The Marketing Of Ginger In Kaduna State, Nigeria

Project and Seminar Material for Agricultural Engineering AE

The Marketing Of Ginger In Kaduna State, Nigeria


Abstract


This study dealt on the economic analysis of ginger (Zirrgiher. qf~cinnle Ii) marketing in Kaduna State, Nigeria. The specific objectives were to determine the situation of the domestic market, and type of intermediaries involved; to ascertain and determine the channels and marketing margin for ginger, to determine the volume, destination and value of exports and derive policy implications based on the research findings. Purposive sampling method was used to select three local government areas from Southern Kaduna for the study. The local government areas and markets selected were Kagarko, Kachia and Jaba. The reason being that these three local government areas were those with the largest markets for ginger in the state. Instrument of data collection was a well structured and pre-tested questionnaire. The result indicated that 36% of the respondents were between 3 1 and 40 years old while 63.3 percent others were between 41 and 60 years. On marital status, 81.7 percent were married while 16.7 percent others were single. Most of the respondents (60%) were literate while the remaining 40.0% others had no formal education. The average household size of the respondents was 8.4. Occupational distribution of the respondents showed that 75.0% of the respondents were farmers (producers) while 25.0% others were either traders and/or civil servants. The market structure of ginger in areas under study was characterised by oligopolistic mode of competition. The reason being the existence of few market organisations to which most potential sellers and buyers were required to belong. The marketing channel for ginger was a network of activities.


Chapter One


Introduction

1.1 Background Information

Nigeria has in recent years, been involved in executing painfid economic recovery programmes arising from recession in international oil market and changes in the macroeconomic direction of the world. This is the consequence of dependence on a monolitic (crude oil) economy at the expense of other untapped economic resources of the nation It will be recalled that in the 1960s, Nigeria relied heavily on the agricultural sector for economic development (contributing over 70% of the GDP). But with the oil boom of the 1970s, the contribution of agriculture fell drastically to the extent that the nation became a net-importer of major agricultural commodities in the 1980s. Farming became an unattractive and non-lucrative business, but a means of survival for the aged in the rural areas. (Husseini, 1996). Government, aware of this dangerous trend, has since put in place various policies and programmes geared towards resuscitating the sector. The introduction of the National Accelerated Industrial Crops Programme (FMAWR, 1993) is one of such programmes of the Federal Government of Nigeria aimed at boosting the country’s foreign exchange earnings and, at the same time, put the Nigeria’s name on the agricultural exporting league. This programme, which applies the principle of comparative advantage, erlcourages the production of cash crops adapted to each ecological zone of the country. (FMAWR, 1993) The downward trend in the world market for crude oil (Nigeria’s major foreign exchange earner since the early 1970s) underscored the need for alternative sources for foreign exchange. Nigeria possesses the potential to produce many crops that could be exported to earn the much needed foreign exchange, and ginger, is one of such crops. It holds a lot of prospects as an export crop because, unlike other export crops, like palm products and %round nut, it is not a major rood staple. (Eluagu and Uswu, 1988). Nigeria began to cultivate ginger in 1927 (Gibbon 1953), when an investigation was carried out to find a crop that would generate internal trade for the people of southern province of Kaduna, the traditional home of ginger in Nigeria. Subsequently, Nigeria became a major exporter of ginger to the United Kingdom and elsewhere By 1959, 1,582 tonnes were exported. This later declined significantly so that by 1984, only about 27 tomes were exported (Federal Ofice of Statistics (FOS, 1985). Over the years, the output increased though with substantial va.riation in production levels. In 1977, Nigeria exported 3,000 tonnes of dried ginger which yielded £1.8 million, \ C1 (N2.6m) in foreign exchange. Out of an estimated world production of 50,000 tonnes (dry weight), Nigeria produced 15,000 tonnes, surpassed only by India, the largest producer (Arene e/ nl, 1987). The post – 1977 period witnessed a marked decline in Nigeria’s production and export of ginger. Consequently, Nigeria continued to lose large amounts of money yearly to other countries in respect of importation of ginger products for augumenting domestic demand (FIRO, 1980). Available statistics show that ginger ale accounts for more than three percent of total soft drink market. (Eluagu and Ugwu, 1988). On the supply side, (Eluagu and Ugwu, 1988) reported that for the past several decades, ginger production in Nigeria has been in the hands of peasant farmers who operated small holdings of 0.05 – 0.5ha, mostly in southern Kaduna districts of Kagarko, Jabba and Kachia. This implies that the sub-sector is dominated by small-scale producers.

