to increase resource efficiency, productivity, profitability of the enterprise and increased adoption of the innovations available in the multi-cropping system of subsistence producers in the humid rainforest ecology of South-Eastern Nigeria, with particular reference to Abia state.

  • Objectives of the Study

The broad objective of this research is to study the economics of cassava production in Abia state, Nigeria.

The specific objectives are to;

  • describe socio-economic characteristics of the cassava farmers and the farming systems adopted in cassava production in Abia state,
  • estimate the cost implications and returns to cassava enterprise in Abia state,
  • estimate technical and economic efficiencies of cassava farmers’ in Abia state,
  • identify and estimate the determinants of farmers technical and economic efficiencies,
  • identify and analyze the factors that influence the rate of technology adoption and the intensity of use after adoption by the farmers in Abia state and,
  • identify the constraints to increased cassava production Abia state.

 

  • Research Hypotheses

ECONOMIC EFFECTS OF CRUDE OIL EXPLOITATION ON CASSAVA PRODUCTION IN NIGERIA

ECONOMIC EFFECTS OF CRUDE OIL EXPLOITATION ON CASSAVA PRODUCTION IN DELTA STATE

 

ABSTRACT

This study examined the economic effects of crude oil exploitation on cassava production in Delta State. Specifically, the effect of crude oil exploitation on land productivity, farm income and cassava yield was explored. The costs and returns, and hence profitability of cassava production as influenced by oil pollution, the farming systems and socio-economic characteristics of cassava farmers were critically examined. Copies of well-structured questionnaires were used to collect primary data from a sample of 204 small scale cassava farmers drawn using stratified and simple random sampling techniques from the three (3) agro-ecological zones of Delta State between October 2007 and February 2009. Data were analyzed using descriptive statistics, costs and returns analyses, net margin and regression analyses. The results revealed that total fixed cost per cassava farmer was N27, 624.49 while total variable cost per cassava farmer was N19, 108.68. Total output of cassava product (garri) before and after oil spill incidents were 48,636kg and 40,549.22kg with an average yield of 328kg and 274kg respectively per cassava farmer. A net margin of N27, 846.43 and N19, 206.43 before and after oil spills incidents per cassava farmer, indicating a 31% reduction in profit, was also revealed. Using the Ordinary Least Square (OLS) multiple regression method to estimate the effect of crude oil exploitation on the major dependent variables, the linear functions had the best fit with adjusted R2 of 0.432 and DW-statistic of 2.08 for land productivity, adjusted R2 of 0.953 and DW-statistic of 1.537 for farm income and adjusted R2 of 0.950 and DW-statistic of 2.015 for cassava yield. The results of the regression analyses and all the hypotheses tested using the paired t-test statistic at 1% and 5% probability levels, indicated that crude oil exploitation had a negative and statistically significant effect on cassava production in consonance with a prior expectations. Thus, it is recommended among other measures that government at all levels should take pragmatic steps at enacting and enforcing stringent environmental laws that will protect the oil producing farming communities as well as guaranteeing the people a better means of livelihood. 

TABLE OF CONTENT

Title Page                                                                                                                    i

Certification                                                                                                                ii

Dedication                                                                                                                  iii

Acknowledgement                                                                                                      iv

Abstract                                                                                                                      v

Table of content                                                                                                          vi

