Consumers Preference And Willingness To Pay For High Iron Sorghum Among Rural Households In Jema’A Local Government Area, Kaduna State
ABSTRACT
In Nigeria sorghum has become the second most important staple food after maize and its consumption continues to increase with population growth, urbanization and changes to consumption habits. Even though sorghum continues to forms a major part of the Nigerian diet, high iron sorghum is not largely patronized. A survey of 400 sorghum consumers was conducted in Jema’a LGA, Nigeria to ascertain consumer preferences and willingness to pay for high iron sorghum, as a basis for quality improvement of local sorghum. There is little information about the preferences of consumers toward the quality characteristics of this staple. Consumer analysis was undertaken on preference for sorghum consumption in Nigeria with the aim to study which attributes of sorghum consumers valued, The specific methodological approach employed was Choice Experiment (CE) Technique which is used to evaluate non-market goods by eliciting people`s stated preference for different options in a hypothetical setting. It is capable of eliciting respondent preferences for new products and outcomes that do not currently exist in the market place. The study also involves consumer Willingness to Pay (WTP), which is defined as the maximum value of money that an individual contributed to equalize utility. The findings suggested that the most important attribute for sorghum was food safety, followed by aroma and length of grain. Consumers were willing to pay premium psorghums for the demanded attributes. The result of the analysis shows very useful information regarding consumer demand that can uniquely assists Nigeria policy makers, particularly the government and farmers, in developing new domestic sorghum production and marketing strategies. The study therefore recommends that efforts to improve sorghum production in Nigeria must therefore aim to introduce these desirable attributes into breeding programmes to make local sorghum attractive to consumers.
CHAPTER ONE
INTRODUCTION
1.1 Background of the study
Sorghum (Oryzasativa, L; Oryzaglaberrima, Steudel) is one of the world‘s most important food crops and serves as a staple food for a large percentage of the world‘s population, especially in India, China, other parts of Asia, and Africa (Zhou et al., 2002). It is ranked as the world‘s number one food crop (Itani et al., 2002). Sorghum is a commodity of strategic importance to Africa and has become the fastest-growing food source to both rich and poor households (Nwanze et al., 2006). According to Tomlins et al., (2005), sorghum has become a staple in Nigeria and much of West Africa where it serves as an important convenience food for urban consumers. Sorghum has become a major staple in Nigeria in recent times although the crop has been cultivated for several years. It is an important food for both rural and urban dwellers, and is gradually taking over from traditional, mainly root and cereal crops, staples. Among cereals in Nigeria, the per capita consumption of sorghum is second to maize (SRID-MoFA, 2009).
Consumption of sorghum in Nigeria has increased tremendously over the last few years and this is mainly as a result of increased urbanization, population growth, industrialization, income growth, and the relative ease with which it can be cooked and according change in consumer preference (WARDA, 2008). Between 1999 and 2008 sorghum per capita consumption in Nigeria increased from 17.5kg to 38.0kg. By 2018 the figure is estimated to grow to 63kg as a result of rapid population growth and urbanization (METASIP, 2009).
Sorghum consumption in Nigeria has increased because it has become part of the main diet in every Nigerian home due to the convenience of its preparation and suitability for favoured dishes (Asuming-Brempong and Osei-Asare, 2007). In addition, increasing numbers of fast food vendors in the major cities in Nigeria have also increased the demand for sorghum. They indicated that sorghum has become a major competitor of staple foods in Nigeria. However, the increasing demand for sorghum (both in quantity and quality) far outweighs local production. Over the past few years sorghum production in Nigeria has stagnated around 235,000 metric tons of milled sorghum with a selfsufficiency ratio of 30 percent (SRID-MoFA, 2009). To make up for the shortfall, greater part of sorghum consumed in Nigeria is imported.
The need to increase production and improve the quality of high iron sorghum to make it more competitive with imported sorghum cannot be over emphasized. Due to self-sufficiency considerations the sorghum sector should not be neglected. In addition, it has a potential to provide employment opportunities especially in the rural areas, hence easing the socio-economic pressure in the urban areas. Consequently, the government has aggressively carried out various programs and plans in order to increase sorghum production (FAO, 2006). The National Sorghum Development Strategy (NRDS) was therefore introduced in 2008 to double local sorghum production and curb the negative impact of sorghum importation on Nigeria‘s economy. Since 2001, there have been about 16 completed and on-going sorghum-related development projects implemented by MoFA and some donor partners with the objective of doubling sorghum production in Nigeria (SRID-MoFA, 2009).
