Iliya Bawa1, Elisha Peter2 and Hussaini Mohammed Ndakwesu3
1&2DEPARTMENT OF MARKETING,
SCHOOL OF BUSINESS STUDIES,
FEDERAL POLYTECHNIC NASARAWA,
NIGERIA.
3 DEPARTMENT OF BUSINESS ADMINISTRATION
AND MANAGEMENT, FEDERAL
POLYTECHNIC NASARAWA.
Being paper presented at the
Eleventh International Conference on Research
and Innovations for Sustainable
Development.
Venue: Ebitimi Banigo
Auditorium, University of Portharcourt, Nigeria
Date: December 6 – 7th,
2016.
ABSTRACT
Nigeria used to be an agrarian economy. In the early 50s up to the early
70s before the discovery of crude oil, agriculture was the mainstay of the
economy. It become more apparent that the agricultural sector could not longer
perform its traditional role of meeting domestic food requirements, raw materials
for industry and the sector which was once a major foreign exchange earner
through export have decline. The peculiar characteristics of agricultural
produce result in a complicated marketing system and in the process the
producers of the produce are exploited. The objective of the study is to
examine how principles of marketing can be use to expand agriculture sector. The
data used for this study is based on secondary data. The study employed
exploratory research design and examines agricultural sector and marketing
activities. The information gathered are weighed in relation to the topic using
both deductive and inductive reasoning. It was recommended that government
should give priority to the need of agricultural development in the allocation
of scarce foreign exchange. The Nigerian marketing system should be re-organized
to make it more effective and efficient. Emphasis should be made on non-oil
production to achieve effective export diversification and reduce the current
dependence on crude oil.
Keywords: Agriculture, marketing, development,
economy, government, export.
Introduction
Before and after the Nigerian political
independence in 1960 to the present day, agricultural revolution and development
had centered on the same objective: provision of food and raw materials, market
for the industrial sector, farmers and national income and growth, supply of
savings to other sectors of the economy, provision of productive employment,
reduction in inflationary rate in the economy etc.
Nigeria used to be an agrarian economy. In the
early 50s up to early 70s before the discovery of crude oil, agriculture was
the mainstay of the economy employing about 70 percent of the total population.
As Ogbuagu (1995: 93) put it, it is often estimated that about 75 percent of
Nigerians are engaged in agriculture. The Nigerian economy is therefore an
agricultural one. Before the oil boom of the 1970s, the country depended hugely
on agriculture for her survival. The agricultural sector provided food for the
over-growing population and employment for over 80 percent of the labour force.
Also, agricultural export products constituted the main source of foreign exchange
earnings that aided the country in the importation of capital goods. Besides,
the agricultural sector before independence in 1960 accounted for over 60
percent of the Gross Domestic Product (GDP) of the country. Even as late as
1968 agriculture still accounted for over 90 percent of Nigeria’s foreign
exchange earnings.
Ukpong and Malgwi (1991) observed that since 1970
particularly after the middle-east oil embargo in 1973, the oil industry has
continued to dominate, the economy. This has accordingly brought about a
drastic decline in the contribution of the agricultural sector to the country’s
GDP, specifically the contribution of agriculture to the nation’s GDP declined
to 8.3 percent (1971 – 1975), to 3.0 percent (1981 – 1985), and witnessed a
shift increase but still significantly as low as 4.6 percent (1986-1989) till
date. Because the agricultural sector and agriculture in Nigeria as a business have
been changing, the farmers, the middlemen, and the government of the country
had been adopting one marketing strategy or the other, to ensure that the role
of agriculture is well played in the economy. However, the problems still
linger, the need to expand agricultural products frontiers via application of
marketing principles is mandatory in every society especially in developing
country like Nigeria whose performance in the sector has been dwindling over
the years. The importance of this could be increase in earning from export,
reducing in imports, contribution to the GDP, employment generation and
nutritional value to the populace.
Agricultural marketing cannot however be planned
and executed in isolation of the development, dynamism and improvement
occurring in the business world. The growth of the agricultural sector is
essential and indispensable in order to meet the challenges of the modern
world.
Statement of the Problem
Nigeria government, both at the central and state
levels have been increasing their expenditure on agriculture to enhance its
productivity. One of the ways the expenditure is being made is through
subsidizing agricultural inputs. Subsidy is carried out in the areas of seeds
and seedling and procurement of fertilizers, insecticides, pesticides. Yet
consumers of agricultural produce still buy the products at an exorbitant
prices. It become more apparent that the agricultural sector could no longer
perform its traditional role of meeting domestic food requirements, raw
materials for industry and the sector which was once a major foreign exchange
earner through exports have decline. The peculiar characteristics of
agricultural produce result in a complicated marketing system and in the
process the producers of the produce are exploited.
