EFFECT OF GROWTH ENHANCEMENT SUPPORT SCHEME (GES) ON THE PRODUCTIVITY AND MARKET PARTICIPATION OF SMALLHOLDER CASSAVA BASED FARMERS IN ANAMBRA STATE, NIGERIA

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ABSTRACT

The study examined the effect of commercialization on productivity and welfare of small holder cassava farmers in Anambra State, Nigeria. A multi-stage sampling procedure was employed to select the 120 responded needed for the study. Data analyses were carried out using descriptive analytical tools such as mean, frequencies, percentage and standard deviation, net return analysis, Total factor productivity formula, multiple regression analysis, chow test and factor analysis. The result shows that the mean ages was 40.87 years; and about 51.7% of the respondent were females. Majority (87.5%) of the respondents were married with about 54.2% of them attaining secondary. The mean household was 7 persons while mean farm size was 1.4 hectares. On average the farmers had spent about 11 years in farming. A dominant number of the farmers indicated access to credit (94.2%) while about 86.7% of the cassava farmers in the area belong to farming cooperative. Profit of N96,933.00 for an average cassava farmer in the area was realized per farming season with mean productivity of 1.77 kg/ N. The mean expenditure was N282,005.13. Ordinary Least Square (OLS) result on factors that influenced the level of commercialization of cassava farmers shows that the coefficient age, credit, household size, farming experience, labour input and distance were the significant factors that influenced level commercialization of the cassava farmers in the area. OLS result on determinants of productivity of the cassava farmers in Anambra State shows that farm size, labour, cost of cuttings, extension visit and household size were significant and positively related to productivity while capital and credit were significant and negatively related to productivity. Furthermore, multiple Regression on determinants of welfare of the farmers shows that the coefficients of education, farm size, coefficient of membership of association and farm production cost significantly influenced welfare of the farmers in the study area. The result of the chow test (F=8.023***) on the effect of commercialization on productivity of cassava in the area shows that commercialization had significant effect on productivity of cassava producers. Also the result shows significant effect of commercialization on welfare of cassava producers in the area. Therefore, the study recommend that government should ensure that farm inputs such as improved cassava cutting, fertilizers, tractors and agro-chemicals are made available to farmers at a highly subsidized rate since cassava production was very profitable as shown in the result. Commercialization should be encouraged as it can enhance productivity and welfare of the farmers thereby reducing and improving the economy.






TABLE OF CONTENTS

Title Page                                                                                                                                i

Declaration                                                                                                                             iii

Certification                                                                                                                           iv

Dedication                                                                                                                              v

Acknowledgements                                                                                                                vi

Table of contents                                                                                                                    vii

List of Tables                                                                                                                          x

List of figures                                                                                                                         xi

Abstract                                                                                                                                  xii

 

CHAPTER 1: INTRODUCTION                                                                                        1

1.1 Background Information                                                                                                  1

1.2 Problem Statement                                                                                                           4

1.3. Objectives of the Study                                                                                                   7

1.4 Research Hypotheses                                                                                                        7

1.5. Justification for the Study                                                                                                8

 

CHAPTER 2: REVIEW OF RELATED LITERATURE                                                 10

2.1       Conceptual Literature                                                                                                 11

2.1.1    Concept of smallholder farmers                                                                                 11

2.1.2    The concept of participation                                                                                       12

2.1.3    The concept of market participation                                                                           13

2.1.4    Concept of productivity                                                                                              16

2.1.5    Strategies for improving market participation among small-holder farmers                        17

2.1.6    Importance of farmer participation in markets                                                           18

2.1.7    Factors influencing the choice of marketing outlets                                                  19

2.1.8    Challenges of market participation of smallholder farmers                                       20

2.1.9    History of Growth Enhancement Support Scheme (GES)                                         21

2.1.10  Impact of intervention on participants                                                                        25

2.1.11  Factors influencing the participation of farmers in GES Intervention                 26

2.1.12  Some constraints encountered by farmers during gess implementation                       27

2.1.13  General information on cassava (Manihot Escalenta Crantz)                                     28

2.1.14  Agricultural policies and cassava programmes in Nigeria                                         29

2.2       Theoretical Literature                                                                                                             30

