Groundnut Oil Production And Marketing In Kaduna State, Nigeria

Project and Seminar Material for Agricultural Engineering AE

Groundnut Oil Production And Marketing In Kaduna State, Nigeria


Abstract


This study examined groundnut oil production and marketing in Kaduna State, Nigeria. The specific objectives were to: examine the socio economic factors that influenced the production of groundnut oil; examine the socioeconomic factors that influenced marketing of groundnut oil; describe gender roles in the production and marketing of groundnut oil in the study area; describe the marketing channels employed in the distribution of groundnut oil; analyse margins of groundnut oil production and marketing; and identify constraints militating against the production and marketing of groundnut oil. Multi-stage random sampling technique was used to stratify the state into northern (mostly Moslems) and southern (mostly Christians) areas. A total of 100 respondents (50 producers and 50 marketers) were randomly selected.

Data were collected from producers and marketers based on the list from the extension agents using two sets of structured and pre-tested questionnaires. Multiple regression model, descriptive statistics and marketing margin analysis were used to achieve the objectives. Socioeconomic factor such as sex, education, occupation, and years of experience were significant at 1% level for production with an R- square of about 70%, while for marketing, age and education were highly significant at 1% level with an R-square of about 90%. Production of groundnut oil was dominated by females, while both sexes had almost equal percentage in the marketing of the product. More retailers (76%) bought groundnut oil directly from the producers at more frequent intervals because they had low capital base. But the wholesalers (24%) bought less frequently at larger quantities because of larger capital. The producer’s margin was 36%, with a Net Income of N43, 925.04 per annum.

The wholesaler’s margin was 28% with a Net Income of N 615, 960.00 per annum, while the retailer’s margin was 36% with a Net Income of N 201,636.00 per annum. The total marketing margin was 100. The constraints of notable importance that affected production were lack of capital (92%), high cost of groundnut (82%), poor variety (50%), and crude processing method (70%). For marketing, high cost of groundnut oil (92%), high interest rate on borrowed money (80%) and fluctuation in price of groundnut oil (70%) and competition from other vegetable oils (50%). The production and marketing of groundnut oil if given a favourable environment by reducing the problems facing the industry to its barest minimum would thrive better.

So, by way of recommendation, research institutes should be encouraged through adequate funding to produce high oil yielding varieties of groundnut. Loans should be made accessible and at reasonable and affordable interest rate to producers and marketers. The indigenous manufacturers should fabricate groundnut oil extractors and groundnut oil producers encouraged to use them so that larger quantities of oil would be produced to meet market demand at a relatively lower price. Proper market information should be disseminated so that all the market players would be in the picture and finally policies should be put in place to discourage unlawful importation of the vegetable oils into the country to avoid unnecessary competition in the market.


Chapter One


Introduction

1.1 Background Of The Study

The most important aspect of a country is the economy because it determines the growth and development of a country. Economy can be explained as a system which tries to balance the available resources of a country (i.e. land, labour, capital and enterprise) against the want and needs of consumers (Yusuf, 2013). Nigeria being a country practicing mixed economy has three sectors, namely, primary sector (Agriculture and natural resources), secondary sector (processing and manufacturing) and tertiary sector (services sector). Agriculture is one of Nigeria economy sector and production of food crops such as groundnut, maize, rice etc. and production of cash crops such as cotton are been produced under it.

Groundnut being one of agricultural products is a rich nutritious food which can be processed into different products such as groundnut oil, groundnut butter, groundnut flour, groundnut milk and animal feeds among others. The world production of groundnut stand at 34 million tones in 2001, at accounting for 10% (10 percent) of the world’s total oil seed production of 324 million tones (WBPR, 2004). A group of sub-Saharan exporters of groundnut and its product such as groundnut oil which Nigeria I one of them has lost ground in the international trade (WBPR, 2004).

However, strong government intervention in 1986 through structural adjustment programme (SAP) under which a ban was placed on importation of edible vegetable oil, local groundnut oil production increased. Recently, the production of groundnut oil has reduced greatly (Aminu, 2007).

Groundnut oil is also known as peanut oil or Arachis oil, is a mild tasting vegetable oil derived from groundnut or peanuts. The oil is available in refined, unrefined and roasted varieties, the latter. With a strong groundnut flavor and aroma groundnut oil is mainly used for cooking because it has a mild flavor and a relatively high smoke point.

Due to its high mono-saturated content, it is resistant to rancidity. Groundnut oil can be extracted locally which involve roasting or cold pressed. The principal raw material required for the production of groundnut oil is groundnut seed, which are produced locally in different region in Nigeria such as Kaduna, Jigawa state, Sokoto state etc. The seed give 44.5-50 percent oil (44.5%-50%), 50-55 percent meal (50-55%). All the other raw materials are also found locally. Groundnut oil is used extensively in West Africa countries as cooking oil as well as in industry for making margarine and other various products (Onwueme, 2009). It has a lot of health benefit because of its nutritional value.

