Download Cite as : Economics of Wheat Marketing In Maiduguri Metropolis

The International Journal of Social Sciences and Humanities Invention
Volume 1 issue 1 2014 page no.01-10 ISSN: 2349-2031
Economics of Wheat Marketing In Maiduguri Metropolis
Borno State, Nigeria.
Ahmed, Funmilola Fausat
[email protected]
Department of Economics, University of Maiduguri. Borno State
ABSTRACT
The study examined the economics of wheat marketing in Maiduguri Metropolis of Borno state. Primary
data were collected using well structured questionnaires administered to randomly selected wheat
marketers in two major wheat markets in the metropolis. Descriptive statistics, gross margin and
marketing efficiency analytical techniques were used to analyze the data generated by the study. The
study revealed that wheat marketing channel in the study area is centralized. The study also revealed
that the marketers are males mostly of ages between 30-50 years with moderate level of education but
with high marketing experience. Wheat marketing in the study area was found to be profitable with a
gross margin of N1,520 per 50kg bag of wheat and high pricing and operational efficiency of 1.32%. The
constraints of wheat marketing enumerated by the respondents included high transport cost; lack of
access to capital; activities of middlemen and inadequate storage facilities. To improve the profitability
and ease of marketing of wheat in the study area, the study recommended that government should
provide adequate transport facilities, build silos, warehouses and other storage facilities to store
produce to cater for lean periods and ultimately reducing the exploitative activities of the middlemen.
Also, wheat marketers should be provided with loans and credit facilities to enjoy the economics of large
scale marketing.
INTRODUCTION
non-oil exports and perhaps most importantly,
Agriculture is one of the most important sectors of
provides over 80 percent of the food needs of the
the Nigerian economy. This is because it
country (Adegboye, 2004).
contributes more than 30 percent of the total
Historical
reports
confirmed
the
annual GDP, employs about 70 percent of the
introduction of wheat to West Africa through
labour force, accounts for over 70 percent of the
Arabs. The crop gradually got into Nigeria via
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Sudan to Lake Chad. Its production in Nigeria,
of boosting wheat production in the country
was initially confined to the Chad basin, and was
(Akinsoye, 2005).
on a very small scale with no improved
Wheat is mainly produced by small scale
technology used and mainly made into ditches by
farmers in the northern parts of Nigeria. Wheat is
the farmers. Since temperate varieties were mainly
consumed in one form or the other in virtually
used, its production is confined to the cool dry
every home, restaurants and hotels throughout the
season of November to March, necessitating the
country. The crop is the main raw material in the
use of irrigation. Wheat is cultivated by most
flour mills. Wheat flour is used in Nigeria for
farmers localized in areas between latitudes 10-
bread and cake (85-99 percent), biscuit (about 4
140N which has been identified by research as
percent), pasta (below 1 percent), macaroni and
suitable for the crop growth (Onu and Illiyasu,
spaghetti (below 1 percent). Wheat is commonly
2008).
milled at 75-76 percent extraction rate. The offal
Wheat is one of the most important staple
(residues)
is
used
in
the
feed-mills
in
food grains in Nigeria. It is leading cereal food
compounding livestock feeds. The crop can also
produced, consumed and traded in Nigeria
be processed for its starch content. Wheat
averaging 533 metric tonnes annually representing
contributes more calories and more protein to the
almost one third of all cereal production (CBN,
world’s diet then any other crop. World trade in
2008). Wheat is an important industrial and food
wheat also exceeds trade in all other grains put
grain for human beings and livestock. The
together. The raised loaf (bread) is possible
demand for wheat in Nigeria started with the
because the wheat kernel contain gluten, an elastic
introduction of bread in the mid 1950s. The
form of protein (Onyibe and Ubi, 2004). The ban
consumption of bread confectionaries, biscuits
on the importation of cereals by the Federal
and other snacks prepared from wheat rose
Government of Nigeria has greatly expanded
tremendously over the years due to urbanization,
these uses, and thus, overall demand for wheat.
