ABSTRACT
The study assesses the economics of palm oil producers in Akwa Ibom State with emphasis on Urue-Offong/Oruko Local Government Area. The study made use of primary data from rural palm oil producers in Urue-Offong/Oruko Local Government Area. 120 respondents were selected for the study using multi-stage random sampling procedure. Data for the study were obtained with the aid of questionnaire. Data were analysed using descriptive statistics and whole whole farm analysis model. The study revealed that 59.2% of the respondents are female, 32.5% were 31 – 40 years old, 60.8% were married, 54.2% had SSCE/OND, 85% had 6 – 10 years experience, 59.2% had farming as their secondary occupation, 46.7% had average income below #25,000 and 94.2% produce palm oil for commercial purpose. On profitability analysis it was revealed that palm oil production business in Urue-Offong/Oruko is profitable. The major constraints faced by the palm oil producers were price fluctuation,high processing fee, insufficient capital, high cost of labour, long distance to market, poor access road, non availability of labour and insufficient credit facilities. The study therefore recommends provision of standard processing mills,credit faculties(interest-free loans) and adequate extension services by government.
CHAPTER ONE
INTRODUCTION
1.1 Background of the study
Nigeria is blessed with lots of natural and human resources such as crude oil, natural gas, water resources as well as palm trees(Elaeis guineensis). In spite of all these natural endowment ,poverty manifested in the form of inadequate agricultural goods is still very high. Also, cases of hunger, malnutrition, unemployment and ruralurban migration have been widely reported in the country. The World Development Report (2000/2001) puts Nigeria as the 28th poorest country in the world. The Federal Office of Statistics (FOS) also observed that, in 1990, the rural areas of Nigeria accounted for 66 percent of the incidence of poverty in the country (FOS, 1992). It estimated also that, over 65 percent of Nigerians live below poverty line and a large majority of those affected live in rural communities. But according to the National Bureau of Statistics, the national poverty incidence in Nigeria is estimated to be 54.7 percent, while majority of Nigerians lived in absolute poverty (NBS, 2012). As observed by Olurode (2001), Ekong (2003), and Udoh (2004), many Nigerians live in rural areas and in spite of the enormous human and natural resources found there, majority of the people are poor. Orokpo (2006) experientially declared that, the scourge of poverty in rural communities is high in spite of their engagements in petty agricultural activities, crafts, subsistence trading and other socio-economic endeavours. According to National Poverty Eradication Survey Report (NPESR, 2010), rural poverty profile in Nigeria has increased from 66 percent in 1999 to 73.2 percent in 2010. Although several intervention strategies by the Federal Government such as, Operation Feed the Nation (OFN), Green Revolution (GR), Directorate of Food, Roads and Rural infrastructure (DFRRI), National Directorate of Employment (NDE), Better Life for Rural Dwellers (BLRD) and the National Poverty Eradication Programme (NAPEP) and many others have been developed to solve the problem of poverty, but the situation continue to pose serious challenges to the people in the country. Oil-production had for a long time been an important phenomenon in Urue Offong Oruko localities. It developed with the people. Palm oil takes great part and parcel of the cooking of food, making of bath soaps, e.t.c. Its importance, therefore cannot be over-emphasized. Nigeria is among the world largest producers of palm oil (CBN, 2012, FAO, 2012 and United State Department of Agriculture, 2012). During the pre-independence period, the country’s bulk exports and foreign exchange earnings came from the palm oil and palm kernel trade. Nigeria was the largest producer of palm oil until early 1960s when it relinquished its position to Malaysia and currently Indonesia (United State Department of Agriculture, 2012). The advent of the crude oil in late 1970s distorted government investment in the sub-sector but rather concentrated investment in the fast yielding and emerging petroleum sub-sector. From 1960 till date, the annual productions of palm oil and palm kernel as well as government investment in the sub-sector have been unsteady and in most years declined (CBN, 2010). For instance, in 2002 the country’s palm oil production recorded a zero growth rate compared to Malaysia with 5.9%, Indonesia 11.2% and Columbia 8.8% growth rates (Basiron, 2002; CBN, 2006 and FAO, 2009). Several researchers have adduced the declined role of palm oil sub-sector to the country's over dependence on crude oil exploitation, prevalence of traditional palm oil processing techniques over the modern technology and the Nigerian civil war of 1967 to 1970 which was fought in the country’s palm oil belt. These events were responsible for the country’s inability to meet up with the global demand for palm oil and palm kernel production (EzeUche, 2008 and Onwubuya, 1997). According to Olagunju, (2008) and PIND, (2011), up till 1960 Nigeria‘s palm oil accounted for 43% of the global palm oil production. Domestic annual production is currently around 900,000 tons (CBN, 2012 and FAO, 2012). Due to the increase in the industrial and domestic demand, there is an estimated overall supply gap of between 150,000 and 300,000 tons of technical palm oil (TPO), and 200,000 tons of special palm oil (SPO) much of which is currently met through imports (PIND, 2011 and CBN, 2012). Kei, et al., (1997) and Olagunju, (2008) in their studies observed that, due to the increase in demand for palm oil products, resulting from increase in population and consumer’s income growth relative to the low productivity of the oil palm sector, Nigeria has become a net importer of palm oil. This has a serious implication on the country’s external reserves and the survival of the domestic palm oil industry.
