Full Project – Groundnut oil marketing in Rimi local government area of Katsina state

Full Project – Groundnut oil marketing in Rimi local government area of Katsina state

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1.1           Background to Study

Groundnut (ArachishypogaeaL.) originated from South America (Wiess, 2018). It is one of the most popular and universal crops cultivated in more than 100 countries in six continents; Asia, Africa, Oceania, North and South America and Europe (Nwokolo, 2020).

Major groundnut producing countries are China (35.9%), India (13.7%) 6.7 millions tonnes and Nigeria (9%) 4.4 millions tonnes (World Bank, 2022). Developing countries account for over 95 percent of total world groundnut area and about 94 percent of total world production. Production is concentrated in Asia and Africa, with Africa accounting for 35 percent of global area and 21 percent of total output mainly in Nigeria, Senegal and Sudan (RMRDC, 2016). In Nigeria, groundnut is cultivated mainly in the northern parts especially North Central, North West and North Eastern states (RMRDC, 2016). World production of groundnut was 48.8 million tonnes. Asia remained the largest producer with 20.5 million tonnes, India 6.7 million tonnes, Nigeria 4.4 million tonnes and Sudan 2.8 millions tonnes. According to RMRDC (2016) report, the total output of groundnut for Nigeria as at 2002 was 1,976,490.80 tonnes with a range of 47.00 – 73,000 tonness for the States. Bauchi State had the largest output (73,000 tonnes) followed by Nasarawa (70,420 tonnes) and Edo State had the least with 47.00 tonnes. The mean groundnut output from farmer’s field for all the States was 15.72 tonnes. Sokoto State had the highest mean output of 57.00 tonnes, followed by Benue with 52.0 tonnes, Jigawa 27.33 tonnes, Kano, 26.29 tonnes, Yobe, 25.70 tonnes, Zamfara, 25.55 tonnes and Kaduna, 22.67 tonnes. Abuja had the least with 2.25 tonnes. Annual average production figure for Nigeria was 456 metric tonnes of groundnut oil, 713 metric tonnes of groundnut cake and 2,652 metric tonnes of unshelled groundnut (Fao, 2018).

Groundnut oil production is actually a post-harvest operation which is referred to as processing. Processing may be regarded as a way of converting harvested agricultural produce into other forms of products that can be preserved over a long period of time. In this case it is converting groundnut seeds into groundnut oil and groundnut cake commonly called “kuli-kuli” in the North. Processing of agricultural products serves as a source of additional income to the processor as well as boost household food security especially among the rural poor. In the process of transforming this product from subsistence to commercial, socio-economic changes of the processor is vital as he occupies key position in production, processing and marketing of agricultural product (Naerls, 2021).

The extraction of oil from groundnut constitutes an important agricultural processing activity for women in Nigeria especially in the northern States. The process involves a number of steps that include cleaning, roasting, de-skinning, kneading and frying and the extraction of oil. The oil extraction process is mainly traditional, characterized by drudgery and time consuming.

In Nigeria, groundnut oil accounts for as much as 17 percent of the total agricultural export earnings because it does not meet domestic demand. The shortfall in domestic demand is 300,000 to 400,000 metric tons (Ojowo, 2014). Its husk (shell) is used as fuel, roughage, and litter for livestock, mulch, and manure and as soil conditioner (Misari, 2018). Groundnut seed contains 40-50 percent protein and 10-20 percent carbohydrate. Groundnut seeds are nutritional sources of vitamin E, niacin, Flavin, calcium, phosphorous, magnesium, zinc, iron, riboflavin, thiamine and potassium. It is also used as animal feed, raw material for oil, cake and fertilizers. The multiple uses of groundnut plant make it an excellent cash crop for domestic markets as well as for foreign trade in several developing and developed countries (Stigter, 2006). Refined groundnut oil could be used in a variety of manufactured food products such as biscuits, cakes, crisps and ready meals. The unique property of stability and long shelf life can makes it a preferred choice for frying. As stable oil, it is often used as a base for some pharmaceutical products and minor food ingredients such as colors and flavors. Groundnut oil is also used in the preparation of skin cream, for instance, eczema cream though they could be problematic to those with a history of allergy due to the presence of groundnut protein (Warner, 2013). Groundnut oil is used extensively for massaging polio patients. It is also used as a carrier in the treatment of asthma and other ailments (Asiedu, 2011).

1.2       Statement of the Problem

Groundnut has contributed immensely to the development of Nigeria. Up to 1969, Nigeria was the third largest exporter of groundnut in the world after India and China. 78 percent of the area put to groundnut production and 88 percent of the production in Nigeria is accounted for by the then Kano, North Central, North West and North Eastern states. It was the country’s most important agricultural export commodity. The total groundnut production up to1974 was 1.95 million tonnes but this dropped to about 0.40 million tonnes (RMRDC, 2016). This decline is attributed to the drought of 1972 and 1973, followed by the devastating rosette disease of 1975 and 1976, increased local consumption caused by increased population, improved living standards, and reduction in the number of farming families caused by the oil boom of the early 70s. This drew out a substantial number of the able Labour force to urban industries, have resulted in Nigeria becoming a net importer of groundnut particularly in the form of oil. For instance, Nigeria imported about 200,000 tons of vegetable oils worth about N77 million in the 1980 fiscal year. Although production has improved over the years, Nigeria is still a net importer of groundnut oils (RMRDC, 2016).

