COCOYAM MARKETING IN SOUTH EAST NIGERIA

ABSTRACT

Cocoyam is highly perishable and considerable economic losses occur after it is harvested. This is as a result of rot, sprouting and other physiological changes. These losses could be reduced through efficient storage, processing and marketing. This study is about economic study of cocoyam marketing in south-east Nigeria. It specifically ranked market participants preference for cocoyam cultivars and the reasons for such preferences. It showed the main marketing  channels  and  socio-economic  and  institutional  factors  affecting  the  choice  of marketing channels. It showed the structure and conduct of cocoyam marketing and socio- economic and institutional factors affecting the volume of cocoyam marketed. It estimated the  costs  and  benefits  of  cocoyam  marketing  as  well  as the  net  income  of  six  storage methods. It assessed the effectiveness of six storage methods. The study was guided by null hypotheses  that  socio-economic  and institutional  factors  did not determine  the choice  of marketing channels; that socio-economic and institutional factors did not determine volume of  cocoyam marketed; that the mean income of farmers, wholesalers  and retailers did not significantly  differ  and  that  the  mean  cocoyam  rot  of  the  six  storage  methods  did  not significantly differ. A total of 260 marketers comprising 100 producers, 60 wholesalers and

100  retailers  were  selected  through  stratified  random  sampling  techniques.  Data  were collected from both primary sources. Primary data emanated from various questionnaires and weekly/monthly monitoring of the six storage methods.  Descriptive statistics such as tables, charts, percentages and mean and inferential statistics such net  income analysis, four firm concentration  ratios, Herfindahl-Hirschman  Index and  Gini-Coefficient,  Multinomial  logit regression model, correlation analysis, Ordinary least square regression model and Analysis of  Variance  were  used  to  achieve  the  objectives.  The  results  showed  that  producers, wholesalers and retailers preferences  for cocoyam cultivars depended on culture and food pattern  more  than  anything  else.  It  also  showed  that  four  firm  concentration  ratios  and Herfindahl-Hirschman  Index  did  not  indicate  oligopolistic  behavior  although  their  Gini- coefficient showed unequal distribution of market sale. The average net income of producers, wholesalers   and   retailers  per  year  were  ₦204,246,  ₦3,650,000  and  ₦474,000     each respectively while the net income of the six storage methods were ₦56.92, ₦47.96, ₦47.80,

₦43.36, ₦15.25 and ₦3.00 per kg respectively. Approximately 33% of the variations in the volume of cocoyam marketed were explained by socio-economic and institutional variables. The multinomial  logit regression  analysis  has R2  value of 0.56 and showed  that age and storage cost were significant (P < 5%).The correlation results for objectives iii and vi showed

that distance to market, family labour, size of land allocated to cocoyam income from other sources and purpose  of marketing  were significant  at (p < 0.001) and thus  contribute  to improvement  in  marketing.  The  Analysis  of  Variance  (ANOVA)   showed  statistically significant difference (P < 0.01) in the mean income of farmers, wholesalers and retailers as well as the mean disease severity of the six storage methods. So, the first, second, third and fourth hypotheses were rejected, while the alternatives were accepted.  The study therefore, recommended  that  government  should  build  the  capacity  of  market  participants  through seminars.  Additionally  financial/technical  support  should  be  provided  especially  to  the commercial  farmers.  There  is  also  need  for  agricultural-chain  partnership  between  the farmers and processors.

xii

CHAPTER ONE INTRODUCTION

1.1      BACKGROUND INFORMATION

Cocoyam (Colocasia spp and Xanthosoma  sagittifolium)  originated from  Southeast Asia.    It  was  introduced  into  Nigeria  and  other  West  Africa  countries  in  16th   and  17th centuries Bown, (2000).  It is third largest root and tubers in south-east Nigeria after cassava and yam in terms of production and acreage Nwagbo, Okorji, and Ugwu (1987). Cocoyam is

grown for its edible starchy corm and leaves.