2.2.1    Theories of trade and utility maximization                                                                30

2.2.2    Random utility theory                                                                                                 33

2.2.3    Social change theory                                                                                                  34

2.3       Empirical review                                                                                                        36

2.4       Analytical techniques                                                                                                 51

2.3.1    The Heckman Sample Selection Model                                                                     51

2.3.2    Regression analysis                                                                                        53                    

2.3.3    Multinomial logit model                                                                                 54

 

CHAPTER 3: RESEARCH METHODOLOGY                                                               57

3.1 Study area                                                                                                                         57

3.2: Sampling technique                                                                                                         57

3.4 Method of data analysis                                                                                                    58

 

CHAPTER FOUR: RESULTS AND DISCUSSION                                                         68

4.1 Socio-economic characteristics of respondents                                                                68

4.2 Cost and returns associated with cassava production and determinants of profit           73

4.3 Level of market participation of the respondent                                                        78

4.4  Factors affecting market participation and the intensity of participation                      79       

4.5  Cassava marketing outlets and determinants of choice of the identified marketing

outlets.                                                                                                                       86

4.6  Total factor productivity and factors affecting total factor productivity of the cassava

farmers                                                                                                                        91

4.7 Impact of participation in GES on the farmers’ productivity                                          96                               

 

CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATION                                                                                                          102

5.1 Summary of Findings                                                                                                       102

5.2 Conclusion                                                                                                                        105

5.3 Recommendations                                                                                                            106

REFERENCE                                                                                                                        108

 






 

LIST OF TABLES


Table 1: Distributions of Respondents according to socioeconomic characteristics             67

Table 4.2: Cost and Return Analysis for cassava farmers Per Month                                  72       

Table 4.3. Regression analysis on factors affecting performance of producers                    74

Table 4.4. Regression analysis on determinants of profit for non-GES-Beneficiaries   76       

Table 4.5. Level of market participation for the farmers in the study area                                    78       

Table 4.6 Parameter Estimates of the Heckman Double Hurdle Model for factors affecting market participation and the intensity of participation by GES beneficiaries    79     

  

Table 4.7 Parameter Estimates of the Heckman Double Hurdle Model for factors affecting market participation and the intensity of participation by non-GES beneficiaries 83 


Table 4.8: Distributions of Respondents according to socioeconomic characteristics 86       


Table 4.9: Results of the MNL model on factors influencing choice of marketing outlet of the GES Beneficiaries.                             87


Table 4.10: Results of the MNL model on factors influencing choice of marketing outlet of the Non-GES-Beneficiaries.             90


Table 4.11: Distribution of respondents according to their productivity levels               92       

Table 4.12 Multiple Regression Result on Determinants of Productivity of GES beneficiaries                                                     93       

Table 4.13. Multiple Regression Result on Determinants of Productivity of Non-GES Beneficiaries                                        95

Table 4.14: Determinants of productivity of among GES beneficiaries and non- GES beneficiaries (pooled without dummy)                      97

Table 4.15: Determinants of productivity of among GES beneficiaries and non- GES beneficiaries (pooled with dummy)           99

Table 4.15 Test for difference in productivity among GES beneficiaries and non-GES Beneficiaries                              101

 

 


  

 

 

 

CHAPTER 1

INTRODUCTION

1.1           BACKGROUND INFORMATION

Agriculture continues to be a strategic sector in the development of most low-income nations (Abu, 2014) and employs about 40% of the active labour force globally. In sub-Saharan Africa, Asia and the Pacific, the agriculture-dependent population is over 60%, while in Latin America and high income economies the proportions are estimated at 18% and 4% respectively (World Bank, 2006).

The sector constitutes 70% of the principal livelihood of the world‘s poor and it is the main source of food security in most developing countries (Onwuemele, 2013; Siewe, 2015). Nigeria is generously endowed with many natural resources and human capital. Its economy, although quite diversified, relies more heavily on the petroleum and agricultural sectors. In Africa, it is the most populous country with an estimated population of 170 million followed by Ethiopia and Egypt. The agricultural sector‘s share of GDP was 37% between 1960 and 2008 and rose to 40.87% in 2010. This makes agriculture the most dominant sector in Nigeria in the period under study.

