ABSTRACT
In this study, we examined factors that may affect the marketing performance of rice farmers’ cooperative members in Enugu and Ebonyi State in Nigeria. Specifically the study examined the effect of access to finance, access to market, market availability, farm size, storage facility, and farming experience on market performance of rice farmers’ Cooperatives in Ebonyi and Enugu State; and to ascertain the relationship between market participation and competitive advantage. We adopted survey research design. The total population was 962 rice farmers who are members of rice farmers’ cooperative in Ebonyi (Abakaliki and Ikwo) and Enugu (Uzo Uwani and Isi-Uzo). Taro Yamane formula was adopted to select 283 sample size. However, from the 283 copies of the questionnaires administered, 266 copies were completed and returned. Multistage sampling techniques were adopted for the selection of respondents. The data were analysed with descriptive statistics such as frequency and percentage distribution. The hypotheses were tested with a simple regression model and correlation coefficient model. The descriptive results, 75.19% and 74.06% of the respondents strongly agreed that practical farming experience of rice farmers cooperative gives competitive advantage over their competitors and knowledge acquisition enhances cost advantage. The result revealed that; cost reduction has significant effect on market efficiency of rice farmers; access to market has significant effect on customer patronage. Market availability has positive and significant effect on customer loyalty to rice farmers. Farm size has significant effect on sales growth of rice farmers. Storage facility has significant effect on product availability. Farming experience has significant effect on competitive advantage of rice farmers. There is positive relationship between market participation and market share of rice farmers. It was recommended that, rice farmer cooperative societies should be strengthened by government in the study area and awareness campaigns should be conducted to encourage farmers who are not members of any farmers’ cooperative society join.
TABLE OF CONTENTS
Title Page i
Declaration ii
Certification iii
Dedication iv
Acknowledgements v
Table of Content vi
List of Tables ix
List of Figures xi
Abstract xii
CHAPTER 1: INTRODUCTION
1.1 Background of the Study 1
1.2 Statement of the Problem 5
1.3 Objectives of the Study 8
1.4 Research Questions 8
1.5 Research Hypotheses 9
1.6 Significance of the Study 10
1.7 Scope of the Study 11
CHAPTER 2: REVIEW OF RELATED LITERATURE
2.1 Conceptual Framework 13
2.1.1 Concept of marketing performance 14
2.1.2 The importance and benefits of marketing performance to rice farmers 16
2.1.3 Marketing performance decisions: simultaneous or sequentially made 17
2.1.4 Factors affecting probability of marketing performance 19
2.1.5 Marketing efficiency, farmers transaction costs and marketing
performance 21
2.1.6 Factors related to market participation by farm households and traders 22
2.1.7 Intensity of rice farmers’ and marketing performance 24
2.1.8 Factors affecting farmers’ participation in markets 27
2.1.9 Strategies for improving market participation of farmers 40
2.1.10 Evolution of rice production in Nigeria 48
2.1.11 Marketing analysis of locally produced rice in southeast Nigeria 50
2.1.12 Relationship of rice value chain and marketing performance 52
2.2 Theoretical Review 56
2.2.1 Trade theory (Ricardo, 1937) 56
2.2.2 Market participation approach (Heckman 1979) 57
2.2.3 The collective action theory (Meinzen-Dick & Di Gregorio, 2004) 58
2.2.4 Utility maximization theory (Marshall, 1927) 62
2.2.5 Market analysis theory 62
2.3 Review of Empirical Studies 63
2.4 Summary of and Gap in Literature 73
CHAPTER 3: METHODOLOGY
3.1 Research Design 73
3.2 Area of the Study 73
3.3 Population of the Study 75
3.4 Sample and Sampling Techniques 76
3.5 Determination of Sample Size 76
3.6 Method of Data Collection 77
3.7 Description of Research Instrument 78
3.8 Validity of the Instrument 78
3.9 Reliability of Instrument 78
3.10 Method of Data Analysis 79
3.11 Model Specification 79
CHAPTER 4: RESULTS AND DISCUSSIONS
4.1 Questionnaire Administration 83
4.1.1 Names and location of rice cooperatives 83
4.1.2 Socio economic characteristics of the respondents 85
4.1.2.1 Gender 85
4.1.2.2 Age 85
4.1.2.3 Marital status 86
4.1.2.4 Educational qualification 87
4.1.2.5 Household size 88
4.1.2.6 Labour (Participants in farm work) 88
4.1.2.7 Years of experience 89
4.1.2.8 Average monthly income 90
4.1.2.9 Quantity of rice produced 90
4.1.2.10 Quantity of rice sold 91
4.2 Data Presentation 92
4.3 Test of Hypotheses 99
4.3.1 Test of hypothesis 1 99
4.3.2 Test of hypothesis 2 100
��.3.3 Test of hypothesis 3 102
��.3.4 Test of hypothesis 4 103