CHAPTER ONE

INTRODUCTION

1.1       Background Information                                                                                1

1.2       Problem Statement                                                                                          4

1.3       Objectives of the Study                                                                                  7

1.4       Research Hypotheses                                                                                      7

1.5       Significance of the Study                                                                               8

CHAPTER TWO

LITERATURE REVIEW

2.1       A Brief History of Petroleum Development in Nigeria                                  9

2.2       Oil Exploitation and Environmental Pollution                                               10

2.2.1    Meaning of Oil Exploitation and Pollution                                                    10

2.2.2    Sources and Types of Oil Industry Pollution                                                 12

2.3       Oil Spillage and Pollution                                                                               14

2.3.1    Causes of Oil Spillage                                                                                     15

2.3.2    Frequency and Magnitude of Oil Spills                                                          15

2.4       Effects of Oil Exploitation                                                                             18

2.4.1    Oil Exploitation and Land Availability for Agriculture                                 19

2.4.2    Oil Exploitation and Soil Pollution                                                                 21

2.4.3    Effect of Oil Exploitation on Water/Aquatic Lives                                       23

2.4.4    Oil Exploitation and Hydrocarbon Pollution of Air                                       25

2.4.5    Oil Exploitation and Rural/Urban Migration                                                  26

2.5       Oil Companies and Corporate Social Responsibility                                      27

2.6       Farming System in Cassava Production                                                         31

2.7       Farm Resource Use                                                                                         32

2.8       Valuation of the Environment: Empirical Measures                                       33

2.8.1    Non-Market Demand Approaches                                                                  34

2.8.2    Market Demand Approaches                                                                          34

2.9       Productivity Implications of Environmental Pollution                                   36

2.10     Conflicts and Resource Use                                                                           38

2.11     Theoretical Framework                                                                                   40

2.11.1  Integrated Environmental Impact Model for Oil and Chemical                   40

Spills

2.11.2  Concept of Agricultural Resource Productivity                                             41

2.12     Analytical Framework                                                                                    42

2.12.1  Multiple Regression Analysis                                                                         42

2.12.2  Gross Margin/Profit Function Analyses                                                         42

2.12.3  The Student’s “t” Test                                                                                                43

CHAPTER THREE

RESEARCH METHODOLOGY

3.1       Study Area                                                                                                      45

3.2       Sampling Procedure                                                                                        46

3.3       Data Collection                                                                                               47

3.4       Data Analyses                                                                                                 48

3.4.1    Model Specification and Estimation                                                              49

3.4.2    Gross Margin Analysis                                                                                    51

3.4.3    Hypotheses Testing                                                                                         52

CHAPTER FOUR

RESULTS AND DISCUSSION                                                     

4.1       Farming Systems of Cassava Farmers                                                            53

4.2       Socio-Economic Characteristics of Cassava Farmers                                     54

4.3       Profitability Analysis of Cassava Farming                                                     56

4.3.1    Cost Analysis in Cassava Farming                                                                  56

4.3.2    Returns in Cassava Production                                                                       59

4.3.3    Net Margin Analysis                                                                                       61

4.4       Corporate Social Responsibility of Oil Companies and Cassava

Farming Activities                                                                                          63

4.5       Effects of Crude Oil Exploitation on LandProductivity and Farm

Income of Cassava Farmers                                                                            66

4.6       Effect of Oil Pollution on Cassava Farm Income                                           69

4.7       Effect of Crude Oil Pollution on Cassava Yield                                            71

CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1       Summary of Findings                                                                                                 74

5.2       Conclusion                                                                                                      76

5.3       Recommendations                                                                                          76

5.4       Contribution of Knowledge                                                                           78

5.5       Suggestion for Further Study                                                                         78

References                                                                                                      79

Appendix                                                                                                        94

LIST OF TABLES

                                                                                                            PAGE

1.1       Nigeria Net Oil Revenue (N million)                                                              3

2.1       Oil spills in Nigeria (1976-1996)                                                                     16

3.1       Communities Surveyed and Sample Sizes                                                      47

4.1       Farming Systems of Cassava Farmers                                                            53

4.2       Distribution of Socio-Economic Characteristics of Cassava

Farmers                                                                                                           54

4.3       Average Fixed and Variable Costs in Cassava Production per hectare          57

4.4       Total and Average Yield of Garri per Cassava Farmer before and

after Oil Spill Incidents                                                                                  59

4.5       Test for Difference in Yield of Garri before and after Oil Spill

Incidents                                                                                                         60

4.6.      Cost and Returns in Cassava (Garri) Production per Cassava Farmer           61

4.7       Depreciation of Fixed Cost Items                                                                  62

4.8       Test for Difference in Net Margin (Profit) per Cassava Farmer

before and after Oil Spill Incidents.                                                               63

4.9       CSR: Responses of Male Cassava Farmers.                                                   64

4.10     CSR: Reponses of Female Cassava Farmers.                                                 64

4.11     Farmers’ Response as to whether CSR of oil companies has

improved their farming activities                                                                    65

4.12     Regression Results on Factors Affecting Land Productivity in

Delta State                                                                                                      67

4.13     Factors Affecting Cassava Farm Income in Delta State                                69

4.14     Factors Affecting Cassava Yield in Delta State                                             71

 

CHAPTER ONE

INTRODUCTION

1.1       Background Information

One of the most discussed issues in Nigeria in recent time is that of sustainable development. Sustainable development, according to the Bruntland commission, is development that meets the needs of the present generation without compromising the ability of future generations to meet their own needs (World Commission, 1987).

