Price transmission between supply and demand markets for cassava-based products: A cointegration analysis for gari in Enugu State, Nigeria

The theory of demand and supply implied a positive relationship, or price   information transmission between the supply and demand markets for products.  Using cointegration analysis and weekly data from week 37 in 2004 to week 26 in 2006, a  long-run equilibrium relationship was investigated between the prices for the yellow and white varieties of gari, a granulated dry food product processed from cassava roots, in a typical rural (supply) and urban (demand) markets in Enugu State of south- eastern Nigeria. The Augmented Dickey-Fuller (ADF) test was used to check for stationarity in the pairs of prices while the Engle and Granger two-step procedure was used to test for cointegration of the markets. Results revealed that, although yellow gari sold for relatively higher prices than the white gari in both the rural and urban markets, the market prices were significantly  positively correlated for the two products. The tests for unit roots revealed that the different price series were individually  nonstationarity while the pair of prices for each product was  integrated of order one. The ADF test statistics were calculated as -1.63 and  -1.59  in levels and -9.45 and –8.35 in first differences for yellow gari. The  statistics were also calculated as -1.69 and –1.56 in levels and –10.57 and –9.10 in first  differences for white gari in the studied rural and urban markets. The results revealed further that the rural and urban markets were cointegrated with t-statistics calculated as -4.09 for yellow gari and -4.20 for white gari. Changes in prices in one of the markets reflected similar long-term changes in prices in the other. The error  correction model did not, however, reveal any significant causality link between the peripheral and central markets, suggesting that there were no clear trends in price leadership between the markets. On the whole, the study had established that there could be efficiency in the transmission of price information among the operators of the traditional food markets in Nigeria. The  implication was that the development of the cassava agro-industrial sector might need to generate its own source of raw materials to guarantee food security in Nigeria.Keywords: Co-Integration, Cassava, Gari, Markets, Price

Factors Informing the Smallholder Farmers' Decision to Adopt and Use Improved Cassava Varieties in the South-east Area of Nigeria

The factors influencing farmers’ adoption and use intensity decisions on improved cassava varieties were investigated. Data collected from 510 cassava farmers randomly selected among the users (62.9%) and non-users (37.1%) from Abia State, south-east, Nigeria were used for the study. Descriptive and inferential statistics and tobit regression technique, with its associated elasticity decomposition framework were used in data analysis. Results revealed that plot size (p<0.01), farmer’s age (p<0.01), education status (p<0.01), and awareness through workshop and trainings (p<0.05) had significant positive influences on adoption and use while awareness through friends (p<0.01) and radio/television (p<0.01) had negative influences. Results were consistent for all three variants of the regression output considered. Elasticity results showed that the marginal effects of changes in all variables increased the elasticity of the probability of use more than they increased the probability of adoption for all households. The implication is that constant training and retraining of farmers on best farming and management practices would foster adoption and use of improved varieties to impact on the farmers’ wellbeing. Interactions among farmers during meetings, co-operatives, and other non-formal forums should be encouraged, but appropriately monitored, to ensure that only right messages were circulated to avoid distortion and negative outcomes. Keywords: adoption decisions, Manihot esculenta, improved varieties, rural farmers, tobit, use intensit

Determinants of Loan Repayment Behaviour of Smallholder Cooperative Farmers in Yewa North Local Government Area of Ogun State, Nigeria: an Application of Tobit Model

The loan repayment performances of smallholder farmers were examined along with their determinants using data from selected cooperative members in Yewa area of Ogun State, Nigeria. A multistage random sampling technique guided the selection of 110 respondents on whom data were collected using structured questionnaire. Data were analyzed using descriptive statistics, correlation, and multivariate regression analytical techniques. Results revealed that the average age of respondents was 44.7 years with 36.4% falling into the 20-40 years active working population. Loan distribution showed that 67.3% of respondents received cooperative credit while the remainder received loan from other sources. Only 74.0% of all loans was fully repaid at due dates. Respondents’ average credit use experience was 9 years. A negative association was found between age and repayment performance, suggesting that younger farmers were better performers. From regression results, repayment performances were positively influenced by non-farm income (p<0.05) but negatively affected by loan size (p<0.01). Rates of response were inelastic for all variables: a 100% increase in loan size caused a 27.7% decrease while corresponding increase in non-farm income resulted to a 14.5% increase in repayment performance. Decomposed elasticities revealed that a small change in each variable resulted to a relatively higher change in the elasticity of repayment intensity than it had in elasticity of probability to repay by borrowers that have started repaying. The synergy between repayment performance and non-farm income underscored the strength of livelihood strategies and diversification in boosting economic activities of rural farmers. Loan packages that recognize this synergy and educate borrowers on befitting complementary livelihood options would likely achieve less rates of default from beneficiaries. Keywords: Farm credit, repayment performance, smallholder, cooperative farmers, Nigeria

Spatial Integration and Price Transmission in Selected Rural and Urban Markets for Cassava Fresh Roots in Nigeria

