Economic Analysis of Cassava Processing and Marketing Kogi State, Nigeria
ABSTRACT
This research work examined the economics of processed cassava products and marketing in Kogi East of Kogi State, Nigeria. Among other objectives the study sorts to: identify and describe different processing/marketing channels of selected the value added chain in cassava processing, and describe the constraints’ seriousness in cassava processing/marketing in the study area. A multistage purposive and random sampling technique was used to select 120 cassava processors/marketers who provided the relevant data for the study through a set of structured questionnaire administered to them. Descriptive statistics, multiple regression, profit function analysis and likert scale rating techniques were employed to analyse the data collected. Results of the study showed that, 66% of the respondents were of middle age between 31-50 years, predominantly females (73%). The majority (67%) of the respondents were married, 37% of the respondents had 5-10 years experience in processing/marketing, and 57% had large family size of about 5-10 persons. Also 55% of the respondents had between 4-6 persons of their family members directly assisting them in the processing/marketing activities. The study noted that about 50% of the respondents obtained capital from their personal savings while 54% of the respondents source their fresh cassava roots from the market. Additionally, 42% of the respondents had no formal education and 52% indicated that the initial capital they invested was between N20, 000 – N39, 000. The results also showed that majority (58%) of the respondents in garri processing adopted processing channel which comprised peeling-washing-grating- dehydration-fermentation and frying (referred to in the text as processing channel ‘1’) while majority (70%) cassava flour processors adopted the processing channel which comprised peeling-washing-soaking-sifting-dewatering-molding and drying (referred to in the text as processing channel ‘1’). For fufu processors, majority (88%) adopted the processing channel which comprised peeling-washing- soaking-fermentation-sifting-dewatering-boiling and molding (referred to in the text as processing channel ‘1’). On marketing channels, majority (60%) and (53%) of garri and cassava flour marketers adopted marketing channels which comprised packaging- transportation-wholesaling-retailing and final consumers (referred to in the text as marketing channel ‘1’) while majority (57%) of the fufu marketers adopted marketing channel which comprised packaging-retailing and final consumers (referred to in the text as marketing channel ‘3’). The socio-economic factors that influenced output of cassava products were sex, level of education, amount of initial capital invested, family size, marital status and age of the respondents. The study also found out that 79.9% of total variability in the output of garri enterprise was explained by the stated socio-economic factors which influenced output of the garri product. Meanwhile, 62.7% and 81.1% of cassava flour and fufu enterprises profit were explained by the same factors respectively. Thus, the null hypothesis which stated that socio-economic factors of cassava processors/marketers do not have significant effect on the output of cassava products processed and marketed was rejected for the three enterprises at the 5% level of probability. In the garri enterprises, the combined effects of all the variables and fixed inputs in the profit function explained 78.9% of the variation in the maximum variable profit while the combined effect of the variable and fixed cost in the profit function in cassava flour and fufu processing/marketing enterprises, explained 80.1% and 84.4% respectively of the variation in the maximum variable profit. The null hypothesis which stated that output and input prices do not significantly affect profit of garri, cassava flour and fufu enterprises was rejected at 5% level of probability. Lack of capital for expansion, irregular power and water supply, fluctuation in prices of output and irregular shapes stood out as the most challenging constraints to the respondents in the cassava processing/marketing activities. The study among other things recommmended, provision of finance and infrastructural facilities such as road and supply of water and electricity to reduce cost of processing/marketing of the cassava products.
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
Cassava (Manihot spp) is believed to have originated from Brazil and was introduced into West Africa countries by the Portuguese (Antonio, 2002). Benue and Kogi States in the north central zone of Nigeria are the largest producers of cassava in the country (IITA, 2004). Cassava’s comparative advantage compared with other food crops lies in its efficient production of cheap food energy. In addition, cassava is available all year round as well as tolerant to extreme conditions. These qualities contribute in alleviating African food crises (Nweke, Dixon, Asiedu and Folayan, 1994). This accounts for why Philip (2005) referred to cassava as the “famine security crop”.
Studies have shown that cassava contains substances known as cyanogenic glucosides, which break down into hydrocyanic acid (HCN) after the crop must have been harvested. This acid makes raw cassava very poisonous for human consumption. Processing is therefore important as a means of removing this poison by reducing its toxicity and increasing its palatability (Adegeye, 1999). After harvest, cassava roots are processed to stop physiological and microbial spoilage, reduce the cyanogenic glucosides content and convert the roots to other products that are more acceptable (Asiedu, 1989). Major products derived from cassava are cassava flour (alibo), fufu, garri, starch, tapioca, sliced cassava chips (abacha) and other cassava-based products.
Rural based cassava processing activities offer opportunities in terms of employment. It is estimated that 60 percent of the labour force in Sub-Saharan Africa are gainfully employed in small-scale food processing enterprises and majority are women (ITDG, 2005). Cassava may in fact hold the key to fully land use intensification in Africa (Enete, 1995). This is because population increase is often accompanied by switch to crops previously thought to be inferior due to protein, essential minerals and vitamins content but with higher yield as is the case with Africa where cassava has ousted the traditional yam (Griggs, 1980). The market for cassava can be divided into two categories, the traditional food-oriented market and the new emerging market for industrially processed cassava. The vast majority of the cassava grown in Nigeria is processed and sold through the traditional market channels which are fairly well known. In 2002, cassava suddenly gained national prominence following the pronouncement of a Presidential Initiative. The intent of the Initiative was to use cassava as the engine of growth in Nigeria. To put Nigeria in the global context for competition, the country needs to upgrade the use of cassava in primary industrial manufacturing of starch, ethanol, chips and flour in order to provide an industrial base for further diversification of its national economy. Cassava can be used to improve rural and urban income and development in Nigeria if investments in the downstream sector or the industry are made more effective through value addition.
