TRADITIONAL AND MODERN GROUNDNUT PROCESSING AND MARKETING IN NORTH CENTRAL NIGERIA

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ABSTRACT

The study evaluated the traditional and modern groundnut processing and marketing in North Central Nigeria. The focus was on groundnut oil processing and marketing systems; input use efficiency in production and factors that made for efficiency; profitability of the processing activity and factors that determined profitability; examination of value added by processing; integration of markets for the processed products and problems of the industry. A total of 175 traditional processors were selected and 17 small-Scale modern processors covered from Nasarawa, Benue and Niger States. Pre-tested, structured questionnaires and observations were used as instruments of data collection. Types of data collected were those on socio-economic characteristics of processors, groundnut procurement, processing, and ground nut oil (GNO) and groundnut cake (GNC) marketing. Weekly price series for GNO and GNC were also collected at various markets within the region. Data analyses were attained by use of descriptive and inferential statistics, stochastic frontier analysis (SFA), profit function analysis, t-test statistic and Johansen test for co-integration. Hypotheses were also tested appropriately. The average age of traditional processors in North Central Nigeria was 38 years and 41years for modern processors. Ninety-four percent of the traditional processors were women while 88% of modern processors were men. Majority of the processors did not participate in co-operative activities. Sixty percent of groundnut processed by traditional processors came from farmers while 94% of groundnut processed by modern processors was obtained from traders. The maximum likelihood result for traditional processors indicated the presence of inefficiency. Raw groundnut variable was significant at 1% level of significance (LOS) in Nasarawa and Niger States. Fuel-wood and salt were both significant at 1% LOS in Nasarawa and Benue States. In the inefficiency aspects, age and years of experience were significant at 1% LOS in all the states. For the zone, labour and salt were significant at 1% LOS; fuel-wood 5% and raw groundnut 10% LOS. In the inefficiency aspect for the zone, household size was significant at 5% LOS, while level of education was significant at 10% level of probability. Raw groundnut and labour were significant in modern processing, while education and experience at 10% in the inefficiency aspect. Most of the traditional processors had their efficiency scores above 0.80 and modern processors were from 0.47. In the profit function results for traditional processors, fuel-wood and packaging variables were significant at 1% LOS. Raw groundnut, procurement and maintenance were significant at 1% in modern processing. Value added was 41% for traditional processors and 44% for modern processors. There was significant difference in the value of groundnut before and value after processing. The Johansen trace test result indicated five co-integration vectors at 5% level of probability for GNO and two co-integration equations for GNC. The markets for GNO and GNC were not fully integrated. Administrative regulations affected market integration for GNO which was significant at 5% LOS. Constraints identified included inadequate finance, inadequate electricity, machine breakdown and transportation. Recommendations made included improved packaging, finance, electricity supply and co-operative education.