An advanced time series econometric technique was used to study the interaction between the prices of cassava fresh roots in typical urban-demand and rural-supply markets in Nigeria. The price data cover 95 weeks from week 37 of 2004 to week 28 of 2006. The Augmented Dickey-Fuller (ADF) test was used to investigate stationarity in the prices while Johansen cointegration test procedure, with its associated vector error correction model (VECM) was used to measure the speed of adjustment coefficients that characterized the long-run dynamics of the system. Unit root tests revealed non-stationarity in both urban and rural prices series: in levels the ADF-test statistics were calculated as -1.68 for the rural price and -2.69 for the urban price while in first differences they were -13.98 and -11.91 respectively. Cointegration test revealed that both prices were cointegrated with the trace- and maximum eigenvalue statistics calculated as 18.79 and 16.38, each being statistically significant (p<0.5). The VECM reveals that any positive deviation from the long-run equilibrium would cause the system to respond with decreases in both the rural and urban prices, albeit the rural price responded faster. The impulse response analysis revealed that the rural price was more responsive to shocks emanating from the rural markets. The effect of the shock was calculated as 63.8% using the forecast error variance decompositions. The effect of rural price shock on the urban price appeared to be very infinitesimal at only 6.0% after about 10 periods. The Granger causality test did not reveal any significant causality link between the rural and urban markets prices, suggesting lack of clear trends in price leadership. The finding reveals the lack of predictability and reliability of markets for highly perishable and susceptible agricultural products, like raw cassava roots. There is need to strengthen cassava value chains with greater emphasis on processing and/or direct sale of roots to commercial processors, so as to reduce the volume of transaction of raw roots in the open market, because of the associated price shocks that have perpetually left the rural Nigerian farmer in abject poverty. Keywords: Cassava fresh roots, spatial integration, rural, urban, markets, price leadership, Nigeria

Efficiency and Its Determinants Among Smallholder Farming Units Supplying Cassava to Commercial Starch Processors in Nigeria: Data Envelopment Analysis Approach

Understanding the resource allocation and use efficiency is essential considering the supportive role of agriculture in the advancement of other productive sectors of the economy. Technical efficiency and its determinants were investigated among smallholder cassava-farming and decision-taking units selected from eight states of the southeast and southwest zones of Nigeria. The states’ selection was purposive, being the states in which the IITA-Nestlé cassava starch project was implemented from 2011-2015. However, a multi-stage random sampling technique was used to select a sample of 96 farming units from the clusters established under the project’s out-growers’ scheme. Primary data were collected from the farming units’ heads by administering the pre-tested household survey instrument. Data were analysed using descriptive statistics, inferential statistics, data envelopment analysis, and multivariate ordinary least square regression techniques. The DEA results revealed that majority (73.9%) of the farming units had efficiency scores less than 1 and as such classified as inefficient. Over 30.2% of the cassava farming units had efficient scores greater than 0.8 including 3.1% with scores that ranged from 0.81- 0.99. Farming units with efficiency scores from 0.6-0.8 constituted 17.7% of the sample while those with scores from 0.4-0.6 consist of 33.3%, which also corresponds to the percentage of farming units with efficiencies scores of less than 0.5. Only three variables: cassava farming experience, fertilizer use and quantity of stems used were statistically significant (p<0.05) in explaining cassava farming efficiency. Of these the influence of farming experience was positive while that of fertilizer use and stems were negative. The finding suggests that the elderly and better experienced farmers combined their versatile previous knowledge of farming with willingness to adopt and use improved farming practices to achieve efficiency. Contrary to expectation, fertilizer and stems were associated with less efficiency, a surprising result that could have resulted from misapplication and wastage of the vital resources. The results highlight the need for appropriate training and technical backstopping for the heads of farming units to enhance their knowledge of the good agricultural practices and improve their levels of efficiency. Keywords: DEA; best farming practices; efficiency; processing; cassava value chain; Nigeria

Profitability of Cassava Production: Comparing the Actual and Potential Returns on Investment Among Smallholders in Southern Nigeria

An analysis was conducted of the productivity of smallholder farmers enrolled into an out-growers’ scheme to supply cassava to commercial starch processors under the Nestlé-IITA cassava starch value chain project. Under the project, improved cassava varieties–cloned to be high-yielding, early maturing and disease-resistance–would be supplied to the farmers without charge. Also, to be provided would be training on good agronomic and farm management practices, like land preparation, soil management, stem-cutting habits, treatment of planting materials, fertilizer and herbicides quantity, time and method of application, and number, time and methods of weeding. It was envisaged that combined use of certified planting materials and good practices would substantially lead to increased yield and profitability. The actual performance based on baseline data was compared with the projected profitability under the project. The study was carried out using a sample of ninety-six farmers randomly selected from the eight states that participated in the project. Designed feedback form was used to assemble data on the farmers’ characteristics, previous cassava production state of affairs, including yield, experiences, and constraints to farming and marketing, input acquisition and use, and output flow and prices. Data were analyzed using descriptive statistics, inferential statistics and budgetary techniques. Results revealed N277400 (about US$1,840) as the baseline gross revenue, but this could have risen by over 114$3947), if farmers adopted the package of practices recommended under the project. The gross margin, calculated as N150536 (US$1003.57) could have increased by about 120$2189). Also, the return on variable cost investment calculated as 0.33 under the prevailing farmers’ practice could have risen to as high as 1.25, reflecting a return of N1.25 (rather than N0.33) on every N1 investment in the variable cost. Even though cassava production was a viable farm initiative, the farmers’ adoption and complementary use the recommended package of practices would guarantee higher yield, profitability and return on investment. Keywords: Cassava production, farm management, package of practices, profitability, smallholders, Nigeria

