ANALYSIS OF OKRA MARKETING IN IKWERE LOCAL GOVERNMENT AREA

CHAPTER ONE

INTRODUCTION

1.1 Background to the study

Okra (Abelmoschus esculentus) is one of the most important fruit vegetable crop with many

health benefits and is of high nutritional value. Okra supplies nutrient such as magnesium, fibre,

anti-oxidants, vitamin c and also posses anti cancer properties. It is widely accepted and

commonly used in variety of dishes like soups, stews and salads. They can be eaten in it's fresh

state, fried, roasted, prickled and boiled.

Vegetables in general are widely cultivated and a major source of income for many part of

Nigeria. Vegetables are grown extensively by small farm holders and commercial farmers.

However marketing of vegetables is complex and risky because of its characteristics such as

highly perishable in nature, seasonality, and bulkiness. These characteristics leads to various

problems such as scarcity and fluctuations in price

India is the world largest producer of okra followed by Nigeria and Sudan (Varmudy, 2011).

Okra grows best only in warm season and therefore planting of okra is best towards the end of

raining season. Although it can be cultivated through out the year using irrigation method.

Towards the end of rainy season, production is large than what the consumer can consume.

During dry season okra fruits are produced in low quantities, thus scarce and expensive (Bamire

& Oke, 2003)

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Okra is a potential export crop. Every part of okra plant is useful, it's leaves and shoots can be

cooked and eaten by humans and also eaten fresh by livestock like goat, sheep and cattle.

Agricultural marketing is an important aspect of marketing that deals with the exchange of

agricultural produce. Conventional definition of agricultural marketing states that agricultural

marketing starts when the crop is harvested. These concept has changed, as it is a process, which

start with farmers decision to produce saleable farm commodities involving all aspects of

marketing structure or systems both financial and institutional with economic consideration

including product assembly, preparation for market, distribution and use by the final consumer

(Kaini & Werner, 1998)

Agricultural marketing deals with all the activities, agencies and policies involved in the

procurement of farm inputs by farmers and movement of agricultural products from the farm to

the consumers (Kiruthiga et al, 2015).

Marketing of agricultural produce is complex and challenging because of their special features

which include; perishability, seasonality, high economic value etc. Marketing factor determines

the success of farming enterprise. Marketing includes decisions and operations made by the

farmer. These decisions range from determining the most marketable crops for production to

deciding how to best deliver quality produce to the consumers at a profit. Inter community

marketing activities are common pre-occupation among marketers in Nigeria even on the entire

African continent. Marketers in cross community and/or interstate trade, most times transport

their commodities to nearby and distant locations for sale on market days.

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In Nigeria, marketing of agricultural produce is mostly carried out in the local markets. The

farmer sells his goods to retailers in the local market and the retailers sells directly to the final

consumers. Nigeria local markets are either periodic or non-periodic in nature. Periodic markets

can also be called food hubs. These are markets that hold at regular intervals, for instance every

five days or seven days. In these markets, middlemen and small farm producers have opportunity

of coming together to execute market related and social transactions (Yusuf, 2012)

Okra marketing towards the end of rainy season when all crops reaches the maturity stage and

are ready for harvest, creates an excessively abundant supply in the local market due to the fact

that there are no proper storage facilities and processing techniques, thereby causing very low

returns to the farmers. In other words, the marketing efficiency becomes an important

determinant factor to the performance of the industry.

1.2 Statement of the Problem

In spite of various initiatives aimed at improving horticultural subsection agriculture has not met

the food needs of our growing population. According to Ayinde, Adewumi and Ojehomon

(2009), the possible reason for the failure is the malfunctioning of marketing chain of major food

items leading to higher rate of spoilage, constant food shortage rising farm product prices,

importation cost inadequate knowledge and technology of production, poor extension services,

insufficient planting materials and climate variables which include weather factors not within the

control of agricultural producers. Marketing of okra is faced with a lot of risk which exposes

them to all kind of intimidation and loses especially within the geographical region of the study,

and most government polices do not favour okra vending which affect the economic output

(Stutter, 2007).
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Unfortunately, studies have not been carried out to solve the disparity between supply and

demand in terms of prices. This research is to find out the bottleneck of okra marketing in

Ikwerre local government area of Rivers State, Nigeria.

The disparity is caused by the bottleneck with a view to proffer solutions to improve the

marketing of okra in Rivers State and Ikwerre local government area in particular. To ascertain

the objective of the study, it came up with the following research questions:

a) What is the socioeconomic characteristics of okra marketers?

b) What is the cost, returns and marketing margin of the marketers?

c) What are the channels of okra marketing

d) What are the challenges associated with okra marketing

1.3 Objectives of the Study

The broad objective of this study was to analyze okra marketing in Ikwerre local government

area, Nigeria. The objectives were to;

i. To describe the socio economic characteristics of the respondents

ii. Evaluate cost and return of okra marketing

iii. To describe the marketing channels

iv. Identify the problems or challenges in okra marketing

1.4 Research hypothesis

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Ho; There are is significant relationship between socioeconomic characteristics and profit of okra

marketers.

1.5 Significance of the study

This study will help people involve in okra marketing in other parts of the country know other

methods of okra marketing. Findings from this study will help okra farmers and marketers know

the possible problems associated with okra mark oketing and possible means of solving the

problems. It can serve as a channel for government and private sector to identify factors which

influence the demand for okra. It is useful to young and old researchers and extension agents and

as well as students of agriculture who may likely go into a study similar to this in the future.

1.6 Scope and limitations of the study

The study will be limited to okra sellers in Ikwerre local government markets. The study will

also look at the socio economic characteristics of the okra marketers, the cost associated with the

marketing process and constraints. The possible limitations might be difficulty in accessing

information from okra distributors and traders in the market due to fear in exposing their

business secrets. Also lack of adequate financial resources for transportation and sundry

expenses for researchers in obtaining further information of paramount importance.