On the demand side, ginger was found to have good markets especially in culinary preparation and soft drink manufacturing. Trade in ginger was the responsibility of the Nigerian Exporting Marketing Boards. Specifically, the Northern States Marketing Board (NSMB) was responsible for the marketing of ginger and other export crops produced in the Northern states (Eluagu and Uwgu, 1988). What are not known in respect of the domestic market, are the statistics on the volume of production, distribution and consumption. Lack of this basic information poses a serious constraint on any plans regarding ginger marketing, processing and utilization in Nigeria. (Asomugha, 1988). In contrast to this situation in the domestic market, Eluagu and Ugwu (1988) found that export market for Nigeria ginger was more developed. Thus, the role of ginger as an export crop and in Nigerian economic growth and development is enormous (Caves, 1965, Le Heron, 1980; EIias and Gados, 1980; Okoli, 1987). The economic value of ginger (Zingibor Officinale Roscoe) centres around its uses in the preparation of medicines, foods and in the manufacturing of beverages, . +.a pharnlaceuticals and perhmes. 1; foods, ginger is used to flavour bread, cakes, biscuits, sussages and cookcies. It is also blended with other spices for household uses. Ginger ale, ginger beer, and ginger tea are among the beverages produced with it (Rodriguez, 1971). It is also used to some extent in perfume products (Patel, 1972). On the domestic scene, ginger is gaining acceptance as a flavouring agent competing favourably with curry and magi cube in this regard. It is becoming popular with “suya” (roasted meat) industry. With the emphasis currently being placed on local sourcing of raw materials in Nigeria, it is envisaged that in the very near future, ginger will be industrially utilized on a larger scale for the manufacture of an assortment of perfumes, confectionery, alcoholic drinks and pharmaceuticals.


1.2 Problem Statement

In the world ginger trade, Nigeria was ranked as one of the principal exporting countries. According to Rodriguez (1971), Sierra Leone, Nigeria, India and Jamaica were the principal exporters of ginger to the international market. Important as this crop is, it has remained essentially a neglected crop in research development and policy. (NRCRI, 1987). This anomalous situation is symptomatic of an existing policy gap. Without appropriately formulated policies, implementation of marketing programmes are not well guided and goals become unattainable (Idachaba, 1980). However, while government is attempting to regulate trade practices for cotton, for instance (Isitor, 1987), little is being done to regulate trade practices in ginger. The result is that the farmer may be exposed to exploitation by the middlemen.

Failure to realize the full benefit of higher world market prices will dampen the incentive of the farmer to increase production. This exploitation becomes more glarin~ in that ginger farmers do not get a fair share of the consumer’s expenditure because of the activities of middlemen. For example, Eluagu and Ugwu – C1 (1988) reported that the former Groundnut Marketing Board offered a comparatively low price to farmers for their ginger. According to them, the board paid N7001ton for split ginger in 198418.5 season whereas the farmers could get up to N10001ton in the open market. This situation could also encourage smuggling across the border. The marketing channels for Nigeria ginger are at the best obscure. According to Onwueme (1988), during the early 1980s for example, when the Nigerian Groundnut Board was officially responsible For ginger marketing, the board handled only a very small fraction of Nigerian ginger. It is clear that this uncertainty with respect to market and marketing channels acts as a disincentive to farmers. Onwuerne (1988) stated that even in late 1980s, when the board was abolished, prices improved but the uncertainties about the market structure still remained Another problem to the marketing of ginger is the issue of the absence of marketing cooperatives or associations. Ezeh and Asumugha (1988) stated that there was no special arrangement or cooperation among the sellers of Nigerian ginger (as in a monopolistic or oligopolistic markets) to fix output and price levels fluctuate depending on market conditions. Economic research on ginger marketing is limited. The profitability and the efficiency of the domestic and international marketing system are as a consequence even less well known. Since the exit of the commodity boards, in 1986, existing marketing arrangement; have remained obscure. Since the current volume, value and direction of exports are not well known and the constraints of existing marketing arrangements have remained rather speculative, market planning has therefore been rendered almost impossible (Njoku, 1988). Hence the need for research into the marketing of ginger. It is therefore necessarily to periodically study the past and present levels of ginger market and marketing with a view to revealing the constraints and potentials of the market . … h and early remedial measures taken to ameliorate the situation, such that at all times, Nigeria is striving towards efficiency on both the domestic and international markets.


