Marketing of Dry Season Vegetables in South-East Nigeria.
ABSTRACT
The study analysed the marketing of dry season vegetables in South-East Nigeria. This study was carried out with five specific objectives.
The specific objectives included (i) description of the channel, as well as the analysis of the structure and conduct of marketing of dry season vegetables in South-East Nigeria; Objective (ii) determined the marketing margins of dry season vegetables marketers.
Determined the effect of the constraints on the margins of dry season vegetables marketers; (iv) determined the price causality in the marketers’ prices of dry season vegetables; (v) measured the extent of market integration of dry season vegetables in the study area.
Multi-stage sampling technique was used to select a total sample size of 227 respondents for the study. Data was collected for 61 days using 2 sets of structured questionnaires for the wholesalers and the retailers.
Data were analyzed using simple descriptive statistics, Gini coefficient model, marketing margin analyses, Pearson Chi-square model, Granger causality tests and Bivariate autoregressive model of Dynamic spatial and temporal market model.
The results showed that there were no barriers to entry and exit in and out of the vegetables markets during the dry season period. Also, eight (8) marketing channels were identified and described for Ugu and Okra respectively.
The marketing margin analyses showed a high percentage margin of Okra marketers as 93%, and that of Ugu marketers as 79%, implying that dry season vegetables marketing is a profitable business venture in the study area.
The identified constraints included: problem of storage, high transport cost, lack of market, poor sales, lack of market stalls, poor preservation facilities, weather problem and inadequate capital.
Pearson Chi-square results showed that few constraints such as problem of weather, lack of market stalls, lack of market, problem of weather and problem of poor sales were significant to the marketers’ margins either at 5% or 10% levels of significance.
Granger causality test showed that there was bilateral price causality existing between the farmgate and wholesale prices, as well as bilateral price causality relationships between the wholesale and their retail prices respectively.
There was no causality relationship between the farmgate and the retail prices. But there was a unidirectional price causality relationship existing between the wholesale price of Okra and retail price, and not the other way.
Bivariate autoregressive model which was used to measure the extent of integration amongst the vegetables markets ascertained that there was significant relationship between the central and local market prices for Ugu wholesalers and retailers, as well as Okra wholesalers and retailers.
From the result, it showed that there is an instantaneous adjustment to price changes in the market pairs of the marketers, an indication of perfect competitiveness amongst them, suggesting the existence of non-collusive pricing arrangement.
Hypothesis (i) was accepted and rejected for the marketers’ prices, based on the judgment from their results. For instance, there were bilateral price causalities for both Ugu wholesalers’ and retailers’ purchase and selling prices. On the other hand, hypothesis (ii) was also accepted and rejected based on the findings.
For example, it was rejected Ugu retailers, Okra wholesalers and Okra retailers, because their local and central markets were integrated at 5%, 5% and 1% significant levels.
The study therefore, recommended that government should build sufficient and modern market stalls to ensure and foster conducive environment and as well provide hygienic environment for their sales.
Moreso, waste places and incinerators should be built by the government in order to maintain a clean market environment.
Government should build new roads and repair worn out roads, as well as construct railways to link the northern regions due to huge supplies from there; marketers should form market associations, which will in turn bring about easy access to information as well as lower transaction costs.
There is need for improved information on current market prices, margins and supply situation of the marketers; as well as need to strengthen emphasis with research on dry season marketing of vegetables
TABLE OF CONTENTS
Title Page – – – – – – – – – – – i
Certification – – – – – – – – – – – ii
Dedication – – – – – – – – – – – iii
Acknowledgement – – – – – – – – – – iv
Abstract – – – – – – – – – – – v
Table of Contents – – – – – – – – – – vi
List of Tables – – – – – – – – – – – vii
List of Figures – – – – – – – – – – – viii
CHAPTER ONE: INTRODUCTION
1.1 Background- – – – – – – – – – 1
1.2 Statement of the Problem – – – – – – – – 4
1.3 Objectives of the Study – – – – – – – – 6
1.4 Research Hypotheses – – – – – – – 6
1.5 Justification of the Study – – – – – – – – 7
1.6 Limitations of the study – – – – – – – – 8
CHAPTER TWO: REVIEW OF RELATED LITERATURE
2.1 Marketing of Agricultural Products – – – – – – 9
2.2 Rural Urban Dichotomy and Marketing of Agricultural Products- – – 10