Notwithstanding the government effort to increase sorghum production in Nigeria, consumer preference plays a dominant role in localization and adoption of sorghum varieties. The market of sorghum in Nigeria is growing as the number of people willing to eat sorghum and pay premium psorghum is increasing (Tomlins, 2005). The future of local sorghum therefore will, to a large extent, also depend on consumer preferences and their motive for paying extra psorghum for locally grown sorghum. Thus, a consumer-oriented approach to understanding the market for local sorghum varieties is important for pursuing better management of local sorghum farming. It is also important to understand consumer decision-making regarding local sorghum produced and seek strategies about how consumption can be promoted.
In Nigeria, the objectives of sorghum breeding programs have been concentrated primarily on improving yield and resistance characteristics, such as, pest and diseases, drought and salinity (JIKA, 2007). Consumer preferences and willingness to pay in the rapidly growing urban markets in Nigeria are almost undocumented (Tomlins et al., 2005). Most farmers and merchants intuitively understand the preferences of their immediate customers, but they lack information on the preferences of new clientele in distant cities. Currently, producers are struggling with issues of market access of local sorghum and this can be answered through producing sorghum varieties, which meet consumer needs and preferences. In order for producers and government to follow an appropriate strategy regarding the marketing, certification and export of local sorghum varieties, consumer surveys are necessary. The study therefore tries to elicit characteristics of consumers‘ preferences and willingness to pay toward multiple attributes of local sorghum by conducting a Choice Experiment.
1.2 Problem statement
Sorghum has become an increasingly important crop in Africa, with imports into the continent accounting for more than a third of world trade in sorghum (FAO, 2006). Industrialization, urbanization, population growth, income growth and accordingly change in consumer preferences have over the past three decades drastically increased the demand for sorghum in West Africa (WARDA, 2008). High incomes in low income countries translate into high demand however, as income grows, consumer tastes and preferences change.
In Nigeria, sorghum has become an increasingly popular food as it is tasty and quick to cook. However, most of the sorghum eaten in the country is actually imported. High iron sorghum has failed to compete with imports because large scale local sorghum production has been weak and consumers especially, urban consumers have become used to the grain and sensory qualities of imported sorghum (Tomlins et al., 2007). One of the major challenges for Nigeria is therefore how to produce sufficient and affordable sorghum that suits the preferences of it fast growing and increasingly urbanized population (WARDA, 2008).
Over the years, several government programs have attempted to stimulate domestic sorghum production with the goal of addressing the increasing demand-supply gap and making Nigeria more self-sufficient in sorghum (METASIP, 2009). Importation of sorghum continues to increase currently reaching the tune of $200 million per annum. It is the government‘s objective to reduce sorghum importation by 30 percent by increasing local production of sorghum (Ministry of Trade and Industry, 2009).
Research on sorghum over the years has largely focused on new varietal releases, production and cultural practices, reduction in post-harvest losses, and improved storage technologies (AduKwarteng et al., 2003). Other studies have focused on explaining the growth of sorghum consumption (Tomlins et al., 2005). Little attention has focused on demand-driven or market research by investigating consumer preferences and willingness to pay for high iron sorghum. For instance, research has not focused on local sorghum varieties that Nigerian consumers prefer and at what quality levels but rather placed undue emphasis on high yielding varieties regardless of its market demand and appeal. Thus emphasized is been placed on production side rather than the consumption side.
Nevertheless, traditional marketing, which was characterized as ―production-oriented market‖, where farmers and processors had significant power in the past, now seems to be irrelevant.
Today‘s market has turned to a ―consumer-oriented market‖, where affluent consumers have more power to demand, especially in terms of quality, healthy and safety for their food consumptions (Henson et al., 2006). As the marketing process becomes more complex, identifying consumers‘ decision-making process when purchasing the sorghum is very vital for today‘s agricultural development. One of the determinants for consumers‘ decision-making is the attribute of the sorghum varieties. Jang et al., (2009) pointed out that food attributes has become a main criteria in the consumers‘ decision-making process and therefore have received much attention in the food marketing literature.
In general, quality attributes of sorghum products is largely determined by individual preferences. Rohr et al., (2005) supported the idea that food quality attributes are heterogeneous term and consumers‘ definitions of food quality are formed by individual preferences. Any interaction between a consumer and a sorghum product involves the consumer considering and evaluating a range of quality attributes in the sorghum. These attributes will contribute, in differing proportions, to the overall level of satisfaction derived from purchasing or consuming the product.
Some of the domestic sorghum varieties currently in Nigeria are Marshall, Ex-Baika, Aromatic Short, Basmati Pusa and Jasmine 85 (Diako et al., 2010). In order to promote the consumption of high iron sorghum, the quality characteristics should match those of the imported brands. There is, therefore, the need to have information on the consumer preferences as a basis for local sorghum production.
