ABSTRACT
The study analysed economic of turmeric production in selected L.G.A’s of Kaduna and Benue state, Nigeria. Specific objectives were to examine profit activities of turmeric business in the study area, analyse technical efficiency of turmeric producers in the study area, determine the cost efficiency of turmeric processors in the study area, determine marketing efficiency of turmeric marketers in the study area and identify and analyse the factors faced by turmeric producers, processors and marketers in the study area. Purposive and simple random sampling techniques were employed to select 222 respondents during the 2019-2020 cropping season. Data for the study was obtained using structured questionnaire. Descriptive and inferential statistics such as mean, frequency percentages, gross margin, rate of return, stochastic frontier function, paired sample t- test and factor analysis were used to achieve the research objectives and hypothesis of the study. The result indicates that an average turmeric producer in Kaduna and Benue States was 38.15 and 46.6 years old, had 8 and 11 family members. Small scale turmeric production was profitable in the study areas with gross margin of N685,391.515 for Kaduna State and N 215,333.9286 for Benue State. The mean technical efficiency for Kaduna and Benue State was 0.28 and 0.49 which suggest that turmeric producers in the study areas were not technically efficient. The result also revealed that turmeric processors in the study areas were not cost efficient since both were operating above one. The result further revealed that 90% of turmeric distribution in Kaduna state was done by the retailers while 100% was also done by the retailers in Benue State. The market structure in both states had Gini Cofficient value above 0.35 which indicates that there was inequitable distribution of income among the respondents in the study areas. Major problems of turmeric production in the study areas include cost of labour, problem in selecting pesticide, financial problem, inadequate of government support, pest and diseases, high cost of pesticides, inadequate of patronage, availability of spurious chemicals in the market. Processing constraints include inadequate of government support, inadequate of buyers, inadequate of slicing machine, and inadequate of preservatives, inadequate of drying and packaging materials. Marketing problems include inadequate of market infrastructure, inadequate of remunerative price, non-availability of grading facility, transportation problem, inadequate of market information, inadequate of regulated market and large number of market intermediaries.
TABLE OF CONTENTS
Title Page i
Declaration ii
Certification iii
Dedication iv
Acknowledgements v
Table of Contents vi
List of Tables x
Lists of Figures xii
Abstract xiii
CHAPTER
1: INTRODUCTION
1.1 Background
of the Study 1
1.2 Statement
of the Problem 3
1.3 Objectives
of the Study 6
1.4 Statement
of Hypothesis 7
1.5 Justification
for the Study 7
1.6
Scope and limitation of the Study 8
CHAPTER
2: LITERATURE REVIEW
2.1 Conceptual
Framework 9
2.1.1 Productivity 9
2.1.2 Marketing 10
2.1.3 Concept of agricultural marketing 12
2.1.4 Value chain definition 13
2.2 Empirical
Review 15
2.2.1 Socio-economic characteristics of respondents 15
2.2.2 Allocative and technical efficiency 16
2.2.3 Cost and returns 21
2.2.4 Marketing channels 25
2.2.5 Constraints in turmeric production 30
2.3 Theoretical
Framework 35
2.3.1 Production function analysis 35
2.3.2 Efficiency measurement 36
2.3.3 Model specification of stochastic frontier function 39
2.3.4 Empirical
review utilizing the stochastic frontier approach 39
2.3.5 Profitability analysis 45
2.3.6 Gross margin analysis 45
2.3.7
Transaction cost theory 47
CHAPTER
3: METHODOLOGY
3.1 Research Design 49
3.2 The Study Areas 49
3.2.1 Kaduna
State 49
3.2.2 Benue State 51
3.3 Population of the Study 53
3.4 Sampling technique and sample size 54
3.5 Validation and reliability of instrument 56
3.6 Data
collection techniques 56
3.7 Data analysis 57
3.8 Analytical techniques 57
3.9 Model specification 58
3.9.1 Gross margin 58
3:9.2. Gini-cofficient 58
3.9.3. Stochastic frontier model 58
3.9.4 Factor analysis 62
3.10 Measurement of Variables 63
CHAPTER
4: RESULTS AND DISCUSSION 64
4.1. Socioeconomic
Characteristics of Turmeric Producers 64
4.2
Socioeconomic Characteristics of Turmeric Processors 66
4.3 Socioeconomic
Characteristics of Turmeric Marketers 69
4.4 Profitability
Analysis of Turmeric Production 72
4.5 Profitability
Analysis of Turmeric Processors 74
4: 6 Marketing
Channels and Structure of Turmeric 76
4.7 Structure
of Turmeric market in the Study Areas 76
4.8 Input-Output Relationship Small Scale
Turmeric Production in
Kaduna State 79
4.9 Technical Efficiency Estimates of Turmeric
Farmers in Kaduna State 83
