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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 1 Cite as : Economics of Wheat Marketing In Maiduguri Metropolis Borno State, Nigeria.; Vol 1|Issue 01|Pg:01-10 2014 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 2 Cite as : Economics of Wheat Marketing In Maiduguri Metropolis Borno State, Nigeria.; Vol 1|Issue 01|Pg:01-10 2014 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 3 Cite as : Economics of Wheat Marketing In Maiduguri Metropolis Borno State, Nigeria.; Vol 1|Issue 01|Pg:01-10 2014 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. 4 Cite as : Economics of Wheat Marketing In Maiduguri Metropolis Borno State, Nigeria.; Vol 1|Issue 01|Pg:01-10 2014 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 65 Cite as : Economics of Wheat Marketing In Maiduguri Metropolis Borno State, Nigeria.; Vol 1|Issue 01|Pg:01-10 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 6 Cite as : Economics of Wheat Marketing In Maiduguri Metropolis Borno State, Nigeria.; Vol 1|Issue 01|Pg:01-10 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 Cite as : Economics of Wheat Marketing In Maiduguri Metropolis Borno State, Nigeria.; Vol 1|Issue 01|Pg:01-10 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: 8 Cite as : Economics of Wheat Marketing In Maiduguri Metropolis Borno State, Nigeria.; Vol 1|Issue 01|Pg:01-10 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 REFERENCES associated with the business are taken care of. Adegboye, R.O. (2004). Land, Agriculture and Food Security in Nigeria. 3rd Faculty of 9 Cite as : Economics of Wheat Marketing In Maiduguri Metropolis Borno State, Nigeria.; Vol 1|Issue 01|Pg:01-10 Agriculture Lecture Series, University of Ilorin Feb. 25th, 2004. 2014 Kwaghe, P. V.; Gaya, H. I. M and Patrick, T. (2008). The economics of Bushmeat Ahmed, M. E. 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