Agriculture is however dominated by smallholder farmers who are predominantly rural dwellers, with about 90% of farm holdings less than 2 hectares in size (Ministry of Food and Agriculture, 2011). The implication of this dominance of smallholders is that no meaningful policy to enhance the development of the agricultural sector can overlook these farmers. As a result, many authors such as Siziba et al., (2011), Denise, (2008), Chamberlin et al., (2007), policy documents (such as GPRS II, FASDEP II, CAADP and institutions such as MoFA, (2007) and the World Bank, (2007) have emphasized the reorientation of policies towards access to markets by smallholder farmers as a means of improving their livelihoods and development. Markets and improved market access are critical and important to rural poor households as a pre-requisite for enhancing agriculturally based economic growth by improving the competitiveness of farming enterprise and improving rural incomes (Ohen et al., 2013).

Commercial transformation of subsistence agriculture, according to literature, depends heavily on the triplet, market orientation, market access and market participation. Market orientation is the degree of allocation of resources (land, labor and capital) to the production of agricultural produce that are meant for exchange or sale (Hinderink and Sterkenburg, 1987; Immink and Aarcon, 1993). Market access is a combination of three factors namely physical access to markets (distance to markets), market structure (usually oligopoly) and finally organization of market (Marketing association) and market information (Understanding of markets). Market participation on the order hand is defined as produce offered for sale and use of purchased inputs (Berhanu and Moti, 2010).

The trade theory posits that if households participate in markets by selling surplus of what they produce on a comparative advantage basis, they are set to benefit not only from the direct welfare gains but also from opportunities that emerge from economies of large-scale production (Siziba et al., 2011; Barrett, 2008). Market participation of smallholder agriculture leads to gradual decline in real food prices due to increased competition and lower costs in food marketing and processing. These changes improve the welfare of smallholder farmers in two ways: low food prices increase the purchasing power for food of consumers while, to producers, a decline in food prices enables reallocation of limited household incomes to high value non-food agribusiness sectors and off-farm enterprises. Despite the stream of benefits that are inherent in market participation, studies show that participation in market by smallholder farmers in developing countries is very low and has slowed down agriculture driven economic growth and exacerbated poverty level (Barret, 2008). Consequently, subsistent farmers cannot benefit from the welfare gains and income growth associated with market participation.

As part of its efforts to increase food production, the Federal Government Growth Enhancement Support Scheme (GES) was conceived and implemented in 2012. The Growth Enhancement Support Scheme (GSS) was designed as a component of the Agricultural Transformation Agenda of the Federal Government (ATA). The ATA is the Government’s response to the crisis that has riddled the agricultural sector in the past and seeks to put agricultural growth at the center of the Government’s development objective given its critical role for food security and economic diversification. The broad objective of the GSS was to achieve food security for the nation at the macro level, and increase household income for the farmers at the micro level. The scheme was designed to encourage the stakeholders in the fertilizer value chain to work together to improve productivity, household food security and raise the income of farmers by providing direct subsidy through the supply of discounted fertilizers and seeds. GES was developed as a poverty reduction strategy designed to sustainably increase the incomes of the participant through subsidizing the cost of major agricultural inputs like fertilizers and seedlings (FEPSAN, 2014).

This study focuses on cassava market participation. Cassava is a tropical root crop - originally from Amazonia - that provides the staple food of an estimated 800 million people worldwide (FAO, 2013). It is one of the most important crops for Nigerians. It is important, not just as a food crop but even more so as a major source of cash income for producing households. As a cash crop, it generates cash income for the largest number of households, in comparison with other staples, contributing positively to poverty alleviation. The New Partnership for African Development (NEPAD) has also identified cassava as a crop that can be used to reduce poverty in Africa and has recommended more intensity in its production.