4.10 Input - Output Relationship in Turmeric
Production in Benue State 85
4.11 Technical Efficiency Estimates of Turmeric
Farmers in Benue State 89
4.12 Estimation of Pricing Efficiency of
Turmeric Marketers in Kaduna
and Benue States 91
4.13 Input- Output Relationship of Small-Scale
Turmeric processing
in Kaduna State 92
4.14 Cost Efficiency Estimates of Turmeric Processors in Kaduna State 95
4.15 Input – output relationship in cost of
turmeric processing in Benue State 96
4.16 Cost Efficiency Estimate of Turmeric
Processors in Benue State 98
4.17 Factor
analysis was used to identify the Constraints Faced by Turmeric
Producers
in Kaduna State 99
4.18 Constraints
to Turmeric Production in Benue State 102
4.19 The
Constraints Faced by Turmeric Processors in Kaduna State 104
4.20 Constraints
Faced by Turmeric Processors in Benue State 107
4.21 Constraints
Faced by Turmeric Marketers in Kaduna State 110
4.22 Constraint
Faced by Turmeric Marketers Benue State 112
4.23 The
result of t test used to test hypothesis that says there is no
significant
difference in technical efficiencies 114
4.24 The result of t test used to test
hypothesis that says there is no
Significant
difference in cost efficiencies 115
CHAPTER
5: SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 Summary 116
5.2 Conclusion
120
5.3
Recommendations 120
5.4
Suggestions for Further Study 121
5.5 Contribution to Knowledge 121
References 123
Appendices 160
LIST OF TABLES
PAGE
1:
Socioeconomic characteristics of
turmeric producers in
Kaduna and Benue States 64
2: Socioeconomic Characteristics of
Turmeric Processors in Kaduna
and Benue
States 67
3: Socioeconomic characteristics of
turmeric marketers in
Kaduna
and Benue States 69
4: Profitability
analysis of turmeric production in Kaduna and Benue State 72
4.1: Rate of returns for turmeric production 73
5: Profitability
analysis of turmeric processors in Kaduna and Benue State 74
6: Marketing channel of turmeric in the
study areas 76
7: Gini-coefficient
for turmeric sales incomes by markets in Kaduna
State and Benue States 78
8: Maximum likelihood estimates for
parameters of the stochastic
frontier production model for
turmeric production in Kaduna State 79
9: Distribution
of respondents by technical estimates in Kaduna State 84
10: Maximum likelihood for parameters of the
stochastic production
frontier model
for turmeric production in Benue State. 86
11: Distribution
of respondents by technical estimates in Benue State 89
12: Estimation of pricing efficiency of
turmeric marketing in
Kaduna and Benue States 91
13: Maximum likelihood estimates for
parameters of stochastic frontier
cost
model for turmeric processing in Kaduna State 92
14: Distribution of respondents by cost
estimates in Kaduna State 95
15: Maximum
likelihood estimates for parameters of stochastic frontier cost
model for turmeric processing in Benue
State. 96
16: Distribution of respondents by cost
estimates in Benue State. 98
17: Constraints
to turmeric production in Kaduna State 99
18:
Constraints to turmeric production in
Benue State 102
19: Constraints
faced by turmeric processors in Kaduna State 105
20: Constraints
Faced by Turmeric Processors in Benue State 107
21: Constraints
faced by turmeric marketers in Kaduna State 110
22: Constraints
faced by turmeric marketers in Benue State 112
23:
Result of the t-test showing the
difference in technical estimates
in turmeric production in Kaduna and
Benue States. 114
24: Result
of t-test showing the difference in cost estimates in turmeric
processing
in Kaduna and Benue States 115
LIST OF FIGURES
PAGE
1: Map of Kaduna State showing the study
areas 51
2: Map of Benue State showing the study areas 53
CHAPTER 1
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The
agricultural sector plays significant role in the economy of developing
countries, especially in sub-Saharan Africa. Despite the importance,
productivity has remained low and this is no exception in Nigeria (World Bank,
2013). Low capital deficient farmers living in rural regions with farm holdings
of 1 to 2 hectares, which are typically dispersed over large areas, virtually
control the agriculture field (Alimi, 2012). The crop sub-sector is one of the
most commercialized of all the sub sectors of the Nigerian agriculture (CBN
2008), one of the crops of value in terms of nutrition and economic relevance
is turmeric. Turmeric is a crop that is gaining recognition in the crop sector
due to its enormous benefits. It is a shallow-rooted crop and herbaceous plant
with thick and fleshy rhizomes. It belongs to the Curcuma genus and the
Zingiberaceae family, and consists of many species. Curcuma longa Linn is the
highest yielding turmeric of commercial value. Its origin has been traced to
South and Southeast Asia. Turmeric is used as a spice and is the major
component of curry powder.