1.7 Organization of the study

The study will be structured into five chapters; that is chapter one, which covers the study

background, statement of the problem, objectives of the study, research hypothesis, study

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significance and study scope and limitations. Chapter two will be the literature review section

and shall be arranged as follows; the theoretical, conceptual, empirical and evaluation of

literature review. Chapter three will be specified methodology. Chapter four will focus on the

result presentation and discussion, while chapter five shall be conclusion of findings,

recommendations and contributions to further studies.

1.8 Definition of terms

Okra: Okra (Abelmoschus esculentus) is a plant of the mellow family with long ridged seed pods

used especially in soups and stews

Marketing: The action or business of promoting and selling products or services, including

market research and advertising. It is also defines by American Marketing Association (AMA)

as the activity, set of instructions and processes for creating, communicating, delivering and

exchanging offerings that have value for customers, clients, partners and society at large.

Market: Dictionary defined market as a regular gathering of people for the purchase and sales of

provisions, livestock and other commodities. It also defined market as an area or arena in which

commercial dealings are conducted

Socioeconomics: It is the science that studies how economic activity affects and is shaped by

social processes. It is how modern societies programs, stagnate or regress because of other local

or regional economy, or the global economy.

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 CHAPTER TWO

LITERATURE REVIEW

2.1 Theoretical Literature

The theoretical literature for the study is anchored on the following theories

Theory of transaction cost

Theory of Demand and Supply

Theory of cost

Literature on Profitability

2.1.1 Transaction Cost Theory

Transaction cost theory (TCT) is widely used in several management disciples, it's value for

explaining organizational phenomena and manager's decision is well accepted and has been

recognized with two noble laureates (Coase and Williamson) the recent noble prize award in

economics to Olivier Williamson, in 2009, recognizes the importance of transaction cost

economic theory (TCT).

According to Williamson (1979, 1986), transaction cost theory posits that the optimum

organizational structure is one that achieves economic efficiency by minimizing the cost of

exchange.

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The theory suggests that each type of transaction produces cost of monitoring, controlling and

managing transaction.

Alternatively, the magnitude of agency and transaction cost depends on the level of bounded

rationality, assets specificity coupled with opportunism and uncertainty (Martins et al, 2010).

Although the term "transaction cost" has its root in neoclassical economics

It has evolved beyond the neoclassical model and has produced new subfields such as a new

institutional economics (Martins, Serra, Ferreira, Leite & St Li, 2010).

It is said that transaction cost affects the market participation level of vegetable producers and

these cost include access to road, information, distance to the market and time of payment.

2.1.2 Theory of Demand and Supply

Theory of demand supply can also referred to as theory of consumer behavior. It plays a very

vital role in processing and marketing of crayfish . Consumer behavior is the study of individual,

groups or organizations and all the activities associated with the purchase, the disposal of goods

and services, including the consumer’s emotional, mental and behavioral responses that precede

or follow these activities. The major determinate(s) of quantities demanded and supplied for any

goods and services depend on structure and type of market (Eastin & Arbogast, 2011). The

quantity of a product which buyers want to purchase depends on the price of the product. It also

depends other factors. For example tastes and fashions; the number and price of related goods

(substitutes and complements); income of the buyers (consumer); the size of the population;

weather and climate; government policies; expectation of future price changes; age, etc. Where

there are many consumers or buyers, processors and producers in a perfectly competitive market,
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the price mechanism is fully operational. In addition to this, the price of goods and services are

determined by the forces of demand and supply of bread. However, the choices of goods and

services demand by the consumer, and the quantities of such goods and services demand by the

consumer, and the quantities of such goods and services that they buy are guided by the price

(Lu, 2012).

Often times, demand is often differentiated from effective demand. However, what a person

desires to own or buy is not demand. To an economist, the term demand refers to the quantities

of a commodity which consumer are willing and are able to buy at given price and at given time.

An effective demand is demand backed up by an ability to pay for the goods and services at a

particular price. Price is an essential element of this definition because we expect different types

of consumer behavior when prices change. Udu and Agu (2002). In a related development,

supply is also an important factor in the marketing process. The urge to sell goods and services is

often described as supply. It refers to the quantity of goods or services when the producers are

willing to make available at a given price and at a given period of time (Abbot & Makeham,

1980). According to Sundaram and Cynthia (2000), supply could be physical or economical.

Physical supply could be referred to as the availability of goods and services, while economic

supply refers to the value (market price) of the physical supply. In addition to this, goods can be

physically available, but economically unavailable. A good is said to be economically

unavailable when the prices of the physical supply are beyond the consumer’s ability to pay for

the goods. Supply like demand is affected by lots of factors. The following are factors cause,

affect or influence the supply of a commodity: price of the goods and services, cost of

production, productive capacity and available technology (Boateng, Amfo, Abubakari &

Yeboah, 2016).supply could also be affected by several other variable such as government
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policies, national disaster or other catastrophe, profitability of goods in joint-supply, entry of new

firms, etc.

2.1.3 Theory of cost

Cost refers to the values of the inputs used in production. Ibrahim, Ayinde, and Arowolo (2014)

defined the cost of producing any goods or services as the value of the resource used in

producing them in their best alternative since there are other alternative means of attaining these

production goals. Production naturally is aimed at either maximizing output, maximizing profit,

maximizing utility; minimizing cost or a combination of or all these. Importantly, there exists a

close relationship between production and cost. According to Ojiako et al., (2018), the cost of

production at a given time is dependent on the prices of the factor inputs, the quantity of output

produced and the production period.

Mathematically, it is as follows;

C = f (X, T, P, K)

Where;

Explicit;

C = Total cost

X = Quantity of output

T = Technology

P = Prices of the factor input

K = Fixed factors

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 Also, the cost of production that accrues to a business or firm consists of both explicit and

implicit costs. Explicit cost is the cost made by a resource or resources used in production,

such as payments for raw materials, firm’s payroll or payment for a firm’s overhead cost.

Conversely, the implicit cost is self-owned. It has to do with the firm’s self-employed

resources (Ibrahim, Ayinde, & Arowolo, 2014). There are two types of costs associated with

production; Fixed cost (FC) and variable cost (VC). Fixed cost are costs that do not change

as production is increased or decreased, e.g. rent, interest on loans, insurance, depreciation.

