ETHNICITY AND CONSUMER BEHAVIOUR OF PALM OIL SELLERS IN AKWA IBOM STATE
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Abstract
This study intends to investigate ethnicity and consumer behaviour of palm oil sellers in Akwa Ibom State. Ethnicity status, consumer behavior, gender perspective, market structure, market performance and constraints to palm oil marketing by palm oil sellers in Akwa Ibom state necessitated this study. Four research questions and two research hypotheses were formulated to guide the study. The data was collected from both secondary and primary sources. The primary data were collected with the help of a well-structured questionnaire of two sections administered to palm oil sellers in the study area. The study reveals that the market structure for palm oil is perfectly competitive. The analysis of market performance revealed that palm oil marketing is profitable in the study area though in the face of few constraints. Palm oil marketing in the area was majorly constrained by high cost of transportation, inadequate capital and poor sales for wholesalers; lack of access to capital, poor sales and high cost of transportation for retailers. Government and other development agencies should build new model markets, rebuild/expand old markets, and provide good road network so as to reduce cost of marketing, hence improve marketing efficiency and profit. The palm oil marketers especially women should form cooperatives in order to access cheap credit facilities, enjoy other benefits of cooperation and empower themselves.
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
Nigeria was the largest producer of palm oil globally during the early 20th century, until the recession of 2015 that affected the country’s economy. History has it that, palm oil plantations provided Nigeria an exceptional opportunity globally in the production of an indigenous crop at a relatively lower cost (Amazing, 2017). The agricultural sector is therefore fundamental to cutting hunger and reduction of the burden of food import (Peacock, 2005). The agricultural sector accounts for over 41% of Gross Domestic Product (GDP) and two-thirds of employment in the country (CBN, 2002). The discovery of crude oil in the 70s led Nigeria to neglect her strong agricultural and light manufacturing bases in favour of an unhealthy dependence on crude oil. The agricultural sector since then has suffered from years of mismanagement, inconsistent and poorly conceived government policies and the lack of basic infrastructure.
The oil palm fruits are used in commercial agriculture in the production of palm oil. Oil palm (Elaeis guinensis) originated from the tropical rain forest region of West Africa which runs through the Southern Latitudes of Ghana, Liberia, Nigeria, Cameroon, Togo, and into the equatorial region of Angola and the Congo (Olagunju, 2008). Palm oil alongside palm kernel featured prominently on the list of typical goods sold to West European dealers by Southern Nigerian croppers. It has been shown that, the miracle crops tied collectively various number of indigenous palm tree farmers, country side merchants, sea traders, distributors, coastal family entrepreneurs and European traders to relish one of the lengthiest eras of continual economic expansion in the History of West Africa (Adetola, 2019). Palm oil marketing is concerned with all stages of operation that aid movement of the produce from the producer to the final consumer which include assemblage, storage, transportation, grading and financing (Ezealaji, 2012).
Ethnicity is linked in a dichotic relationship with race. Ethnicity is also ascribed at birth, but the ethnic group normally defines its cultural characteristics itself. Some social scientists and marketing researchers have come to view ethnicity as a category of identity, which has a strong influence on consumption decisions (Costa and Bamossy, 1995; Cui, 1997; Gren, 1999). There is also research that concludes that acculturation and ethnic identification are positively related to food consumption (Bojanic and Xu, 2006; Satia-Abouta et al, 2002).
Since consumers are the key factors in the promotion and recommendation of goods and products. Developing an understanding of the relationship between ethnicity and consumer behavior is crucial because it provides insights into why there are differences in consumer behaviour between consumers from the same ethnic background, as well as between different ethnic backgrounds.
Oil palm was identified as the most productive crop with five times higher oil production when compared to other crops, thus played a critical role in the Nigerian palm oil industry (Seng and Ahmad, 2017). However, other vegetable oils, such as olive and coconut oil, still garnered a significant position in the local market (Seng and Ahmad, 2017). The palm oil is a common cooking ingredient in Nigeria and has increasing use in the commercial food industry in Nigeria and other parts of the world. It is locally used in cooking and in the manufacture of candles, margarine and soap (Akangbe et al., 2011). It is used extensively in the tin plate industry, protecting cleaned iron surfaces before the tin is applied. It is also used as lubricant in the textile and rubber industries. A recent innovation is the use of palm oil as an environment-friendly carrier in pesticide formulations (Griffee, Diemer and Chinchilla, 2012 as cited in Ada-Okungbowa, Oghorodi and Omofonmwan, 2013).
1.2 Statement of the Problem
The price of palm oil in Nigeria is basically affected by cost of production such as cost of inputs, labour cost, transportation cost, processing cost, and so on. After processing the palm fruits, packaging is done using kegs, tins and drums before the onward transmission to different places and markets within the reach of the final consumers. According to Ezealaji (2012), the major distribution points for palm oil ranges from market stalls, wholesale points, palm oil depots or beaches and supermarkets. Each of these points is characterized by activities of trading associations or unionism which does not permit free entry into the business of palm oil marketing as the case may be. This compels palm oil distributors to register with substantial amount of money to join the union, buy kola and beer for the union members before being allowed to sell his goods in certain strategic locations. Thus, the Union heads fix price of palm oil and agree with members of the union to sell at that price. Presently, Nigeria is experiencing supply shortages of all grades of vegetable oil, especially palm oil (USDA, 2013). Local market prices are currently more than double the international price levels. Palm oil is marketed in the country throughout the year and majority of the population keep demanding for it. Marketing of palm oil is encumbered with its attendant problems such as price fluctuations, lack of/-or inadequate transport facilities, low level of marketing experience, lack of knowledge (by buyers & sellers) of type of competition operating in the palm oil market, poor storage facilities and non-uniformity in the scales used, which largely affect conduct. All of these have been largely responsible for the poor marketing efficiency of palm oil as regards price mechanism, price collusion and discrimination in the market (Ohen et al., 2007). Local farmers and palm oil producers will only continue to produce as long as there is market for their product, to fill this gap, there is the need for the study is aimed at examining ethnicity and consumer behavior of palm oil sellers in Akwa Ibom State.