Agriculture plays fundamental role in the development of any economy. Thus, according to Uwakahet al, (1991), agriculture is the bedrock of the economic development of most developing nations. Edordu, (1986) put it succinctly as follows: “experience has shown that no modern developed country around the world achieved rapid industrialization without having previously or simultaneously attained a marked increase in agricultural production”. The contribution of agriculture to development, most especially in the developing countries includes provision of food supplies, employment, capital formation, release of labour for industrial development and fibre needs of industries (Okorie and Eboh, 1999; Njoku, 2000; FAMRD, 2002). This implies that agriculture is very crucial to the social and economic development of Nigeria.

Agriculture is a vital business enterprise having various components. One of these components that is productive in nature is crop production-a component that dominates largely the Nigerian agricultural scene. It is noteworthy that agriculture in Nigeria is dominated by small scale farmers who are responsible for about 90 percent of the total production (Olatunbode, 1990). The small holder farmers usually have farm sizes ranging between 1-4 hectares and cultivate mainly staple food crops (Obinne and Mundi, 1999).

In recognition of the importance of crop production in the Nigerian economy, successive governments in Nigeria have undertaken various policy measures to revitalize the agricultural sector. However, none of these measures has yielded adequate fruitful result. This is an evidence of the fact that the bulk of Nigeria’s foreign currency earning presently comes from crude oil and gas. NNPC, (2004) reports that the national budget depends heavily on the revenue expectation from oil and gas and this will remain for a while. Thus, the dominant role of crude oil has pushed agriculture, the traditional mainstay of the economy from the early fifties and sixties, to the background.

According to Onwudiwe, (2003), there are eighteen oil companies operating currently in Nigeria. These companies operate over 159 oil fields and produce from over 1,481 oil wells. Of this figure, the Shell Petroleum Development Company (SPDC), controls about half (83 oil fields and 748 oil wells). All of these are almost exclusively in the Niger Delta region.

Oil production in Nigeria has come a long way from the early days of the 1950s. Today, of Africa’s proven crude oil reserves of some 66 billion barrels, Nigeria accounts for 25 billion barrels, more than 35 percent of the total. Therefore, the significance of oil in Nigeria’s political economy has grown considerably. From accounting for one percent of Nigeria’s export earning in 1958, it now accounts for up to 98 percent of export earnings; and from accounting for some 70 percent of total government revenue in 1970, it now accounts for between 80 and 90 percent. This phenomenal rise is attributable to crude oil output, which grew from 1.88 million barrels in 1958 to 822.75 million in 1974 and to 547.08 million in 1985 (NNPC, 1985). This figure rose significantly to 751.8 million barrels as at 1996 (CBN, 1996).

According to CBN, (2000) Nigeria’s crude oil production, including condensates, rose by 11.2 percent over the level in the preceding year (1999) to 2.18 million barrels per day (mbd). Consequently, net oil revenue rose sharply from N204, 848m in 1996 to N857, 582m in 2000 as shown in the following table.

Table 1.1: Nigeria Net Oil Revenue (Nmillion)

Fiscal Year Oil Revenue (Net)

(N million)

1996 204,848.0
1997 218,727.3
1998 166,333.1
1999 1/ 336, 131.6
2000 2/ 857,582.2

Sources: Federal Ministry of Finance Central Bank of Nigeria. In CBN Annual and Statement of Accounts for the year ended 31st December, 2000 (P. 102).

Extracted from Federation and Account Operation

1/Revised

2/Provisional

There is therefore, no doubt that the Nigerian oil industry has affected the country in a variety of ways. On one hand, it has fashioned a remarkable economic landscape for the country. However, on the negative side, petroleum exploration and production also have adverse effects on fishing and farming which are the traditional means of livelihood of the people of the oil producing communities in the Niger Delta region of Nigeria, specifically Delta State.

Eteng, (1997) asserts that “oil exploration and exploitation had over the last four decades impacted disastrously on the socio-physical environment of the Niger-Delta Oil-bearing communities, massively threatening the subsistent peasant economy and the environment and hence the entire livelihood and basic survival of the people”.