1.2 STATEMENT OF THE PROBLEM
According to th United States Department of Agriculture(USDA), Akwa Ibom is the largest producer of palm oil and kernel in Nigeria (USDA 2018).
Palm oil production is a viable and lucrative business which has the capacity to sustainably provide foreign exchange earnings and improve the living standard of the producers. Oil palm is almost naurally occuring in Urue-Offong/Oruko Local Government Area. It is a major constituent of her forest vegeation including the swamps. Despite these facts, palm oil production has been on the decline in recent times. This perhaps can be atributed to the event of oil boom and inadequate government credit facility in the area of palm oil production to enhance the the production of palm oil. It is in view of the above that the researcher intend to investigate the economics of palm oil production in Urue Offong Oruko local government area of Akwa Ibom state,and finding possible ways to ameliorate the constraints to palm oil production in the study area.
1.3. RESEARCH QUESTIONS
The following research questions were formulated by the researcher to aid the completion of the study;
(i). What are the socioeconomic characteristics of palm oil producers in Urue-Offong/Oruko Local Government Area of Akwa Ibom State?
(ii). What is the profitability of palm oil production in Urue-Offong/Oruko Local Government Area of Akwa Ibom state?
(iii). What are the constraints of palm oil production in the study area?
1.4. OBJECTIVE OF THE STUDY
The main objective of this study is to examine the economics of palm oil production in Akwa Ibom state with emphasis on Urue Offong Oruko local government area; but to aid the completion of the study, the researcher intends to achieve the following specific objectives:
- i) To describe the economic characteristics of palm oil production in the study area.
- ii) To determine theprofitability of palm oil production in the study area.
iii) To determine the constraints if palm oil production in the study area.
1.5 SIGNIFICANCE OF THE STUDY
It is believed that at the completion of the study, the findings will be of great importance to the state ministry of agriculture as the findings of the study will help to improve the oil palm production process, quantity and quality in the study area, the findings will also be useful to the faculty of agriculture as the literature in the study will serve as a reference point to students for further learning, the study will also be of significance to researchers who intend to embark on a study in a similar topic as the findings will serve as a pathfinder to further research. Finally, the study will be of great importance to student, teachers, lecturers, academia's and the general public as the study will contribute to the pool of existing literature.
1.6 SCOPE AND LIMITATION OF THE STUDY
The scope of the study covers the economics of palm oil production in Akwa Ibom state with emphasis on Urue Offong Oruko local government area, but in the cause of the study, there were some factors that limited the scope of the study;
- a) AVAILABILITY OF RESEARCH MATERIAL: The research material available to the researcher is insufficient, thereby causing a level of limitation to the study.
- b) TIME: The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.
- c) Finance: Limited Access to the required finance was a major constrain to the scope of the study as the researcher could not cover more ground.
1.7 OPERATIONAL DEFINITION OF TERMS
Economics
Economics is the social science that studies the production, distribution, and consumption of goods and services. Economics focuses on the behaviour and interactions of economic agents and how economies work
It tries to study human reactions to profitability, cost, price, quantity demanded, quantity supplied etc
Palm Oil.
This refers to the red-pigmented liquid(oil ) extracted from the fleshy mesocarp of ripe oil palm fruits. It can also be referred to as Crude Palm Oil (CPO). It is edible and can be used for several other purposes including domestic and industrial. It can serve as a source of revenue for the family and a source of foreign exchange earnings to a country.
Oil palm
Oil palm (Elaeis guineensis) is a tropical tree crop which is mainly grown for its industrial production of vegetable oil. It is a typical estate crop, grown and harvested over large uniform areas (3,000 to 5,000 ha) around a central oil mill to allow rapid industrial handling after harvesting.