4.3.5 Test of hypothesis 5 104
4.3.6 Test of hypothesis 6 105
4.3.7 Test of Hypothesis 7 107
4.4 Discussion of Findings 108
CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 Summary of Findings 112
5.2 Conclusion 114
5.3 Recommendations 115
5.4 Suggestions for Further Research 116
5.5 Contribution to Knowledge 116
References 118
Appendices 128
LIST OF TABLES
3.1: List of registered rice farmers cooperatives in Ebonyi and Enugu State 75
4.1: Questionnaire administration to rice farmers in Ebonyi and Enugu states,
Nigeria 83
4.2: Distribution of respondents according to names and location of cooperative 84
4.3: Distribution of Respondents according to gender 85
4.4: Distribution of Respondents according to age 85
4.5: Distribution of respondents according to marital status 86
4.6: Distribution of respondents according to educational qualification 87
4.7: Distribution of respondents according to household size 88
4.8: Distribution of respondents according to labour 89
4.9: Distribution of respondents according to years of experience 89
4.10: Distribution of respondents according to average Monthly Income 90
4.11: Distribution of respondents according to quantity of rice produced 91
4.12: Distribution of respondents according to quantity of rice sold 91
4.13: Effect of access to finance on marketing efficiency of rice farmers 92
4.14: Effect of access to market on customer patronage of rice farmers 93
4.15: Effect of Market availability on customer Loyalty 94
4.16: Examine the effect of farm size on sales growth 95
4.17: Effect of Storage facility on product availability 96
4.18: Effect of farming experience on competitive advantage of rice farmers 97
4.19: Relationship between market participation and market share growth 98
4.20: Simple regression analysis result on effect of access to finance on
market efficiency of rice farmers 99
4.21: Simple regression coefficients result of access to market on customer
patronage 100
4.22: Regression analysis of effect of market availability on customer loyalty 102
4.23: Simple Regression Result on effect of farm size on sales growth of rice farmers 103
4.24: Simple regression result on effect of storage facility on product availability among rice farmers 104
4.25: Simple regression result on effect of farming experience on competitive
advantage of rice farmers 105
4.26: Pearson Correlation coefficient analysis of the relationship between market participation and market share 107
LIST OF FIGURES
1: Operational/ conceptual framework showing the relationship between
determinants of market performance 13
CHAPTER 1
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Agriculture throughout the world remains the most important human occupation for food security and household welfare (Goetz, 2012). Despite all the advancement in technology in recent years, it is still the only source of food, fiber and other products, whose synthetic substitutes are often not good as the natural products. However, focusing on agricultural production alone without incorporating market participation or commercialization of output into the production process has always affected the rate of agricultural growth and development. Thus, market performance among farmers has long been on the research agenda of agricultural marketers in both developed and developing nations (Barrett, 2017). In sub-Saharan Africa, market performance has taken renewed urgency as policy makers seek ways of stimulating agricultural growth through the pathway of commercializing and marketing of agricultural products (Goetz, 2012). Meanwhile, market performance implies scaling up of agricultural production from subsistent level to commercial level which is the key strategy for promoting accelerated modernization, sustainable marketing growth and development and, hence, poverty reduction and job creation (Ndegwa, 2016).
In Nigeria, and other developing countries, rice farmers and marketers are facing challenges while trying to embark on commercial agriculture. Those challenges may be reflected in the prevailing socioeconomic conditions which made access to markets and productive resources difficult (Sharma & Wardhan, 2017). More so, most market oriented rice farmers are residing in the hinterlands of the country where access to efficient marketing services, marketing infrastructure and finance are difficult. In addition to deficit marketable surplus, rice farmers’ decision to take part in the market are influenced by socio-economic and farm specific characteristics such as household size, farm size, yield/output, access to market, access to credit, age, total land size, educational level of farmers, group participation, market information and contractual agreement, household labour, inadequate transport and storage facilities.