In a similar vein, Gbadegesin, (1997) averred that “oil exploration and production in South Eastern Nigeria, has adversely affected peasant agriculture, the basis of sustenance of millions of rural inhabitants through a complex web of interaction of several negative environmental factors. Such factors include contamination of streams and rivers, the problem of oil spill, forest destruction and bio-diversity loss, the environmental effect of gas flaring and effluent discharge and disposal”. Thus, if the oil industry is considered in view of its enormous contribution to foreign exchange earnings, it has achieved a remarkable success. On the other scale, when considered in respect of its negative impact on the socio-economic life and the environment of the immediate oil bearing local communities and their inhabitants, it has left a balance sheet of ecological and socio-physical disaster. This rightly provides a framework to carry out an economic assessment of the effects of crude oil exploitation on small scale cassava production in Delta State of Nigeria.

1.2       Problem Statement

Before the discovery of oil in Nigeria, and even up to the time of Nigeria’s political independence in 1960, agriculture was undisputably the mainstay of the country’s economy, providing employment for the bulk of the population and bearing the physical brunt of economic development. As a share of GDP, agricultural output (crops, livestock, forestry and fishery) accounted for 41.5 percent, compared with 41.0 percent in 1999 (CBN, 2000). This corroborated the report of Erinle and Mijindadi (1992) that agriculture is the most important enterprise in the country employing over 60% of the total labour force and providing over 40% of the National Gross Domestic Product (GDP).

Toluyemi, (1990) asserts that the small scale farmers constitute the bulk (about 60%) of the Nigerian farmers. These peasants, operating at low level of resource inputs are constrained by a number of factors. These factors, as summarized by FMAWR and RD, (1994), are technical, socio-economic, organizational and institutional problems. In recent years, however, the oil boom has compounded the problem of agriculture.

According to Onyige, (1996), the euphoria that followed the large revenues from oil, among other things, not only led to the neglect of other sectors of the economy, particularly agriculture, but also to a neglect of the effects of oil exploitation on the areas in which it is taking place. One other way in which oil exploration has affected agriculture is through pollution. Uchegbu, (2002), citing Imevbore, (1973), maintains that the various activities in all the phases of the oil industry are sources of emissions and products whose entry into the natural environment produces effects of pollution greater than the amount that can be controlled by natural self purification capacity of the ecosystem. Unfortunately, a review of nearly three decades of development planning in the country (1962-1985) shows that government planning did not take a serious view of these externalities nor has planning been sufficient to prevent poor distribution of wealth, uneven resource allocation and undesirable exploitation patterns (Onyige, 1996).

Oil production in Nigeria, has had severe environmental and human consequences for the indigenous people who inhabit the areas surrounding oil extraction. Of course, it is precisely the peasants in the oil-producing areas, especially farmers, who are the main victims of industrial pollution. Degradation of the environment through pollution has had serious consequences for peasant economy and society. Obioma, (1985), argues that the problem of the oil communities is not just that they do not gain from the oil operations but that they suffer numerous and severe damages to their economic resources.

The above is justified in the minutes of meeting between Rivers State Government, the Egbema liaison committee and Nigerian Agip Oil Company Limited (NAOC), 30 December, 1981 which contain the devastating effects of oil exploitation on the people of Egbema particularly farmers and fishermen. A similar point was also made by the Egbema Youth Association in a reminder to NAOC about the repercussions of its industrial activities in their farmlands, claims which equally apply to oil producing communities in Delta State.

Corroborating all the assertions above, Mba, (2001) maintains that the people of the rural Niger Delta communities live with a deep sense of loss and deprivation. The communities are found to be suffering immense human, economic, ecological or environmental and agricultural damages on the account of the operations of the oil exploration companies there, notably the Shell Petroleum Development Company (SPDC). While reporting on the damaging effects of gas flaring, an integral part of oil exploration and exploitation on the communities of the Niger Delta where oil prospecting takes place, Adegbulugbe, (1994), asserts that cumulative gas flaring between 1965 and 1987 amounted to 3.15 x 1011m3. This represents a significant amount of pollutants discharge into the atmosphere with consequent negative impacts on the growth of vegetation and increased localized haze in the affected areas (Salau, 1987). Ibe, (1998) in his view, reports that oil spillages from SPDC had consequently led to the pollution of water and destruction of both aquatic life and agricultural land in their host communities.