The payment is in advance of production. They exist even if the output is zero. Variable cost,

on the other hand, is a cost that varies with the level of output, e.g. direct labour, raw

materials and components, packaging costs, heating and lighting (Ojiako et al., 2018).

Net Processing Income Approach: Profitability Perspective

In this study, the profit and return of okra marketing will be measured from the point of view of

okra profitability. Profitability ratios are typically based on earnings that accrued to participants.

Sales, or revenue—the amount of money that the customers pay for your processed goods-less

the cost of goods sold, equals your gross margin. Profit is what is left after you deduct general

and administrative expenses from the gross margin. Specifically, net processing income

approach was used to determine the profitability of okra marketing over time. Olukosi and

Erhabor (2005), define net processing income as the difference between gross profit and total

cost of production. It is used to show the levels of costs and net profit that accrue producers

involved in production. This technique elaborates more on the cost (fixed and variable cost) and

profit of any processing industry. Two major categories of costs have been examined in

production, which are fixed cost and variable cost (Olukosi & Ogungbhe, 1999). Fixed cost (FC)

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refers to those cost that does not change with an increase or decrease in the amount of goods and

services produced or sold. They tend to be time-related, such as interest or rents being paid per

month and are often referred to as overhead costs. In addition to this, fixed cost (FC) are costs

that do not vary with output. However, variable costs (VC) are costs that change as the quantity

of good and service that a business produces changes. Consequently, variable cost increase or

decrease depending on a company’s production volume; they rise as production increases and

fall as production decreases. Examples of variable costs include the cost of raw materials and

packaging. The total cost (TC) is the sum of total fixed cost (TFC) and total variable cost (TVC).

The net processing income is mathematically expressed as:

Gross profit=PiQi – TC

Where:

GP=the gross profit in naira per groundnut sold

Pi=price per unit of output (N)

Qi=output of individual enterprise (kg)

Tc=total cost of production (N)

2.2 Conceptual framework

2.2.1 Marketing Concept

The Marketing Concept refers to the idea that organizations are obligated to their customers and

their marketing strategies should be developed in a manner that meets customer's needs . It holds
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that the key to achieving its organizational goals (goals of the selling company) consists of the

company being more effective than competitors in creating, delivering, and communicating

customer value to its selected target customers. The marketing concept rests on four pillars:

target market, customer needs, integrated marketing and profitability.

The Marketing Concept represents the major change in today’s company orientation that

provides the foundation to achieve competitive advantage. This philosophy is the foundation of

consultative selling.

The Marketing Concept has evolved into a fifth and more refined company orientation: The

Societal Marketing Concept. This concept is more theoretical and will undoubtedly influence

future forms of marketing and selling approaches.

The main aim of marketing is to achieve efficiency, but most of Nigerian agricultural markets are

inefficient due to high market margin, abnormal profits, poor infrastructural facilities, high

marketing cost and poor pricing performance (Bila & Bulama, 2007). Therefore, this study

analyzed the gross margin, marketing margin and identified the problems of okra marketing in

the study area.

2.2.2 Gross Margin

This is a primary measure of an enterprise profitability. Gross margin is very important in partial

budgeting and linear programme analysis. Gross margin is the difference between the gross farm

income and total variable cost (Olukosi & Erhabor, 2005). For instance

GM= GFI – TVC

2.2.3 Marketing Margin

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Marketing margin is difference between retail price and farm gate price. Kazemnezhad and

Sadroleshraghi (2000) added that the criterion to determine the marketing margin in an imperfect

market is likely to be higher than that in a competitive market because of the expected abnormal

profit. It can also be high, even in competitive market due to high real marketing costs (Wolday,

1994). Meanwhile Vanessa and Jonathan (1992) asserted that low marketing margins might co-

exist with inefficient use of resources, poor coordination, poor consumer’s satisfaction and

disproportionate profit level. In agricultural produce, three important information in the process

of marketing: agricultural produces tend to be produced at considerable distance from center of

consumption, agricultural products are often harvested within a distance and short time and

consumption tends to be consistently spread quickly Amdt et al (1998).

2.2.4. Marketing Channels

Most producers of agricultural commodities work with marketing intermediaries to bring

their product to market. The marketing intermediaries make up a marketing channel. Thus,

marketing channels can be viewed as sets of independent organizations involved in the

process of making a product or services available for consumption (Arene, 2003).

According to Kotler (2003), a marketing channels is formally seen as a business structure

of interdependent organization, that reach from the point of product origin to the consumer

with the purpose of moving products to the final destination. It is also viewed as the path a

product passes through the producer to the final consumer (Alamu, Bichi & Ahmed, 2004).

Marketing channel can be viewed as large canal or pipeline through which products, their

ownership, communication, financing and payment, ad accompanying risk flow to the

consumer (Backman & Davidson, 1962; Muhammed, 2011).

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It is the set of interdependence organization that ease the transfer of ownership as product

move from producer to consumer (Lamb, Masters & Lovett, 2004). It is a chain of different

systems involved in the marketing from production to consumer with intra-linkage and

inter-linkages.

The channel of distribution of a product is the path through which it passes from the raw state to

the finish form (Olukosi & Isitor. 1990). Consequently, the longer the channel of distribution the

higher the selling price (Ojiugo, 1984).

This affects the spatial price variations. Market channel according to (Kohl & Uhl, 2002), is

defined as the sequence of intermediaries through which goods pass from the producers to the

consumers thus the process is a form of movement, series of action and evens that takes place in

the marketing sequences. The participants in this distribution can be from two to six.

Trade flow is unidirectional in practices, urban wholesalers and retailers often travel to

producing areas to make purchases from producers or rural wholesalers, while other purchase

directly from the farms or sides of production. Wholesalers are largely responsible for the intro

and interstate flow of food stuff from rural assembles or commissioner agent. Some buy directly

from producers and others buy from a combination of other wholesalers and commissioned

agents. They sell to urban retailers, urban consumers, rural wholesalers and retailers.