Household characteristics and market participation competence of smallholder farmers supplying cassava to starch processors in Nigeria

The household head characteristics of smallholder cassava farmers supplying raw materials to the major commercial starch processors in Nigeria were examined alongside their market participation categories. A multi-stage random sampling technique was used to select 96 farmers working in clusters in the eight cassava producing states. Data were analyzed using a combination of descriptive and inferential statistics, including the use of independent sample t-test technique to compare farmer's characteristics for the farmers' market participation categories. Results revealed that majority of the farmers were farming for subsistence with only 19.80% selling up to 50% of their farm produce as against 80.20% who sold less. Average mean values were found to be higher for the high market participants compared with the low participants for the age, farming experiences, education, farm size, gender, marital status, household size, training, season of harvesting and fertilizer use, but lower for use of credit, improved cassava variety, harvesting method, farming time devotion, and road access. Only farm size, gender and harvesting season at p<0.01 level and training at p<0.05 level were found to be statistically significant in distinguishing the high and low market participation categories. Policies and programmes aimed at promoting market participation among cassava farmers in Nigeria should be more impactful if directed at these significant factors

Price Transmission Between Supply And Demand Markets For Cassava-Based Products: A Cointegration Analysis For Gari In Enugu State, Nigeria

The theory of demand and supply implied a positive relationship, or price information transmission between the supply and demand markets for products. Using cointegration analysis and weekly data from week 37 in 2004 to week 26 in 2006, a long-run equilibrium relationship was investigated between the prices for the yellow and white varieties of gari, a granulated dry food product processed from cassava roots, in a typical rural (supply) and urban (demand) markets in Enugu State of south-eastern Nigeria. The Augmented Dickey-Fuller (ADF) test was used to check for stationarity in the pairs of prices while the Engle and Granger two-step procedure was used to test for cointegration of the markets. Results revealed that, although yellow gari sold for relatively higher prices than the white gari in both the rural and urban markets, the market prices were significantly positively correlated for the two products. The tests for unit roots revealed that the different price series were individually nonstationarity while the pair of prices for each product was integrated of order one. The ADF test statistics were calculated as -1.63 and -1.59 in levels and -9.45 and -8.35 in first differences for yellow gari. The statistics were also calculated as -1.69 and -1.56 in levels and -10.57 and -9.10 in first differences for white gari in the studied rural and urban markets. The results revealed further that the rural and urban markets were cointegrated with t-statistics calculated as -4.09 for yellow gari and -4.20 for white gari. Changes in prices in one of the markets reflected similar long-term changes in prices in the other. The error correction model did not, however, reveal any significant causality link between the peripheral and central markets, suggesting that there were no clear trends in price leadership between the markets. On the whole, the study had established that there could be efficiency in the transmission of price information among the operators of the traditional food markets in Nigeria. The implication was that the development of the cassava agro-industrial sector might need to generate its own source of raw materials to guarantee food security in Nigeria

HOUSEHOLD CHARACTERISTICS AND MARKET PARTICIPATION COMPETENCE OF SMALLHOLDER FARMERS SUPPLYING CASSAVA TO STARCH PROCESSORS IN NIGERIA

The household head characteristics of smallholder cassava farmers supplying raw materials to the major commercial starch processors in Nigeria were examined alongside their market participation categories. A multi-stage random sampling technique was used to select 96 farmers working in clusters in the eight cassava producing states. Data were analyzed using a combination of descriptive and inferential statistics, including the use of independent sample t-test technique to compare farmer's characteristics for the farmers' market participation categories. Results revealed that majority of the farmers were farming for subsistence with only 19.80% selling up to 50% of their farm produce as against 80.20% who sold less. Average mean values were found to be higher for the high market participants compared with the low participants for the age, farming experiences, education, farm size, gender, marital status, household size, training, season of harvesting and fertilizer use, but lower for use of credit, improved cassava variety, harvesting method, farming time devotion, and road access. Only farm size, gender and harvesting season at p<0.01 level and training at p<0.05 level were found to be statistically significant in distinguishing the high and low market participation categories. Policies and programmes aimed at promoting market participation among cassava farmers in Nigeria should be more impactful if directed at these significant factors