Economics Of Farm-Gate Rice Marketing In Enugu State, Nigeria

Project and Seminar Material for Agricultural Engineering AE

Economics Of Farm-Gate Rice Marketing In Enugu State, Nigeria


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


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).

Economics Of Farm-Gate Rice Marketing In Enugu State, Nigeria

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