increase in population and income growth. High
Enormous market potential however exists
proportion of this wheat demand is however met
for wheat grains and wheat products in the
through importation. Quantity of wheat grains
country. Marketing of wheat involves such
imported rose from 1.8million tones in 1996 to
business operations such as buying and selling,
3.4million tones in 2004. In line with this, the
transportation, storage, grading, pricing, financing
Federal Government of Nigeria initiated the
of trade and risk bearing. A chain of middlemen is
accelerated wheat production programme (AWPP)
involved who incur costs of marketing and take
in the states within the “wheat zones” as a means
profits for the services they have rendered. Wheat
marketing is very important in the availability and
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accessibility of food (Olukosi et al, 2005). On the
The study was carried out in Maiduguri
supply-side causes of food insecurity, Idachaba,
Metropolis, the capital city of Borno State,
(2004) argued that the dwindling agricultural
Nigeria. Maiduguri is also the main commercial
production in Nigeria is a confirmation of the
city in the North east geo-political zone of
unattractiveness of agriculture as a result of low
Nigeria. It covers an area of about 69,436 square
returns and compensation being paid to farmers
kilometers (Ministry of Land and Survey, 2004)
tend to discourage increased production. The
and bordered by Konduga Local Government
national output of wheat increased progressively
Area to the north and northwest, and Jere Local
over the years from 113 metric tones in 1984 to
Government Area to the south (Annals of Borno,
515 metric tones in 1992 but took a downward
2003) According to 2006 population census,
trend from 1993 to 33 metric tones. In 2007, total
Maiduguri has an estimated population of
output of wheat only increased minimally to 50.7
1,197,497 (National Population Commission,
metric tones (Central Bank of Nigeria, 2008)
2006).
The food marketing problems are evident
Maiduguri
Metropolis
is
ecologically
when farmers could not get their produce to the
characterized as a sahelian savanna with mainly
market at the right time are not given better
grasses, shrubs and few trees. The climatic
returns for their efforts.
Certainly, by raising
condition of the state is hot and dry for most part
agricultural productivity, food availability could
of the year. It has low rainfall of about 500 mm
be increased. However, this is not enough; the
annually and a low relative humidity ranging from
food must be distributed efficiently at minimum
42% to 49%. The average temperature is about
cost in order to guarantee continuous availability
200C and a low relative humidity of about 42
of the food. This is subject to food marketing. The
percent annually (Maryah, 2005). The major
main aim of this study, therefore, is to examine
ethnic groups are Kanuri, Shuwa, and Babur-Bura.
the economics of wheat marketing in the study
Its economy is largely based on agriculture, trades
area. The specific objectives were to: determine
and services. The major crops cultivated are
the
wheat, maize, millet, cowpea and groundnut as the
socioeconomic
characteristics
of
wheat
marketers in the study area; examine the market
major crops grown.
performance of wheat marketing; and highlight
the problems associated with wheat marketing in
the study area.
Source and Nature of Data
The research work employed both primary
and secondary information. The primary data were
METHODOLOGY
obtained through the administration of well
Study Area
structured questionnaires and personal interview
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and physical market survey of the study area
GR = Gross Revenue/Income in naira per 50kg
while secondary data were obtained from journals
bag of wheat.
and textbooks, students’ theses, and government
TVC = Total Variable Cost in naira per 50kg bag
publications.
of wheat.
Marketing Efficiency (ME) estimate of
wheat was determined as opined by Olukosi et al.
Sampling Technique
Purposive
sampling
technique
was
(2005) and expressed as:
employed to select the wheat markets. Muna and
ME = Value added by marketing activities x
Gomboru markets were purposively selected for
100%
the administration of questionnaires. This is
Alternatively,
because these markets serve as the major markets
ME = Value of output
for grains and has the highest number of wheat
x 100
Value of input
marketers in the study area. Thirty (30) wheat
marketers were randomly selected from each
DATA PRESENTATION AND DISCUSSION
market. A total of sixty (60) wheat marketers were
OF FINDINGS
sampled for this study.
Socio-Economic
Characteristics
of
Respondents:
Analytical Techniques
Descriptive Statistics such as means, tables
and percentages were used to present the results
on socioeconomic characteristics of respondents
and problems associated with wheat marketing.
