Analysis of the Profitability of Maize Products in Nigeria

ABSTRACT

This study analyzes the profitability of maize products in Nigeria. It determines the socio-economic characteristics and processing activities of the processors; it identifies the various processed products from maize and then estimates costs and associated returns to maize processing. It also identifies constraints to maize processing; analyzed the factors that influence profit and investigate the specific effects of identified constraints on the processor’s growth potential of profit in Nigeria. As this work is part of Support to Agricultural Research and Development of Strategic Crops (SARD-SC) project, it guided the sampling technique. A multi-staged sampling technique was used to select 536 maize processors in the six innovation platform (IP) areas of the SARD-SC project area. A validated and structured questionnaire was used in collecting primary data. Descriptive statistics, budgetary, multiple regression, Likert scale, and ordinal logit model were employed to analyze the data collected. Seventeen maize products which are mainly traditional food products were identified, these include agidi, dokunu, dunkwa, egbo, madidi/abari, maize flour, maize kokoro, maize kunu, maize bran, masa/huce/chibi, ogi/kwokwo, Pate, Pele, popcorn, roasted corn and tuwo-masara. The predominant products from the IPs are as follows: Kwara-Oyo IP (IP 1): ogi/kwokwo and tuwo-masara; Nasarawa-Kaduna IP (IP 2): maize flour, maize kunu, pankaso, ogi/kwokwo and tuwo masara; Katsina-Zamfara IP (IP 3): waina, tuwo-masara, maize flour and couscous/ dambo. The result showed that female dominated maize processing with 97.9 percent from IP 1; 99.5 percent from IP 2 and 96.3 percent from IP 3. In IP 1and IP 3, 80.8 percent of the processors have a non-formal education while in IP 2, 64.9 percent have one form of education or the other. The highest age limits were within ≤30 and 40 years with a mean age of 31 to 40 years with a household size of 7 to 13 persons. The profitability analysis in IP 1 showed average monthly net return of N33,709 and N74,721, PI of 0.57 and 0.64; OR of 0.38 and 0.32 with a rate of return of N1.33 and N1.77 for tuwo-masara and huce/masa/baked cake in Kwara and Oyo State; In IP 2, profitability analysis showed average monthly net return of N67,793.97 and N24,988; PI of 0.44 and 0.22; OR of 0.54 and 0.77 with a rate of return on investment of 0.81k and 0.26k for maize flour in Nasarawa and Kaduna State; in IP 3, profitability analysis showed average monthly net return of N36,816 andN35,117, PI of 0.35 and 0.92; OR of 0.62 and 0.68 with a rate of return on investment of 0.54 and N1.22 for maize flour and tuwo-masara in Katsina and Zamfara State. The regression analysis revealed that in IP 1: gender, household size, cost of maize, depreciation cost, years of experience and working cost significantly influenced the profit level at one percent level while education attainment and cost of grinding were significant at five percent level; in IP 2: marital status, cost of maize grain, cost of grinding, depreciation cost, years of experience, location, initial capital at start-up, working cost and current capital significantly influenced the profit level by one percent; in IP 3: age, gender, marital status, cost of maize grain, depreciation cost and current capital significantly influenced the profit level at one percent level. The major constraints faced by the maize processors in the IPs is as follows: IP 1; Inadequate capital, lack of credit, expensive credit, difficulty in acquiring credit, problem of water supply, epileptic electricity supply, high transportation cost of maize products drudgery/poor processing equipment, inadequate storage facilities, high storage cost; IP 2: lack of credit, inadequate capital, expensive credit, difficulty in acquiring credit, high electricity tariff, epileptic electricity supply, high transportation cost of maize products; IP 3: lack of credit, difficulty in acquiring credit, expensive credit, inadequate capital, epileptic electricity supply, inadequate storage cost, high storage cost, high interest rate and drudgery/poor access to equipment. The result reveal empirically that some constraints were significant factors that determines processors profit growth potential in the IPs these include: IP 1: inadequate capital and drudgery/poor access to equipment; in IP 2: high transportation cost, drudgery/poor access to equipment, epileptic electricity supply and high electricity tariff; in IP 3: lack of credit, difficulty in acquiring credit, expensive credit, epileptic electricity supply and high interest rate. The study recommends that as tuwo-masara and egbo (IP 1); maize flour, tuwo masara and waina (IP 2); maize flour, tuwo masara and huce/masa/baked cake (IP 3) are more profitable than other products in the IPs; investors are encouraged to invest and diversify their use of maize in these products. The Government, the private sector and development agencies such as SARD-SC should help create conditions (enabling environments) to all the sectors to continue to grow and also invest in agriculture. Enabling environment such as infrastructure, access to credit, introduction of modern method and adequate processing technology in the agricultural sector is required in order to encourage diversification and boost the economic performance of the agricultural sector of the economy and hence make the processing of maize more attractive and lucrative. This will awaken more women, youths, and even men to go into commercial processing of maize. The government should create education awareness on the importance of education through radio and television using processors local language and hence primary education should be made compulsory. This will equip them and make their business more profitable.

Keywords: Maize, products; Profitability, Net return, Constraint; Multiple regression and Ordinal logit.