The total amount of groundnut required by groundnut processing companies amounted to 413,784 tones but only 21,417 tones were supplied, representing only 5.2 percent of their requirement. This indicates that there still exists a ready market for producers. But this decline and shortage in supply of raw material led to the closure of groundnut oil mills in the country which resulted in decreased demand of the crop. Consequently, farmers were forced to take up the production of other crops such as cowpea, maize, sorghum, pearl millet and horticultural crops. The increase in the price of agricultural inputs such as fertilizers and pest control chemicals also discouraged farmers from growing groundnuts especially since the relative turn-over from groundnut was much smaller compared to crops such as maize, sorghum, and millet. Also, the dissolution of the marketing boards and the decline in groundnut production resulted in the collapse of the marketing structure such that farmers were no more assured of a ready market for their produce. With the coming of the SAP (structural adjustment programed) in 1986 and the concomitant devaluation of the naira, Nigerian manufacturers found it difficult to import the needed raw material and machinery needed to produce profitably. The local machines are less sophisticated and mainly used for oil extraction, expelling, decortication and shelling. Generally, groundnut processing (oil extraction) in Nigeria and especially in the study area is usually by traditional method associated with high expenditure in energy, Labour and time. For instance, during kneading operation, at least two women (one kneading and the other holding the mortar for stability) are needed, making the operation strenuous, costly and time consuming. These factors result in relatively lower output, high Labour input and low income for the processors (Naerls and Kaul, 2020).

The distribution of groundnut oil is to a large extent sold within the local markets. This limitation in the channel of distribution reduces the extent to which the product travels to other parts of the country thus giving the product a small market shares and reducing its contribution to the gross domestic product. The overall efficiency of the marketing system is hindered by gender biases which favor accumulation and sometimes excessive profits by male-controlled, large trading concerns or support services higher up the marketing chain. Women, although often the majority of traders tend to be trapped in the vicious cycle of petty trading lower down the marketing chain. Lack of economies of scale and poor integration in agricultural markets is linked to these gender biases. In the study area, even though groundnut oil marketed, it is done at a loss. Most of the gain comes from the by-product; groundnut cake popularly called ‘Kulikuli’ in the north. Also the poor financial status of the rural producers hinders them from purchasing oil extractors to facilitate production. In conclusion therefore, because very little has been done in this area, this research is meant to bridge the gap of information on the problems militating against the marketing of groundnut oil in the study area.

1.3   Research Question

  1. What are the socio-economic characteristics of the respondents in the study area?
  2. What are the marketing channel of groundnut oil marketing in the study area?
  3. What are the profitability of groundnut oil marketing in the study area?
  4. What are the problems affecting of groundnut oil marketing in the study area?

1.4       Objectives of the Study

The broad objectives of this study of groundnut oil marketing in Rimi Local Government Area in Katsina State. The specific objectives are:

  1. To describe the socio-economic characteristics of the respondents;
  2. To identify the marketing channel of groundnut oil in the study area;
  3. To determine the profitability of groundnut oil marketing in the study area;
  4. To describe the problems affecting groundnut oil marketing in the study area

1.5    Justification of Study

The study on groundnut oil marketing is apt in such a time as this bearing in mind that the groundnut pyramid of Kano in the 70s once boosted the economy of the nation before the oil boom. It is also timely at a time when Government is agitating and looking for possible ways of laying less emphasis on petroleum and diversifying the economy by encouraging the agricultural sector and other sectors like Tourism as seen in the Presidential 7-point Agenda (Misari, 2018). Effort in the direction of this study will create employment opportunities for all those involved in the production of groundnut oil such as crushers, sorters, transporters and consequently improve the living standard of the people. Rather than import other vegetable oils, this study will encourage and create a solid base for marketers who will in turn be exporters, thus contributing to the GDP of the nation. Other subsidiary industries like the plastic industry, cosmetic and pharmaceutical industries will be encouraged. For the researchers, this study will serve as a base on which further work will be done and ways in which groundnut oil will be produced at least cost so as to maximize profit will also be considered. Policy makers will come up with policies which will discourage the importation of other vegetable oils competing with the locally produced groundnut oil hereby encouraging the patronage/consumption of locally produced groundnut oil. Knowing that the producer’s margin is small using the low, oil-rich variety of groundnut, producers of groundnut oil will therefore purchase the high, oil-rich variety for their production and consequently encourage farmers to cultivate more of the high, oil rich variety. The two types of groundnut are; Erect type (bunch type) or (up right) this variety of groundnut the stem and branches grow upright so that there is little spreading. It also matured early and pots are developed in bunch. This variety is very high rich oil. While the Runner type ( creeping type) This type of groundnut variety has branches which grow horizontally and flowering pegs comes out from all over the branches not bunch together as in bunch types its also mature late. This variety is a low rich oil.



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Full Project – Groundnut oil marketing in Rimi local government area of Katsina state