Analysis of the cattle market in Delta State - The supply determinants

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1 African Journal of General Agriculture /2010 $ Vol. 6, No. 4, December 31, African Studies on Population and Health Printed in Nigeria AJGA /6402 Analysis of the cattle market in Delta State - The supply determinants K. N. Tibi* and A. Aphunu Department of Agricultural Extension and Management, Delta State Polytechnic, Ozoro, Nigeria (Received June 8, 2010; Accepted July 8, 2010) ABSTRACT: The study was carried out to determine the factors influencing the supply of cattle in Delta State. Six cattle markets were purposively selected from the study area. The selected cattle markets were Asaba, Warri, Agbor, Sapele, Kwale and Oleh. The respondents were selected by proportional random sampling. Data were collected through questionnaires which were administered to the respondents in the six markets location. Descriptive statistics and regression analysis were used to achieve the objectives. Result of the study showed that 87% of the respondents transported their cattle to the markets by lorries and trucks while less than 14% of the respondents walk or trek their cattle to the markets. A great proportion of the respondents transported their cattle to the market with commercial vehicles as only very few of them could afford their own personal vehicles, most of the roads traveled by the traders were either partially tarred or untarred. The result of the study further showed that the average number of cattle sold per day in the study area was sixty (60) with an average price of N92, 477 per cattle. The average cost incurred by the traders in marketing one cattle was N80, in which about 86% of the total cost was borne on the purchase of cattle, 8% on transportation while the remaining 6% on other marketing cost such as feeding, labour, rentage and health issues. There is a short fall in the supply of cattle due to the high cost of cattle marketing; because the cattle are brought from the northern part of the country to the south usually there is high cost of transporting the cattle considering the long distance that the traders have to travel with them. The wide gap in the supply and demand of cattle is also expressed by the cost of purchase of the cattle. The result of the regression analysis showed that capital, demand and price of cattle were statistically significant at 5% level. There was 86% variation in the supply of cattle as explained by all the explanatory variables; an increase in capital, demand and price of cattle raised the supply of cattle whereas an increase in purchase and transportation cost lower the supply of cattle in Delta State. Keywords: Cattle market; Market forces; Supply determinants; Delta State; Nigeria. Introduction Nigeria is one of the leading countries in Sub-Saharan Africa in cattle production, in 1988 the country had over 12,200,000 cattle, where 1,220,000 were milking cows and 10,980,000 were beef cattle in which less than one percent of these population are managed commercially while over ninety nine percent are managed traditionally (RIM, 1990). *To whom correspondence should be addressed. Kentustibi@yahoo.com 199