2.2.5 Marketing Functions

According to Olukusi and Isibor (1990), marketing function can be defined as specialized

services that have to be performed in the process of moving a product from the produces to the

consumers, Kohl (2002). Classified marketing function into three major groups

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Exchange Function

Physical Function

Facilitating Function

Exchange function: It involves the act of buying and selling, this is the process of goods transfer

from hand to hand thereby creating possession utility. The buying and selling function is

performed with a judgment of halve usually expressed in prices place on the goods and services

involved.

According to Alex (1990) the buying function in marketing involves a number of activities these

include:

Determination of the kind of goods

Determination of the quantity of goods

Selecting proper service of supply and buying policies and practices.

The selling function on the other hand involve, advertising and promoting activities to influence

or create demand, this is called merchandising (Olukosi and Isibor , 1990).

Physical function: the physical function was defined by Olukosi, Isitor and Odo (2007), as those

services that add forms time and place utility to the commodity physical function includes

storage transportation and processing, they are those activities involving handling movement and

physical change in the natural form of commodity, these activities create time, place and form

utility to the product. According to Olukosi et al ---(2007), processing adds form utility to a

product by holding it from production and distributing it to the market overtime as at when

needed the storage function occurs at all levels in the marketing channel.

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Facilitating function: the facilitating function make possible the growth performance of the

exchange and physical function olukosi and Isiro (1990) explained that facilitating function

improve the performances of the marketing system by increasing the operational and price

efficiency.

Storage and marketing

Okra may be spray washed or placed in a large water tank for cleaning. It is recommended that

the wash water be chlorinated to 75 to 100 ppm (mg·L –1) of free chlorine to prevent disease

problems. Excess water should be removed after packing.

Using postharvest dips, various packaging technologies, and controlled atmosphere storage have

been somewhat successful in extending the shelf life of okra (Fontenot et al., 1987; Ilker &

Morris, 1975; Perkins-Veazie & Collins, 1996; Singh et al., 1980). Reshipment packaging in

perforated film prevents wilting and physical injury during handling. Results of a packaging

study suggest that 5% to 10% carbon dioxide in the atmosphere lengthens the shelf life of okra

by ≈1 week. Higher concentrations of carbon dioxide caused off-flavors (Anandaswamy, 1963).

In general, okra has the same storage requirements as green beans, cucumber, eggplant, peppers,

and squash. These products may be stored together without deleterious effect. Okra should not be

stored with melons (Cucumis sp.), bananas (Musa sp.), apples (Malus sp.), or other produce that

gives off ethylene gas.

Okra is supplied to the markets in the United States by the southern tier of states during June,

July, and August, while California ships okra from June through October. Mexico exports okra

year-round to the United States

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The performance of any industry is determined by the structure of the industry and market

conduct (Bain 1968; Kohls & Uhl 1990). Studies on okra marketing have established a direct,

casual and deterministic relationship between market structure, conduct and performance

(Okereke & Anthonio 1988; Anuebunwa 2002; Anuebunwa et al. 2006; Marion & Muller

1983). The structure of the market implies those characteristics of the organization of the market

that seen to affect the behavior and performance of the market. These characteristics include the

number of sellers and nature of the product, ease of entry, nature and size of the purchasers of the

firms products and the firm’s ability to influence demand by advertising (Anuebunwa 2002;

Anuebunwa 2006; Okereke & Anthonio 1988). Based on these characteristics, two theoretical

market models have been distinguished (Bateman 1976; Bressler 1984; Hanson 1971;

Scarborough & Kydd 1992). These are perfect and imperfect markets.

Okra crop marketing generally operates within the realm of perfect market framework. However,

in the real world, food markets operate with some degree of imperfect knowledge, resulting into

imperfectly competitive markets, characterized by many sellers of similar products, but

imperfection result from differentiation in the services provided, behaviour of market

participants, and the level of marketing margin (Anuebunwa 2002; Anuebunwa et al. 2006).

Under competitive conditions, marking marketing margins should change with shifts in the

demand for and supply of marketing services, the latter depending on factor costs and

technological changes and the former on consumer income and performances (Scarborough &

Kydd 1992). By comparing costs and prices, inference can be made about the economic

efficiency of marketing, exchange and price formulation. Under the neo-classical economic

model of perfect competition (Hanson 1971), returns to economic activities should be just

sufficient to reward investment of resources. The performance of food and vegetable marketing
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have shown very low gross margins due to bulkiness, perishable nature and high risks and

uncertainty in food marketing. Similarly, the level of marketing margin has influence on the

magnitude of the portion of the consumers expenditure on food that the farmers receive.

Anuebunwa et. al. 2006; Anuebunwa 2006; Njoku 1994; Njoku & Nweke 1985). This study

determines the market structure for fresh okra, marketing margin and the farmers’ share of the

consumers expenditure on okra that went to the marketing system with a view to highlighting the

performance of the okra marketing system.

2.3 Empirical literature

Oyewo (2020), analyzed cost and return of okra marketing among 70 okra marketers, in Ijebu

local government area, Ogun State Nigeria. He established that the marketers incurred a total

cost of #688, 866.66 with a total revenue of 813, 000. They as such realized a gross margin of

#124, 133.33. He revealed that for every #1 invested by the okra marketers, there would be a

return of #1.8 from sales of okra in the study area.

Agbugba (2013), used marketing margin analysis to determine the efficiency of okra marketing

enterprise in Aba, Abia State Nigeria. They postulated that the marketing margin of okra is the

difference between price paid by the ultimate consumer and the price received by the okra farmer

or the difference between producer’s price and the retail price. From the study wholesalers

recorded 58% margin than retailers who recorded 35% margin.

Layade (2016), in their study, marketing analysis of fresh okra in Ibadan, Nigeria. Most

marketers had poor access to funds. They observed that constraints of okra marketing were low

pricing, perishability, distance to source of purchase, inadequate storage facilities, and market

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levies. The retail okra market exhibited an efficient market structure; the wholesale market had

some degree of imperfection, but fresh okra marketing is profitable as long as consumer demand

is present.

