Marketing Decision Among Oil Palm Farmers In Itu Local Government Area Akwa Ibom State

Project and Seminar Material for Agricultural Science Students

Marketing Decision Among Oil Palm Farmers In Itu Local Government Area Akwa Ibom State


Abstract


This study analysed marketing system of palm oil farmers in Akwa Ibom State by describing the socio- economic characteristics, structure and conduct, performance, the factors that influence the performance and identifying the problems that faced palm oil marketing in the State. Multi-stage sampling technique was employed in selecting the respondents. Primary data for the study were collected using structured questionnaire, administered to 180 respondents. Data were analyzed using descriptive statistics, structure analysis, marketing margin, marketing efficiency and regression analyses. The results showed that the average ages of palm oil farmers in Akwa Ibom was 38. Factors influencing marketing efficiency were age, education and years of marketing experience. The major constraints to palm oil marketing in the study area were Lack of efficient and affordable technology, lack of effective marketing research and dirty environment/poor hygienic state.


Table of Content


Chapter One:

Introduction

  • 1.1 Background of Study
  • 1.2 Problem Statement
  • 1.3 Purpose of the Study
  • 1.4 Objective of the Study
  • 1.5 Research Questions
  • 1.6 Justification of the Study
  • 1.7 Scope of the Study
  • 1.8 Limitation of the Study
  • 1.9 Operational Definitions
  • 1.10 Organization of The Study

Chapter Two:

Literature Review

  • 2.1 Conceptual Review
  • 2.2 Theoretical Review
  • 2.3 Empirical Review
  • 2.4 Review of Analytical Tools

Chapter Three:

Methodology

  • 3.1 Study Area
  • 3.2 Research design
  • 3.3 Population of the study
  • 3.4 Sampling and Sample Size Determination
  • 3.5 Sources of Data
  • 3.6 Instrumentation
  • 3.7 Reliability of the Study
  • 3.8 Validity of the Study
  • 3.9 Method of Data Collection
  • 3.10 Method of Data Analysis
  • 3.11 Ethical consideration

Chapter Four:

Data Analysis and Result

  • 4.1 Presentation of Results

Chapter Five:

Conclusion and Recommendation

  • 5.1 Summary
  • 5.2 Conclusion
  • 5.3 Recommendations
  • REFERENCES
  • APPENDIX 

Chapter One


Introduction

1.1 Background to the Study

Palm oil is usually one of the products produced from the oil palm tree which is a perennial crop that originates from the tropical rain forest of West Africa. In Nigeria, palm oil tree grows in the coastal belt of Nigeria which varies in depth from 100 to 150 miles and a riverine belt which follows the valleys of the Niger and Benue for a distance of about 450miles from the sea and naturally, production of palm oil usually occurs along these locations (FOA, 1999). The main palm oil producing states in Nigeria include Cross River, Akwa Ibom, Akwa Ibom, Imo, Rivers, Anambra, Enugu, Ogun, Delta, Edo, Oyo and Ekiti.

Agricultural marketing is a driving force for economic growth and development and has a guiding and stimulating impact on production and distribution of agricultural produce. The increasing proportion of the population living in urban areas and rising level of income require more organized channels for processing and distributing agricultural products. Agricultural marketing acts as an agent of rural development. Moreover, agricultural marketing will play a coordinating role, steering supply and demand with respect to place, time and form utilities. A properly functioning market (such as pricing system) for agricultural products is generally perceived at the best organizational structure to achieve more efficient production, in terms of type, quantity, quality and consumption decisions (Bradhan, 1990).
Improved information and marketing facilities enable farmers to plan their production more in line with demand, schedule their harvests at the most profitable times, to decide which market to send their produce to and negotiate on a more even footing with traders and also it enables traders to move produce profitably from a surplus to a deficit market and to make decisions about the economics of storage, where technically possible. The possible increment in output resulting from the introduction of improved technology could not be exploited in the absence of convenient marketing conditions. As efficient, integrated and responsive market mechanism is of critical importance for optimal area of resources in agriculture and in stimulating farmers to increase their output (Jones 1972 and cited in Andargachew, 1990).