Thus far, the pollution of farmlands, water bodies, top soil depletion, deforestation and other ecological and economic problems by oil exploration and exploitation activities had culminated in the small scale crop producers experiencing diminishing returns to their efforts year in year out. Emphasis has always been placed on increased crude oil exploration without giving enough thought to how the environment and agricultural productivity are affected and ways of controlling oil spillage and other forms of pollution by the exploring companies concerned. It should be noted that in Nigeria, as in other developing countries, a key policy objective targeted at achieving sustainable human development is to establish energy development paths that are economically efficient and environmentally sustainable. Though theoretical explanations abound on the impacts of oil exploration on the environment, there is a dearth of empirical studies on how it economically affects the activities of small scale crop producers (especially cassava) in Delta State. Thus, there is the need to undertake a detailed economic study of the effects of oil exploitation and other related activities on cassava production by small-scale farmers in Delta State with a view to improving the living standard of the people.

1.3       Objectives of the Study

The broad objective of this study is to assess the economic effects of crude oil exploitation on cassava production in Delta State.

The specific objectives are to:

  1. describe the farming systems and examine the socio-economic characteristics of cassava farmers in Delta State.
  2. assess the effects of crude oil exploitation on land productivity and farm income of cassava farmers in the study area.

iii.        ascertain the effects of crude oil pollution on cassava yield in the study area.

  1. determine the costs and returns and hence, profitability of cassava farming as influenced by oil exploitation
  2. describe the extent to which corporate social responsibility of oil companies has improved the activities of cassava farmers in the study area.
  3. make policy recommendation based on research findings.

1.4       Research Hypotheses

The following hypotheses were tested in the study.

  1. Oil pollution has no significant effect on land productivity of cassava farmers.
  2. Oil pollution has no significant effects on cassava yield in Delta State.

iii.        Oil exploitation has no significant effect on farm income of cassava farmers.

  1. Socio-economic characteristics of cassava farmers have no significant effect on cassava production.

1.5       Significance of the Study

Agriculture forms a major economic activity in Nigeria particularly in the Niger Delta region. According to CBN (2010) the overall contribution of agriculture to real GDP was N316, 728.70 million. Of this total, crop production accounted for about 89%.

Thus, in attempting to build an environmentally sustainable economic and social order, we have to be virtually concerned about safe-guarding the life-support systems of the oil-bearing communities of which crop farming is one of such life support systems. It is therefore, essential to create a broad awareness of the actual or potential hazards threatening the subsistent peasant economy and the environment and hence the entire livelihood and basic survival of the people. As mentioned earlier, no much emphasis has been placed on how oil exploitation and its related activities have impacted economically or otherwise on small scale crop farmers in Delta State. The researchers, therefore, believes that this study will enable the oil companies appreciate the extent of damage done through their activities on the agricultural resources of the area and to take appropriate step(s) to remedy such situations. The study will also give an insight into the effects of oil exploitation on the socio-economic lives of small-scale crop farmers in Delta State. It is also hoped that the research findings will draw the attention of the multi-national oil companies and every other stakeholder in the oil industry to be aware of the hardship being suffered by farmer’s vis-à-vis oil exploitation so that policies could be aimed at alleviating the suffering of these people

ECONOMIC ASSESSMENT OF THE NATIONAL FADAMA DEVELOPMENT PROGRAMME

ABSTRACT

 

Fadama farming has contributed significantly to Nigeria’s agriculture in particular and the country in general, but the contributions have remained largely unmeasured.  As a result, this study examined the influence of the National Fadama Development Project on Fadama farmers in Kano State. Primary and secondary data were sought.  A set of questionnaires was developed and information was collected from 108 respondents who were randomly selected from the three agricultural zones in the study area. Multiple regression analysis and simple statistical tools, such as, means, frequency, range and percentages were used to realize the objectives of the study.  Analysis of the data revealed that fadama farming was a profitable venture among the farmers studied.  A majority of respondents owned and purchased their farm land and the houses they lived in.  A large percentage also owned radio, television, bicycle and irrigation pump. Water from tube-wells and wash bores were used for irrigation and drinking. The customary land system was practiced in the study area.  About 46% of the respondents inherited their farm land while 26.9% purchased theirs. Majority of respondents practiced mixed cropping to ensure maximum plot utilization. There was efficient use of facilities provided by the loan package.  Inputs such as pumps, fertilizers, pesticides and insecticides were used by farmers.  Respondents also admitted adequate visit to farms by extension agents. There was a significant difference between the average income of the two groups (beneficiaries and non-beneficiaries) at a probability level of 95%. Some constraints, such as, high cost of farm inputs, chronic shortage of petrol and petroleum products, seasonal glut of some perishable agricultural commodities, poor storage facilities, poor access roads to Fadama areas and difficulties in getting registered as  members of Fadama Users Association (FUA), were experienced by respondents. Recommendations included subsidization of prices of fertilizers and other farm inputs, frequent conduct of soil survey to determine level of salinity, creation of more micro credit facilities to enhance productivity and provision of infrastructural facilities.