2 Afr. J. Gen. Agric. Volume 6, No. 4 (2010) Cattle contribute over 12.7% of the agricultural Gross Domestic Product GDP in Nigeria (CBN, 1999). The cattle industry provides a means of livelihood for a significant proportion of the pastoral families in the sub humid and semi-arid ecological zones of Nigeria (Adegeye, 1995). Although there are many sources of animal protein studies have shown that products from cattle are the most commonly consumed in Nigeria. Ikpi (1990) stated that between 1970 and 1989 beef contributed over 70.93% of the total meat consumed in Nigeria; consequently the cattle industry provides a better nutrition though which the living standard of the people can be improved. Marketing of cattle is a business activity associated with the transfer of cattle from the producers to the consumers: it is concern with the movement of cattle from the pastoralists to the consumers who are located in both urban and rural areas (Omoruyi et al, 2000). Cattle marketing make it possible for cattle to reach the buyers in the form, place and time where they are wanted; it involves bringing the cattle from where they are surpluses to where they are shortages. According to the National Livestock Project Division NLPD (1992) the supply of cattle and its products have been declining while the demand has been increasing, the short fall in the supply of cattle has often been linked to the high cost of cattle marketing. Because the cattle are brought from the northern part of the country to the south usually there is high cost of transporting the cattle considering the long distance that the traders have to travel with them. The wide gap in the supply and demand of cattle is also expressed by the price of cattle, being that the high cost of purchase of cattle influences the number of cattle supplied or sold in the market. This study was aimed at establishing the determinants of the supply of cattle in Delta State. Specifically the study determined (i) the mode of cattle transportation; (ii) the average number of cattle sold per day; and (iii) the influence of capital, demand, price, purchase and transportation cost on the supply of cattle in Delta State. The findings of the study will make the business more attractive. At a minimize cost the supply and demand of cattle is increased with the aim of making more profit and improving on the market efficiency. Research Methodology The study was conducted in Delta State. Delta State is located in the southern part of Nigeria within latitude and N; and longitude and E, with annual mean rainfall and temperature of mm and C respectively ( Nwajei, 1993). Its elevation above sea level is about 150m (Nwajei, 1993). The River Niger runs through the lower part of the eastern boundary; It is bounded on the west by Ondo State, on the south by Rivers and Bayelsa State, on the north by Edo State and on the East by Anambra State. Two geographical seasons are identifiable in the state, the rainy season is from late March to the end of October and dry season is from November to early March. Six cattle markets were purposively selected from the study area. The selected cattle markets were Asaba, Warri, Agbor, Sapele, Kwale and Oleh. These markets were selected based on the volume of cattle traded in those areas. Then a random selection of thirty cattle traders each from Asaba, Warri, Agbor and Sapele cattle markets, and twenty cattle traders each from Kwale and Oleh cattle markets respectively. The sample size was made up of a total of one hundred and sixty respondents. Data were collected through questionnaire which was administered to the respondents in the six markets location. Descriptive statistics was used to achieve objective (i) and (ii) which involve the use of simple percentages and frequency distributions, objective (iii) was achieved through regression analysis. Regression model Three functional forms of the regression model were estimated. The explicit forms of the three functions are: (1) Linear function: Y = b 0 + b 1 X 1 + b 2 X 2 + b 3 X 3 + b 4 X 4 + b 5 X 5 + U (1) Y = no. of cattle supplied X 1 = capital X 2 = no. of cattle demanded X 3 = price per cattle X 4 = cost of purchase X 5 = cost of transportation b 0 = constant b 1 b 5 = regressions coefficients. 200

3 (2) Semi-log function: Y = b 0 + b 1 logx 1 + b 2 logx 2 + b 3 logx 3 + b 4 logx 4 + b 5 logx 5 + U (2) logx 1 to logx 5 = logarithms of the variables explained above. (3) Double log function: LogY = b 0 + b 1 logx 1 + b 2 logx 2 + b 3 logx 3 + b 4 logx 4 + b 5 logx 5 + U (3) LogY =logarithm of the no. of cattle supplied. Results and Discussion Over 87% of the respondents transported their cattle to the markets by lorries and trucks while less than 14% of the respondents walk or trek their cattle to the markets. However, a great proportion of the respondents transported their cattle to the market with commercial vehicles as only very few of them could afford their own personal vehicles. Most of the roads traveled by the traders were either partially tarred or untarred. Over 79% of the traders traveled on very poor roads and 21% on fairly good roads depending on the place of purchase of the cattle (Table 1). This result agrees with Jansen s (1992) findings that most of the market roads are not easily accessible to both the traders and buyers as the roads are characterized with potholes and usually messy during the rainy season. Table 1: Access roads and mode of transportation of cattle to the markets. Markets Access roads and mode of transportation Partially tarred roads Untarred roads Lorries for transport Trailers for transport Asaba Warri Agbor Sapele Kwale Oleh Percent (%) Source: Field Survey The average cost incurred by the traders in marketing one cattle was N53, in which about 86% of the total cost is spent on the purchase of cattle; 8% on cost of transportation while the remaining 6% on other marketing cost such as feeding, labour, rentage and health issues (Table 2). The result of the study further showed that the average number of cattle sold per day in the study area was sixty (60) with an average price of N72, 477. This result agrees with Ikpi (1990) that majority of Nigerians consume beef and milk (products of cattle) particularly during festivity periods as religion or beliefs does not affect its consumption. However, it was observed that this price varied from trader to trader depending on the size, appearance, level of demand of cattle and the bargaining power of the individual buyers. The findings of this study imply that there is a great demand for cattle products in the study area. 201