The poorest people in the world are farmers with low market participation and low agricultural productivity (Rios et al., 2008). Increasing either one could help to improve the other, and both could boost living standards: higher market participation could drive productivity by providing incentives, information and cash flow for working capital, while higher productivity could drive market participation since households with higher productivity are more likely to have crop surpluses above their immediate consumption needs. Examining these concepts along the GES participation is the core thrust of this research.

1.2       PROBLEM STATEMENT

Since 2000, the world‘s annual cassava production has increased by an estimated 100 million tonnes, driven in Asia by demand for dried cassava and starch for use in livestock feed and industrial applications, and in Africa by expanding urban markets for cassava food products (FAO, 2014). Booming demand offers millions of cassava growers in tropical countries the opportunity to intensify production, earn higher incomes and boost the food supply where it is most needed. Despite this apparently expanding market for cassava due to its high economic potentials, high productivity has eluded the sector owing to a number of reasons – use of crude tools, use of low-yielding disease non-resistant varieties etc.

However over the years, remarkable progress in Nigeria have been made by agricultural research and development organizations on increasing agricultural productivity and promoting intensification of major food crops for small scale farmers. This progress have not significantly impacted on the cassava actors although an average growth of about 4.92% growth rate in cassava yield is observed between 2000 and 2012 (FAO, 2014). In other words, there has been an improvement in cassava productivity across the country over the period under consideration with little reflection on the living standard of the people. As a result, poor performance and inefficiency abound.

It is well-known that the backbone of any agricultural revolution is access of farmers to modern agricultural inputs. These agricultural inputs range from improved seeds, fertilizers and crop protection chemicals to machinery, irrigation and knowledge. Seeds are critical to successful crop production and inevitably, farm productivity and profitability. Fertilizer supplies nutrients to the soil that are essential for growth. Increased use of fertilizer and improved seeds are partially credited with the large increases in agricultural productivity growth in Asia during the Green Revolution in the 1960s. Irrigation is also essential for growth as it enables off-season farming, provides the potential for multiple harvests per year, and brings additional land under cultivation. Crop protection chemicals (pesticides, herbicides, insecticides and fungicides) control weed species, harmful insects and plant diseases that afflict crops. Nigeria as the world’s largest producer of cassava is faced with high production costs as a result of the scarcity of these agricultural inputs. Production is seriously hampered and market participation is discouraged.  However, majority of Nigerian farmers still utilize traditional farming implements; do not have access to improved seeds and seedlings, fertilizers and crop protection chemicals. There are no irrigation facilities and most of the farmers lack formal training whereas those who have training prefer to work in other places rather than in farms.

There is also a growing emphasis on the importance of graduating from a subsistence-based smallholder system to a sector characterized by a stronger market-based orientation based on a combination of productive smallholders. Consistent with this, Siziba et al. (2011) observed that markets are the pivotal point in the agricultural transformation process. Despite this growing emphasis, agricultural commercialization is low (IFAD-IFPRI, 2011). They indicated that the national average of marketed surplus ratio which defines the level of commercialization is 33%, which is observed as low. This problem is highlighted by the Swedish International Development Association (SIDA) cited in Siziba et al., (2011), that only 10% of Sub-Saharan African smallholders produce enough marketable surpluses. The low level of commercialization is partly explained by small farm sizes, crop-mix, low productivity per hectare and high household size (IFAD-IFPRI, 2011). Chamberlin et al. (2007) noted poorer access to input and output markets as well as credit and advisory services as responsible for the low commercialization. The agricultural sector has remained largely untapped leading to dwindling performance of the agricultural sector both domestically and internationally.

Many studies have addressed the impact of either market participation or productivity on farmers’ income, and some studies related them to each other. There is however, surprisingly little research on the extent to which these factors influence each other, and almost none that does so at the whole-farm level across. This study will be built upon relevant theories, literatures and econometric applications in analyzing the direction of causality between market participation and productivity, that is, to address whether higher sales of farm produce have led to higher agricultural productivity, or whether higher agricultural productivity has led to a higher volume of sales. This study targets important questions in developing the specific objectives. They include: what is the profitability of cassava production and what factors affect the profit level? What is the level of cassava farmers’ participation in the market and what factors affect market participation and its intensity? What are the various cassava marketing outlets farmers utilize and what informs the choice of the marketing outlets? What is the productivity of cassava farmers and what factors affect productivity? What are the levels of statistical differences between GES beneficiaries and non-beneficiaries’ profits, market participation and productivity respectively?