Table 1.1: World Production of Edible Aroids (cocoyam)

2008             2007             2006             2005             2004             2003

World  Production

(Mt)

11,773,733    11,348,596    11,674,399    11,224,032    10,916,616    10,700,770

Nigeria production (Mt)

5,387,000      4,996,000      5,473,000      5,068,000      5,010,000      4,980,000

Source: FAOSTAT, 2010

FAOSTAT,  (2010)  estimated  the  production  of  cocoyam  in  Nigeria  in  2008  as

5,387,000 metric tons out of a total of 11.77 million metric tons of world output of cocoyam. Coastal West Africa accounts for 90% of the global output with Nigeria accounting for 50% of this (FAOSTAT, 2010). World cocoyam production increased slowly from 10.7 to 11.77 million metric tons between 2003 and 2008 (Table 1)  (FAOSTAT,  2010). The table also shows production of cocoyam in Nigeria between  2003 and 2008. Production of cocoyam was approximately 46% from 2003 to 2006 in Nigeria and then decline to 45% 2007 and rose up again to approximately 46% of world output in 2008.

Cocoyam is a popular root and tuber grown and marketed in the study area where it is relatively consumed in large quantities. It thrives well in warm, humid forest areas  where high annual rainfall and long wet season are conducive for its optimum yield. Considering that this climate makes up about 80 percent of land mass in South-east Nigeria, an efficient and effective cocoyam marketing system that will increase production cannot be overlooked.

During the past decades,  products of cocoyam were mainly consumed at home  in South-east  Nigeria.  Their  nutrient  content  carbohydrates,  protein,  fats,  crude  fiber,  ash, carotene, thiamine, riboflavin, Niacin and vitamin C are more digestible when compared to other root crops (Chukwu, Nwosu, Madu, Chinaka and Okoye, 2008).  However, recently, there  has  been  an  increase  in  output  and  commercialization  of  cocoyam.  Also  as  the processes  of  urbanization  progresses  in  Nigeria,  an  increasing  share  of  national  food

consumption  takes  place  at locations  other  than where  food  is produced.  The  marketing system must develop well to satisfy the local demand and to provide necessary services as producers sell in markets distant from where consumers buy food  items (Enete, 2003 and FAO, 2009).

Cocoyam marketing, like any other agricultural marketing, encompasses everything that  happens  between  the  farm  gate  and  the  consumer,  including  processing,  storage, assembly,  wholesaling,  and  retailing  of  cocoyam  (Kohl  and  Uhl,  1985;  Takele,  2010). Cocoyam industry consists of primary production by producers as well as creation of form, space and time utilities by other market participants. Economic study of cocoyam marketing is  viewed  as  obtaining  scientific  evidence  on  the  situation  of  cocoyam  marketing  and identification of potential intervention as a way of assisting the industry in contributing to socio-economic  development  of  the  nation.  However,  going  by  the  estimated  figure  of postharvest losses in cocoyam, Chukwu, et al, (2008), reported about 50% economic losses after two months and about 95 % after five months as a result of rots, sprouting and other physiological changes. This is pointing to poor access to agricultural chain partnership, rural infrastructure,  storage,  processing  and market  for cocoyam.  Storage  participants  used six main storage methods for cocoyam among which are storage in the basket in storage house, on the floor in storage house, storage in the shelf in storage house, storage in raised platform in the barn, heap in barn, bury in the barn. However, reliable information is not available on the relative effectiveness of these methods in reducing losses in fresh weight, rots and other changes.

Cocoyam is produced beyond the needs of the households and they desire to use the surplus in satisfying their other needs. Producers have three main options for marketing their produce. At the beginning of the marketing channel producers either sell directly to consumer or  to  other  participants   (retailer  or  wholesaler)  depending  on   various  factors.  Other participants in the market channels such as retailers or wholesalers not only create possession utility by transferring cocoyam from surplus to deficit region but also enhance the value of cocoyam in terms of form, place and time for consumers.