More so, the difficulties from socioeconomic factors such as age, gender, marital status, educational level, non-farm income, farming experience, poor output quality and high cost of inputs, high transportation costs, high market charges and unreliable market information some of the farmers cannot cope with this high-income agricultural market (Udoma, 2012). Thus, the market performance status of the farmers is relatively low. To meet expanding demand and set opportunities for income generation in rural economy, it is necessary to link smallholder and market oriented large scale farmers strongly with market. The necessary linkage between the farmers and market will increase the purchasing power for food and reallocate incomes to high valued non-food agribusiness sectors and off-farm enterprises (Davis, 2016).
Studies from Babatunde and Oyatoye (2009) and Asemota (2012) have shown that the return on investment by most market oriented rice farmers is quite poor. Agbaje (2015) also confirmed this statement by pointing out that, market oriented farmers complained of low and unattractive prices which do not cover their cost of production which may limit market participation level (Makhura, 2011).Nevertheless, market performance among rice farmers is an ultimate result of agricultural commercialization. It requires access to emerging high-income agricultural markets for buying input and selling output (Balint, 2013). Ndegwa (2016) argued that farmers’ market participation is influenced by factors which are both external (such as input and output markets, institutions, cultural and social factors, labour opportunity costs) and internal (natural capital) to the farmers’ socio-economic environment (Berhanu & Moti, 2010).
However, the demand for rice in the current expanding market has provide opportunities for rice producers and marketing cooperatives and individuals. Thus, improving access to markets of rice entrepreneurs can help them benefit from the rapidly growing demand for grains since, International Arable Crop Research Institute in USA (IACRI, 2013) have identified that encouraging market participation of smallholder farmer is a major pathway for getting rural people out of poverty and improving their food security as grain contribute to the livelihoods of more than two-thirds of the world’s rural poor (Holloway, 2012); but uncertainties of market condition and socioeconomic factors in most cases limit agropreneurs from participating actively in commercialization of outputs per farming season (Nnamdi, Kalu & Ikenna, 2008). Increasing market performance among farmers has the potential to lift them to better income levels through increased productivity and surplus production. Thus, there is nowhere in the Nigerian agricultural sector were increase in market performance are sought than in rice sub-sector as the government endeavors to promote the crop’s commercialization and to tap into the international or regional market has increase extensively within the past one decade (Berhanu & Moti, 2010).
In effect, farmers’ social networks like rice cooperative societies, farmers’ groups and others social organizations have played a crucial role in farmers’ market participation decision-making, through mechanisms such as information diffusion, knowledge sharing, cooperation, solidarity and social interaction. A common feature of local rice farmers is their low participation in the markets due of a range of social constraints and barriers such as poor transport and storage infrastructures, weak banking system (lack of credit and insurance markets), non-competitive situations and inadequate market information. Most of these small-scale rice farmers face serious financial and cash flow difficulties. They are therefore very often forced to sell immediately after the harvest while prices are lower (Aju, Labode, Uwalaka & Iwuanyanwu, 2013). Moreover, storage infrastructures are more often inefficient and as a result, farmers are unable to defer sales until prices rise, generating additional losses. Collective action from cooperative societies is often proposed as a strategy to reduce the risks of market participation. To reverse this situation, rice farmers have to organize themselves and practice bundled sales. Conversely, rice farmers’ ability to participate effectively in the market is most often hampered by personal, cultural and institutional constraints. According to Ajani and Igbokwe, (2012) farmers produce according to their income-objectives (anticipation income).
In most of the developing countries, rice is considered as one of the most important food crop. It is one of the major staples which can provide a nation’s population with the nationally required food security minimum of 2,400 calories per person per day (FAO, 2014). The crop is commonly consumed even as a food crop for household food security, marketed and commercialized for the welfare of farmers and the marketers (Ihere, 2009). Since the second half of the 20th century till date, the relative importance of rice has slowly shifted from developed to developing countries although, rice production sector are still being dominated by smallholder farmers (Ohen, Umeze & Cobham, 2014).
Rice (Oryza sativa) is one of the crops being promoted for commercialization and diversification by the Nigerian government. The crop is promoted because of its economic value for household consumption, increase market value for welfare of farmers and its increase of the gross domestic product at the national level, it is the most important crop before maize and wheat (Musa et al., 2014). The nature of rice market competitiveness in the global food market has raised concerns among agriculturist, researchers, economist and policy makers about the need and importance of rice farmers in market participation. This is particularly so because, market participation ensures continuous survival, growth and profitability of small holder rice farmers, and it has heightened the need for more competitive strategies to be developed for growth of smallholder rice farmers. This tends enhance the welfare and livelihood of small holders’ farmers (Kayode & Raphael, 2015).