Farris(1997) stated that there are three(3) categories of agricultural market analysis; the application of structure/conduct/performance analysis(the idea of effective competition), the analysis of marketing margins and the analysis of supply and demand relation which includes the explanation for price movement overtime and space. Market structure can be defined as the characteristics of the organization of a market, which strategically influence the nature of competition and pricing behavior within the market (Bain,1987 cited in Girma 2002). Kotler (1999), opined that the three theoretical market models often used in analyzing market structure are the perfectly competitive market, oligopolistic market and the monopolistic market. Farris (1997), argued that a market structure has implications for its price and output levels everywhere a single seller dominates a market and output can be restricted and prices forced up. Some market structures result in highly competitive and efficient markets, but others tends to be less satisfactory. The structure of a market is in turn, an important indicator of the conduct and economic performance of the market.

The ease with which potential participants can enter the various functions is commonly used as a means of assessing the degree of competition in an industry (Scarborough and Kydd, 1992). Stigler (2005) suggests about three points that can create barriers to entry: legal barrier (franchise and patents), economies of scale and pace of entry.

Market conduct is the pattern of behavior of enterprises in determining prices, sales promotions and coordination policies and the extent of predictor or exclusionary tactics directed against established rivals or potential entrants (Pomeroy and Trinidad, 1995). The determinants of conduct indicators are price setting behavior, buying and selling practices, advertising, merging together others that make traders profit. Market conduct indicates the ways by which firms compete, whether they look for new techniques and apply the techniques early as practicable or whether they are dis-investing and transferring funds elsewhere (USAID, 2008).

The sole aim of marketing is the successful movement of produce from point of production to the ultimate consumer putting into consideration time, price and quality of produce at the point of consumption. The terms market conduct means the pattern of behaviour in the market between the sellers and the buyers.

Performance of a market reflects the impact of the structure and conduct on prices, costs, volume and the quality of the product. There are such practical indicators of how well a certain marketing system is operating. In addition, quantity supplied, equity (distributional and informational), access to market information are main performance indicators (USAID, 2008).


1.2 Problem Statement

The recognition of critical role of markets in economic development led to sweeping marketing reforms across a number of developing countries. In spite of these reforms, symptoms of poorly functioning markets in tropical Africa are evident in the segmentation of markets, low investment in the market infrastructure, the persistence of high margins and limited progression towards more complex arrangements (Eleni, 2001).

Nwawe (2005), observed that Nigeria ranked the largest producer and exporter of palm oil in the 1970’s, but now palm oil marketing is not as competitive as it was within Nigeria and even in the world market. A properly functioning market (such as pricing system) for agricultural products is generally perceived as the best. In Nigeria, the production of palm oil is constrained by seasonal conditions as a result the variation in its supply in rural and urban market is seen. Furthermore, the marketing activities and their characteristics in southern states have not been fully described.


1.3 Purpose of the Study

The general purpose of the study is to describe the marketing decision among oil palm farmers in Akwa Ibom State of Nigeria.


1.4 Objective of the Study

The specific objectives of the study are to:

  1. Describe the socio economic characteristics of the palm oil farmers in Akwa Ibom State.
  2. Describe the structure and conduct of palm oil marketing in Akwa Ibom State.
  3. Describe the performance of palm oil marketing in the State.
  4. Determine the factors influencing the performance of palm oil marketing in the State.
  5. Describe the problems faced by the palm oil farmers in the State.

1.5 Research Questions

  1. What is the socio economic characteristics of the palm oil farmers in Akwa Ibom State?
  2. ii What is the structure and conduct of palm oil marketing in Akwa Ibom state?
  3. iii What is the performance of palm oil marketing in the State?
  4. iv What is the factors influencing the performance of palm oil marketing in the State?
  5. v What is the problems faced by the palm oil farmers in the State?