According to Yusuf (2011) viewed that the country’s requirement of groundnut oil is met through import domestic production. However, the market is quite dominated by import. In 2006-2008 the highest share that could be achieved by domestic manufacturers, was 26 percent (26%). Recently groundnut oil is now recognized by the people due to its nutrition value. The demand for groundnut oil is dependent on population and become. As a product targeted to a segment of the market, groundnut oil will be more dependent on income. The marketing of groundnut oil is now increasing due to the new market strategy developed by the domestic manufacturers and marketers of the oil (Wikipedia, 2010). Marketing strategy can be explained as a process that allows organizations or manufacturers to concentrate its resources on the optimal opportunities with the goals of increasing sales and achieving a sustainable competitive advantage. (David Daker, 2010). Groundnut oil is becoming easy and attractive due to the use of tight and attractive packaging materials.

However, groundnut oil has an important role to play in the growth of market in Kaduna metropolis and economic growth of Kaduna in general. Therefore, this research work seeks to assess the economic benefit of groundnut oil marketing in Kaduna metropolis.


1.2 Statement Of The Problem

Groundnut oil has a lot of health benefit to its consumer and economic benefit to the society. (Adedeji, 2011) observed that stress, time consumption, frustration, incommutability of making groundnut oil and lack of modern tools, instrument of making it as well as insufficient fund to provide what is needed for the production of groundnut oil which would boost the economic benefit of a given society especially Kaduna local government area of Kaduna State and he country in general.

One of the problems of groundnut oil is the presence of Aflatoxing in groundnut used in producing groundnut oil. The cost of sorting, drying and storing groundnut is high, and it effect the production of domestic groundnut oil because of its health effect, selling price is the most dominant variable. Hence, a marketer or producer of domestic groundnut oil must include in his or her promotions that the product is clean and safe and try to obtain the highest possible price that will positively influence his or her net returns (Okello et al, 2009).

Moreover, other problem includes the stress in sorting and processing the groundnut, it also consumes time because of the local method used in extracting the oil (Temitayo, 2012). Another problem is the money needed to start a business of groundnut oil; it requires huge capital and risk because of presence or growth of fungi called Aflatoxing in groundnut.

In the same vein, lack of modern facilities to test the rate or level of mycotoxins or Aflaxocins in groundnut used to produce domestic groundnut oil. In the other hand, inadequate planning administration and implementation of good strategies by the marketers of groundnut oil in Kaduna local Government were also constituted to the problem affecting the economy benefit of groundnut oil in Kaduna local government area.


1.3 Research Questions

The following research questions have been formulated:

  1. What are the methods of producing groundnut oil?
  2. To what extent do the community benefit from groundnut oil marketing towards it economy development?
  3. What are the factors that hinder the smooth marketing of groundnut oil?
  4. To what extent have these factors hinder the marketing of groundnut oil in Kaduna metropolis?

1.4 Objectives Of The Study

The general objective of this research work is to determine the assessment of economic benefit of groundnut oil marketing in Kaduna metropolis. Other specific objectives are to:

  1. Find out the various method of producing groundnut oil.
  2. Economic benefit of groundnut oil to the society.
  3. Find out the various factors that hindered the smooth marketing of groundnut oil.
  4. Find out the necessary marketing strategy needed for smooth marketing of local ground oil.

1.5 Significance Of The Study

The research work is cardinal because it hopes to enhance the understanding on the importance of groundnut oil marketing in the society and eventually aid in understanding its health benefits and economic benefit to the community.

The research work will be of benefit to the following people, institutions, community, state and federal government, government policy markers etc.

It will also encourage researchers and food technicians to investigate on how to preserve the nutrient of local government oil and how to test for Aflatoxins in groundnut oil to reduce the health effect of contamination of Aflatoxins.

Finally, it will also encourage researchers to search for good marketing strategies needed for the smooth running of groundnut oil business so as to bring out its benefit to the society.


1.6 Scope Of The Study

The scope of the study will be with the framework of the research topic where each bit of the topic will be discussed adequately. Moreover, the scope covers some market areas in Kaduna metropolis.


1.7 Limitation Of The Study

This research work was limited to Kaduna local government area of Kaduna state. Other limitations are:

Time:

The researchers realized that the time frame within research period is not enough because it is colluding with time for teaching practice.

Cost:

The researchers realized that the cost of data collection, typing and printing of the work is high.


1.8 Organization Of The Study

This very work has been divided into five chapters. Chapter one specifically revolves round, the general introduction, and also the aim and objectives the purview of the research. Chapter two also deals with the review of the related literature, which includes the concept of groundnut oil, method of producing groundnut oil.

Chapter three dwells into the research methodology; the major subheadings are the research design, population of the study, instrument of data collection, procedure for data collection and procedure for data analysis. Chapter four deals with the data presentation and analysis while chapter five, deals with summary, conclusion and recommendation.


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