The value chain describes the full range of activities which are required to bring products from conception, through different phases of processing involving a combination of physical transformation and the input of various producers, before delivery to the final consumers and final disposal after use (Kaplinsky and Moris, 2000). Most of the processors prefer to offer the commodity to the market without bearing the cost involved in value adding because of the uncertainty in the market. The continuous fluctuation of prices of final goods in the market poses a serious problem to processors who are interested in adding value to their products.
Figure 1.1 illustrates a simple value chain.
Source: (Kaplinsky and Moris 2000)
Figure 1.1 Four links in a simple value chain
Cassava remains a major source of food and income for a large population of the people in Eastern part of Kogi State who are involved in its production, processing and marketing. It is in realization of this fact that the Federal and Kogi State Governments are partnering to establish a three billion naira multi-purpose cassava processing industry in the State (Graphics News, 2008). However, for the purpose of this research work, the cassava processors are also the marketers because that was the usual practice in the study area.
1.2 Problem Statement
The demand for cassava products is on the increase as Nigeria’s population continues to grow rapidly without control. Bridging the rapidly increasing demand and supply gap in cassava processing and marketing calls for value addition as the products are being processed. The poor storage life of cassava has also given rise to a number of investigations which are designed to prolong the shelf life, so as to increase the market value and hence increase the income of the processors and marketers (Alinor, 2002) and (Nweke, 2004).
Meanwhile, poor processing is one of the major factors that cause post harvest loss in the world with special emphasis on developing countries like Nigeria (FAO, 1995). Nigeria produces more cassava than any other country in the World (Nwosu 2006). Its production in 2006 was put at about 46 million metric tons a year, grown on a total land area of about 3.85 million hectares with an average yield of about 11 tons per hectare (FAOSTAT, 2008). Moreover, available data revealed that Nigeria lags behind in the world export market in cassava production as it contributes a very small proportion of about 0.001% of the world export market as against Thailand which accounts for 50%. This variation in market share could be as a result of small value addition among cassava processors and marketers in Nigeria. The differences in the cost of production and processing between 104 US dollars/ton in Nigeria and 21 US dollars/ton in Thailand reflect the challenges in cassava processing and marketing in Nigeria (Oyewole and Phillip, 2006).
The state of the products for marketing depends on individual consumers and the purpose for which it is desired. Generally, there are many forms into which cassava tubers are processed before marketing them in the study area, for instance, cassava could be processed into garri, cassava flour and fufu which are very common in the study area. There is a large opportunity for cassava processors and marketers to earn reasonable incomes and live comfortably, if enough values are added to cassava. However, poverty still thrives among these farmers. The odds against maximizing the utility of cassava in Nigeria are many. Majority of the processing areas still lack good roads and communication networks. The bulk of the processors travel long distances to the nearest market either in the urban or rural areas to dispose off their produce and cost of transportation is still high, this further reduces the profit margin of processors (Oyewole and Phillip, 2006).
Although, some studies have been carried out on cassava processing and marketing such as Kaine (1995), Alinor (2002), Nweke (2004), Oyewole and Phillip (2006) among others, not much has been done to investigate the value added chain in cassava processing and marketing channels in the study area. Specifically, Kaine (1995) looked at the Economic Analysis of Alternative Cassava Processing Technologies; Alinor (2002): studied the economics of cassava processing in Nsukka Agricultural zone of Enugu state; Nweke (2004); worked on the challenges in the cassava transformation in Nigeria and Ghana; and Oyewole and Phillip (2006) studied Agro-Food chain and sustainable livelihood. This study is therefore aimed at identifying and describing different processing/marketing channels of the selected value added chains for different cassava products in the study area.
1.3 Objective of the Study
The broad objective is to study the economic analysis of cassava processing and marketing in Eastern senatorial zone of Kogi State, Nigeria. Specifically, the study will:
- describe the socio-economic characteristics of cassava processors/marketers in the study area.
- identify and describe different processing methods and marketing channels of the selected value added chain in cassava processing in the study area.
- examine the socio-economic factors that influence output of the selected cassava products in the study area.
- identify factors that influence profitability of the selected cassava products in the study area.
- describe the constraints of value chain addition and analyze degree of the constraints’ seriousness in cassava processing/marketing in the study area.
- make recommendation based on the findings that will be useful for policy formulation in cassava processing/marketing enterprises.
1.4 Hypothesis of the Study
(i) Ho: The socio-economic factors of cassava processors/marketers do not have significant effect on the output of cassava products processed and marketed.
(ii) Ho: The output and input prices do not have significant effect on the cassava products profitability.
1.5 Justification of the Study
The study on economic of processed cassava products and marketing is necessary because it will bring to focus problems and difficulties encountered by these cassava processors in the process of adding value to their cassava products. More importantly, the study will provide information on factors that influence level of profitability in value addition which will enhance agricultural productivity and efficiency. The study will also identify constraints militating against value addition in cassava processing and marketing in the study area with a view to making useful recommendations towards enhancing productivity of processors in the study area.
Also, with the proposed establishment of a multi-purpose cassava processing industry in Kogi State through a partnership agreement between the Federal and Kogi State governments, a study on the Economic of processed cassava products and marketing in part of the State is timely. It will be available as reference material for the planning and execution of the proposed project. The findings from this study will be of immense benefit to other prospective investors in the cassava processing industry, policy makers, researchers and processors. A study of this nature would therefore equip the processors/marketers of cassava with the knowledge of the market efficiency and profitability of the value added activities. The study will also be a useful reference point to research scholars interested in this topic and other related topics. A study of Economic of processed cassava products and marketing in Kogi East will definitely enhance empirical profitability decision in the enterprises.
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