Get the complete project »
- The Complete Research Material is averagely 222 pages long and it is in Ms Word Format, it has 1-5 Chapters.
- Major Attributes are Abstract, All Chapters, Figures, Appendix, References.
- Study Level: MTech, MSc or PhD.
- Full Access Fee: ₦40,000
The study analysed market integration and pricing efficiency of soyabeans in Benue and Enugu States, Nigeria. Low household demand for soyabeans makes its production and marketing less popular amongst farmers and marketers which leads to marketing inefficiency. A two-stage sampling technique was used to select 207 respondents. Secondary data comprising monthly retail prices (urban and rural) of soyabeans from 1999 to 2013 was also collected BNARDA and ENADEP. Descriptive statistics, regression, Herfindal Hirschman Index, Gini Coeffiient, Johansen Co-integration, Spatial price model, t-test and correlation analysis were the analytical techniques used. It was found that soyabeans marketing was dominated by married (80%), literate (91.3%) males (63.3%), with a mean annual income of N474,370. The factors that determine the volume of soyabeans marketed include price of soyabeans (-1.515), transfer and handling costs (0.345), education (0.157) and quantity of loan (0.035). Although, soyabeans market was characterized by many buyers and sellers with no barriers to entry and exit, the high value of HHI got for wholesalers and retailers (2,017.18 and 1,081.97) indicated high concentration of soyabeans in the hands of few marketers. This was further supported by high inequalities in the distribution of sales among wholesalers and retailers respectively as evident in the values (0.84 and 0.81) of gini coefficients. Whereas few marketers (6.8%) had negative marketing margins, their mean was 20.40%. Average net margin for Benue and Enugu soyabeans marketers were calculated as N405.79 and N786.26, respectively which represented about 6.24% and 10% of the cost price.
1.1 Background of the Study
The potential contribution of agricultural marketing towards improved rural incomes in developing countries can not be over-emphasized. Agricultural marketing assumes greater importance in the Nigeria economy because excess production from the farm must be disposed off in order to earn some income with which farmers can purchase goods and services not produced by them (Adekanye, 1988). Olayemi (1982) observed that food marketing was very important but rather neglected aspect of agricultural development. More emphasis is usually placed by government on policies that increase food production with little or no consideration on how to distribute the food produced efficiently and in a manner that will enhance productivity. The Nigerian government in recent years has provided incentives to the rural farmers which have tremendously increased the grain production output per hectare in the rural areas. Grain production in Nigeria rose in recent years as farmers expanded planted area and beneficial rainfall patterns improved yields. For instance, a study by Sanni, Onah and Njiforti (2007) revealed that output of grains like rice, maize, sorghum and soyabeans in Nigeria had been on the increase. This means that hunger in Nigeria is not entirely the problem of production. Rather, it has to do with the accessibility vis a-vis affordability components of the concept of food security. Similarly, Ladele and Ayoola (1997), in their study on food marketing and its role in food security in Nigeria, concluded that an efficient food marketing system would reduce post-harvest losses, ensure adequate returns to farmers’ investment and stimulate expansion in food production thereby enhancing the level of food security in Nigeria.
A good and efficient marketing system accelerates the pace of economic development by encouraging specializations which leads to increase in output. Moreso, a good and well-coordinated national food marketing system can affect food production and household’s food security in two ways. One, it can stimulate increased commercial activities that could generate more funds for plough back investments in both agricultural and agro-allied industrial sectors. The resultant increased agricultural production will lead to increased food production and increased food output. Secondly, it can lead to employment generation for both food distributors and rural farmers. The involvement of rural people in food marketing could uplift the rural populace’s standard of living and increase their personal income thereby enhancing the prospect of food security at the household, local and national levels.
