Impact Of Prices Of Tomato On Tomato Production And Marketability

Project and Seminar Material for Agricultural Engineering AE

Impact Of Prices Of Tomato On Tomato Production And Marketability


Abstract


The potential to increase the production of tomato is dependent on its marketability. Factor that determine the marketability of a product include eating habits, knowledge, resources and tomato consumers preference of tomato. This study examined the factors that determine the price of tomato in the market. Primary data were used in the study. The analytical technique employed includes the descriptive statistics, the regression, marketing margin and marketing efficiency. The primary data were collected with the use of well structure questionnaires from 120 respondents. The study revealed that 82.8% of the respondents are female from the sample survey, 95.7% are married and age ranges from 21-40 years and 41-60 years. Most of the respondents have no formal education and primary education with a corresponding percentage 30.2% and 36.2% respectively.

The household size ranges from between 1-10 with a percentage of 89.7. The study revealed also that there are variation in the price of tomato over time which was determined by the quantity purchased and amount purchased. The prices are at their highest peak in August and lowest in March. The study revealed that lack of good transportation; good storage facilities and high taxation from government affect the prices of tomato. The shelf life of four days and above e.t.c. when purchasing tomato, consumers prefer UTC variety because of long shell life and quality taste. The regression analysis also revealed that quantity purchased and amount purchased both measured in kilogram and naira respectively determined the variability of tomato price in the market.


Chapter One


Introduction

1.1 background to the Study

Agriculture is one of the most important sectors of the Nigerian economy, As such; increase in agricultural productivity depends heavily on its marketability so as to improve its vital roles in a national economy. Efficient market does not only link sellers and buyers in reacting to current situations in supply and demand but rather has a dynamic role to play in stimulating consumption of outputs which are essential elements of economic development. Marketing can play an active role in agricultural and economic development by holding down cost of food and increase demand, thereby encouraging expansion in farming and other related economic activities .

Tomato is considered as a member of the family Solanaceae. The botanical name of tomato is (Lycopersicon esculentum Mill). It is a diploid plant with 2n = 24 chromosomes. Naturally, tomato is a perennial plant, but it is cultivated annually because of having a great economical and commercial advantages. Moreover, tomato is considered as the 2nd greatest significant vegetable crop in the world after potato.

Tomatoes were domesticated in America however, the original site of domestication and the early events of domestication are largely obscure. African tomato varieties introduced to Africa and Nigeria in particular at the end of the 19th century. The principal areas of tomato production are the northeast part of Nigeria . It can be grown in most places all over the world, like growing in the field, greenhouses and net houses. The tomato crop is grown and used for both fresh market and processing and it is an adaptable crop. Tomato is a very important vegetable and also a cash crop for small scale farmers and a potential source of revenue generation, Tomato is of great importance because it has high nutritional value, a source of vitamins, minerals and thus, essential component of human diet. It is consumed by every family and makes up about 18 percent of average daily meal, as it is consumed in sauces, soup, meat and fish. It is highly nutrious and improves health status of a family.

Tomato marketing is characterized mainly by the problem of seasonality and perishability amongst others. Efficient harvesting, handling, transportation and marketing techniques are extremely important in tomato production because it is seasonal and highly perishable in nature. Subsequently, [2], in their study on ” food marketing and its role in food security in Nigeria, ” concluded that an efficient food marketing system would reduce post harvest losses, ensure adequate returns to farmer’s investments and stimulate expansion in food production thereby enhancing the level of food security in Nigeria. Tomato produced must be distributed efficiently at a minimum cost in other to guarantee continuous availability of the produce. [8] argued that availability of food is a function of food production, stock holding and food marketing. Tomato is one of the most important vegetables in the world, Nigeria is ranked second largest producer of tomato in Africa and fourteenth largest in the world, with current production of 15.6 metric toones and Area harvested as 2.7 million Hectares of farm land [3]. Tomatoe is considered as a fruit by a quarter and vegetable by many, it contains substances which increase immunity, repair body vigour, stimulate digestion and regulate the acidity and alkalinity of the body.