Among
the several spices, turmeric ranks second with regard to its foreign exchange
earning being next only to chili peper (Babu, 2008). Turmeric is used in
cosmetics for its bright yellow color and distinctive aroma, in addition to its
function as a seasoning. It's also used as a pigment for fabric coloring, among
other things. It is used in medicine for the prevention and cure of a number of
diseases. Turmeric has a yellow food pigment called curcuminoid (6%) and
essential oils (5%) (Ishimine, Hossain, Murayama, 2003), and it's a great
repository of foreign exchange in the global market, according to (Njoku,
Olojede, Melifonwu, 2012). Curcuminiods, the active principles or ingredient in
turmeric rhizomes, have anti-inflammatory, anticancer, antibacterial,
anti-oxidant, and antifungal, anti parasitic and detoxifying properties
(Sugiyama et.al, 2018). According to
(FAO, 2004), there are two important types of turmeric found at the
international market: ‘Madras', and 'Alleppey', both named after the regions of
production in India. The orange-yellow flesh Alleppey turmeric is predominantly
imported by the United States, where users prefer it as a spice and a food
colorant (Buescher and Yang, 2000). Alleppey turmeric has a variable oil
content of 3.5 percent to 5.5 percent and a curcumin content of 4.0 percent to
7.0 percent (Wesis, 2002).
The
Madras variety, on the other hand, includes just 2% volatile oils and 2%
curcumin (ASTA, 2002). (American Spice Trade Association). Turmeric is grown
primarily on a consumption basis about 19 States in Nigeria, and it is known by
various local terms based on the region (Olojede and Iluebbey, 2005). It's
known in Yoruba as atale pupa, Hausa
as gangamau, Ebonyi as nwandumo, Enugu (Nkanu East) as ohu boboch, Tiv as gigir, Kaduna as magina,
Niger State as turi, and Cross River
as onjonigho (Meo tribe). Turmeric
can develop under different warm areas, according to (Olojede et al., 2009), with altitudes varying
from sea level to 1500 meters above sea level (Rema and Madan, 2001), on a
well-drained sandy or clay loamy soil, and temperatures ranging from 20 to 30
degrees Celsius, with a yearly rainfall of 1500 millimeters or more. Turmeric
is cultivated vegetatively utilizing the rhizome, and it is ready to harvest 7
to 10 months after planting, as shown by the drying of the vine. After
loosening the soil with a tiny digger, the rhizomes are cautiously picked with
a spade and clumps manually raised. Prior to actually extracting the root
system, it's a good idea to remove the plants Rhizomes are cleaned up by
soaking them in water, as well as removal of long roots and leaf scales.
Rhizomes are then further cured and processed, or stored for the next year's
planting (Anandaraj et.al, 2001).
Rhizomes for next year’s planting should be stored in well-ventilated rooms and
shielded with dry leaves to prevent dehydration; or warehoused in pits covered
with sawdust, sand, or panel (Glycosmispentaphylla) leaves that may act as
insect repellent (Anandaraj et al.,
2001). Given the country's favorable climate and soil requirements Nigeria has
the potential to be a leader in turmeric development. Despite this, its maximum
potential has yet to be realized since farmers lack a thorough understanding of
the techniques required for its cultivation, resulting in low yields (Olojede
and Iluebbey, 2005). Turmeric yield per unit area is very low due to farmers'
lack of awareness about appropriate farming technology (Ishimine et al., 2003). According to (Njoku et al., 2012), weed reduces root and
tuber crop yield by 65 percent and consumes 25 percent of total labor in
output. This study was carried out in Kaduna and Benue state on value chain of
turmeric and aims to look at economic analysis of turmeric production in Kaduna
and Benue State, Nigeria.
