Abstract:
The study was to determine the effects of price variation on the production of natural rubber in
Nigeria with focus on Edo and Delta States being the major producing belt responsible for about
35% of the country’s output. Other objectives were to determine the international market
concentration among rubber producing countries using the Herfindahl Hirschman Index from 2007
to 2017, the relationship between producer price and output of natural rubber using co-integration
model and the determination of technical efficiency and profitability of natural rubber production
among 162 smallholder rubber farmers in Edo and Delta States using data envelopment analysis
and gross margin analysis respectively. Results of the study showed that the international export
market for natural rubber was moderately concentrated with five countries having a total market
share over 80% throughout the period with a Herfindahl Hirschman Index ranging from 2,039 to
2,458 for the entire period, while the import market was not concentrated thus indicating the
possibility of collusion among major exporting countries to influence price, results also showed
the producer price of natural rubber was led and predicted by output and not the other way round
with a speed of adjustment of 0.72% towards the long run from a previous deviation in equilibrium
and a 0.142 change in output was responsible for a 1% change in price. The mean technical
efficiency was 0.477 while the average gross margin was found to be N150.2 per hectare per
annum. Among factors that affected efficiency, the age of plantation was found to be significant
at 5%. The study recommended the establishment of commodity trading institution for the country
to provide a hedge against the adverse effects of the international market price changes on local
production, the development of high yielding varieties of natural rubber and sensitization of rubber
farmers to increase the adoption of good agronomic and tapping practices.
