ECONOMICS OF OIL PALM PRODUCTION IN AKWA IBOM STATE (A CASE STUDY OF URUE OFFONG/ ORUKO LGA)

TABLE OF CONTENT

Title page

Approval page

Dedication

Acknowledgment

Abstract

Table of content

CHAPETR ONE

1.0   INTRODUCTION 

1.1        Background of the study

1.2        Statement of problem

1.3        Objective of the study

1.4        Research Hypotheses

1.5        Significance of the study

1.6        Scope and limitation of the study

1.7       Definition of terms

1.8       Organization of the study

CHAPETR TWO

2.0   LITERATURE REVIEW

CHAPETR THREE

3.0        Research methodology

3.1    sources of data collection

3.3        Population of the study

3.4        Sampling and sampling distribution

3.5        Validation of research instrument

3.6        Method of data analysis

CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS AND INTERPRETATION

4.1 Introductions

4.2 Data analysis

CHAPTER FIVE

5.1 Introduction

5.2 Summary

5.3 Conclusion

5.4 Recommendation

Appendix

 

 

 

 

 

 

 

 

 

Abstract

Oil palm production  and marketing in South-South Nigeria is one economic activity in which the people make a living and sustain their lives. Despites its economic importance, the business is fraught with series of challenges begging for solutions. This study was conducted in three palm oil processing communities in  Urue Offong Oruko local government area of Akwa Ibom State. Sample consisted of 200 selected respondents. Questionnaire and Oral Interview combined with Participant Observation methods were used for data collection. Data were analyzed using Simple Percentages. Findings from the study showed that, palm oil production  and marketing is a lucrative economic activity of Akwa Ibom people of the South-South, Nigeria. The business enhances the financial status of the people, boosts the sales of other economic crops, promotes inter-tribal communication, trade and marriages as well as encouraged the use of locally produced goods and tools. Equally, findings revealed that poor transportation, low pricing of goods, inaccessibility to credit facilities and the used of obsolete processing equipments as the challenges the business is currently facing.

 