However, transaction costs and other institutional and socio-economic factors could limit the volume of supply of cocoyam as well as the preferences for marketing  channel. Scientific information on social and other institutional characteristics  that  affect  marketing are needed urgently for improving the volume of cocoyam marketed as well as the decision to participate in cocoyam distribution.  Imperfect   market  information  for buying and selling; lack of cash, and credit availability to finance short-run inventories; insufficient facilities for

storage and transportation, no uniform system of grade and standard to facilitate trading at a distance, have been recognized in various studies (Mainville, 2004; Hernandez, 2009; Jari, 2009; Take, 2009; Takele, 2010). Thus attention is required in these areas for improvement of volume of supply as well as choice of marketing channels.

To  unleash  the  potential  contribution  that  this  industry  could  make  to  improve income and food security of rural poor, assessment of costs and benefits are needed as they are  the  critical  determinant  of  returns  to  farmers,  traders  and  other  participants  in  the commodity chain as determined by retail food prices they face. The major components of the analysis of marketing margin consist of gross marketing margin, net marketing margin and farmers’ share of consumers’ price. The net marketing margin accrues to the middlemen as profit (Mainville, 2004; Hernandez, 2009; Jari, 2009; Taka, 2009; Takele, 2010).

Marketing of cocoyam requires special attention also because of the diversified nature of demand of the final consumers. Cocoyam may be needed by consumers for the treatment and prevention of blood sugar disorder due to its low glycemic index (slow sustained release of energy to the body) (Daniells, Hughes, Traynor, Vawdrey and Astridge, 2009). A clear understanding of supply determinants as well as factors affecting the decision to participate in different market channels can contribute to the action and efforts of those actors that aim to implement market-led development strategies.  Analysis  of cocoyam marketing system will also ensure information on economic values of cocoyam and factors hampering the industrial development  such  as  poor  access  to  local  markets  infrastructure  and  transport  facilities necessary for cocoyam sub-sector development. The outcome of market led development is to assist in sustainable development of the industry by increasing the available information on more  market   opportunities   necessary   for  generating   employment,   increasing   income, reducing poverty and increase supplies for healthier consumer nutrient.

1.2: STATEMENT OF THE PROBLEM

In South  East Nigeria,  information  on preference  for cocoyam  cultivars  and  their reasons for such preferences are needed for identifying the cultivars with highest demand and thus high potentials  for improving  the income  of players.  Marketing  of  cocoyam  is also constrained  by socio-economic  and institutional  factors required for  maintaining  standards and improving competitiveness.  It is constrained by technical factors such as lack of post- harvest  handling  knowledge,  storage  and limited  market  (Babatunde  and Oyatoye,  2009; Okoye, Dimelu, Okoye and Agwu, 2009; FAO, 2009; Enibe, Chidebelu, Onwubuya, Agbo and Mba, 2008; Jones, 1994; Hay and McCoy, 1977). The consequences have been seasonal glut, increased spoilage of cocoyam tubers, poor market access and severity of food shortages

which in turn affect investment in cocoyam production. Economic study of cocoyam based on analyzing the factors influencing the choice of marketing channels as well as volume of supply  reveals  how  weak  the  performance  of output  markets  are affecting  the  cocoyam industry in South-east Nigeria.

The  Federal  Government  of  Nigeria  is  a  member  and  signatory  to  World  Trade Organization  (WTO) since 2001 and has thus liberalized  and fully integrated  into global economic system (Oji et al., 2005). This implies that producers are facing increasing market competition, both in international and local markets (Jari, 2009). In liberalization markets are organized structures that link co-operatives and producers and thus can bring opportunities to farmers  but  at  the  same  time  great  challenges  (Blandon,  2006).  However,  in  Nigeria liberalization  was translated to mean removal  of credit and fertilizer subsidies, increase in import  duties  of  rice,  animal  and  soybean.  Thus  economic  study  of  cocoyam  based  on examining  structure  and  conducts  of  the  cocoyam  marketing  system  shows  the  level  of competition,  efficiency of cocoyam  market structure  and where to draw attention for the overall performance.