1.3       OBJECTIVES OF THE STUDY 

The broad objective of the study is to examine the effect of Growth Enhancement Support Scheme (GES) on the productivity and market participation of smallholder cassava based farmers in Anambra State while the specific objectives were to:

i.               describe the socio-economic characteristics of the respondents;

ii.              estimate the cost and returns associated with cassava production and analyze the determinants of profit;

iii.            determine the level of market participation of smallholder cassava based farmers

iv.            estimate factors affecting market participation and the intensity of participation;

v.              identify the various cassava marketing outlets and analyze the determinants of choice of the identified marketing outlets;

vi.            determine the total factor productivity and estimate factors affecting total factor productivity of the cassava farmers;

vii.           examine the impact of participation in GES on the farmers’ productivity.

1.4       HYOTHESES

The following hypotheses are formulated in line with the objectives of the study.

H1: there is no significant difference in the profits of GES and Non-GES cassava farmers;

H2: Net returns of cassava farmers is positively influenced by farmers’ age, level of education, farming experience, selling price and quantity of products sold and negatively influenced by depreciation and purchase price.

H3: the decision to and extent of cassava farmers’ market participation of cassava farmers is positively influenced by farmers’ age, level of education, farm size, farming experience, number of extension contacts, off-farm income, household income, cassava output, volume of credit, market information, cooperative membership and selling price of cassava and negatively influenced by household size and distance to market;

H4: the choice of marketing outlets is positively influenced by farmers’ age, level of education, cassava output, vehicle ownership, market group membership, price information and marketing experience (Years).

H5: Total factor productivity is positively influenced by age of the farmers, farmers’ education, number of extension contacts, farm size, farmers’ experience and negatively influenced by household size of the farmer, labour cost and capital inputs of the farmers.

1.5       JUSTIFICATION FOR THE STUDY

This study would be useful to various commitments by the various actors by providing empirical evidence on the factors that influence market participation and intensity of participation by smallholder farmers which is vital in informing priority setting in policies geared towards  transforming smallholder farmers especially in the area of responding to market incentives for improved farm incomes and subsequent reduction in poverty and enhanced food security.

To the field of academics, the empirical evidence from this study would serve to add to the scanty literature on market access of agricultural commodities while also providing a blueprint to guide further research.

To farmers, this study would provide evidence on farmer specific characteristics that affect market participation and intensity of participation that would be useful to farm households for their decision making. For example, membership in farmer based organization is a choice that farmers make. Evidence from this study about the effect of membership on marketing behaviour is useful to farm households to make decision.

The outcomes of this study will generate information for policy makers, governmental and nongovernmental organization and all those interested in cassava production and commercialization in Anambra state to design and develop effective framework for sustainable livelihood strategies and policies among small scale cassava farmers. Specifically, findings of this research will provide empirical evidence of the quantitative impact of GES on farm productivity and cassava market participation for poverty alleviation and economic efficiency of small scale farmers in the study area. The motive behind the idea of GSS implementation is to mainly achieve food security for the nation at the macro level, and increase household income for the farmers at the micro level. This aim justifies this study. 

The findings from the study will help in evaluating factors affecting participation of farmers in Growth Enhancement Support Scheme programme for livelihood in Anambra State. It is also hoped that the research will provide relevant information to policy makers which will enhance formulation of agricultural policies aimed at improving agricultural productivity, income of farming households and reduce poverty level among farmers.

It is also hoped that the findings of the study will be of immense benefits to the government as it will help in identifying areas of constraints during the implementation process in order to make adequate effort that will enhance its effective implementation and to the farmers, as such will create in them confidence that GES scheme, if properly implemented will lead to higher agricultural production in the country.

Finally, the findings and recommendations of this research work will be of benefit to the government in policy formulation and a source of information to future researchers as this will enable them assess the effectiveness of similar projects in any part of the country. In the same vein, the findings could as well be published in journals and in that way help future researchers. 

 

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