1.6 Justification of the Study

In Nigeria, palm oil marketing is concerned with all stages of operation that aids movement from the producers to the final consumer. These include: assemblage, storage, transportation, grading and financing. Marketing of palm oil in Nigeria takes place in homes of the processors, road sides, local/periodic market centres and stalls.
These can involve both wholesalers and retailers in both rural and urban markets.

Distribution and marketing of agricultural products are as essential as the product itself (FAO, 2002). The findings of this study are also believed to be useful to oil palm producers, traders and marketing agents to make informed decisions. The work also serves as a reference document for researchers to embark on studies of the same or related kinds in other parts of the country. The study is also envisaged to generate valuable information on palm oil marketing that would assist policymakers in designing appropriate policies for intervention. Governmental and non -governmental organizations that are engaged in the palm oil industry would benefit from the results of this study.
The study will give detailed information on how oil palm marketing is currently functioning in the study area. It points out factors that constrain oil palm production and marketing system.

The study also generates information that will help formulate palm oil marketing development programs and guidelines for interventions that would improve efficiency of the palm oil marketing system. It’s important to know the activities that happen beyond the palm oil producing states especially the marketing aspect so as to improve on the competiveness of palm oil marketing all over Nigeria and beyond to close the wide gap in knowledge between marketers and the final consumer. With the recent move of the government to improve the transportation sector such as rehabilitating the railway system, the transporting of the palm oil from the South eastern part of the country to the northern part. This study showed if the price of palm oil will be reduced if the railway lines become fully functional. This study provides a clearer understanding of organisational characteristics such as the actors involved in the palm oil marketing specifically in Akwa Ibom State. It knows what happens around the palm oil marketing ie activities been carried out from where its been brought into the markets in Akwa Ibom state and then how it gets to the selected markets in Akwa Ibom state. This study will help us know the level of performance in the marketing of palm oil and how to improve on it between the selected markets in Akwa Ibom State.

The successful application of oil palm trunk to multi- industrial usages portends huge economic opportunities for our people. This offers opportunity for wealth creation and economic empowerment of our people if properly harnessed. The study will close the gap between the participants in palm oil marketing such as the wholesalers, commission agent, retailers and the consumers by providing adequate information such as the price, season when palm oil is more in the market so that they could always have fresh palm oil at low prices.

The study made effort to identify and proffer solutions to problems that prevail in the palm oil marketing between supply and demand areas.


1.7 Scope of the Study

The study covered structure, conduct and performance of oil palm marketing among oil palm farmers. It was restricted to farmers in Itu Local Government in Akwa Ibom State.


1.8 Limitation of the Study

Finance, inadequate materials and time constraint were the challenges the researchers encountered during the course of the study


1.9 Operational Definitions

Palm Oil

Palm Oil an edible fat obtained from the flesh of the fruit of several palms and used especially in soap and lubricating greases.

Farmer

Farmer a person who owns or manages a farm.

Wholesaler

Wholesaler a person that sells goods in large quantities at low prices, typically to retailers.

Retailer

Retailer a person or business that sells goods to the public in relatively small quantities for use or consumption rather than for resale


1.10 Organization of the Study

The study is organized into five chapters.

  • Chapter one covers; background to the study, statement of the problem, general objective of the study, specific objectives of the study, research hypotheses, significance of the study, limitation of the study, delimitations of the study, operational definition of terms and organization of the study.
  • Chapter two covers review of related literature.
  • Chapter Three covers research methodology which includes: introduction, research design, target population, sampling techniques and sample size, data collection instruments, validity and reliability of research instruments, data collecting procedures, data analysis techniques and ethical considerations.
  • Chapter four covers research results of the study.
  • Chapter five covers discussions and interpretations of research findings.