1.2 STATEMENT OF THE PROBLEM
Turmeric
is one of the minor root crops that have significant potentials to contribute
to the development of Kaduna and Benue States economy in terms of job creation,
increase farmers’ standard of living and investment opportunities for
investors. The global market for turmeric production, processing and marketing
is large. However, more turmeric products are brought into Nigeria than is
being exported (Olife et al., 2013),
this point to a significant investment opportunity in the turmeric business in
Kaduna and Benue State. In many developing countries, agricultural production
offers significant employment opportunities, food security, and economic
development to local people. However, for sustainable turmeric production,
efforts must be made to introduce changes in order to increase turmeric yields,
efficiencies, and sustainability. According to Akinyemi (2007), this can only
be effectively achieved by the application of adequate research and mechanized
agricultural practices. Sims, Helmi, and Keinzle (2016) analyzed the current
challenges being faced in turmeric farming including affordability,
availability, lack of farmer skills, poor infrastructure, lack of improved
technology, manpower development, middle men, constraints within the private
sector, and gender issues. Although small scale farming system can feed people
in urban areas, it is largely considered for rural populations in developing
countries (Reijntjes, 2009). In some countries, small-scale farms contribute
drastically both to national and export needs. Rukuni and Eicher (1994) stated
that small-scale farming in Zimbabwe contributed almost 60% of national food
needs and almost 20% of exports. Similarly, Altieri (2008) reported that small
farms in Latin America produced 77% of beans, 61% of potatoes, and 51% of maize
consumed nationally.
Nonetheless,
one of the major problems faced by small farmers is the adoption of present-day
mechanized technologies to increase their productivity. Rukuni and Eicher
(1994) stated that most small-scale farmers in the developing countries have
yet to benefit from the research in agriculture. Additionally, most of the
current education systems do not adequately support the improvement of family
farms; rather, they promote industrial agriculture. In other cases, modern
technology is not available, either because it is too expensive or because it
is not appropriate for the system (Altieri, 2008). However, there have been little
“trickle-down” effects for the small subsistence farmers, often due to poor
financial resources, limited technical knowledge, and low educational
standards. Agricultural marketing, on the other hand, cannot be prepared and
performed in isolation from the growth, fluidity, and change that is taking
place in the business environment.
According
to Kotler (2003), marketing is a mechanism of exchange between individuals or
organizations that gives gratification to both parties in terms of achieving
goals and objectives. Agricultural marketing success in developed countries
like Nigeria has declined over time. It is the pattern of movement of produce
from farm to the ultimate consumer which plays a crucial role in assessing the
returns to the farmer. In enhancing the agricultural problems of production,
processing and marketing in Kaduna and Benue State, it is imperative to
comprehend the nature of agricultural marketing problems in those areas: - Lack
of transport services:- this has many dimensions, in some case, there are not
enough vehicle or good road to carry goods from the farms to the village
markets and from village market to the town or cities .Sources of supply:-
Commodities are produced on small size and farmers are scattered over the
country. It is not an easy task to organize how the goods can be assembled for
efficient marketing. Lack of uniform weights and measurements: - In the market,
different types of measurement are used Weights are seldom used in the selling
of food and animal products; instead, rates are normally determined by
negotiating (debating), and the price is determined by the buyer's negotiation;
in certain cases, consumers pay a price based on their perceived social
standing. Poor marketing study: Over the years, resources have been centered on
making more without knowing how to sell them. There is a need for market demand
and desire analysis, among other things.
