GROUNDNUT OIL PRODUCTION AND MARKETING IN KADUNA STATE, NIGERIA.

GROUNDNUT OIL PRODUCTION AND MARKETING IN KADUNA STATE, NIGERIA.

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ABSTRACT

This study examined groundnut oil production and marketing in Kaduna State, Nigeria. The specific objectives were to: examine the socio economic factors that influenced the production of groundnut oil; examine the socioeconomic factors that influenced marketing of groundnut oil; describe gender roles in the production and marketing of groundnut oil in the study area; describe the marketing channels employed in the distribution of groundnut oil; analyse margins of groundnut oil production and marketing; and identify constraints militating against the production and marketing of groundnut oil. Multi-stage random sampling technique was used to stratify the state into northern (mostly Moslems) and southern (mostly Christians) areas. A total of 100 respondents (50 producers and 50 marketers) were randomly selected. Data were collected from producers and marketers based on the list from the extension agents using two sets of structured and pre-tested questionnaires. Multiple regression model, descriptive statistics and marketing margin analysis were used to achieve the objectives. Socioeconomic factor such as sex, education, occupation, and years of experience were significant at 1% level for production with an R- square of about 70%, while for marketing, age and education were highly significant at 1% level with an R-square of about 90%. Production of groundnut oil was dominated by females, while both sexes had almost equal percentage in the marketing of the product. More retailers (76%) bought groundnut oil directly from the producers at more frequent intervals because they had low capital base. But the wholesalers (24%) bought less frequently at larger quantities because of larger capital. The producer’s margin was 36%, with a Net Income of N43, 925.04 per annum. The wholesaler’s margin was 28% with a Net Income of N 615, 960.00 per annum, while the retailer’s margin was 36% with a Net Income of N 201,636.00 per annum. The total marketing margin was 100. The constraints of notable importance that affected production were lack of capital (92%), high cost of groundnut (82%), poor variety (50%), and crude processing method (70%). For marketing, high cost of groundnut oil (92%), high interest rate on borrowed money (80%) and fluctuation in price of groundnut oil (70%) and competition from other vegetable oils (50%). The production and marketing of groundnut oil if given a favourable environment by reducing the problems facing the industry to its barest minimum would thrive better. So, by way of recommendation, research institutes should be encouraged through adequate funding to produce high oil yielding varieties of groundnut. Loans should be made accessible and at reasonable and affordable interest rate to producers and marketers. The indigenous manufacturers should fabricate groundnut oil extractors and groundnut oil producers encouraged to use them so that larger quantities of oil would be produced to meet market demand at a relatively lower price. Proper market information should be disseminated so that all the market players would be in the picture and finally policies should be put in place to discourage unlawful importation of the vegetable oils into the country to avoid


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unnecessary competition in the market.

CHAPTER ONE

INTRODUCTION

1.1         Background Information

Groundnut (Arachis hypogaea L.) originated from South America (Wiess, 2000). It is one of the most popular and universal crops cultivated in more than 100 countries in six continents; Asia, Africa, Oceania, North and South America and Europe (Nwokolo, 1996; ICRISAT, 1999).

Major groundnut producing countries are China (40 percent), India (23 percent) and Nigeria (8.4 percent) (World Bank, 2003). Developing countries account for over 95 percent of total world groundnut area and about 94 percent of total world production. Production is concentrated in Asia and Africa, with Africa accounting for 35 percent of


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global area and 21 percent of total output mainly in Nigeria, Senegal and Sudan (RMRDC, 2005). In Nigeria, groundnut is cultivated mainly in the northern parts especially Kano, North Central, North West and North Eastern states (RMRDC, 2005). World production of groundnut was 35.9 million tonnes. Asia remained the largest producer with 20.5 million tonnes, India 10.9 million tonnes, and Africa, 4.5 million tonnes. According to RMRDC (2005) report, the total output of groundnut for Nigeria as at 2002 was 1,976,490.80 tonnes with a range of 47.00 – 73,000 tonness for the States. Bauchi State had the largest output (73,000 tonnes) followed by Nasarawa (70,420 tonnes) and Edo State had the least with 47.00 tonnes. The mean groundnut output from farmer’s field for all the States was 15.72 tonnes. Sokoto State had the highest mean output of 57.00 tonnes, followed by Benue with 52.0 tonnes, Jigawa 27.33 tonnes, Kano, 26.29 tonnes, Yobe, 25.70 tonnes, Zamfara, 25.55 tonnes and Kaduna, 22.67 tonnes. Abuja had the least with 2.25 tonnes. Annual average production figure for Nigeria was 456 metric tonnes of groundnut oil, 713 metric tonnes of groundnut cake and 2,652 metric tonnes of unshelled groundnut (FAO, 2002).