Chapter Five


Summary, Conclusion and Recommendations

5.1 Summary

The study examined the marketing decision among oil palm farmers trade between Akwa Ibom State of Nigeria. The specific objectives were to identify and describe the structure and conduct of palm oil marketing between Akwa Ibom State, describe the performance of palm oil marketing between the State, identify and describe factors influencing the performance of palm oil marketing between the State and to identify the problems faced by the palm oil farmers in the State.

Multi-stage sampling technique was employed in selecting the respondents. Primary data for the study were collected using structured questionnaire, administered to 180 respondents, these included the middlemen between the farmers that produce the oil and the wholesalers that gathers them in cans, drums and then sell to marketers (wholesalers)

Focus group was used to get response from the target audience. Data were analyzed using descriptive statistics, structure analysis, marketing margin, marketing efficiency and regression analyses.

The value of gini coefficient (0.65) for oil palm trader in Akwa Ibom State is tending towards unity indicating that there is an equality or high level of seller concentration at this level. From the Lorenz curve, the extent of deviation of the curve from the line of equality shows an imperfect market competition (65% gini). In the case of oil palm marketers in Akwa Ibom State, the wholesalers, the market was found to be purely competitive (gini 48%) as indicated in the Lorenz curve. The calculated gini coefficient (0.47) pointed towards a low level of seller concentration.

The results further revealed that I in Akwa Ibom state, the middlemen had a marketing margin of 1.29% which signifies their profit making. The wholesalers had a marketing margin of 1.25% and the retailers had a marketing margin of 1.43%. In Akwa Ibom state, the retailers had a marketing margin of 1.25% and the wholesalers had theirs as 1.21%. The marketing efficiencies in Akwa Ibom State were 3444.47 and 883.34%% respectively. Factors influencing marketing efficiency were age, education, and years of marketing experience. The major constraints to palm oil marketing in the study area were Lack of efficient and affordable technology, lack of effective marketing research and Cheating/Stealing.


5.2 Conclusion

From the study, it is concluded the market structure for palm oil in the stateis purely competitive. The conduct of the marketers is affected by market structure. The behavior of the market, the decision in term of their pricing and output policy, their competitive tactics determined the structure. Their prices of palm oil are determined by the forces of demand and supply. In terms of market performance, the marketing margin and percentage returns per market participant were used as indicators for performance. The study revealed that age of the marketer significant had an inverse effect on the performance of oil palm marketing. Education and years of marketing experience increased the efficiency of palm oil marketing. The study showed that profit increases toward Akwa Ibom state. This increase is as a result of the additional costs and services incurred in the process of marketing. The cost of drum of palm oil in Akwa Ibom State shows that there is significant difference at 1% level of probability.


5.3 Recommendations

Based on the findings of this study, the following recommendations were made:

  1. The Non – Governmental Organization should assist in the area of enlightenment campaigns, seminars and workshops for training of marketers on area of promoting palm oil marketing through their unions, this will help to improve the marketing system in all ramifications.
  2. The railway system should be rehabilitated around the nation i.e from the palm oil producing states to the northern parts. This will help reduce accidents on highways, ease transportation of palm oil to towns; this will help in reducing the cost of palm oil.
  3. The feeder roads should be rehabilitated by the government to allow for easy transfer of palm oil from villages to the towns where they are been marketed.
  4. The marketing environment where the palm oil is being marketed should always be monitored by the environmental health workers to ensure cleanliness and ensure that there is proper hygienic state as palm oil is edible.
  5. The government should work alongside with the agricultural researchers so that there will be improved breeds of palm oil fruits that can produce more oil that can be got at reduced price.
  6. The government should ban the importation of palm oil into the country and then encouraging the oil palm producing states to grow more palm trees rather than depending on aged ones.

Marketing Decision Among Oil Palm Farmers In Itu Local Government Area Akwa Ibom State


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