Furthermore, rice farmers contribute enormously towards food security, equitable distribution of income and linkage creation for economic growth. And market participation of farmers plays a key role in the process of agricultural development and in stimulating and extending development opportunities and the wellbeing of the farmers. The increase in production of food crops requires effective demand from outside the farming area in the form of population growth or demographic change (Ohen et al., 2014). Such demand increases commodity prices which in turn spiked total turnover. The importance of markets to small and medium farmers entails several facets: (a) households derive benefits such as income, wellbeing and open opportunities for rural employment and (b) marketing activities such as processing; transportation and selling provide avenues of employment for smallholder farmers willing to exit the farming sector (Mugera, 2012).
1.2 STATEMENT OF THE PROBLEM
Agricultural marketing activity is one of the principal economic occupations in the world, as it is the main source of income and employment for majority of the world’s population in rural areas. Market oriented Farmers contribute to food security, equitable distribution of income, and linked wealth creation for economic growth. Nonetheless, the performance rate of farmers in the efficient rice marketing remains low due to various constraints. However, market oriented farmers are facing constraints in terms of physical access to markets and lack of market information. Market oriented Farmers involved in traditional food crops generally depend on informal markets due to weak or lack of linkages with formal markets. Fundamentally, most of the farmers are in remote areas and are characteristics by poor transport facilities and market infrastructure leading to high transaction cost. In addition, most rice farmers lack reliable market information as well as information on potential exchange partners. These may be as a result of their small surpluses in production, high exposure to risk and transaction costs (Nyein, Soojung & Sang, 2018).
In addition, most rural farmers sell their produce mainly at their farm gate and in village markets. Their decisions on the amount of output to sell are mainly influenced by marketing information, produce prices, and distance to the market. Economic liberalization has provided opportunities for farmers to diversify their products and take their surplus to nearby markets. However, one drawback regarding some farmers is that they lack marketing knowledge and as a result, most of the crops are sold with lower prices at their farm gate or in local markets. Limited access to guaranteed markets for their produce and for the acquisition of inputs is another major problem the small farm holders confront. Countries with the highest portion of smallholder farmers are recognized as low-income countries (Nyein, Soojung & Sang, 2018). In Sub-Saharan Africa, more than 60% of the farm households have less than 1ha of farmland, and more than 80% of the farm households have less than 2 ha of farmland. Thus, it is necessary to take actions to increase economic activities of smallholder farmers so that they can raise competitiveness.
In the Southeastern part of Nigeria, like Ebonyi State, Enugu State among others, large percentage of the inhabitants are farmers. Specifically, 68.1% of the farmers are producing rice, with a large portion of small-scale farms that do not exceed 5 ha (Ohen et al., 2014). Therefore, studying the market performance of rice farmers in Ebonyi and Enugu States can provide useful implications for the State and others in country with similar circumstances and characteristics. In addition, Johnson and Mathew (2014) added that rice farmers’ market participation may be determined by the literacy level of the head of household and household’s market orientation. The literacy level of rice entrepreneur may also have effect on the level of participation in the market as it determines how the farmer makes marketing decisions and interprets market signals, proportion of output to be sold in order to promote both micro and macro wellbeing (Ohen, Umeze & Cobham, 2014). The distance to the market also influences both the decision to participate in the market and the proportion of output that is sold. Hill and Benett (2015) opined that large scale rice farmers may sell their produce at distant markets given that they can afford high transport costs as compared to smallholder counterparts (Ndegwa, 2016).
Nevertheless, there are some existing studies related to this topic understudy. For instance, Thomas et al., (2018), Ohen et al., (2014) revealed that, large quantity of agricultural produce like rice is often lost after production due to spoilage and inability to access the markets. This is mainly because, most of the farmers are who are faced with wide range of technical, socio- economic and institutional factors influencing marketing of their output. Whereas the marketing infrastructure is poorly developed, smallholder farmers lack supportive organizations like cooperative societies which may represent and serve them with marketable information. In spite of the role rice plays in human life and its effect on the economic development of Nigeria, researchers have tended to ignore scholarly investigations on the constraints and challenges militating against marketing of locally produced rice. It is only when such studies are conducted that solutions can be provided to both rice farmers and marketing cooperatives on the appropriate and ethical ways of marketing rice to their esteemed customers profitably. This study therefore, investigated those factors that affect marketing performance of rice farmers’ cooperatives in Ebonyi and Enugu States of Nigeria and to what extent the factors affected them which previous studies also did not capture.