Inequality  of  income  between  the  rural  and  urban  areas  draw  people  away  from agricultural  production  and  this  affects  farm  investment  decision.  Thus  measurement  of market performance  based on assessment of costs and benefits are  needed as they are the critical determinant of income for farmers, wholesalers and retailers. Technical development, supportive institution as well as operational and marketing efficiency motivate market players to continue in production and marketing. It is operating efficiently when the consumer price is equal to the producer price plus marketing costs. The operational efficiency of marketing system  is  enhanced  when  the  marketing  costs  are  reduced  at  the  same  level  of  output (Babatunde  and Oyatoye,  2009;  Oguntade  and Mafimisebi,  2010).   However,  unless  the middlemen earn profit  in excess of what they require to pay for the interest on borrowed capital and cater for the risk they take their interest in arbitraging across time, space and form will not be sustainable.

Insufficient facilities for storage affect arbitrage across time, space and form. Proper post harvest handling, storage and market access contribute to ensuring quality maintenance for perishable agricultural products. In order words, cocoyam has to be harvested at a specific point  in  time,  but  is  consumed  year-round,  thus  necessitating  proper  storage  facilities. Therefore if cocoyams are to be available throughout the year, proper storage facilities have to  be  implemented  by  all  in  the  marketing  chain:  producers,  wholesalers,  retailers  and consumers. Thus evaluation of market performance based on accessing relative effectiveness

as well as efficiencies of various methods of storage in reducing loss in fresh weight  and other physiological damage are required for identifying the strategies that will reduce these economic losses and increase the income of market participants.

Further, there is need for more research with respect to cocoyam marketing in South- east Nigeria. The scope of early studies on cocoyam was limited to production and gender (Okoye,  Dimelu,  Okoye  and  Agwu,  2009).  Furthermore,  the  available  research  base  in agricultural marketing has focused on major crops such as cassava, yam and cereals, while the cocoyam sub-sector remained  under addressed.   Taking  into account the problems of cocoyam markets in South-east Nigeria, three issues are important in the activities of market participants. These are arbitrage in time (storage), in space (transfer) and form (opportunity for agricultural value chain). In line with the foregoing, the following objectives would guide the research.

1.3: OBJECTIVES OF THE STUDY

The broad objective  of the research  is to conduct an economic  study of  cocoyam marketing in South-east Nigeria.

Specifically, the study seeks to:

i.         rank market participants preference for cocoyam cultivars and their reasons for such preferences;

ii.     describe marketing channels and their problems in south east Nigeria;

iii.    analyze  socio-economic  and  institutional  factors  influencing  selection  of marketing channel by market participants;

iv.    determine the structure and conduct of the cocoyam marketing system;

v.      estimate the costs and benefits of cocoyam marketing;

vi.    analyze factors that determine the volume of cocoyam marketed in south east

Nigeria;

vii.   assess the effectiveness of six methods of storing cocoyam in relation to loss in fresh weight, sprout and rot in south east Nigeria;

viii.  estimate  the costs and returns of the six storage techniques  of cocoyam  in south east Nigeria;

ix.    make recommendations to the appropriate authorities for intervention policies

1.4: HYPOTHESES OF THE STUDY

Based on the above specific objectives, this study was guided by the following null hypotheses:

i.         Socio-economic and institutional factors do not affect producer’s marketing channels choices.

ii.        Socio-economic factors do not determine the volume of cocoyam marketed. iii.       The  mean  net  income  of  producers,  wholesalers  and   retailers  do  not

significantly differ.

iv.       The  mean cocoyam  rots  of the six  storage  methods  do not  significantly differ.