1.3 Objectives of the Study

The board objective of the study is to analyse the marketing of ginger (Zhgiher OJi’cinake Roscoe) in Uaduna State. The specific objectives of the study are to:

  1. Determine the structure of the domestic market, and the type of intermediaries involved;
  2. Identify and determine the channels and margin for ginger;
  3. Identify the constraints and potentials of ginger marketing in Nigeria;
  4. Determine the volume destination and value of exports and
  5. Derive policy implications based on the research findings.

1.4 Significance of the Study

In Nigeria, where agricultural exports played a significant role in the country’s development in the 1950’s and 19601s, the economic horizon has changed drastically both in the domestic economy and in the international trade arena. For this and other reasons, traditional exports like palm produce, cocoa and groundnut can no longer be relied upon by Nigeria for meaningful foreign exchange – earning (Obadan, 1993). It is in line with the foregoing, that ginger which in the past had been a good foreign exchange earner but which currently is neglected, comes handy as an agricultural commodity that is capable of ensuring increased foreign exchange earning for the country. Within the framework of the Structural Adjustment Programmes (SAP), African countries, including Nigeria, have in recent years paid increasing attention to Export Promotion activities. This interest derived from their unpalatable experiences with macroecononlic stability and other econonlic problems – minimal growth in output, stagnant or declining growth, underutilization of industrial capacities, high inflation rate, huge fiscal deficits and balance of payment problems which have been accentuated by huge debt service obligation and constraining foreign exchange shortages. Developing countries have recognized the potential benefits of agricultural export development among which are: the need to overcome the external resource gap, to promote industrialization, to create employment and develop entrepreneurial abilities and technical progress (Uduebo 1994). The Structural Adjustment Programme embarked upon by Nigeria did not succeed completely in diversifying the export base, which remained narrow and largely dependent on petroleum products and a few agricultural and mineral export (Mullei, 1994). Consequently, the Nigerian economy is susceptible to external shocks and economic distress each time the major product, oil, faces unfavourable market condition. It is in order to find ways of cushioning these economic shocks and distresses that new non-oil products capable of earning foreign exchange for the country become imperative and ginger is one such non-oil agricultural commodity. This research is therefore designed to fill the research gap on ginger marketing. Also the study is desirable because market information contributes to efficient agricultural production and marketing and improves rural income and is useful to various occupational groups like farmers, extension workers, policy makers, exporters, importers, cooperators, researchers and transporters (CTA, 1997; Dixie, 1987). This means that ginger market information, if provided, may invariably go a long way to increasing the income and standard of living of the farmers and help other professional groups in many ways. This study will generate data and information on ginger and hopefully researchers and students will find this a very useful reference material.


1.5 Scope of the Study

The study focuses on the marketing of ginger in Kaduna State. The study will determine the structure of the domestic market, and the type of intermediaries involved. This study will also identify and determine the channels and margin for ginger and identify the constraints and potentials of ginger marketing in Nigeria. This study will further determine the volume destination and value of exports and derive policy implications based on the research findings.


1.6 Limitation of the Study

The major factors that posed a challenge or constraints to the researcher while carrying this research were insufficient fund, time and unavailability of materials.


Chapter Five


Summary, Recommendations and Conclusion

5.1 Summary

This research dealt on the analysis of ginger marketing in Kaduna State, Nigeria. The results indicated that 36.7 percent of the respondents were between 31 – 40 years of age while 63.3 percent others were between 41 – 60 years. On marital status, 81.7 percent of the respondents were married while 16.7 percent others were single. Most (60 percent) of the respondents were literate while the remaining 40.0 percent had no formal education. The average household size of the respondents was 8.4. Occupational distribution of the respondents showed that 75.0 percent of the respondents were farmers (producers) while 25.0 percent were either traders and/or civil servants. . 6.- The market structure of =iinga- in the areas under study was characterized by oligopolistic mode of competition. The reason being the existence of slightly differentiated goods and an organisation to which most potential sellers and buyers were required to belong. The marketing channel for ginger is a network of activities. This range from farmer (producer) – Wholesaler – Retailer and then the Consumer. The marketing margins per bag or ginger For producers were N120.00 for fresh ginger and N140.00 Cor dried ginger. The wholesaler got N50.00 for fresh ginger and N70.00 for dried ginger per bag of ginger while the retailers made N1O.OO and N30.00 as marketing margin for fresh and dried ginger, respectively. The total volume of ginger exported amounted to 346,04 1 tonnes of dried ginger with Europe i~npolting the highest (39.33) perce~lt) percentage by volume of the export. The destination of the ginger exports were Europe, United Kingdom, Westem Europe, IJnited States of America, Canada, Asia and Morocco with the total value of exports from 1980 – 1997 was NSO,4 1 0,000.00. The potential Tor ginger production and n~arketing are very bright. This is due to its ability to be grown in a diversified climate and geographical location in Nigeria It gives quick returns to investment because of its short gestation period and has a higher market value per unit weight than most other agricultural commodities. Ginger marketing js beset by myriads of problems such as poor storage, qualities of the tuber, middlemen, low producer prices, and lack of rural infrastructure.


