DETERMINANTS OF MARKET PARTICIPATION AND MARKET OUTLET CHOICE BY LOCAL RICE FARMERS IN EKITI STATE, NIGERIA

Abstract

Several development policies in Nigeria had placed undue emphasis on increasing rice production to serve as a base for agricultural transformation. Even though there has been an increase in rice production, the absence of household’s market participation and understanding of the sales outlets that could offer the best returns are still a major drawback. This study was undertaken to determine factors affecting market participation and market outlet choice by local rice farmers in Ekiti State, Nigeria. It specifically examined the socio-economic characteristics of local rice farmers in the study area, identified market outlets for local rice marketing, compared the differences in income among users of each of the identified market outlet and determined factors affecting market participation and choice of rice market outlets in the study area. A multi-stage sampling technique was used to select 132 local rice farmers and structured questionnaire was administered on them. 42 rice farmers were also selected for Focus Group Discussion (FGD). Data collected were analysed using descriptive statistics, probit regression model, ANOVA and Multinomial Logit model. The study revealed that about 67% of the farmers belong to the economically active segment of the population. Results also showed that rice production and marketing were dominated by males which accounted for about 74% of the farmers. Three market outlets were identified in the study area. The individual market outlet was the most patronized (33.0%), followed by cooperatives market outlet (27%) while the least patronized market outlet was private processing firm (17%). However, 23% of the farmers made use of combinations of outlets. 80% of the FGD participants also confirmed these three market outlets. The probit regression result showed that out of the 12 variables included in the model, five were statistically significant at 1% and 5% level of significance. The result showed that rice output, group participation, market information and ownership of rice land cultivated were those that positively determined market participation, while size of land devoted to other crops negatively affected the probability that a farmer would participate in the output market. The Multinomial logit result showed that the likelihood ratio statistic (χ2) of 329.88 was highly significant (p< 0.000), suggesting the model had a strong explanatory power. The result indicated that individual buyers’ market outlet was the dominant outlet in the study area. The result further showed that compared to individual buyers’ market outlet, the likelihood of accessing cooperative market outlet increased with increase in volume of rice output, number of years of formal education, years of farming experience and land size under rice cultivation. The summary statistics of ANOVA result showed that farmers who patronized cooperatives are significantly different in income as compared to farmers that patronized individual buyers’ market and private processing firms. The marketing activities of the farmers in the study area were hampered by inadequate credit facilities, shortage of processing facilities, poor pricing and among others. The study concluded that increased access to market information and group participation would increase market participation and that there is significant difference between the incomes accrued to farmers that patronized cooperatives market outlet as compared to individual buyers’ and private processing firms market outlet. This study recommended that government should increase fund to local rice industry and that formation of cooperatives should be encouraged among the local rice farmers because it will enhance their bargaining power and provide them the opportunity to sell in more lucrative markets, thus providing more income to the farmers.