DETERMINATION OF THE INTEGRATION OF RICE MARKETS IN ENUGU STATE, NIGERIA

ABSTRACT

This study was designed to determine the integration of rice markets in Enugu state. Factors considered include: socio-economic characteristics, existing market structure and channels, integration of rice markets, structural factors that affect the integration of rice markets and the problems affecting rice traders in the state. Forty wholesalers and forty retailers were selected for the study. Primary data and secondary data were collected and analyzed using descriptive statistics, co-integration analysis and market integration function. The results showed that majority of the rice traders were between 30 and 49 years with low educational status and marketing experience ranging from 6 to 10 years. Unit Root Test showed that the variables were stationary at first differencing and were integrated of the order zero, 1(0). Rice markets in the study area were integrated but the integration level was low. The Error Correction Model had a coefficient of -0.0061872 which was significant at 1% level and was negative. The Market Integration Function had R2 (Coefficient of Determination) of 0.78 showing that the independent variables explained about 78% of the variations in the prices of rice in the rural and urban rice markets. Transportation cost, toll fee, processing cost and storage cost significantly affected the level of market integration. The greatest problems encountered by the rice traders were inadequate finance, (100%), high transportation cost/bad roads and poor quality of local rice compared to foreign rice. To improve the level of market integration; transportation, processing, storage, communication and credits facilities should be provided.

CHAPTER ONE
INTRODUCTION
1.1      Background Information
Rice is the second largest produced cereal in the world, after wheat. About half of the world population depends on rice for their staple food. In the 1960s, the world rice production averaged at 264MT and over the years it increased to 596MT during 2001-2005 (Reddy, 2006).

In Nigeria, although rice has been a traditional food, it was only recently it assumed a prominent role in the diet of the majority of Nigerians, following a structural shift in the consumption of traditional coarse grains. According to Akande and Akpokodje (2003), the demand for traditional cereals such as millet and sorghum has fallen by 12kg per capita, and their share in cereals used as food has decreased from 61% in the early 1970s to 49% in the early 90s. In contrast, the share of rice in cereals has grown from 15% to 26% over the same period. In addition, the per capita rice consumption has risen from 18kg in 1980s to 22kg from 1995 to 2000 (Ogundele and Okoruwa, 2006). Two major factors appear to be responsible for this structural shift. These include population growth and urbanization, of which the later appears to be more important factor. To the urbanites, the major edge of rice over other traditional cereals is its relative ease of preparation thereby reducing the task of food preparation and fitting more easily into the urban lifestyles of rich and poor alike. Rice indeed is no longer a luxury food in Nigeria but has become a major source of calories for the urban poor. Stylized facts from several states in Nigeria demonstrate that rice availability and rice prices become a major welfare determinant for the poorest segments of the country’s consumers who also are least food secure (Akande and Akpokodje, 2003). From this perspective, rice marketing assumes an important place.

Rice marketing is the performance of all business activities in the flow of paddy and milled rice, from the point of initial rice production until they are in the hands of the ultimate consumers at the right time, in the right place and as convenient as possible, at a profit margin so as to keep the farmer in his farming operations (Iheme, 1996). The marketing of local rice in Nigeria involves four stages with a change of product ownership occurring between each pair of stages (Aderibigbe, 1997). The first stage is production through harvesting. Stage two concerns movement from the farms to processing centers while stage three involves moving the milled rice from processing area to urban consumption centers. The fourth stage encompasses wholesaling and retailing in the urban centers.

The marketing of any commodity is a specialized technique and demands proper organization. In case of agriculture and particularly rice products, the marketing aspect is even more important and demands a proper organization considering the increasing demand for the product (Ikeme, 1990). Efficient marketing system creates and activates new demand by improving and transforming production and by seeking and stimulating customer’s links. It guides farmers to production opportunities and encourages innovation and improvement in response to demand and price (Kohl and Downey, 1972).

According to Olukosi and Isitor (1990), it is within the marketing system that price allocation of resources, income distribution and capital formation are determined. This is to say that prices are key signals in the resource allocation process that take place through markets. A guaranteed market for farmers’ produce is a ready invitation to.....

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Item Type: Postgraduate Material  |  Attribute: 77 pages  |  Chapters: 1-5
Format: MS Word  |  Price: N3,000  |  Delivery: Within 30Mins.
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