Farinde (2006), in their study, Assessment of production, processing, marketing and utilization

of okra in Egbedore local government area of Osun State, Nigeria observed that some personal,

socio-economic characteristics of farmers such as level of education, marketing channel, crops

intercropped with okra, frequency of harvest, enjoyed taste, type of processing for dried okra,

measures for retail and measures for wholesales influences okra production.

2.4 Analytical Framework

2.4.1 Descriptive statistics

This is a summary statistics that quantitatively describes or summarizes features from a

collection of information. It could be divided into different types;

i. Frequency: This is the number of times the observation occurred/recorded in an experiment of

study.

ii. Percentage: This one of the most frequent ways to represent statistics. It simply means per

hundred and it is represented by the symbol `%`.

iii. Mean: This simply the collection of numbers divided by the count of numbers in the

collection. It is given mathematically as: Mean = ∑ X /n

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2.4.2 Gross Margin

The gross profit margin calculation measures the money left after the sale of your goods or

service, once the operating expenses used to generate them are deduced (e.g labour and material

costs). It is calculated by subtracting the cost of goods sold from the total revenue.

Cost of goods sold: The cost of goods sold refers to all the direct cost and expenses involved in

producing or delivering your goods and services. It does not include indirect cost such as staff

salaries or sales and marketing.

Revenue: It is the total amount of income your company generates from the sale of your

products or services. It shows you clearly how much money you are bringing in from your total

sales.

Gross margin is given mathematically as:

Gross margin = Revenue – Cost of goods sold (variable costs)

2.4.3 Multiple regressions

This is a linear approach of for modeling the relationship between a scalar response and one or

more explanatory variables. The case of one explanatory variable is called linear regression; for

more than one, the process is called multiple linear regressions.

Using multiple regressions, the study will establish if the dependent variable is influenced by the

independent variables. This implies that the research hypothesis which states that the

socioeconomic characteristics of okra marketers do not significantly influence its profitability

will be adequately tested viz., multiple regression analysis.

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The implicit function is given as: (a)

Q = f(X1, X2, X3, X4, ) 3.1

Explicitly, the function is presented as:

Q = bo + b1X1 + b2X2 + b3X3 + b4X4 + e 3.2

Where,

Q = Profitability of banana

bo = Intercept

b1- b5 = Regression coefficients

X1 = Gender

X2 = Age

X3 = Education

X4 = Income level

X5 = Household size

e = Error term

(b) Q = f(X1, X2, X3, X4, )

2.4.4 Likert scale

A Likert scale is a psychometric scale commonly involved in research that employs

questionnaires. It is the most widely used approach to scaling responses in survey research, such

that the term is often used interchangeably with rating scale, although there are other types of

rating scales.

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The rating is presented in the following order:

Strongly agreed (SA) = 4,

Agreed (A) = 3,

Disagree (D) = 2,

Strongly disagree (SD) = 1.

The mean scores of the respondents based on the 4-point scale will be 4 + 3 + 2 + 1 = 10, 10/4 =

2.50. Using the interval scale of 0.05, the upper limit cut-off point will be 2.50 + 0.05 = 2.55.

The lower limit was 2.50 – 0.05 = 2.45. On this basis, any mean score (MS) below 2.45 (i.e. MS

< 2.45) will be regarded as not important. Those between 2.45 and 2.55 will be considered as

important (i.e. 2.45≥MS≤2.55). Mean score greater than 2.55 (MS>2.55) will be considered very

important.

2.5 Evaluation of Literature Reviewed

From the literatures reviewed, no study has been carried out on this particular topic. The related

topics were those of Oyewo (2020), who analysed cost and return of okra marketing among 70

okra marketers, in Ijebu local government area, Ogun State Nigeria, Agbugba (2013) who

studied the efficiency of okra marketing enterprise in Aba, Abia State Nigeria, Layade (2016)

who studied Marketing analysis of fresh okra in Ibadan, Nigeria and Farinde (2006) who studied

the assessment of production, processing, marketing and utilization of okra in Egbedore local

government area of Osun State, Nigeria. This study is therefore geared towards identifying the

marketing channels of Okra and the problems associated with Okra marketing. Hence this

becomes the gap in literature.

23
 CHAPTER THREE

METHODOLOGY

3.1 Area of the study

The study area is in Ikwerre Local Government area of Rivers State Nigeria. It is located in the

coastal southern part of the country. Ikwerre is comprised of Isiokpo, Omagwa, Omudeme, Elele,

Omuanwa, Apani, Ipo, Omerlu, Igwuruta, Ubima, Ozaha and Aluu. Ikwerre LGA sits on a total

area of 1380 square kilometers and has an average temperature of 26 degrees centigrade. Ikwerre

LGA has a population of about two million people.

24
Figure 3.1: Map of Ikwere Local Government Area
Source: Hycienth (2014)
3.2. Research Design
25
Survey research design will be employed in this study where structured questionnaires will be

used to generate data from the sample size for the purpose of the study.

3.3 Population of the study

The sample frame for the study comprised of okra marketers who engage in okra marketing in

Ikwerre LGA, Rivers State, Nigeria. According to the information gathered from okra union

(2022), there are 152 registered okra marketers in the LGA.

S/N NAME OF MARKET NUMBER OF RESPONDENT

1. Omerelu Market 18

2. Igwuruta Main Market 18

3. Omueke Market 18

4. Omagwa Station Market 18

5. Elele Market 18

6. Ubima Central Market 18

Source: Researcher’s Initiative, 2022

3.4 Sampling Procedure and Sample Size

A purposive and random sampling technique will be introduced to select respondents for this

study. A purposive selection of technique of five local markets within the local government area

based on okra marketing. This is owing to the fact that there is more okra marketers concentrated

in the selected markets. The study made do of the Taro Yamene formula to determine the sample

size. This sampling technique is based on the selection procedures whereby all cases in the

defined population has an equal probability of being selected. The questionnaires will be

distributed such that every Ward and communities in the local government will be represented.
26
 The Taro Yamene formula is given as:

n= N

1+N(e)2

Where:

n= sample size

N= sample population (151)

e = level of precision or confidence level (0.05)

n= 152

1+151(0.05)2

n= 152

1+151(0.0025)

n= 152

1.38

n = 110

3.5 Method of Data Collection

The use of copies of structured questionnaire will be employed for primary data. Collection

copies of questionnaire will be structured in line with specific objectives of the study before

administering them to respondents in the study area. The information will be collected base on

A) Marketers' socioeconomic characteristics such as age, education level, marketing experience,

genders, monthly costs, marketing income.