Tomato contributes to a healthy well balanced diet; It is mostly processed into paste, puree, juices and ketch up. Its shelve life can be prolonged by sun drying, pre boiling or processing into cans.

The important factor that energizes agriculture development towards commercialization and diversification is the development of proper marketing system.

Price in any transaction is an exchange of something of value, usually money for a bundle of satisfaction. Price fluctuation in the marketing of tomato refers to the changes in price of tomato over time. These prices can fluctuate from day to day depending on supply and demand for tomato. Price fluctuation is a multifaceted problem attributed to various factors which, when combined, culminate in dangerous consequences for the most vulnerable. Although high prices can technically be good news for farmers, price fluctuation is extremely dangerous, as farmers and other agents in the food chain risk losing their investments if prices fall. One frequently cited reason for increased prices is ‘market fundamentals’.

Demand is thought to be outstripping supply and thus leading to increased prices. Climate change, depleted soils and aquifers and the loss of biodiversity are often noted as contributing factors. Yet food production has never been as high as it is today and commodities markets are becoming increasingly interesting for financial speculators (German 2005).

Price fluctuation is not only harmful to consumers but also affects producers. Generally, poor farmers do not have enough investment capital to sustain such unpredictability. This can result in suboptimal investment decisions and compromise production in the long term. Higherfood prices have not necessarily translated into better prices for farmers in developing countries because non-food essentials such as cooking fuel, transport, rent, fertilizers, kerosene and agricultural inputs have also become more expensive. Also, intermediaries are facing higher transportation costs which they are in turn passing on to farmers (Baffes, 2011; ; Israel, Sunday, Mansong and Ubong, 2016).

One of the definitions of marketing as given by Dixie center, (2014), is that marketing involves finding out what the customer wants and supplying it at a profit.” The phrase “finding out what your customer wants” emphasizes the role of communications in agricultural marketing. It encompasses the immediate information required on the market’s demand for specific volumes and quality of agricultural products and the longerterm information on market trends (referred to here as “market intelligence”) required to make future plans for the farm.

Efficient food marketing system and its role in food security in Nigeria is pivotal to a reduction in post-harvest losses; ensuring adequate returns to farmer’s investment and stimulating an expansion in food production thereby enhancing the level of food security in Nigeria through adequate information about prices of agricultural produce (Ladele et. al, 1997). Prices are a measure of availability because they tend to rise as the supply of food falls in relation to demand (e.g. poor production, constrained imports of food), and they tend to fall when supply expands in relation to demand (e.g. a bumper harvest). Agricultural prices contribute significantly to the pace and direction of agricultural development. They serve as market signals of the relative scarcity or abundance of a given product (Akintunde et. al., 2012). Prices also serve as a stimulus to direct the allocation of economic resources and to a large extent they decide the structure and rate of economic growth. Prices vary almost throughout the year and understanding the trend of such variations was therefore essential for good planning by the producers, consumers and policy makers. The price volatility of agricultural commodities in Nigeria is attributable to various factors including variances in bargaining power among consumers, cyclical income fluctuations among sellers and consumers, natural shocks and inappropriate response by farmers to price signals (Adebusuyi, 2004; Udoh et. al 2007). However, short-run fluctuations in agricultural commodity prices take place between production seasons.

During the harvesting period, farmers offer to the market the minimum price for their products while prices become high during the drought or off-season owing to reduced production and seasonal changes (Cashin and Pattillo, 2000). A major characteristic of agricultural markets in Oyo State is the inter- and intra-pricing variations among its urban and rural retail markets due to the forces of demand and supply (Adenegan and Adeoye, 2011).