4 Afr. J. Gen. Agric. Volume 6, No. 4 (2010) Items Amount (N) Percentage of Total Cost Cattle 73, Transportation 4, Feeding Labour Rentage Medication 1, Association fee Total 80, Result of the regression analysis The lead function was the dobble log function which was used to establish the influence of capital, demand, price, purchase and transportation cost of on the supply of cattle (Table 3). The dobble log function was adopted based on the fact that its coefficient of determination (R 2 ) was greater and closer to 1 with a better goodness of fit of the regression model. The result of the regression equation was: Log Y= logX logX logX logX4 8.68logX 5 The regression result showed 86% variation in the supply of cattle(y) explained by all the explanatory variables; capital(x 1 ), no. of cattle demanded(x 2 ), price of cattle(x 3 ), purchase(x 4 ) and transportation cost(x 5 ). The positive and negative signs in the regression equation above indicated that capital, demand and price of cattle increase the supply whereas purchase and transportation cost decreased the supply of cattle. Explanatory variables Linear Dobble log Semi-log Capital (X 1 ) 1.55 (3.61) (0.35)* (53.2) Price per cattle (X 2 ) 1.98 (10.2) 9.43 (1.21)* (2.94) Price of cattle (X 3 ) 3.74 (0.08) 5.02 (14.1)* 15.2 (0.87) Purchase cost (X 4 ) 87.5 (-0.75) (1.24) (-32.4) Transportation cost (X 5 ) (0.33) (0.67) 57.5 (-1.03) R *Significant at 5% level. Nos. in parentheses indicate the t-value. Source: Computed from survey data Conclusion There is a short fall in the supply of cattle due to the high cost of cattle marketing; because the cattle are brought from the northern part of the country to the south usually there is high cost of transporting the cattle considering the long distance that the traders have to travel with them. The short fall in the supply of cattle is also expressed by the cost of purchase of cattle. The average number of cattle sold per day in the study area was sixty (60) with an average price of N92, 477 per cattle. Capital, demand and price of cattle increase the supply whereas purchase and transportation cost decreased the supply of cattle in the study area. 202

5 Recommendations There is the need for both Federal and State Government to establish cattle markets in all the headquarters of the local Government areas of Delta State and the country in general so that cattle traders will not have to travel far distances before they can buy their cattle. More supplies of cattle should be encouraged so that the wide gap existing between demand and supply can be bridged. The Government can help to subsidize the cost of marketing cattle and encourage more traders into the cattle market enterprise. The traders should place more emphasis in improving the market efficiency rather than making abnormal profit as abnormal profit will encourage higher price and less demand. References Adegeye A.J. (1995): Statistical Analysis of Demand for Beef in the Western State of Nigeria. A bulletin of Rural Economics and Developments, Ibadan, Nigeria. Pages 70, 72, and 74 Central Bank of Nigeria (1999): CBN Annual Report of 1998, Lagos Nigeria, Vol.10 page 41 Ikpi A.E. (1990): Livestock Marketing and Consumption in Nigeria from An unpublished Research in the Department of Agricultural Economics University of Ibadan, Nigeria. Page Jansen P. (1992): Cattle as a store of wealth in Swaziland; American Journal of Agricultural Economics. Page 306 and 313 National Livestock Project Division (1992): NLPD survey in Kaduna Nigeria Vol.58 page 175 and177 Nwajei F.N. (1993): A Primary Atlas for Edo and Delta State. Macmillan Publishers. Nigeria. Page 60 and 61. Omoruyi,S.A.; Orhue U.; Akerobo A.A.; Aghimien C.I. (2000) Prescribed Agricultural Science for Secondary Schools; Benin City. Idodo Umeh publishers Ltd. Page 443 and