1.5: JUSTIFICATION OF THE STUDY

Marketing systems development is critical to present and future economic growth and improvement in the welfare and livelihood systems of Nigeria and other African countries in general (Roy-Macaule, 2002). It is important to recognize the role of marketing systems in linking urban and rural food systems and providing food security especially in the face of changing  food  policies  that  affect  the  systems  (GECAFS,  2006;  FAO,  2009).  Therefore development of strategies related to market structure and conduct are necessary for reducing perishability  and thus increasing  the productivity  and  viability  in the industry.  Improved performance of agricultural markets will therefore encourage productivity and thus enhance food availability, accessibility and utilization.

Production   has  to  be  accompanied   by  application   of  improved   post   harvest technologies, rural infrastructure and trade related capacity for market access. Such progress may be important for a movement towards commercial production and economic benefit to all the commodity marketing chain. Scientific information on socio-economic characteristics, marketing and other post harvest characteristics and their effects on supply of cocoyam are important in addressing the challenge of cocoyam  industry in south east Nigeria.   Several researchers (Omoregie and Thomson, 2001; Gabre-Madhin, 2001; Soderbom and Teal, 2003; Raj, 2007), have indicated that access  to market are limited by lack of capacity building, transportation  problems,  storage  losses  and information  on grade  and standard.  However there is need to obtain local scientific evidence on the effect of these factors on marketing channels as well as on volume of cocoyam marketed in South east Nigeria.

Huge loss of cocoyam after harvest could be one of the courses of food insecurity of Nigerian citizens. For any meaningful  development  of cocoyam in Nigeria,  production of cocoyam should be accompanied by improvement in marketing. This requires knowledge of the socio-economic  and institutional situation as well as structure-conducts-performance  of participants. This will highlight areas where intervention can have an impact in addressing the challenges of those who are interested in taking risks involved in arbitrage across time, space and form.

In various studies of microeconomic  behavior of households in marketing in  South East  Nigeria,  it  has  been  argued  that  marketing  margins  have  remained  high  due  to inadequate   infrastructure,   inefficient   flow   of  information,   imperfect   competition   and incomplete credit and insurance. Further, agricultural marketing are also said to be inefficient resulting in high rate of food spoilage, poverty and unaffordable food prices by consumers (Mainville,  2004; Hernandez,  2009; Jari, 2009; Take, 2009;  Takele, 2010). However,  not many studies have empirically evaluated the validity of these claims to obtain local scientific evidence with respect to performance of cocoyam marketing in Southeast Nigeria. There is urgent need for empirical evidence on how well marketing of cocoyam have performed in terms of costs and margins associated with it for policy options.

The knowledge of institutional, technical and socio-economic factors that determine the supply of cocoyam as well as producers’ choice of marketing channels is  essential for highlighting the leaking pipes. Similarly, examination of the effectiveness of various methods of storing cocoyam will show post harvest characteristics and losses across time. These are necessary  for viability  of cocoyam  industry and for more  commercialization  of cocoyam enterprises in south east Nigeria. This will be the prime concern in any strategy for bridging the gaps in supply and demand for food and poverty alleviation for farmers, middlemen as well as consumers (Onu and Iliyasu, 2008).

1.6: LIMITATION OF THE STUDY

The study was carried out in South East Nigeria and specifically the markets  with observed preponderance of cocoyam marketing.   Information collected includes input used and factors that determine the output as well as access to major markets. It was limited by data accuracy and poor records of their activities. Most of the values  used or given were estimated on averages based on respondents. Sampling of states and major markets was based on  consultation  with  chairman  of  various  market  associations.  There  were  problems  of inadequate  or lack of incentives to respondents  who needed immediate  reward for giving information and taking their time. There was also problem of funding for this research work as this is not a funded research.

₦5,000.00 – DOWNLOAD FULL PROJECT DOWNLOAD FULL PROJECT Added to cart

---

---

---

---

Related Project Topics :