Groundnut oil production is actually a post-harvest operation which is referred to as processing. Processing may be regarded as a way of converting harvested agricultural produce into other forms of products that can be preserved over a long period of time. In this case it is converting groundnut seeds into groundnut oil and groundnut cake commonly called “kuli-kuli” in the North. Processing of agricultural products serves as a source of additional income to the processor as well as boost household food security especially among the rural poor. In the process of transforming this product from subsistence to commercial, socio-economic changes of the processor is vital as he


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occupies key position in production, processing and marketing of agricultural product (NAERLS, 2000).

The extraction of oil from groundnut constitutes an important agricultural processing activity for women in Nigeria especially in the northern States. The process involves a number of steps that include cleaning, roasting, de-skinning, kneading and frying and the extraction of oil. The oil extraction process is mainly traditional, characterized by drudgery and time consuming.

In Nigeria, groundnut oil accounts for as much as 17 percent of the total agricultural export earnings because it does not meet domestic demand. The shortfall in domestic demand is 300,000 to 400,000 metric tones (Ojowo, 2004). Its husk (shell) is used as fuel, roughage, and litter for livestock, mulch, and manure and as soil conditioner (Misari, 1980).Groundnut seed contains 40-50 percent protein and 10-20 percent carbohydrate. Groundnut seeds are nutritional sources of vitamin E, niacin, flavin, calcium, phosphorous, magnesium, zinc, iron, riboflavin, thiamine and potassium.

It is also used as animal feed, raw material for oil, cake and fertilizers. The multiple uses of groundnut plant make it an excellent cash crop for domestic markets as well as for foreign trade in several developing and developed countries (Stigter,2006).Refined groundnut oil could be used in a variety of manufactured food products such as biscuits, cakes, crisps and ready meals. The unique property of stability and long shelf life can makes it a preferred choice for frying. As stable oil, it is often used as a base for some pharmaceutical products and minor food ingredients such as colours and flavours. Groundnut oil is also used in the preparation of skin cream, for instance, eczema cream though they could be problematic to those with a history of allergy due to the presence of


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groundnut protein (Warner, 1997). Groundnut oil is used extensively for massaging polio patients. It is also used as a carrier in the treatment of asthma and other ailments (Asiedu, 1990).

1.2    Statement of the Problem

Groundnut has contributed immensely to the development of Nigeria. Up to 1969, Nigeria was the third largest exporter of groundnut in the world after India and China. 78 percent of the area put to groundnut production and 88 percent of the production in Nigeria is accounted for by the then Kano, North Central, North West and North Eastern states. It was the country’s most important agricultural export commodity. The total groundnut production up to1974 was 1.95 million tonnes but this dropped to about 0.40 million tonnes in 1983 (RMRDC, 2005). This decline is attributed to the drought of 1972 and 1973, followed by the devastating rosette disease of 1975 and 1976, increased local consumption caused by increased population, improved living standards, and reduction in the number of farming families caused by the oil boom of the early 70s. This drew out a substantial number of the able labour force to urban industries, have resulted in Nigeria becoming a net importer of groundnut particularly in the form of oil. For instance, Nigeria imported about 200,000 tonnes of vegetable oils worth about N77 million in the 1980 fiscal year. Although production has improved over the years, Nigeria is still a net importer of groundnut oils.

The total amount of groundnut required by groundnut processing companies amounted to 413,784 tonnes but only 21,417 tonnes were supplied, representing only 5.2 percent of their requirement (RMRDC, 2005).This indicates that there still exists a ready market for producers. But this decline and shortage in supply of raw material led to the



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