27
B) Constraints and challenges faced by the marketers

C) Cost and total return of the marketers.

3.6 Validity of Research Instrument

The research will be validated using the criterion-related validity approach. Pilot testing will also

be carried out before the instrument will be administered to the study area.

3.7 Reliability of Research Instrument

The split-halves method will be employed to check the reliability of the instrument. The

questionnaire will be divided into two halves and the correlation between the two halves used to

estimate the reliability of each half.

3.8 Method of Data Analysis

The tools of analysis used include: Descriptive statistics, Gross margin analysis, regression

analysis.

3.8.1 Descriptive statistics

Descriptive statistics tools show as mean frequency distribution, ratios and tables will be

deployed in analysis, the socio economic statistics of the marketers and constraints affecting okra

marketing.

3.8.2 Gross Margin Analysis

28
The Gross margin model will be use to analyse objective three (3) of the research work. Gross

margin is the difference between the total revenue and the total cost of production. Total cost of

production is the total expenses incurred during the production period. It is expressed as:

Gm = TR - TC

Where,

GM = Gross Margin

TR = Total Revenue

TC = Total Cost

3.8.3 Multiple regression analysis

Using multiple regressions, the study will establish if the dependent variable is influenced by the

independent variables. This implies that the research hypothesis which states that the

socioeconomic characteristics of respondents do not have significant effect on their profitability

will be adequately tested.

a) Q = f(X1, X2, X3, X4, X5)

Explicitly, the function is presented as:

Q = bo + b1X1 + b2X2 + b3X3 + b4X4 + b5X5 + e

Where,

Q = Profit (₦)

bo = Intercept

b1- b5 = Regression coefficients

29
X1 = gender

X2 = age (years)

X3 = education (years)

X4 = income level (₦)

X5 = household size (person)

e = Error term

CHAPTER FOUR

30
 RESULT PRESENTATION AND DISCUSSION

4.1 Socio-economic characteristics of the respondents

This part of the study covers the respondents` gender, age, marital status, educational level,

household size, years of experience in Okra marketing and income level. The result is presented

in table 4.1 below using frequencies and percentages.

Table 4.1 Frequency distribution table showing summary statistics of respondents

according to their socio-economic characteristics (n=152)

Variable Categories Frequency Percentage

(%)

Gender Male 0 0

female 152 100

total 152 100

Age 18-30 27 17.8

31-43 70 46.1

44-56 55 36.2

57 and above 0 0

Total 152 100

Marital status Married 126 82.2

Single 27 17.8

Divorced 0 0

Seperated 0 0

total 152 100

Educational level No formal education 14 9.2

Primary education 40 26.3

31
 Secondary education 98 64.5

Tertiary 0 0

Total 152 100

Household size 2-4 42 27.6

5-7 110 72.4

8-10 0 0

Above 10 0 0

total 152 100

Years of experience 1-3 42 27.6

4-6 82 53.9

7-10 28 18.4

Above 10 0 0

total 152 100

Income level 10,000-40,000 138 91.4

41,000-80,000 13 8.6

81,000-120,000 0 0

Above 120,000 0 0

Total 152 100

Field survey (2022)

4.1.1 Gender of the respondents

Result from table 4.1 shows that 100% of the respondents were females. This indicates that okra

marketing is dominated by females in Ikwere LGA. The result also implies that the males were

not interested in okra marketing as they saw it to be a local and unprofitable business. This result

shows that women are dominant in agricultural activities in the study area. This conforms to the

study of Farinde (2006) which stated that majority of his respondents were females.

32
4.1.2 Age of the respondents

From table 4.1, the result shows that 46.1% of the sampled respondents were between the ages of

31-43yrs, 36% of them were between the ages of 44-50yrs, 17.8% of them were between the

ages of 18-30yrs while none of them was between the ages of above 57yrs. This indicates that

majority of the respondents were between the ages of 31-43yrs. It also shows that most of the

respondents were at the ages where they had lots of responsibilities both from their families and

outside their families. This result agrees with that of Layade (2016) which stated that most of his

respondents were between the ages of 30-45yrs.

4.1.3 Marital status of the respondents

Result as collected from table 4.1 revealed that 82.2% of the respondents were married, 17.8% of

them were single, while none of them was neither divorced nor sepearted. This indicates that

majority of the respondents were married. The result indicates that when people are married, they

eventually give birth thereby increasing their responsibilities in their families. They engaged in

okra marketing so they could generate income, hence take care of their families.

4.1.4 Educational level of the respondents

Result from the table shows that 64.5% of the respondents had secondary school educational

attainment, 20.3% of them had primary school educational attainment, 9.2% of them had no

formal education while none of them had tertiary education. The result indicates that majority of

the respondents had secondary school educational attainment. It also implies that most of the

respondents were educated as they had at least primary and secondary educational qualification.

33
This result is in conformity to the observation of Oyewo (2020) which stated that majority of his

respondents were educated.

4.1.5 Household size of the respondents

Result from table 4.1 revealed that 72.4% of the respondents had household size of 5-7 persons,

27.6% of them had household size of 2-4 persons, none of them neither had household size of 8-

10 persons nor above 10 persons. This indicates that majority of the respondents had household

size of 5-7 persons. Its shows that the respondents had much responsibilities as they had a large

household size and there must look for a way to take care them, hence they ventured into okra

marketing.

4.1.6 Years of experience

From table 4.1, result shows that 53.9% of the respondents had 4-6yrs experience in okra

marketing, 27.6% of them had 1-3yrs marketing experience, 18.4% of them had 7-10yrs

marketing experience, but none of them had marketing experience above 10yrs. This indicates

that majority of the respondents had 4-6yrs experience in Okra marketing in the study area. The

result implies that all the okra marketers had good experience in okra marketing.