Furthermore, FAO (1997) stated that if available food could be evenly distributed (through efficient national and international markets), each person would be assured of 2,700 calories a day, which is the recommended daily calorie intake. However, since available food is not evenly distributed (due to marketing inefficiencies and other problems), there are shortages of food in some regions but excess in some other regions. Therefore, the issue of how much food gets to the households, which is fundamental in household’s food security, is a function of food production level, food marketing efficiency and the households’ income level (Ladele and Ayoola, 1997).
Soyabean (Glycine max), a herbaceous annual food legume, is an important food, feed, oil and cash crop in the world. It has been the dominant oilseed produced since the 1960s and is used as human food, livestock feed, and for various industrial purposes (Myaka, Kirenga & Malema, 2005). Described as a ‘miracle bean’ or ‘golden bean’ because of its cheap protein-rich grain, it is obvious that soyabeans is a commodity of interest and warrants special attention for several reasons. First, it plays an important role in Nigeria as staple and food supplement in many homes and a prominent role in livestock industry especially in the manufacture of poultry feed; and secondly, the structure and conduct of soyabeans marketing can affect the economy of the people and nation’s economy in significant ways (Onu & Iliyasu, 2008). Its industrial uses range from the manufacture of edible oil, infant food supplements, pharmaceutical, paints, cosmetics, soap-making to animal feeds (Singh, Rachie & Dashiell, 1987). Available research has shown that greater demand for soyabeans comes from livestock industry for the manufacture of livestock feeds (Omotayo, Olowe, Fabusoro, Babajide, Ojo & Adegbite, 2007).
In recent years, the use of soyabeans as animal feed has taken another centre stage. The rapidly increasing middle class believe that meat consumption is a sign of affluence which is fueling an alarming increase in demand for animal protein. This results in increased pressure on grain supply. For instance, it takes 8kg of grain to produce 1kg of beef, resulting in vast amount of edible crops previously grown for human beings used to feed livestock (Shaver, 2008). To accomodate this demand, over 760 million tonnes of grains were used in 2008 to feed animals (Shaver, 2008). This competitive demand from livestock sector has tremendous effect on the availability of the crop for human food and most importantly on the price.
Due to the recognition of its importance (food/feed, fertility, medicine, income e.t.c.), efforts have been made to promote soyabeans in some African countries. For instance, there was a successful soyabean promotion in Nigeria (through a project by the International Institute of Tropical Agriculture [IITA] and Canada’s International Development Research Centre (IDRC) between 1987 and 1999, supported by public policy). As a result, between 1988 and 1998, soyabeans production in Nigeria increased by 166% (from 150000T in 1988 to 405000T in 1998) (FAO, 2001) as there was widespread incorporation of soyabeans into maize-based cropping system. Micro statistics of soyabeans growing villages in Benue State, Nigeria confirmed that production increased drastically (Sanginga, Adesina, Manyong, Otite & Dashiell, 1999). The number of farmers cultivating improved soyabeans varieties increased by 228% between 2000 and 2003 (Sanginga, Dashiell, Diels,, Vanlauwe, Lyasse, Carsky, Tarawali, Asafo-Adjei, Menkir, Schulz, Singh, Chikoye, Keatinge, & Rodomiro, 2003).
Nigeria’s domestic production of soyabeans is trending upwards with an increase of 171% between 1990 and 2008 but still lags behind the rapidly growing demand from the poultry industry for soyabean meal and vegetable oil processors. This supply deficit resulted in the increase in the price of soyabean meal within ten months, reaching as high as $670 per tonne (Michael, 2011). According to FAO (1997), Africa spent US$1 billion in 2004 to import soyabeans and soya oil. Of this, US$752 million was for soyabean oil and US$254 million was for soyabeans grains/meal.