The issues discussed above raise a number of research questions especially concerning consumer preference for local sorghum in Nigeria. It‘s in the view of this that it has become essential to study and understand consumer preference and willingness to pay for locally grown sorghum.
1.3 Research Questions
- What are the most important attributes that consumers consider when purchasing sorghum?
- What are consumer‘s perceptions towards local sorghum?
- Are consumers willing to pay for the attributes of local sorghum varieties?
- What are the magnitudes of the effect of the sorghum attributes on consumer willingness to pay for the improved local sorghum?
- What are the roles played by consumer socio-demographics on preference for each of the attributes?
- What are the constraints to the local sorghum consumption in Nigeria?
1.3 Objectives of the study
The overall objective of this survey is to study consumer preferences and WTP for local sorghum attributes in Nigeria. The specific objectives of the study are;
- To find out the most important attributes that consumers consider when purchasing sorghum.
- Analyze consumers‘ perception towards local sorghum.
- Determine the premium consumers are WTP for the attributes of the local sorghum varieties
- Determine the magnitude of the effect of the sorghum attributes on consumer willingness to pay for improved local sorghum.
- To test the role played by consumer socio-demographics on preference for each of the attributes.
- To examine the constraints to local sorghum consumption in Nigeria.
1.4 Significance of the study
The Nigeria government sees agricultural development as one of the strategies toward economic diversification. It is one of the most important sectors because it provides food security in the country while having the potential to contribute greatly to the country‘s economy (SRID-MoFA, 2009).
Food self-sufficiency is an important agenda because Nigeria imports a large bulk of overall food requirement from foreign countries. Although sorghum is a major staple food for Nigerians, domestic or local sorghum production is still at an unsatisfactory level. Sorghum breeding programs in Nigeria have been concentrated primarily on improving yield and resistance characteristics, such as, pest and diseases, drought and salinity, reduction in post-harvest losses, and improved storage technologies (JICA 2007; IRRI, 2008). Other studies have focused on explaining the growth of sorghum consumption in Nigeria (Asuming-Brempong and Osei-Asare, 2007). Nothing had been written about consumers‘ preferences and willingness to pay for locally grown sorghum. The present study will fill this gap by providing a pioneering application of consumers‘ preferences and willingness to pay for high iron sorghum in Nigeria.
Why and how are consumers‘ preferences for sorghum variety traits relevant for today agricultural and modern technology adoption? According to the characteristic model developed by Lancaster (1966), consumers derive utility not from goods themselves but from the attributes they provide. Accordingly, this implies that consumers are maximizing their household utility by consuming their preferred variety attributes not by directly consuming the varieties embedding those preferred attributes. Hence, what consumers are looking for at the end of the day is variety attribute, and the demand for varieties can be considered as a derived demand revealed from consumers‘ preferences for variety attributes (Enneking et al., 2007). Therefore, understanding consumers‘ variety attribute preferences will be useful to predict the likelihood of survival of varieties embedding those attributes. This enables policy makers to identify varieties for which policy incentives are required. In agricultural research priority setting too, understanding farmers‘ and consumers‘ variety attribute preferences will serve as an input for developing varietal technologies with more chance to be adopted and be successful (Edilegnaw, 2004).
Better market information for sorghum producers will assist them in making better decisions to produce appropriate sorghum qualities and maximize their returns (Kingsey, 2001). Emerging products often require extensive research and development using innovative technology, food manufacturers want to ensure sufficient demand exists and that their return on investment will be justified.
The results of this study could help policymakers and marketers to make more informed decisions about consumer response to some important attributes and promotion of locally grown sorghum. For policymakers and marketers, estimates of the premiums that consumers are willing to pay for the locally grown sorghum attribute can guide promotion investment decisions and efficient fund allocation. For producers, the information contained in this study may help select most profitable marketing strategies. The need to understand consumers preferences and willingness to pay (WTP) for local grown sorghum varieties justifies undertaking this study.
1.5 Organization of the study
The study is organized into five chapters. Chapter one comprises of the background of the study which is followed with problem statement with research questions relevant to the study. Moreover, chapter one contains the objectives of the study followed by the justification of the study. Chapter two is on literature review which takes stock of what has already been written on the topic in terms of theories or concepts, scientific research studies and the overall goal of clarifying how the present study intends to address the gap silence or weakness in the existing literature.
The third chapter contains the methodology employed in this study. Here, the choice of the study area and sampling procedure as well as the data collection method are elicited. It also includes the theoretical framework and the empirical model employed. Chapter four deals with the analysis pertaining to the data collected and discussion of the outcome. The study therefore concludes with chapter five, and it is concerned with summary of the major findings of the study, the main recommendations and limitations of the study.
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