5.2 Recommendations

For the attainment of the goal of increased ginger production and marketing in Nigeria, the following recommendations are postulated:
results on the control of ginger diseases should be made available to the farmers on time. It is suggested that short training meetings should be organised by the Extension Agents for farmers on the control measures for ginger diseases during storage. Emphasis should be on preventive rather than prophylactics. In order to obviate the services of the middlemen, the farmers/producers/traders should come together as co-operatives. This will enable them pool their resources together to embark on efficient production and marketing. So far most of Nigeria’s ginger production goes into export market. The domestic market is virtually not developed due essentially to inadequate local alternative uses. While efforts need to be made towards identifying and opening up new frontiers for export market, corresponding efforts ~leed to be made towards developing domestic markets to shore up the internal producer prices. Producer Prices of Nigeria ginger have shown a continued tendency to fluctuate below their world market equivalent To redress these inefficiencies and increase the profitability of ginger production and marketing, efforts need to be made to raise and stabilize producer prices and keep production and marketing costs low. Prices of ginger in the world market have been found to be associated with their source and quality Buyers have easily substituted Nigerian ginger with Jamaican ginger due mainly to its finest quality. Marketing policy should therefore aim at producing the best quality of ginger possible. It is recommended that efforts should be made to introduce the Jamaican ginger into Nigeria and the quality control arrangements of the produce inspection unit of the States Ministries of Agriculture resuscitated and made more effective. Rural infrastructure such as roads, electricity, effective communication should be improved to facilitate and enhance marketing activities and efficiency. P1 Ultimately, the solution t6 most of the problems, which will be market friendly is the introduction of the commodity exchange market. The exchange is a sophisticated marketing tool requiring modem infrastructural facilities such as adequate storage, readily available credit and efficient communication system Given good planning and commitment, Nigeria can introduce the commodity exchange system successfully. This system will shift the risk from the farmers/producers to other stake-holders and ensure that at all times the leakages that result in inefficient practices in the agri-business sector is adequately attended to and result in the overall aspects of the economy being oiled efficiently and effectively. Formation of co-operative societies is also highly recommended. This will enable the producers and traders pool their resources together and to be able to fix prices instead of continuing to be price-takers which the lack of organisation had turned them into. Besides, forming co-operatives will help them to educate themselves on efficient marketing and make normal profit while also becoming agents of development in their place of business.


5.3 Conclusion

From the study, it has been observed that the potential for ginger production and marketing in Nigeria is very high. This is due to its ability to be grown in diversified climatic and geographical locations in Nigeria, with quick returns on investment because of its short gestation period, and has higher market prices per unit weight than most other agricultural commodities. Nigeria ginger cannot compare favourably in the international market because of the fact that there is at present no organised agency approach to standards accepted internationally by exporters of ginger. Ginger meant for export market should be – – processed, sorted and graded Gaining quality standards acceptable in the world ginger market. Besides making such products easily marketable, there is also an increased added value. Lack of a standard apparatus for grading of ginger has exposed the ginger producers/marketers to losses of revenue which has eventually become counter productive. Efforts should be made by guverrment to promote ginger production and marketing by setting up a machine~y which will ensure that at all times, the farmer gets a fair price for his produce taking into cognizance the global villaze concept. This is to short-circuit a situation where ginger farmers may desert their farms because of unfavourably price fluctuations. Ginger production should be promoted in the southern parts of the country in order to increase the country’s share of the world ginger trade. This supposes that an aggressive export promotion scheme should be put in place for ginger production and marketing, making the ECOWAS sub-region and other parts of the African Continent the target markets. 58 Ginger production and marketing in Nigeria in the new millennium would have been put on greater heights should all of the above be considered as ginger produced in Nigeria will again compete favourably with ginger produced elsewhere in the world


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