BANANA AND PLANTAIN MARKETING IN ENUGU STATE, NIGERIA

Abstract

The study was designed to analyze the marketing of banana and plantain in Enugu State. The specific  objectives  were  to:  describe  the  socio-economic  characteristics  of  banana  and plantain marketers; identify the marketing channels for the crops, examine the structure of the marketing system for both crops, estimate their marketing margins at  both wholesale and retail levels, estimate the rate of price transmission and market integration among banana and plantain markets, and identify the constraints facing the marketing of both crops. The study adopted survey research design. Multi-stage sampling technique was employed to compose a sample of 160 respondents (30 wholesalers and 50 retailers for banana, and 30 wholesalers and 50 retailers  for  plantain).  Data for the study  were collected  from both primary  and secondary sources. Time series data on retail prices of banana and plantain from 2007 to 2011 were obtained from Enugu State Agricultural Development Programme (ENADEP). Primary data were collected using structured questionnaire. Data collected were analyzed using Gini coefficient, marketing margin analysis, Johansen co-integration test, Vector error correction model, and descriptive statistics. The result showed that majority of the respondents (87.50%) were females with average age of 35 years, 76.20% of them  were married while 41.20% attained primary education. The mean scores for  household size and marketing experience were  seven  and  13  years  respectively.  Also,  78.30%  of  the  wholesalers  obtained  their products in heaps directly from producers while 21.70% bought from rural assemblers. Most of the retailers (78.00%) obtained their products in bunches from wholesalers while 28.00% bought  from  producers.  Furthermore,  the  results  of  the  Gini  coefficient  for  banana  and plantain retailers and  wholesalers showed low levels of inequitable distribution of income amongst them. However, inequalities existed more at retail level than at the wholesale level. The mean marketing margin for plantain (21.62%) and banana (13.68%) retailers showed that there  was a significant difference between them, while the marketing margins for plantain (11.65%) and banana (10.58%) wholesalers did not differ significantly. The analysis of price transmission and market integration showed that the Error Correction coefficient (-0.22 and –

0.25) measured by the error correction mechanism (ECM) for the rural and urban prices of banana had low rate of price transmission, while the ECM result (-0.12 and -0.30) for the rural and urban prices of plantain indicated also a low rate of price  transmission; though, showing the presence of market integration. Also, low capital/initial investment, finance, high cost of transportation and heavy imposition of tax/levies are significant constraints to plantain and banana marketing in the study area. The study therefore recommended that government should set up fiscal and monetary policies that will stabilize price for consumable products like banana and plantain, and that government should reduce the high inequality that exists among retailers by making  available adequate  credit to market participants  at appropriate interest  rates.  Finally,  government  should  formulate  and  implement  policies  targeted  at improving  infrastructures  such  as  roads  and  providing  market  information  outfit  that disseminates information timely to marketers for improved marketing of banana and plantain.

1.1      Background of the Study

CHAPTER ONE INTRODUCTION

Three out of every four people in developing countries live in rural areas; 2.1 billion people live on less than 2 US dollars a day and 880 million on less than 1 US dollar a day (Damme,  2009).  Majority  of  these  people  considered  poor  depend  on  agriculture  either directly or indirectly for their livelihoods (World Bank, 2007). The 2008 World Development Report  (WDR)  stresses  the  important  role  agriculture  can  play  in  achieving  the  first Millennium Development Goal (MDG) of reducing by halve the number of people suffering from extreme poverty and hunger. The 2008  WDR  further draws attention to the fact that agriculture has unique features embedded in its ability to: function with other sectors as an economic  activity  for livelihoods,  produce  faster  growth,  reduce  poverty  and sustain  the environment (Godoy and Dewbre, 2010).