CHAPTER ONE

INTRODUCTION

  • Background Information

Agricultural production in Nigeria remains essentially traditional with cultivation largely undertaken at individual level using local implements (Abdullahi, 1983). This traditional method and the subsistence nature of agricultural production help in perpetuating the vicious cycle of poverty and restricting the farmer’s ability to embrace modern technology (Bala, 1992).  The food security situation in Nigeria has been deteriorating over the past 15 to 20 years.  Per capital food production has declined more than 15% in the past 20 years (UN, 1992).

As a way of boosting agricultural production, government introduced modern irrigation scheme in the country.  Although the concept of irrigation farming has been practiced in Nigeria for several decades, the introduction of modern irrigation is a government initiative.

Modern irrigation in Nigeria can be traced back to the pioneering efforts of Colonel Collins, a British Colonial officer who, after a survey of the irrigation potentials of Northern Nigeria in the 1900s, developed 243 hectares of land for irrigation.  This was followed in 1949 by the establishment of an irrigation division in the Ministry of Agriculture of the Northern Region with the main objective of initiating small-scale irrigation schemes (Dawakintofa, 1989).

Another major step in irrigation development in Nigeria was the Food and Agricultural Organizations (FAO) report of 1965, which stressed the need for the Federal Government’s active involvement in planned water resources and irrigation development for the country.  Consequent upon the Food and Agricultural Organization’s report, the Chad and the Sokoto Rima-Basin Development Authority was established by Decree numbers 32 and 33 of 14th August, 1973.Kano State Government,(1995). In 1976, the River Basin Development Authorities were expanded to eleven in number by Decree number 36 of 25th June and Decree Number 37 of 3rd August, 1976 (Dawakintofa, 1989).  These Authorities were charged with the responsibilities of constructing and maintaining dams, polders, wells, boreholes and drainage systems for irrigation purposes.  There was also the Bakolori Irrigation Scheme, which was established in consonant with the laid down guidelines for irrigation development (KNARDA Baseline Survey, 1993).

These schemes attracted generous funding from government.  Inspite of the enormous sum of money (2.25 billion) and the facilities provided, the schemes had limited success (Samorock, 1983). For instance, the total irrigated area proposed to be accomplished by the River Basin Development Authorities for the Nation was 1,999,139 hectares (Nwa and Martins, 1982).  But as at 1980, only 25,754 hectares had been developed.  Only about 77,369 hectares were expected to be developed by 1991 (Abdullahi et al, 1989).  This is about 4% of the total land meant for development.  Salihu (1986) and Dawakintofa (1989) attributed the limited success of the early irrigation schemes to the fact that the plans were developed without much consideration of economic and social problems.

Fadama” is an Hausa word meaning low-lying swamp area consisting of fluvial deposit and containing extensive exploitable aquifers” (Gandi and Radashekara, 1989).  Fadama also refers to a seasonally flooded area used for farming during the dry season.  It is defined as an alluvial, low land formed by erosion and depositional action of the rivers and streams (Qureshi, 1989).  The extent and subsurface formation of the Fadama land depend on the terrain over which the rivers are formed and flowed.

They can also be referred to as flood prone, low lying, slow drainage areas that generally possess a finer texture and less acid soils.  Fadama lands are regarded as very rich agricultural areas.  They encompass land and water resources that could easily be developed for irrigation agriculture (World Bank, 1992).  In Nigeria, this type of rich irrigable land can be found along the flood plains of the Niger, Sokoto-Rima, Benue, Nassarawa, Yobe and Hedejamaari river systems.  Fadama land covers about 4.9 million hectares in the country (BSADP, 1994).  It is therefore necessary to harness it in order to accelerate agricultural production.