2.3 Marketing of Nigeria’s Staple Food Stuff – – – – – – 11
2.4 Social and Economic Importance of Indigenous Vegetables – – – 12
2.5 Characteristics of Vegetables Marketing – – – – – – 15
2.6 Concept of Price Causality- – – – – – – – 16
2.7 Conceptual Framework – – – – – – – – 17
2.8 Theoretical Framework – – – – – – – – 18
2.8.1 Market Structure-Conduct-Performance Theory – – – – – 19
2.8.2 Theory of Law of One Price (LOP) – – – – – – 20
2.8.3 Theories of Price Discovery and Causality- – – – – – 21
2.8.4 Theory of Supply – – – – – – – – – 23
2.9 Analytical Framework- – – – – – – – – 24
2.9.1 Analysis of Market Structure – – – – – – – 24
2.9.1.1 Concentration Ratio – – – – – – – – 25
2.9.1.1.1 Gini Coefficient Model – – – – – – – – 25
2.9.1.2 Barriers to Entry and Exit – – – – – – – – 27
2.9.2 Analysis of Market Conduct- – – – – – – – 27
2.9.3 Analysis of Market Performance – – – – – – – 28
2.9.3.1 Marketing Margin Analysis – – – – – – – 28
2.9.4 Pearson Chi-square Test Statistics – – – – – – – 29
2.9.5 Granger Causality Model and Hypothesis – – – – – – 30
2.9.6 Measurement of Integration – – – – – – – 33
2.9.7 Students’ t-test – – – – – – – – – 36
CHAPTER THREE: RESEARCH METHODOLOGY
3.1 Study Area – – – – – – – – – – 37
3.2 Sampling Procedure – – – – – – – – 37
3.3 Data Collection – – – – – – – – – 37
3.4 Data Analyses – – – – – – – – – 38
3.4.1 Gini Coefficient Model – – – – – – – – 39
3.4.2 Marketing Margin Analysis – – – – – – – 39
3.4.3 Pearson Chi-Square Analysis – – – – – – – 40
3.4.4 Granger Causality Model – – – – – – – – 40
3.4.5 Bivariate Autoregressive Model – – – – – – – 42
CHAPTER FOUR: RESULTS AND DISCUSSION
4.1 Channel of Distribution in the Marketing of Dry Season Vegetables – – 43
4.1.1 Producers – – – – – – – – – – 43
4.1.2 Wholesalers – – – – – – – – – 44
4.1.3 Retailers – – – – – – – – – – 45
4.1.4 Commission Agents – – – – – – – – 45
4.1.5 Rural Assemblers – – – – – – – – – 46
4.1.6 Ugu Marketing Channels – – – – – – – – 46
4.1.7 Okra Marketing Channels – – – – – – – – 47
4.2 Structure and Conduct of Dry Season Vegetables- – – – – 48
4.2.1 Gini Coefficient – – – – – – – – – 48
4.2.1.1 Market Conditions of Entry and Exit for Dry Season Vegetables Markets – 51
4.2.1.2 Ticket Fee Payment – – – – – – – – 52
4.2.1.3 Forms of Purchase, Packaging and Sale of Dry Season Vegetables – – 52
4.2.1.5 Unit of Measurement – – – – – – – – 53
4.3 Conduct of Vegetables Marketers in the Dry Season Period – – – 54
4.3.2 Identified Roles/Performances of Dry Season Vegetables Marketers – – 56
4.3.3 Means of Transportation – – – – – – – – 57
4.3.7 Dry Season Vegetables Marketing Association – – – – – 58
4.3.8 Market Players – – – – – – – – – 58
4.4 Marketing Margins – – – – – – – – 58
4.5 Effect of Constraints on the Margins of Ugu and Okra at Wholesale and Retail Levels – – – – – – – – – – 60
4.6 Pairwise-Granger Causality Results – – – – – – 63
4.6.1 Ugu Wholesalers: Farmgate – Wholesale Price Causality – – – 64
4.6.2 Ugu Retailers: Wholesale – Retail Price Causality – – – – 64
4.6.3 Okra Wholesalers: Farmgate – Wholesale Price Causality – – – 65
4.6.4 Okra Retailers: Wholesale – Retail Price Causality – – – – 65
4.7 Market Integration in Dry Season Vegetables Markets – – – – 66
CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 Summary – – – – – – – – – – 70
5.2 Conclusion – – – – – – – – – – 72
5.3 Recommendations – – – – – – – – – 74
5.4 Contribution to Knowledge – – – – – – – 75
5.5 Areas of Further Research – – – – – – – – 75
REFERENCES
INTRODUCTION
Background
Agriculture is receiving increasing attention as an instrument for growth, especially going by the World Development Report 2008 (WDR) titled “Agriculture for Development” (World Bank, 2007). Agriculture is one of the most important sectors in all developing countries (World Bank, 2008).
Agriculture remains the largest sector of the Nigerian economy, where it plays an important role as food provider, employer of labour, foreign exchange earner, key contributor to wealth and poverty alleviation (Onyishi, 2010).
From statistics, agriculture contributes about 31% of the Gross Domestic Product (GDP), with crops accounting for 87%, livestock 7%, fisheries 4% and forestry 2% (Central Bank of Nigeria, 2011).
It employs about 51.3% of the labour force in Nigeria and accounts for 70% contribution to GDP of the non-oil sector (Mang, 2009; National Bureau of Statistics, 2010; World Bank, 2010; Achike and Ichoku, 2011).
With the projected annual population growth rate of 5.5% and food production annual growth rate of 3.2% in the country, there is need to improve the agricultural system in Nigeria (Adebisi-Adelani, Olajide-Taiwo, Adeoye and Olajide-Taiwo, 2011; CBN, 2011).
According to Akintoye, Adekunle and Kintomo (2011), agriculture is the bedrock of the Nigerian economy. What must be made clear is that crop agriculture, with limited support already supplies a significant share of food, especially fresh vegetables.
Fresh vegetables add to the important component of diversified diets which improve dietary quality. They could be boiled, fried or cooked and consumed in different forms.
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