In agriculture-based economies, agriculture generates an average of 29% of the Gross Domestic Products (GDP) and employs 65% of the labour force (Damme, 2009). In Nigerian economy, agriculture remains one of the largest sectors, where it plays an important role as food provider, employer of labour and foreign exchange earner, contributing about 40% of the GDP, broadly defined with crops accounting for 85%, livestock 19%, fisheries 4% and forestry  1%  (Federal  Ministry  of  Finance  and  National  Food  Reserve  Agency,  2008). Agriculture  also  employs  about  77%  of  the  working  population  and  accounts  for  70% contribution to GDP of the non-oil sector (Federal Republic of Nigeria, 2006; Mang, 2009). However, Ayinde, Adewumi and  Ojehomon, (2009) noted that the increase in farm output has not led to a corresponding increase in the earnings of the vast majority of farmers. One of the  factors  emphasized  as  being  responsible  for  the  imbalance  is  a  poorly  developed agricultural marketing system for major food staples, leading to high rate of spoilage, rising farm product prices and huge importation of food by government.

Banana and plantain (Musa Spp.) are among the major staple food throughout  the humid tropics of the world (Chander, 1995). They are major food crops in the humid parts of Africa and are major sources of energy for millions of people in these regions. Banana and plantain  fruits  have  diverse  uses  to  millions  of  Nigerians  and  they  have  always  been important traditional staples food for both rural and urban populace in Nigeria (Philips, 1995; Baiyeri, 1996). Nutritionally, unripe banana and plantain are  sources of iron, while ripped ones provide mainly energy (Achike, Okoroafor and Mkpado, 2011).

Musa spp. constitute a rich energy source with carbohydrates accounting for 22% and

32% of fruit weight for banana and plantain respectively, and rich in vitamins A, B and C, as well  as  minerals  and  dietary  fibre  necessary  for  healthy  growth  (Honfo,  Kayode  and Tenkouano, 2007). The dense caloric content coupled with nutritional quality makes Musa spp. one of the most important and regularly consumed staple foods in Nigeria and other sub Saharan African countries (Ajayi and Aneke, 2002; Lusty, Akyeampong, Davey, Ngoh and Markham,  2006). Banana and plantain provide cash  income and employment  to the rural populace in the producing countries like Nigeria.  The crops have become a key source of revenue as they are not only traded within the region, but also exported to other countries of the world (Ortis and Vuylsteke, 1996 in Adejoro, Odubanjo and Fagbola, 2010). The status changes from food to food/cash  crop  and enhances its importance. They are useful in the management  of  common  diseases  such  as  diabetes,  ulcer  and  tonsillitis  and  are  also considered a major component of livestock feed (Babatunde, 1991; Food and Agricultural Organisation, 2007).

According to Ajayi and Mba (2004), banana and plantain have similar features  of Musa spp. and provides an important source of carbohydrate, minerals, vitamins and revenue. Banana and plantain cultivation has become a feature of great socio-economic  importance from the point of job creation and food security. These crops produce fruits throughout the year, the major harvest occurs in the dry season (December to March). During this period, many food crops are in short supply or difficult to harvest (Alves, 1987 as cited in Achike et al,  2011).  Banana  and  plantain  thus,  contribute  to  food  security,  provide  employment, diversification of income sources in both rural and urban areas, as well as contributing to the Gross National Product ( Nkedah and Akyeampond, 2003; Ajayi and Mba, 2007).  In view of the importance of banana and plantain, marketing of the products become pertinent to meet the needs of consumers and also to increase income of the producers and the marketers in Enugu State.

Marketing  of agricultural  products such as banana and plantain  is said to  involve everything  that  happens  between  the  farm  gate  and  the  consumer  including  processing, storage, assembling, wholesaling and retailing (Taleke, 2010). Agricultural marketing is the main driving force of economic development and has a guiding and stimulating impact on production and distribution of agricultural products (Mussema, 2006). The transformation of the production system requires the existence of efficient market system that can transfer the products from the points of production to the required market at the least possible cost (Lutez, 1994).