                                        CHAPTER ONE

                                        INTRODUCTION

1.1 Background of the study

Nigeria is blessed with lots of natural and human resources such as crude oil, natural gas, water resources, good climate, fertile soil, good vegetation, agricultural produce, rocks, gravels, sand as well as palm trees which are found everywhere in the South-West, South-East and South-South part of the country. In spite of these rich natural endowments, it is observed that incidence of poverty, manifested in the form of inadequate agricultural goods is still very high. Also, cases of hunger, malnutrition, unemployment and ruralurban migration have been widely reported in the country. The World Development Report (2000/2001) puts Nigeria as the 28th poorest country in the world. The Federal Office of Statistics (FOS) also observed that, in 1990, the rural areas of Nigeria accounted for 66 percent of the incidence of poverty in the country (FOS, 1992). It estimated also that, over 65 percent of Nigerians live below poverty line and a large majority of those affected live in rural communities. But according to the National Bureau of Statistics, the national poverty incidence in Nigeria is estimated to be 54.7 percent, while majority of Nigerians lived in absolute poverty (NBS, 2012). As observed by Olurode (2001), Ekong (2003), and Udoh (2004), many Nigerians live in rural areas and in spite of the enormous human and natural resources found there, majority of the people are poor. Orokpo (2006) experientially declared that, the scourge of poverty in rural communities is high in spite of their engagements in petty agricultural activities, crafts, subsistence trading and other socio-economic endeavours. According to National Poverty Eradication Survey Report (NPESR, 2010), rural poverty profile in Nigeria has increased from 66 percent in 1999 to 73.2 percent in 2010. Although several intervention strategies by the Federal Government such as, Operation Feed the Nation (OFN), Green Revolution (GR), Directorate of Food, Roads and Rural infrastructure (DFRRI), National Directorate of Employment (NDE), Better Life for Rural Dwellers (BLRD) and the National Poverty Eradication Programme (NAPEP) and many others have been developed to solve the problem of poverty, but the situation continue to pose serious challenges to the people in the country. Oil-production had for a long time been an important phenomenon in Urue Offong Oruko localities. It developed with the people. Oil-palm takes great part and parcel of the cooking of food, making of bath soaps, e.t.c. Its importance, therefore cannot be over-emphasized. Nigeria is among the world largest producers of palm oil (CBN, 2012, FAO, 2012 and United State Department of Agriculture, 2012). During the pre-independence period, the country’s bulk exports and foreign exchange earnings came from the palm oil and palm kernel trade. Nigeria was the largest producer of palm oil until early 1960s when it relinquished its position to Malaysia and currently Indonesia (United State Department of Agriculture, 2012). The advent of the crude oil in late 1970s distorted government investment in the sub-sector but rather concentrated investment in the fast yielding and emerging petroleum sub-sector. From 1960 till date, the annual productions of palm oil and palm kernel as well as government investment in the sub-sector have been. unsteady and in most years declined (CBN, 2010). For instance, in 2002 the country’s palm oil production recorded a zero growth rate compared to Malaysia with 5.9%, Indonesia 11.2% and Columbia 8.8% growth rates (Basiron, 2002; CBN, 2006 and FAO, 2009). Several researchers have adduced the declined role of palm oil sub-sector to the country over dependence on crude oil exploitation, prevalence of traditional palm oil processing techniques and the Nigerian civil war of 1967 to 1970 which was fought in the country’s palm oil belt. These events were responsible for the country’s inability to meet up with the global demand for palm oil and palm kernel production (EzeUche, 2008 and Onwubuya, 1997). According to Olagunju, (2008) and PIND, (2011), up till 1960 Nigeria‘s palm oil accounted for 43% of the global palm oil production. Domestic annual production is currently around 900,000 tons (CBN, 2012 and FAO, 2012). Due to the increase in the industrial and domestic demand, there is an estimated overall supply gap of between 150,000 and 300,000 tons of technical palm oil (TPO), and 200,000 tons of special palm oil (SPO) much of which is currently met through imports (PIND, 2011 and CBN, 2012). Kei, et al., (1997) and Olagunju, (2008) in their studies observed that, due to the increase in demand for palm oil products, resulting from increase in population and consumer’s income growth relative to the low productivity of the oil palm sector, Nigeria has become a net importer of palm oil. This has a serious implication on the country’s external reserves and the survival of the domestic palm oil industry.

1.2 STATEMENT OF THE PROBLEM

Oil palm production industry is an important sub-sector in the Nigeria‟s economy where several plantations and wild farms exist. According to the Federal Ministry of Agriculture, Akwa Ibom is the third largest producer of palm oil and kernel in Nigeria (FMA, 2002). Study by Ehirim (2004) shows that palm oil is rich in carotenoids (pigments found in plants and animals) and fatty acid. Because of its importance as a high yielding source of edible and automobile oils, the oil palm is now grown as a plantation crop in most countries with high rainfall of 1600 mm/yr and a tropical climate of between 100 F. The palm bears its fruits in bunches which vary in weight from 10 to 40 kg, with individual fruits weighting between to 20gms and 30gms. According to Poku (2013), the palm fruit has an outer skin of a pulp mesocap containing the palm oil in a fibrous matrix, a central nut covered with a hard shell (endocarp), which contains the kernel that contains the “kernel oil” on extraction. The palm produce business therefore, constitutes a significant sector of the Nigerian economy by providing revenue, food and raw materials for the people and for industrial use. The sector also provides employment for hundreds of rural and urban dwellers. People in the South- Eastern, South-Southern and parts of South-Western and the North- Central Nigeria, largely depend on oil and kernel as their major source of revenue. Also, the market and demand for palm and kernel oil is national as middlemen engaged in bulk buying of the product to the Northern parts of the country. In Akwa Ibom State, palm produce business first started in the riverine communities of Eket and Ikot Abasi Local Government Areas where Ibo traders found and bought the product at very cheap rates. With the high demand of palm oil at the international markets, attention for palm and kernel oil shifted to Urue Offong Oruko, Abak, Ikot Ekpene and Ikono Local Government Areas. Udoh (2001) observed that the success of this business depended largely on women who constituted the necessary labour force for oil palm production. It is in view of the above that the researcher intend to investigate the economics of oil palm production in Urue Offong Oruko local government area of Akwa Ibom state.