Gross Margin (GM) was used to determine
the profitability of wheat marketing in the study
area. It is based on the assumption that fixed cost
component of marketing is negligible and applied
by Iheanacho (2000) and Kwaghe et al (2008).
The gross margin is expressed as:
GM = GR- TVC
The study indicated that all the wheat
marketers are males (100%). The result is in
support of the study carried out by Orobiyi (2007)
who observed also that all fish marketers in
Maiduguri are males. This could be attributed to
high energy required in performing the marketing
operations. Respondents between the ages of 30 –
39 (23.33%) and 40 – 49 (53.33%) are actively
involved in wheat marketing in the study area.
Joseph (2007) noted that marketing activities
involve making the product available to the
consumers in the form, place, time, and at price
Where;
GM = Gross Margin in Naira per 50kg bag of
the consumers are willing to pay. This obviously
requires experience and as such marketers below
wheat.
the age of 30 are very few.
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Marital status indicates the extent to which
respondents that were interviewed, 70% have 6–
responsibilities are borne by the wheat marketers
10 household members while 11.67% have 11–15
(Joseph, 2007). The study revealed that most
household members. The family size obviously
wheat marketers in the study area are married
indicates the number of dependents and wheat
(61.67%)
The
marketers would not have remained in the
involvement of married people as opined by
business if it is not profitable enough to meet the
Kwaghe et al. (2008) could mean that the trade is
needs of their somehow large families (Kwaghe et
remunerative to cater for family responsibilities.
al. 2008).
while
38.33%
are
single.
On the family size of wheat marketers, out of 60
Table 1: Distribution of Respondents by some Socioeconomic Variables
Socioeconomic Variables
Gender
Male
Female
Age (years)
Below 30
30-39
40-49
50 and above
Marital Status
Married
Single
Educational Qualification
Quaranic
Primary
Secondary
Tertiary
Marketing Experience (years)
Below 10
11-20
5
Frequency
Percentage
60
0
100
0
8
14
32
6
13.33
23.33
53.33
10
37
23
61.67
38.33
26
11
21
2
43.33
18.33
35
3.33
12
39
20
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Above 20
Source of Capital
Family and Friends
Cooperative
Personal Savings
Bank
Other Occupation
Solely Wheat Marketing
Involve in other occupation
9
15
34
8
12
6
56.67
13.33
20
10
17
43
28.33
71.67
2014
Source: Field survey, 2013.
As observed by Ahmed (2008), education
and friends are usually limited and does not allow
provides marketers with knowledge and skills to
for continuous expansion of business activities.
enhance marketing activities thereby ensuring
He further stressed that a lot of potentials for
efficiency in market performance as well as
expansion can be achieved if marketers look up to
improving the standard of living of marketers. The
banks for funds.Most wheat marketers in the study
result of the study indicates that most wheat
area during the course of study engage in other
marketers had non-formal education (43.33%)
business ventures. These include farming, buying
while 35% of the total respondents had secondary
of farm produce such as grains during harvest
school education. The result on marketing
(peak period), stores and dispose at lean period
experience revealed that most wheat marketers are
thereby making more profit. Others retail seasonal
well experienced supported by age and the low
farm produce such as mangoes, cucumbers,
level of education. These factors seem sufficient
onions etc. Respondents involved in other
to keep them in business. Sule, (2004) also opined
business activities are 71.67% while those on
that there is a close relationship between
wheat marketing solely are 28.33%.
marketing and years of experience. Marketing
activities require sufficient capital to be performed
efficiently. Access to capital will go along way in
broadening the scope of wheat marketing through
expanding
scale
and
hence
advantages
of
Market Performance
This section focused on the examination of market
performance through the performance indicators
which are:
economics of scale will prevail. Most wheat
marketers in the study area source their capital
(i) Gross Market Margin In this section, the
from family and friends (56.67%), 20% from
cost incurred and the returns from wheat
personal savings and very few respondents source
marketing by the respondents were considered and
capital for business from banks. Momoh (1987)
used to assess the profitability of the enterprise.
stated that capital obtained from family members
The revenue and total variable cost of wheat
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marketing in the study area is presented in Table
2014
2.