In Australia, the main market for soyabeans has been the crushing sector. Up till the late 1990’s, almost 50% of the crop was crushed for meal and oil and a further 25% went into full fat meal for intensive livestock [Australian Oilseeds Federation (AOF), 2012]. According to (AOF, 2012), human consumption market only accounted for around 25-30% and the remaining 5% was retained for planting seed with little or no export. In Canada, soyabeans can be categorized into two quite distinct markets: (1) commodity beans which are generally crushed by domestic processors; and (2) specialty beans which are food grade products, usually exported as whole beans (Erik, 2007). In North America, soyabeans are an unregulated commodity whose prices are determined by free market interaction of supply and demand. Currently, the demand for soyabean meal is declining in North America owing to increased feeding of livestock with distillers dried grain, which is a by-product of ethanol production (Richard, 2010). This substitution will likely continue as ethanol production expands. Declining domestic meal demand along with increasing soyabeans oil demand for bio-diesel may eventually result in soyabeans prices being driven by oil demand rather than meal demand. As a result, soyabeans prices will remain relatively low.
The rapid growth in the poultry sector in the past few years has increased demand for soyabean meal in Nigeria as soyabean meal is the dominant preferred protein ingredient in poultry feed rations. Nigeria currently produces soyabeans worth $85 million in the international market, though most of the nation’s soyabeans is consumed locally, where it is used in the production of soyamilk and specially formulated foods to help malnourished children (Omotayo et al., 2007). The international market for the product according to them is growing and sustainable. Nigeria has been steadily importing soyabeans meal and occasionally soyabeans since 1999, primarily from Argentina and the United States to augument the deficit in supply. For instance, the estimated demand for soyabeans in 2004, as reported by Omotayo et al., (2007), was 634,000 metric tonnes while the domestic supply stood at 386,864 metric tonnes. In addition, soyabeans crushers in Nigeria are operating below capacity and are unable to satisfy the growing demand for soyabean meal and oil. There is a domestic annual supply shortfall of about 100,000 tonnes for soyabeans meal and 300,000 tonnes for vegetable oil (Michael, 2011).
Furthermore, a study by Omotayo et al. (2007) shows that in the commodity chain for soyabeans marketing, middlemen play a significant role in the distribution of soyabeans from farmers’ field (the primary markets) to the processors. Two categories of middlemen were identified by them. They were those who bought directly from farmers, re-bagged, stored and transported to the feeder and central markets; and those who bought from these feeder and central markets and supplied to industrial processors. Marketing opportunities exist in Nigeria for exporters of soyabeans, soyabean meal, crude vegetable oil and value added soya-based food products. Some 140 soya-based food products have been developed for use in Nigeria. The market for soyabeans in Nigeria is growing very fast with opportunities for improving the income of farmers. Currently, SALMA oil mills in Kano, Grand cereals in Jos, ECWA feeds in Jos, AFCOT oil seed processors in Ngurore Adamawa State, Phinomar in Enugu, Hule and Sons in Benue and PS Mandrides in Kano all process soyabeans.
In order to ensure availability of food grains, the Federal Government of Nigeria had intervened in standardizing grain prices through agricultural price policy reformation. Other instruments used by the government as pointed out by Akpan and Udoh (2009) included input subsidies, establishment of National Strategic Grains Reserve (NSGR) Programme, ban on importation of rice and maize in 1985 and the liberalization of the economy through Structural Adjustment Programme (SAP) of 1986, among others. The National Strategic Grains Reserve (NSGR) was launched in 1988 to provide relief in times of national disasters, drought, food shortages and wars both locally and internationally. It was also established to provide a ready and accessible market for locally produced items through Buyers of Last Resort (BLR); and to maintain price stability and ensure food security (Egbuna, 2003). Despite all these efforts of government, producer prices of grains still fluctuate.