4.1.7 Income level of the respondents

Result from table 4.1 shows that 91.4% of the respondents earned 10,000-40,000naura, 8.6% of

them earned 41,000-80,000 naira, none of them earned neither 81,000-120,000naira nor above

120,000naira. This indicates that majority of the respondents earned 10,000-40,000 naira per

month. This result implies that the okra marketers were low income earners. This result conforms

34
to the observation of Oyewo (2020) which stated that majority of his respondents were not low

income earners.

4.2 Costs and Returns analysis of Okra Marketing

This part of the study is important as it shows the costs and returns of okra marketing. It also

shows whether okra marketing is profitable or not. The result is presented in table 4.2 below.

Table 4.2 Costs and Returns analysis of Okra Marketing

Costs and returns Amount (naira)

Cost of okra (1 basket, 15kg) 9000

Cost of transportation per week 1200

Cost of packaging materials 800

Ticket fee 600

Total variable cost 11,600

Selling price 2000 per kg x15kg=30,000

Total revenue per week 30,000

GM=TR-TVC 30,000-11,600=18,000

Gross margin 18,000

ROR=TR/TVC 30,000/11,600=2.59

Rate of return 2.59

Field survey (2022)

35
Result in table 4.2 shows that the total variables per week was 11,000 naira implies that the sum

total of the varying cost over time with the level of output, was at a given amount. Hence, the

assertion that total variable costs are second phase costs which vary with level of output

(Agbugba and Shelaby, 2017). The table also revealed that the total revenue per week was

30,000 naira. This indicates that the total amount of money received by the okra marketers from

the sales of certain quantities of the okra at various price was at the above amount. It was

revealed from the table that Gross margin was equal to 18,000 naira. This implies that okra

marketing is a profitable business in Ikwere LGA and clearly shows why they have remained in

business. Rate of return of 2,59naira was obtained as presented the table which implies on every

1naira invested, 2.59 kobo was gained. This shows that okra marketing is a good business to

venture into. This result is in agreement with that of Oyewo (2020) which stated that okra

marketing is profitable and worthwhile of venturing into

4.3 Marketing channels of Okra Marketing

This part of the study shows the marketing channels of okra marketers in Ikwere LGA. The

result is presented in the figure below.

Channel 1: Producers Wholesalers Retailers Consumers

(53.95%)

Channel 2: Producers Wholesalers Consumers

(17.11%)

36
Channel 3: Producers Retailers Consumers

(26.97%)

Channel 4: (1.97%)
Producers Consumers

Figure 4.1: Showing the Distribution Channels

Four (4) channels of distribution linking the producers from the bakery to the final consumers

were identified in the study. Result from figure 4.1 shows that 53.95% of the respondents used

channel 1, which is producer to wholesaler to retailer then to consumers, 26.97% of them used

channel 3 which is producer to retailer then to consumers, 17.11% of them used channel 2 which

producer to wholesaler then to consumers and 1.97% of them used channel 1 which is producer

to consumer. This indicates that majority of the sampled respondents used the first channel. This

implies after producing, the producer sells the produce to the wholesaler, the wholesaler sells it

to the retailer and the retailer sells it to the ultimate consumer.

4.4 Constraints to Okra marketing.

This part of the study shows the problems associated to okra marketing in the study area.

37
Table 4.3 Constraints to okra marketing

S/NO CONSTRAINTS MEAN REMARKS

1 High price fluctuation 3.55 Agreed

2 Quality deterioration when not 3.18 Agreed

sold immediately and
consequently reduction in price
and income

3 High perishability of the product 3.18 Agreed

4 Unsuitable position of market 2.64 Agreed

5 Level of education 2.18 Disagreed

6 Age of individual as either too 2.18 Disagreed

young or too old

7 Loss of capital due to debtors 1.72 Disagreed

Criterion mean score ≥ 2.50

Source: Field survey 2022

The constraints to okra marketing as identified by the respondents were ranked in the table

above. The result shows that items 1, 2, 3 and 4 were agreed with by the respondents as they had

mean scores greater than 2.50. This implies that high price fluctuation, quality deterioration

when not sold immediately and consequently reduction in price and income, high perishability of

the product and unsuitable position of market were the major constraints to okra marketing in the

study area. However, 5, 6 and 7 were disagreed with by respondents as they had mean scores less

than 2.50. This indicates that level of education, age of individual as either too young or too old
38
and loss of capital due to debtors were the major constraints to okra marketing in the study area.

This result does not conforms to the observation of Layade (2016) which stated that low pricing,

perishability, distance to source of purchase, inadequate storage facilities and market levies were

the major constraints to okra marketing.

4.5 Test of Hypothesis

HO; there is no significant relationship between the socio-economic characteristics of okra

marketers and their profit.

This section shows the relationship between the socio-economic characteristics of okra marketers

and their profit.

Table 4.4 Multiple regression showing that the relationship between the socio-economic characteristics
of the okra marketers and their profit

Variables Coefficient Std error Beta T-statistics Sig.

Constant 1.578 0.700 2.254 0.026

Age 0.011 0.142 0.011 0.078 0.938

Marital status 0.097 0.333 0.053 0.290 0.772
Education -9.637E-5 0.124 0.000 -0.001 0.999
Household size 0.067 0.164 0.43 0.406 0.685
Years of experience -.017 0.110 -0.17 -0.156 0.876
Income level -0.171 0.330 -0.69 -0.518 0.605

R-Squared 0.002
R 0.049b
F-Probability 0.999b
Sig. (P-value<0.05)
Source: field survey 2022
39
Result from table 4.4 shows that all the independent variables were not significant as they had P-

values greater than 0.05. The resultant R-squared of 0.002 shows that 2.00% of the variation in

the dependent variable is caused by a change in the independent variables. Result from the table

shows that the correlation coefficient ( r ) is equal to 0.049. This indicates there was a weak

relationship between the independent variables and the dependent variable (profit). From the

table, result shows that some of the explanatory variables (age, marital status and household size)

had positive constants which mean that they had a positive relationship with the dependent

variable. This implies that an increase in them will lead to an increase in the dependent variable.