1.3 Objectives of the Study
The main aim of the study is to examine ethnicity and consumer behavior of palm oil sellers in Akwa Ibom State. The specific objectives are;
- To ascertain the major ethnicity constraints to palm oil sellers in Akwa Ibom State.
- To examine the relationship between ethnicity and consumer behavior of palm oil sellers in Akwa Ibom State.
- To evaluate the effect of transportation of palm oil to consumers in rural and urban areas in Akwa Ibom State.
- To determine the effect of inadequate capital on large-scale wholesaling and retailing of palm oil.
1.4 Research Questions
To guide the study to go in line with the above objectives, the following questions were formulated;
- Are there major ethnicity constraints to palm oil sellers in Akwa Ibom State?
- Is there any significant relationship between ethnicity and consumer behavior of palm oil sellers in Akwa Ibom State?
- Is there any significant difference in the effect of transportation of palm produce to consumers in the rural and urban area?
- Is there any significant difference in the effect of inadequate capital on large scale wholesaling and retailing of palm produce?
1.5 Research Hypotheses
Based on the above research questions, the hypotheses for the study will include;
H0: There are no major ethnicity constraints to palm oil sellers in Akwa Ibom State.
H1: There are major ethnicity constraints to palm oil sellers in Akwa Ibom State.
H0: There is no significant relationship between ethnicity and consumer behavior of palm oil sellers in Akwa Ibom State.
H2: There is a significant relationship between ethnicity and consumer behavior of palm oil sellers in Akwa Ibom State.
1.6 Significant of the Study
The findings of this study will help educate local palm oil producers in Akwa Ibom State to understand that the consumers are the controlling function in any business activity, who require to be given qualitative services in order to achieve the producer’s objectives through their patronage.
The study will give policy makers, government and association of palm oil marketers in the state data to work with in eradicating the negative influence of ethnicity among palm oil sellers in the region.
The study will help to ensure that the middlemen in the business realize the importance of cooperation in trade and that for them to achieve efficiency in the distribution system, they should be integrated especially in the aspect of ethnicity and customer relationship.
The study will ensure that palm oil produce are easily available to the consumers when needed (availability), consumers are made to purchase goods without much difficulty (convenience), they have the opportunity of being exposed to different levels of service (service).
Finally, future researchers will widen their academic horizon by acquiring more knowledge about the marketing process of palm oil.
1.7 Scope and Limitation of the Study
The study will be discussing ethnicity and consumer behaviour of palm oil sellers in Ibiono Ibom local Government Area of Akwa Ibom State. There were some constraints that tends to hinder the flow of the study;
Financial Problem: Research at this level and time requires adequate financial backing to achieve qualitative result. Gathering data (Primary and Secondary) are indeed very expensive.
Availability of Research Material: The research material available to the researcher is insufficient, thereby limiting the study
Time: The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.
Attitude of Respondents: Obtaining information from the respondents is a very difficult task. They are afraid that the information they may provide might affect them negatively. This negative attitude is attributed to their ignorance and illiteracy.
1.8 Definition of Terms
Ethnicity: The fact or state of belonging to a social group that has a common national or cultural tradition. Or an ethnic group; a social group that shares a common and distinctive culture, religion, language, ethnic traits, background, allegiance, or association.
Consumer: A consumer is a person or a group who intends to order, orders, or uses purchased goods, products, or services primarily for personal, social, family, household and similar needs, not directly related to entrepreneurial or business activities
Consumer behavior: Consumer behaviour is the study of individuals, groups, or organizations and all the activities associated with the purchase, use and disposal of goods and services. Consumer behaviour consists of how the consumer’s emotions, attitudes and preferences affect buying behavior.
Palm Oil: Palm oil is an edible vegetable oil derived from the mesocarp of the fruit of the oil palms. The oil is used in food manufacturing, in beauty products, and as biofuel.
Palm Products: Palms are common tree species in mixed small farming systems and agro forestry (mixed production systems – combination of annual crops, perennial crops and livestock) tends to favour such multipurpose trees. The major domesticated palms are chiefly cultivated for products such as palm oil and palm kernel derived from their fruits.
Distributors: A distributor is an intermediary entity between the producer of a product and another entity in the distribution channel or supply chain, such as a retailer, a value-added reseller (VAR) or a system integrator (SI). The distributor performs some of the same functions that a wholesaler does but generally takes a more active role.
1.9 Organization of the Study
This research work is organized in five chapters, for easy understanding, as follows
Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study. Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature. Chapter three deals on the research design and methodology adopted in the study. Chapter four concentrate on the data collection and analysis and presentation of finding. Chapter five gives summary, conclusion, and recommendations made of the study.
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