1.2 Statement of Problem

Despite the fact that vegetable production is a viable option to increase farm income and alleviate widespread poverty considerable attention has not been given for its marketing aspects. The marketing of horticultural crops, in general and vegetables in particular is more complex and risky because of the special characteristics of tomatoe which is high perishablity , seasonality, bulkiness and wide fluctuation in prices , It requires special care and immediate disposal of the product. However, Despite the overwhelming importance of tomato in Imo state , the supply of tomato in Imo state is not keeping pace with the increasing demand in dishes, soups, sausages and edible packaging material leading to a shortfall in the recommended consumption of tomatoe vegetable per person per day [14]. On this back drop this study intends to determine the impact of price of tomatoes on its production and marketing in Owerri Imo State Nigeria.


1.3 Objective of the Study

The main objective of this study is to determine the impact of prices of tomatoe on tomatoes production and marketability

The specific Objectives are:

  1. To determine the socio-economic characteristics of the respondents in the study area,
  2. Determine the perception of tomato retailers on the possible causes of price fluctuation on the marketing of tomato,
  3. Identify the variations in profit made by tomato retailers during the on-season and offseason of tomato,
  4. Identify the variations in the price level over the 5 years (2009-2013) marketing period of tomato during its on-season and off-season in urban markets in Oyo state.

1.4 Significance of the Study

At the market place, the seller is faced with problems of spoilage as the tomato has to be sold within the shortest time possible before they get spoilt. Determinants of price fluctuation in the marketing of tomato include fluctuation in production, seasonal supply preference of farmers and middlemen for urban markets than processors due to low farm gate prices, socio-economic characteristics of marketers along the marketing chains. They are influential in the continuous availability because of perishable nature.


1.5 Hypotheses of the Study

Hypothesis 1: Statement of hypothesis for prices of tomato during its on-season in the urban market.

Hypothesis 2: Statement of hypothesis for prices of tomato during its off-season in the urban market:

  1. (Ho) 1: there is no variation in the price level over the years (2009-2013) marketing period of tomato during its on-season in urban market.
  2. (HA) 1: there is a variation in the price level over the years (2009-2013) marketing period of tomato during its on-season in urban market.
  3. (Ho)2: there is no variation in the price level over the years (2009-2013) marketing period of tomato during its off-season in urban market
  4. (HA)2: there is a variation in the price level over the years (2009-2013) marketing period of tomato during its off-season in urban market.

1.6 Scope / Limitation of the Study

The current study is focused on the analysis of the effect of price on the marketing and production of tomato in Oyo state, Nigeria.

  1. Limitation of the study
  2. Financial constraint
  3. Time constraint
  4. Availability of study data

Chapter Five


Conclusion and Recommendations

5.1 Conclusions

Based on the findings of this study, females who are energetic and capable of working well on the marketing activities dominate tomato retailing business. Profits were higher during the on-season of tomato probably due to high volumes of sales. From the monthly retail prices per kilogram of fresh tomatoes obtained from Oyo state Agricultural Development Programme (OYSADEP), it was revealed that there were variations across the years of 2009-2013. The Tukey honestly significant difference test revealed that during the on-season of tomato, the year 2010 has the least mean price and it showed very wide variation in mean price from the other years. During the off-season of tomato, the years that showed variations in their mean prices were 2009 and 2011. The implication of price variation is that it causes instability in the income level of tomato producers and marketers.


5.2 Recommendation

Based on this study, the following recommendations were made;

As it was observed from the results of the finding, that there were variations in price level, government should create buffer stock schemes that will help to stabilize the market price of tomatoes by buying up supplies of the product when harvests are plenty and selling stocks of the products on to the market when supplies are low.

The problem of price variations and profit variations can be curbed by tomato retailers by having a proper inventory control skills so as to avoid over stocking of tomato at a time in the store. This is because of the perishable nature of tomato and over stocking of tomato causes spoilage of the tomato due to lack of storage facilities. This makes retailers to sell the damaged tomatoes at lesser prices and this reduces their income. Processing should be encouraged.

The problem of price fluctuation can be reduced by the governments providing storage facilities. Also government should provide adequate transport facilities with good roads for easy movement of tomatoes, so that transportation cost can be minimal and this can reduce price fluctuation.


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