Inadequate and uneven distribution of rainfall in the arid and semi arid North, prompted some state governments to initiate Fadama through small-scale irrigation system (Abdullahi and Phillip, 1989).  The enclave states, which pioneered the Programme, were Kano, Bauchi, Jigawa, Gombe, Sokoto, Zamfara and Kebbi.

The staff appraisal report (SAR) estimated that traditional irrigation was practiced in over 60,000 hectares of Fadama land of which 13,000 were cultivated for dry season vegetable production while the whole of it could be used for summer rice production under semi-controlled flooding, primarily in the Hedejia valley area (APMEU, 1991).

This Fadama development component, covering 27,400 hectares in Kano State, comprised; (i) Fadama intensification – bonding of run-off and using residual moisture to produce a second crop planted in September/ October on 14,700 hectares;   (ii) the use of wells (usually not exceeding 7m deep) and making 1,500, 3″ diesel pumps and 4,600 hand pumps available through the Kano Agricultural Supply Company (KASCO) to replace Shadoof and bring an incremental 6,800 hectares into production; and  (iii) improved flood irrigation of rice by bonding an estimated 5,900 hectares to allow two crops a year.

Incremental crop production achieved by these activities  amounted to 29 million annually up to the end of project life cycle of five years.  This technique was found to be cheaper than the large-scale system and more efficient than the traditional method of irrigation.  While small-scale irrigation costs US1, 000 ( 80,000) per hectare, large-scale irrigation scheme cost US10, 000 (800,000) per hectare all at the 1990 prices (World Bank 1992).   The small-scale irrigation scheme took off in Kano State in 1982 with loan effectiveness. The irrigation component started-off primarily with the introduction of extension services and the sale of pumps.

1.2     National Fadama Development Project

The Agricultural Development Projects (ADPs) has been identified as the most successful strategy towards agricultural development in Nigeria (World Bank, 1992).  The system, which consists of several sub-programmes and its related components, is specifically designed to address the small holder sub-sector in its agricultural development efforts.  One of such sub-programmes/components is Fadama development (KNARDA Baseline Survey, 1997).  This small-scale, low cost, farmer managed irrigation Fadama programme had been adjudged successful initiation of the agricultural development project system (World Bank, 1992).

Evidence showed that, there existed great potentials for Fadama development of which only about 7% was then being exploited (SAR, 1990 NFDP).  It was in realization of this that the Federal Government of Nigeria (FGN) in 1991, requested a World Bank loan of US67.5 (N536.00) million to finance a project for developing Fadama lands (flood plains) by introducing small-scale irrigation.  The loan was to assist Fadama Development projects in states meeting pre-determined eligibility criteria.  The project is currently being implemented in Kano, Bauchi, Jigawa, Kebbi and Sokoto States which have pioneered Fadama development.  These facilities were expected to assist beneficiary states consolidate pilot Fadama Development Projects by;

(i)         financing the provision of shallow tube wells in Fadama land for small-scale irrigation;

(ii)        constructing about 7,000 wash bore, tube wells in Kano State through private contractors;

(iii)       constructing Fadama Infrastructure based on the experiences of on-going Agricultural Development  Projects (ADPs), Fadama roads and storage facilities;

(iv)       formation of  institutional  development.  Fadama farmers would be organised into Fadama Users Associations (FUA).  The union would serve as a single contact points for services to farmers, and

(v)       providing planning assistance free-of-charge to interested farmers.

In order to ensure fair allocation of resources to eligible states, certain criteria were employed as measurement indicators to evaluate the performance of the Agricultural Development Projects (NFDP Baseline Survey, 1996). The proposed Fadama land to be covered under the National Fadama Development project in Kano State was 27,400 ha; out of a total of 163,000 ha of the main Fadama and their flood plains. The project is expected to benefit 430,000 farm families, cultivating an average of 2.8 hectares. The project intervention is expected to raise the assured project preliminary feasibility study yield of 2.0 for wheat to 2.5 t/ha and vegetables from 9.0 t/ha to 13t/ha, while rice, would increase from 2.5 t/ha to 3.5 t/ha (World Bank, 1992).   However, to assess the performance of the Fadama loan package, it is pertinent to make a cross comparison between the non-beneficiaries of Fadama loan with their counterpart beneficiaries.