1.2. Statement of the Problem
Soyabeans, although consumed in few homes, is mainly produced for local and international markets. Most farmers do not produce this crop because of their inability to identify markets. The low participation of marketers in soyabeans as a result of its low household demand with high industrial demand could give rise to inefficiency in its marketing and a departure from the competitive market behaviour. While production has sustainably increased in some States, there is no information whether it is being marketed efficiently since the key players are very few. According to Adekunle, Ogunlade and Ladele, (2003), world production statistics acclaimed Nigeria the second largest producer of soyabeans in Africa after Zimbabwe and also, surprisingly, considered Nigeria a protein deficient country (Okuneye, 2002). Average consumption of animal protein in Africa is less than one quarter of what is consumed in Americas, Europe and Oceania, and represented about 17 percent of the recommended consumption level for all proteins (FAO, 2011). Evidence has shown that soyabeans carry twice the protein of meat or poultry and contain all eight essential amino acids needed for childhood development and is yet affordable, although its marketing defects may hinder its effective distribution.
There exists inadequate empirical information on soyabeans marketing that will enhance understanding and hence improvement of the operation of soyabeans markets in Nigeria. Moreso, the knowledge of marketing margin and pricing efficiency determine to a large extent marketing efficiency and integration (Negassa, 1994). In order to facilitate agricultural development process, analysis of pricing efficiency of foodstuff (soyabeans inclusive) is considered very pertinent and, it is expected that favourable pricing efficiency will stimulate more of the products concerned to be produced. The differences in climatic conditions among agro-ecological zones in Nigeria make grain production capacity of each State to differ; coupled with poor road network which results in high transfer costs for food market transactions among regions of the country. This makes it interesting to examine the degree of integration in soyabeans markets. Hence, according to Chirwa (2000), without spatial price integration of the markets, price signals will not be transmitted from food deficit to food surplus areas, prices will be more volatile, agricultural producers will fail to specialize according to a long-term comparative advantage and the gains from trade will not be realized.
Moreover, the fluctuating movement of agricultural prices can have ramifying effects on the economy. Over the years, food prices have been unstable and this has significant effect on general price level (Prakash, 2011). The instability of price is undesirable for both consumers and producers of grains as price fluctuation at the international and wholesale markets makes planning and decision-making process for both farmers and marketers difficult. Again, fluctuations in food prices even though not rapid may create pressure on wages, lower real incomes, raise inflation and unemployment and decrease demand for non-agricultural products. Therefore, the effect of price instability in marketing should be a matter of great concern. Thus, the study of price behaviour and price velocity is important for its contribution to an understanding of the phenomenon of rising cost of living.
Also, since availability of food is not entirely the problem of production; rather that of distribution and marketing (Ladele and Ayoola, 1997), it has become necessary to investigate the inherent constraints in soyabeans marketing. It is therefore logical to find out the factors that are responsible for the price hike of this important food and cash crop and the constraints marketers face that impede further innovation and production growth in the industry. Soyabeans production in Nigeria has been stymied by unfavourable market which often times results to cyclical gluts. According to Omotayo et al., (2007), unlike the marketing of other food crops in Nigeria, the soyabeans marketing chain appear simple but fragmented; it would seem that the business is in the hands of various middlemen who dictate local prices of soya grains and other soya based raw materials. And the local price of soyabeans tend to follow international trend adjusted for foreign exchange rate fluctuations. With the available evidence of increased soyabeans production in Nigeria in recent times as a result of increased general awareness of its ecomomic importance and government efforts through different agencies (FMAWRD, 2006), there is therefore a need to examine how this important crop is being marketed.