However,
these problems can be reduced or solve if there is effective and efficient
management of the resources and use of the marketing concepts and principles
for the promotion of agricultural products for national development. Despite
the significance of this wonderful crop there is little research carryout on
it, related studies carried on turmeric include Amadi, evaluation of turmeric cultivars in Jos
Plateau state Nigeria, Nwaekpe, (2020), advancement of turmeric for
food/pharmaceutical company in Nigeria, Rashid, (2019) economic analysis of
turmeric cultivation in khagrachari district of Bangladah, Angles, Sundar, and
Chinnadurai, (2011) Globalization's effect on turmeric output and trade in
India but none of this studies addresses economic analysis of turmeric value
chain in northern Nigeria. Given the above problems the following research
question was appropriate.
i. What
are the socio-economic characteristics of turmeric production in the study
areas?
ii. What
is the profit activities of turmeric businesses in the study areas?
iii. What
is the technical efficiency of turmeric producers in the study areas?
iv. What
is the cost efficiency of turmeric processors in the study areas?
v. What
is the marketing efficiency of turmeric marketers in the study areas?
vi. What
are the marketing channels and structures that are included in turmeric
marketing in the study areas?
vii. What
are the constraints in the production turmeric in the study areas?
1.3 OBJECTIVES OF THE STUDY
The broad objective of the survey is
economic analysis of turmeric production in some selected Local Government
Areas of Kaduna and Benue States in Northern Nigeria. The specific objectives
are to:
i. examine
the socio-economic characteristics of turmeric producers in the research areas
ii. determine
the profitability of the turmeric business in the research areas
iii. examine
the different marketing channels and structure involved in turmeric marketing
in the survey areas
iv. estimate
the productivity of turmeric producers in the research areas
v. estimate
the marketing efficiency of turmeric marketers in the research areas
vi. estimate
the cost efficiency of turmeric processors in the research areas
vii. identify
and analyse constraints in production of turmeric in the study areas
1.4 STATEMENT OF HYPOTHESIS
H01:
there is no significant difference in technical efficiencies of turmeric
production between Kaduna and Benue
H02:
there is no significant difference in cost efficiencies of turmeric processing
between Kaduna and Benue;
1.5 JUSTIFICATION FOR THE STUDY
This
study draws motivation from the poor economic situation in Nigeria requiring
diversification of the nation’s economy. Due to the fall in oil prices and oil
output as well as the consequent fall in the worth of the naira, the Nigerian
economy is declining and the researcher also seek to find out where opportunity
exit in turmeric business. These situation calls for urgent effort to find ways
of sourcing alternative foreign exchange for the country. Turmeric has high
potentials to contribute significantly to the nation’s foreign trade earnings
as well as improve the rural economy of the producing communities, generate
employment if the right strategies are employed or used. Agriculture before
known was the main source of the nation’s earnings. It was the major
development driver of the economy employing over 80% of the country’s active
population (Adegboye, 2004). It also contributed over 60% to the nation’s Gross
Domestic Product (GDP) and provided almost 100% of the economy’s food
requirement, raw material for industries and others (Abu et.al, 2001). However,
when oil became a major foreign exchange earner, agriculture contribution to
GDP began to decline from over 60% in the 1970s to less than 26% in 2007
(Aigbokhan, 2001; CBN, 2007). With the present situation in the oil industry,
agriculture holds the key to Nigeria’s economic revival. Turmeric will create
high potentials for foreign exchange earnings for the country if the
opportunity is harnessed optimally. Besides, turmeric production has the
potential to reduce spice importation into the country; this is due to the
increasing acceptance and demand locally following its use as spice, cosmetics
and for medicinal needs. Additionally, the survey was useful to the government
and policy makers in shaping policy for the country, the academia, for purposes
of research, investors, non-governmental organization (NGOs) e.t.c
1.6
SCOPE OF THE STUDY
The
study covers turmeric production in two states, which include Kaduna and Benue
state in Northern Nigeria. The main objective of the study was economic
analysis of turmeric production in some selected states in Northern Nigeria;
specifically the study looks at profit activities of turmeric businesses,
marketing channels, technical efficiency, cost efficiency and constraints faced
in turmeric farming. This study cover one production season 2019-2020.
1.7 LIMITATIONS TO THE STUDY
In pursuant of this study on economic analysis of
turmeric production in some selected Local Government Areas of Kaduna and Benue
States in Northern Nigeria the major setback are
language barrier and pressure of other academic work. Even with help of
enumerator communication it was not easy with local producer, marketer and
processor. However, the researcher was able to rise above these challenges in
order to present a study whose results could be very effective in analyzing turmeric
production in some selected Local Government Areas of Kaduna and Benue States
in Northern Nigeria
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