 

1.3       Problem Statement

Successive Nigerian governments have initiated various agricultural and food production strategies to execute a wide range of agricultural programmes through irrigation agriculture but have failed to achieve their expectations to boost agricultural production (Salihu, 1986i Gana, 1986).  Food output has been so  low that there is a widening gap between crop output and quantity needed (RMSMN, 1993).

In order to realise the dream of increased food production, the Federal Government identified small-scale, low-cost managed irrigation pilot scheme by the Agricultural Development Projects (ADPs) as the most efficient technique that can accelerate the pace of food production in the country.  To enhance the involvement of more farmers in the project, the Federal Government sought the assistance of the World Bank loan for a National Fadama Development Project.

Fadama loan package attracted both small and large-scale farmers in the loan disbursement process through registration with Fadama Users Association (FUA).  The programme operated on the basis of full-cost recovery with built in rebates which serve as incentive for prompt repayment.  Prevailing commercial bank lending rate was used.  The pilot scheme ended by September, 1998 and the scheme was extrapolated to the rest of the states in Nigeria.

 

1.4       Objectives of the Study

The broad objective of this study is to assess the influence of the National Fadama Development Project on Fadama farmers in Kano State.

The specific objectives are to;

  • Ascertain the extent of use of facilities provided through the loan package by beneficiaries;
  • compare the crop output, farm income, farm size and labour use of beneficiaries and non-beneficiaries;
  • identify the major problems of Fadama farming in the study area; and
  • make policy recommendations for improving Fadama farming, based on findings.

 

1.5       Research Hypotheses

In line with the research objectives, the following null hypotheses were tested;

There is no significant difference between;

  • the farm output, of loan beneficiaries and non-beneficiaries;
  • the farm size of beneficiaries and non-beneficiaries and
  • the farm income of beneficiaries and non-beneficiaries

1.6       Justification for the Study

The findings of this study will serve as a motivating force for non-beneficiaries of National Fadama Development Project loan to embrace the loan package. The outcome of the study will also enable both Fadama farmers and the loan beneficiaries (Fadama users association) to adjust positively to their farming activities to enhance optimal level of output.

A comparative study of beneficiaries and non-beneficiaries of the loan in Kano State will provide the opportunity for assessing the influence of the National Fadama Development Project (NFDP) loan scheme on Fadama Development. Information revealed by the study, with respect to loan patronage, increased Fadama cultivation and farm output will motivate participants and credit agencies resulting in a good base for the take-off of the second phase of the projects.

It is therefore anticipated that the findings of this investigation will serve as an information source for research scholars, policy makers and operator of Agricultural Sector for effective policy formulation and good management.

ECONOMIC ANALYSIS OF RICE MARKETING MARGIN IN ADANI UZO-UWANI LOCAL GOVERNMENT AREA OF ENUGU STATE, NIGERIA

 ABSTRACT

 

This study was carried out to analyses the marketing margin for rice among participants in  the marketing of rice in Adani Uzo-Uwani Local Government Area. A purposive sampling technique was used in the selection of respondents. The study identified and described the marketing of rice in the study area, the participants and their activities in the marketing of rice. It determined the cost of perfuming the physical functions of transportation, storage, processing and margin accruable to the participants (producers,   wholesales and retailers). Problems of agricultural marketing were also identified to include production conditions, transportation and communication, handling packaging and processing, storage and warehousing institutional support input distribution; urban food supply system and price  stabilization. This work sets out elements which make up an efficient marketing system to include functions and services, agencies and channels, the enterprises of which they are composed and the institutional  framework within which they operate. The analytical tools used in this work included descriptive statistics such as frequency, percentage, mean, rage and market margin analysis. From he results it was affirmed that 28% of the producers have no formal education and 5% have HND/B.Sc. certificates. The age renege of producer and retailer is between 40 and 50 years and household size of between 6 and 10. Farming and marketing experiences of the respondents ranged from 40-50 years and they were mostly married. It was also found out that the marketing margin for 50kg  bag of milled rice sold in the study area for the village merchant is N26, for the retailer N29, for the wholesaler N10, and for the producer N 68. The study identify source of supply (large numers of very small farms, each operating independently), Igrge number of  middlemen, transportation, inadequate storage  and warehousing facilities, forced sales, grading and standardization, adulteration and instability of prices as problems to the participants in the study area. Among the reduction of high cost of processing by provision of machinery and machinery spare parts, to increase farmers yield, maintenance of rural feeder roads using the mill for other purposes like cassava processing and the need proper grading and standardization

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