Efficient and good marketing system can only operate where there is fully utilized good market structure and conduct (Adegeye  and Ditto, 1985). Olukosi and  Isitor (1990) defined market structure as those features of the organisation of a market that change nature of competition and pricing within the market. These characteristics  include the number of buyers and sellers in the market, level of product differentiation, ease or barrier of exit and entry  into  the  markets  and  knowledge  of  cost,  price  and  market  condition  among  the marketers in the market.

Market  structure  in agricultural  and food  sectors  has  changed  fundamentally  and rapidly since 1950s in developed and developing countries (in the latter countries usually with a delay of three decades or more) (McCorriston, Sexton and Sheldon,  2004). Reardon and Timer (2005) stated that it is important to understand  the market  structure  especially  the producer-retailer  relationship  because  it  helps  in  the  analysis  of  food  chain.  Another important variable in marketing structure analysis as stated by Okereke & Anthonio (1988) is concentration level which shows the nature of the market and pricing system.

The marketing channel of food crops such as banana and plantain is an important part of its cost, and its location to the market may shorten the path of distribution from producers to consumers and makes the marketing process simple and efficient (Egbuna,  2009). Farm producers  may  not  effectively  distribute  their  produce  to all consumers  who  are  widely separated in space and time without the services of middlemen. These middlemen no doubt, play prominent roles in the distribution of crop for consumption in, within and outside the main producing states of Nigeria (Anzaku,  2007). These  specialized  agents, according to Arene (2003), perform the functions of marketing more  efficiently than would the farmers themselves.  It  is  expected  that  in  a  competitive  market,  that  middlemen  who  provide marketing services must charge the lowest price to cover their cost and allow for a normal profit. The profit margin must  be  just sufficient to reward investment at the going rate of interest, pay for risk  bearing, provide incentive for new ideas and to save cost or improve service (Abbott & Makeham, 1986; Arene, 2003).  Unless middlemen earn profit in excess of what they require to pay for the borrowed capital and cater for the risk they take, their morale to   continue  to  invest  will  be  dampened  (Abbott  and  Makeham,  1986).  The  critical determinant of returns to producers and middlemen and to retail food price is the marketing margin.  Marketing  margins  include  all the costs  incurred  by middlemen  for  moving  the products from the point of production to the point of consumption, of any processing which may be undertaken, handling at all levels plus profits accruing to them, if any (Kohls, 1969)

The major components of the analysis of marketing margin consist of gross marketing margin,  net marketing  margin  and farmer’s  share.  The  net marketing  margin  accrues  to middlemen as profit (Anuebunwa, 2006), while the farmer’s share is the proportion of the consumer price that goes to the farmer (Majeha, Nwosu and Efenkwe, 2000).  This obviously determines farm investment decision. Effective coordination of different markets is critical to increasing  the opportunities  for exchange  and interdependence  that underlie  growing and expanding economies. Market integration ensures that a regional balance occurs among food deficit,  surplus  and  non-cash  crop  producing  regions  (Goletti,  Ahmed  and  Farid,  1995). Market  integration  is enhanced  by the provision  of transport  infrastructure,  provision  of adequate formal marketing information and standardization of weights and measures in the marketing system (Dittoh, 1994; Oladopo, 2004). According to Barrett, (1996),  studies on market integration provide information on market performance which is necessary for proper policy formulation and macroeconomic modelling. If markets are not spatially integrated it could be indicative that market inefficiencies exist as a result of, amongst others, collusion and market concentration which results in price fixing and distortions in the market. In such cases, inter temporal or cross-sectional aggregation of demand and supply loses its logical foundation (Barrett, 1996 as cited in Adeoye, Dontsop, Badmus and Amao, 2011). Market integration is central to the assessment of market performance and a  useful measure  of  competitiveness  and  interdependence  between  markets  and  middlemen.  This study intends among other things to analyse the market integration of plantain and banana products by focusing on the price adjustment in the rural and urban markets in Enugu State. A critical review of the changing pattern of the prices for both products in rural and urban markets of Enugu State can be shown in the charts below:

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