1.3 OBJECTIVES OF THE STUDY
The broad objective of the study was to investigate those factors that affect marketing performance of rice farmers’ cooperatives in Ebonyi and Enugu States of Nigeria. The specific objectives were to:
i. examine the effect of cost control on marketing efficiency of rice farmers cooperatives in the two selected States of Nigeria;
ii. examine the effect of access to market on customer patronage of rice farmers and cooperative in the selected States of Nigeria;
iii. determine the effect of market availability on customer loyalty for rice farmers cooperatives in the two States of Nigeria;
iv. determine the effect of farm size on sales growth of rice farmers cooperatives;
v. determine the effect of storage facility on product availability;
vi. examine the effect of farming experience on competitive advantage of rice farmers cooperatives;
vii. ascertain the relationship between market participation and market share.
1.4 RESEARCH QUESTIONS
This study attempts to find answers to the following research questions;
i. How does cost control affects market efficiency of rice farmers’ cooperatives in the south-east of Nigeria?
ii. What is the effect of access to market on customer patronage?
iii. How does market availability affect customer loyalty?
iv. What is the effect of farm size on sales growth of rice farmers’ cooperatives?
v. What is effect of storage facility on product availability?
vi. What is the effect of farm experience on competitive advantage of rice farmers?
vii. What is the relationship between market participation and market share of rice farmers’ cooperative members in Ebony and Enugu States of Nigeria?
1.5 RESEARCH HYPOTHESES
The following hypotheses were formulated to guide the study:
H01: Cost control has no significant effect on market efficiency of rice farmers.
H02: Access to market has no significant effect on customer patronage.
H03: Market availability has no significant effect on customer loyalty.
H04: Farm size has no significant effect on sales growth of rice farmers.
H05: Storage facility does not have any significant effect on product availability.
H06: Farming experience has no significant effect on competitive advantage of rice farmers.
H07: There is no significant relationship between market participation and market share.
1.6 SIGNIFICANCE OF THE STUDY
The study focus on investigating those factors affecting marketing performance of rice farmers’ cooperative members in Ebonyi and Enugu States, Nigeria. Although several studies have been conducted on production, processing and marketing of agricultural products in Nigeria, most of the studies focused on efficiency of farmers in terms of resources use, structure, conduct and performance of market; but, this study specifically examined both operational and socioeconomic determinants of marketing performance of rice farmers in South-east part of Nigeria.
It is worth noting that, information on the extent to which factors influence the marketing decisions among rice farmers and marketing cooperative members in eastern part of Nigeria are lacking and not much research has been conducted to verify the major factors responsible for gloomy marketing performance of rice farmers, especially those in developing economies such as Nigeria. This work is an attempt to fill the research gap and contributes to the generation of evidence for policy makers to realize greater market performance may have effect on welfare of rice farmers and solve some operational and socioeconomic challenges in Nigeria. Hence, these types of studies are very essential for reliable assessment and formulation of appropriate rice marketing policies among farmers and marketing cooperatives.
The study would be of immense benefit to the following groups:
To rice farmers and cooperative, the findings and recommendation of this study will address the extent by which socioeconomic status affects their level of market participation and how it affects output efficiency.
To policy makers and economic planners, the findings and recommendations of the study will help them in formulate policy that will favour rice farmers with different operational and socio-economic categories and policy that will reduce the problem encounter in market participation process, also the study will act as a guide to government by helping them to put necessary measures in order to encourage rice production and marketing, thus provide necessary incentives to increase their market performance, intensity to sale output and profitability at large.
Theoretically, researchers and students interested in similar field of study in future will find this work as a useful conceptual guide and reference material. Finally it will be useful to any researcher who wishes to carry out related study in future as the information and data provided will be helpful. It will also justify the ground that it will serve as a frontier of knowledge to upcoming researchers who are willing to carry out similar research work. Finally, rice farmers who are not members of cooperative societies would see the need to join considering numerous advantage therein especially in the areas of financing and sales growth.
1.7 SCOPE OF THE STUDY
The study investigates those factors of marketing performance of rice farmers’ cooperatives in Ebonyi and Enugu States of Nigeria. Conceptually, the study examined the effect of cost reduction on market efficiency; examine the effect of access to market on customer patronage; determine the effect of market availability on customer loyalty; determine the effect of farm size on sales volume of rice farmers; determine the effect of storage facility on product availability; examine the effect of farming experience on extent of market growth of rice farmers; and ascertain the relationship between market participation and competitive advantage. Geographically, the study was carried out in Ebonyi and Enugu States of Nigeria, which are some of the most rice producing States in Eastern part of the country. They also have functional rice farmers’ cooperatives which formed basis of this study.
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