However, some of the independent variables (education, years of experience and income level)

had negative constants which show that they had a negative relationship with the dependent

variable. This indicates that an increase in will lead to a decrease in the dependent variable.

Finally, since the P-value of 0.999 is greater than 0.05, the null hypothesis was accepted and

concluded that there is no significant relationship between the socio-economic characteristics of

okra marketers and their profit.

40
 CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATION

5.1 Summary

This study on the analysis of okra marketing in Ikwere Local Government Area of Rivers state

was carried out to know how Okra is been marketed in the area.

The objectives of this study were to describe the socio-economic characteristics of the

respondents in the study area, estimate the costs and returns of okra marketing, describe the

marketing channels of okra marketing, and identify the problems/challenges in okra marketing.

Data were collected from 152 respondents drawn from the study area using multi-stage sampling

stage techniques. A set of structured questionnaire were used for this study.

Data were analysed using descriptive statistics such as frequencies, percentages, mean scores

(likert scale), Gross margin and multiple regressions. Result from the study showed that all

(100%) the respondents were females and most (46.1%) of the respondents were between the

ages of 31-43yrs. Result from the study revealed that majority (82.2%) of the respondents were

married and that most (90.85) of them were educated. The study showed that 72.4% of the

sampled respondents had household size of 5-7 persons while 27.6% of them had household size

of 2-4 persons. Result from the study showed that respondents had good experience in okra

marketing in the study area. The study revealed that majority (91.4%) of the respondents earned

10,000-40,000 naira per month, while 8.6% of them earned 41,000-80,000 naira per month. This

indicates that the respondents were not low income earners.

41
The study showed that majority (53.95%) of the respondents used channel 1, which is producer

to wholesaler to retailer then to consumers, and that okra marketing is a profitable and

worthwhile venture in the study area. It was revealed that high price fluctuation, quality

deterioration when not sold immediately and consequently reduction in price and income, high

perishability of the product and unsuitable position of market were the major constraints to okra

marketing in the study area.

Finally, the study showed that there was no significant relationship between the socio-economic

characteristics of okra marketers and their profit.

5.2 Conclusion

The study showed that okra marketing is profitable in Ikwere local government area and that

there was no significant relationship between the socio-economic characteristics of okra

marketers and their profit. The study also revealed that high price fluctuation, quality

deterioration when not sold immediately and consequently reduction in price and income, high

perishability of the product and unsuitable position of market were the major constraints to okra

marketing in the study area.

5.3 Recommendation

1. Policies on price regulation should be made by the government to avoid unnecessary price

fluctuation.

2. Government should provide storage facilities to avoid quality deterioration and perishability of

the product.

42
3. Government should build standard markets in good positions to enhance the marketing of okra

in Ikwere LGA.

4.Government should provide steady electricity so as to enhance storage of the product.

43
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45
 Appendix

gender of the respondents

Frequenc Valid Cumulative
y Percent Percent Percent
Vali female 152 100.0 100.0 100.0
d

age of the respondents

Frequenc Valid Cumulative
y Percent Percent Percent
Valid 18- 27 17.8 17.8 17.8
30
31- 70 46.1 46.1 63.8
43
44- 55 36.2 36.2 100.0
56
Total 152 100.0 100.0

marital status of the respondents

Frequenc Valid Cumulative
y Percent Percent Percent
Vali married 125 82.2 82.2 82.2
d single 27 17.8 17.8 100.0
Total 152 100.0 100.0

educational level of the respondents

Frequenc Valid Cumulative
y Percent Percent Percent
Vali no formal education 14 9.2 9.2 9.2
d primary school 40 26.3 26.3 35.5
secondary school 98 64.5 64.5 100.0
Total 152 100.0 100.0

46
 household size of the respondents
Frequenc Valid Cumulative
y Percent Percent Percent
Valid 2-4 42 27.6 27.6 27.6
5-7 110 72.4 72.4 100.0
Total 152 100.0 100.0

years of experience
Frequenc Valid Cumulative
y Percent Percent Percent
Valid 1-3 42 27.6 27.6 27.6
4-6 82 53.9 53.9 81.6
7-10 28 18.4 18.4 100.0
Total 152 100.0 100.0

income level
Frequenc Valid Cumulative
y Percent Percent Percent
Vali 10,000-40,000 139 91.4 91.4 91.4
d 41,000-80,000 13 8.6 8.6 100.0
Total 152 100.0 100.0

Descriptive Statistics
Maximu Std.
N Minimum m Mean Deviation
highprice fluctuation 152 3 4 3.55 .500
quality deterioration when 152 3 4 3.18 .389
not sold immediate and
consequently lead to
reduction in price
high perishability of the 152 3 4 3.18 .389
product
unsuitable position for 152 2 3 2.64 .482
market
level of education 152 2 4 2.18 .580
age of individual as either 152 2 3 2.18 .389
too young or too old

47
loss of capital due to 152 1 2 1.72 .449
debtors
Valid N (listwise) 152

Model Summary
Mode R Adjusted R Std. Error of
l R Square Square the Estimate
a
1 .049 .002 -.039 .714

a. Predictors: (Constant), income level, years of experience,

household size of the respondents, age of the respondents,
educational level of the respondents, marital status of the
respondents

ANOVAa
Sum of Mean
Model Squares df Square F Sig.
1 Regression .177 6 .029 .058 .999b

Residual 73.922 145 .510

Total 74.099 151

a. Dependent Variable: PROFIT

b. Predictors: (Constant), income level, years of experience, household size of the respondents,
age of the respondents, educational level of the respondents, marital status of the respondents

Coefficientsa
Standardized
Unstandardized Coefficients Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) 1.578 .700 2.254 .026
age of the respondents .011 .142 .011 .078 .938
marital status of the .097 .333 .053 .290 .772
respondents
educational level of the -9.637E-5 .124 .000 -.001 .999
respondents
household size of the .067 .164 .043 .406 .685
respondents
years of experience -.017 .110 -.017 -.156 .876

48
 income level -.171 .330 -.069 -.518 .605
a. Dependent Variable: PROFIT

49