1.3 OBJECTIVE OF THE STUDY

The main objective of this study is to examine the economics of oil palm production in Akwa Ibom state with emphasis on Urue Offong Oruko local government area; but to aid the completion of the study, the researcher intends to achieve the following specific objectives:

1. i) To ascertain the economic benefit of oil palm production in Akwa Ibom State
2. ii) To examine the impact of oil palm production on the economic growth of Urue Offong Oruko local government area of Akwa Ibo state

iii) To ascertain if there is any relationship between oil palm production and improvement in the standard of living of Orue offong Oruko people

1. iv) To examine the role of oil palm production in curbing unemployment and rural urban migration

1.4 RESEARCH QUESTIONS

The following research questions were formulated by the researcher to aid the completion of the study;

1. i) Are they economic benefit of oil palm production in Akwa Ibom State?
2. ii) Is there any impact of oil palm production on the economic growth of Urue Offong Oruko local government area of Akwa Ibo state?

iii) Is there any significant relationship between oil palm production and improvement in the standard of living of Orue offong Oruko people?

1. iv) Does oil palm production play any role in curbing unemployment and rural urban migration?

 

1.5 SIGNIFICANCE OF THE STUDY

It is believed that at the completion of the study, the findings will be of great importance to the state ministry of agriculture as the findings of the study will help to improve the oil palm production process, quantity and quality in the study area, the findings will also be useful to the faculty of agriculture as the literature in the study will serve as a reference point to students for further learning, the study will also be of significance to researchers who intend to embark on a study in a similar topic as the findings will serve as a pathfinder to further research. Finally, the study will be of great importance to student, teachers, lecturers, academia’s and the general public as the study will contribute to the pool of existing literature.

1.6 SCOPE AND LIMITATION OF THE STUDY

The scope of the study covers the economics of oil palm production in Akwa Ibom state with emphasis on Urue Offong Oruko local government area, but in the cause of the study, there were some factors that limited the scope of the study;

1. a) AVAILABILITY OF RESEARCH MATERIAL: The research material available to the researcher is insufficient, thereby limiting the study
2. b) TIME: The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.
3. c) Finance: Limited Access to the required finance was a major constrain to the scope of the study as the researcher could not cover more ground.

1.7 OPERATIONAL DEFINITION OF TERMS

Economics

Economics is the social science that studies the production, distribution, and consumption of goods and services. Economics focuses on the behaviour and interactions of economic agents and how economies work

Oil palm

Palm oil is an edible vegetable oil derived from the mesocarp of the fruit of the oil palms, primarily the African oil palm Elaeis guineensis, and to a lesser extent from the American oil palm Elaeis oleifera and the maripa palm Attalea maripa

Oil palm tree

Oil palm (Elaeis guineensis) is a tropical tree crop which is mainly grown for its industrial production of vegetative oil. It is a typical estate crop, grown and harvested over large uniform areas (3,000 to 5,000 ha) around a central oil mill to allow rapid industrial handling after harvesting.

 

1.8 ORGANIZATION OF THE STUDY

This research work is organized in five chapters, for easy understanding, as follows

Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study. Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature. Chapter three deals on the research design and methodology adopted in the study. Chapter four concentrate on the data collection and analysis and presentation of finding.  Chapter five gives summary, conclusion, and recommendations made of the study

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