Over several decades, there have been various studies on prices of agricultural products in the aspect of price efficiency, integration and margin analysis all over the world and Nigeria in particular (Adekanye, 1988; Ali and Iheanacho, 2008; Balami and Bumba, 1995). Similarly, several studies that examined the marketing system of various agricultural commodities and its implications for agricultural and economic development in Nigeria have employed the structure- conduct- performance approach (Abalu, 1986, Adekanye, 1988, Okeke, 1997). But only few of these studies addressed soyabeans marketing. For instance, Akor (2010) worked on price differential and variability of wholesalers and retailers for selected crops and markets in Benue State. The work centered on the velocity of wholesale and retail prices of soyabeans, groundnut, maize and sorghum. Also, Osho, Akinleye & Akanni (2009) studied the relationship between farmers’ socioeconomic characteristics and size of plot of soyabeans planted. Available literature shows that limited researches were conducted along the costs, market margins, integration, pricing efficiency, price velocity and price spreads of soyabeans in Nigeria. Consequently, the following research questions have largely remained unanswered:
a) What are the variables that determine the volume of soyabeans in the market?;
b) What is the structure of the soyabeans market in the study area?;
c) What is the market share (costs and margins) of market participants?;
d) How efficient is soyabeans market in the study area?;
e) Are soyabeans markets in the study area integrated?;
You either get what you want or your money back. T&C Apply
You can find more project topics easily, just search
SIMILAR AGRICULTURAL ECONOMICS FINAL YEAR PROJECT RESEARCH TOPICS
» CHAPTER ONE INTRODUCTION BACKGROUND TO THE CASE STUDY The advent of computer technology has boost production of both domestic and industrial activitie...Continue Reading »
2. EFFECTS OF CAPITAL STRUCTURE OF SMALL AND MEDIUM SCALE AGRO-ENTERPRISES ON ACCESS TO MICROFINANCE BANKS CREDIT IN ENUGU STATE, NIGERIA» ABSTRACT The study evaluated the effects of capital structure of small and medium scale agro enterprises on access to microfinance banks credit in Enu...Continue Reading »
3. ECONOMICS OF SIZE IN IRRIGATED TOMATO (Lycopersicum esculentum Mill) PRODUCTION UNDER KANO RIVER IRRIGATION PROJECT (KRIP) PHASE I, KANO STATE, NIGERI...» ABSTRACT The broad objective of the study was to examine the economics of size in irrigated tomato production under Kano river irrigation project (KRI...Continue Reading »
4. THE APPLICATION OF COMPUTER TECHNOLOGY ON THE INVENTORY CONTROL SYSTEM AS A PRODUCTIVITY IMPROVEMENT STRATEGY IN NIYYA FARMS NIGERIA LIMITED KADUNA» CHAPTER ONE INTRODUCTION BACKGROUND TO THE CASE STUDY The advent of computer technology has boost production of both domestic and industrial activitie...Continue Reading »
5. PERFORMANCE OF FOREST MANAGEMENT COMMITTEES IN THE MANAGEMENT OF FOREST WOOD TREES IN CROSS RIVER STATE» ABSTRACT Out of all the forests and forest reserves in Nigeria that remained relatively undisturbed, significant portions of them have been lost in th...Continue Reading »
6. A COMPARATIVE PROFITABILITY ANALYSIS OF BROILER PRODUCTION SYSTEMS IN URBAN AREAS OF EDO STATE, NIGERIA» ABSTRACTBroiler production is carried out under different production systems and different production systems imply variations in cost of inputs andre...Continue Reading »
» ABSTRACT This study examined access to agro credit by farmers in Kaduna state. This study employed survey research methodology which covered the three...Continue Reading »
8. MARKET AGE, ENTERPRISE SIZE AND RELATIVE EFFICIENCY IN BROILER PRODUCTION IN IMO STATE OF NIGERIA» ABSTRACT The study focused on market age, enterprise size and relative efficiency in broiler production in Imo State . The main aim was to determine r...Continue Reading »
» INTRODUCTION 1.1. BACKGROUND OF THE STUDY Agriculture is concerned with the husbandry of crops and animals for food and other purposes. It is the foun...Continue Reading »
10. ECONOMIC ANALYSIS OF PLANTAIN PRODUCTION IN SAGBAMA LOCAL GOVERNMENT AREA, BAYELSA STATE, NIGERIA» ABSTRACT The study investigated the profitability and efficiency of plantain production in Sagbama Local Government Area of Bayelsa State, Nigeria. A ...Continue Reading »