Table 2: Monthly Average Variable Costs and Returns per 50kg Bag of Wheat
Item
Monthly total
Average per marketer
Revenue
Sales of Wheat
372,000.00
6,200.00
Total Revenue (TR)
372,000.00
6,200.00
Variable Costs
Purchasing price
211,200.00
3,520.00
Transportation cost
25,200.00
420.00
Storage
15,600.00
260.00
Labour
19,200.00
320.00
9,600.00
160.00
270,800.00
4,680.00
91,200.00
1,520.00
Tax
Total Variable Cost (TVC)
Gross Market Margin
Source: Computed by Author from Field
N4,680.00. Analysis of the total variable costs
Survey Data, 2013
revealed that 75.21% of it is the purchasing price
while the remaining 24.79% represents variable
The total monthly revenue accruing to all
the respondents from their wheat business is
N372,000.00 while the monthly average total
revenue per 50kg of wheat is N6,200.00. The total
monthly
variable
costs
incurred
by
the
respondents is N270,800.00 while the average
monthly variable cost per 50kg of wheat is
7
costs on transportation, storage, labour and tax.
The gross market margin accruing to the
respondents per month totals N91,200.00 and the
monthly average margin per 50kg of wheat is
N1,540.00. This indicates that wheat marketing is
profitable. All things being equal, a marketer is
expected to have an approximate level of profit
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depending on the number of bags of wheat sold
2014
Marketing efficiency is calculated by
dividing the total revenue by the total variable
per month.
cost and multiply by hundred.
(ii) Marketing Efficiency of wheat in the study
area
Table 3: Marketing Efficiency of Wheat.
ITEM AVERAGE
AMOUNT (per 50kg of
wheat)
Gross Revenue (output)
N 6,200
Total variable cost (inputs)
N 4,680
Marketing Efficiency
1.32%
Source: Computed by Author from Field
Survey Data, 2013
This process is usually characterized by
the producers, middlemen and consumers. Wheat
grains are bought from the producers (farmers)
According to Olukosi et al (2005),
marketing efficiency is a function of both pricing
and operational efficiency. The above result
therefore, implies that, there is high pricing and
operational efficiency in wheat marketing in the
study area with marketing efficiency of 1.32%.
Wheat Marketing Channel
through brokers, who serve as agents to the
farmers. However, in the study area, there are
instances where the market participants and even
consumers buy wheat grains directly from the
farmers. Due to the activities of the middlemen,
there is high incidence of exploitation by the
agents. In this market, most wholesalers also retail
wheat grain to maximize profit.
Marketing channel represents the route
through which wheat grains passes from the
producers to the final consumers. The channel
Problems of Wheat Marketing Marketing
Table 4: Problems of Wheat
determines how wheat grains come in and out of
the market and also eliminates the difficulties
where consumers cannot buy directly from the
producers (farmers) who are mostly located in the
rural areas.
The problems identified as affecting wheat
marketing in the study area are presented below:
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Problems
Frequency*
Percentage
High transport cost
51
39.5
Lack of access to capital
43
33.3
Activities of middlemen
23
17.8
Inadequate storage facilities
12
9.3
Total
129
100
2014
*Multiple responses existed
Based
Source: Field Survey, 2013.
The major wheat marketing problems
faced by the respondents in the study area include
on
•
profit.
markets
respondents find it difficult to take advantage of
•
CONCLUSION
by
and
security
on
the
Loans and credit facilities should
be made available to the wheat
scale. Furthermore, activities of middlemen and
the respondents.
measures
highway.
access to capital to expand their present business
inadequate storage facilities constitute problems to
policy
the rural areas to the urban
Also,
large scale purchases due to lack of (33.3%)
Definite
as adequate road networks form
respondents (39.5%) indicated that high transport
their
following
to reduce high transport costs such
storage facilities. The study revealed that most
affect
the
government can be embarked upon
activities of the middlemen and inadequate
ultimately
study,
recommendations were proffered.
high transport cost, lack of access to capital,
cost
the
marketers.
•
Government should build silos,
warehouses and
other
storage
facilities to cater for lean periods
which ultimately will reduce the
In spite of the problems associated with
activities of the middlemen.
wheat marketing in the study area, it is evident
that wheat marketing is profitable. The marketers
stand to earn more profit if the problems
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