Objective of the Study
Given the above problem statement, the objective of
this study is to examine how principles of marketing can be use to expand
agricultural sector for Nigeria.
Research Methodology
The data used for this research work is based on
secondary data. It examines agricultural sector and marketing activities. The
study employed exploratory research design. Important books published and
electronic materials; journals, seminars papers and other materials related to
the study were used. Information from these sources are weighed in relation to
the topic using both deductive and inductive reasoning to arrive at conclusion
and Recommendation.
Literature Review
Agriculture and
Economic growth:- Several authors are
of the view that growth in the overall economy depends on the development of
agricultural sector, Johnson and Meller (1961) postulated that agriculture
contribute to the economic growth and
development through five inter-sectoral linkages. The sectors are linked
via:-
i.
Supply of surplus
labour to firm in the industrial sector
ii.
Supply of food
domestic consumption
iii.
Provision of market for industrial output
iv.
Supply of domestic
savings and industrial investment and
v.
Supply of foreign
exchange from agriculture export earnings to finance import of intermediate and
capital goods.
In addition to these five direct market based
linkage, Timmer (1995) observed that agriculture indirectly contributes to
economic growth via its provision of better caloric nutrient intake by the
poor, food availability, food price stability and poverty reduction and
employment.
Nigerian Government Policies on Agricultural
Development
The federal government of Nigeria developed some
agricultural policies and programmes to alleviate the sector, they are:-
i.
The operation feed
the Nation (OFN)
ii.
The agricultural
development project (ADPs) assisted by the world bank
iii.
The river basin
development authorities (RBDAs)
iv.
The national accelerated
food production programme (NAFPP)
v.
The green revolution
progeramme
vi.
The director of
food, roads and rural infrastructure (DFRRI)
vii.
Agricultural policy
of Nigeria
viii. The agricultural land development authority (NALDA)
ix.
Land reforms and
food security policy
x.
Agricultural
transformation agenda
A review of these policies reveals more of failures
than success. Among the identified reasons for the failure of the policies are
implementation problems, poor government funding, paucity of agricultural
inputs, policy instability and uncertainty, and excessive rent seeking,
corruption and poor management. Others are inadequate agricultural
mechanization, lack of infrastructural facilities, lack of credit facilities to
farmers, and bad influence of politics. The rest are problems associated with
agricultural research, unfamiliarity with agricultural insurance scheme, and
lack of national culture of popular participation (Obi, et al., 2008).
Recently, the present regime under the leadership
of President Muhammadu Buhari launched another Agricultural policy tagged ‘The Green Alternative’ with the hope
to position agriculture as the arrowhead of the economic recovery effort “The Green Alternative” Agricultural
promotion policy 2016 – 2020 identifies two key challenges:-
i.
The first is the
inability to meet domestic food requirements: this is a productivity challenge
driven by an input system and farming model that is likely inefficient, the
lack of good seeds, fertilizers irrigation, crop protection etc.
ii.
The second is the inability
to export the level required for marketing, which is typified by an inefficient
system for setting and enforcing food quality, poor knowledge of target
markets, a weak inspectorate system and poor coordination amongst relevant
agencies.
As earlier noted, the problem has never been a lack
of policy, it has always been the focus and capacity to satisfy to the plan, to
modify when necessary and ensure also that the plan aligns with all aspects of
the economic plan of the government.
Previous
Studies
Empirically, Adefila and Adeoti (2004) investigated
government funding of agricultural sector through annual budgetary allocation
in Nigeria. The study which is mainly descriptive revealed that the impact of
agriculture in the area of employment generation was enormous as it accounted
for between 75 percent and 45 percent share of employment generation in the
country between 1990 and 1999, respectively. The study further revealed that
government funding of agriculture was rather too low between 1991 and 1998 as
the budgetary allocation to agriculture in any particular year was never more
than 5 percent of the total budget with the trough at 1.8 percent in 1994 and
the peak of 4.2 percent in 1991. While Izuchukwu (2011) examined the impact of
the agricultural sector on the Nigerian economy through multiple regressions on
data spanning 1986 – 2007. The result indicated a positive relationship between
GDP as dependent variable and domestic saving, government expenditure on
agriculture and foreign direct investment as independent variables. It was also
revealed in the study that 81 percent of the variation in GDP could be
explained by the independent variables. Ugwu and Kanu (2012) examined effects
of agricultural reforms on the agricultural sector in Nigeria. The economic
reform strategies were geared toward the achievement of food self-sufficiency
and food security, generation of gainful employment, increased production of
raw materials for industries, increased production and processing of export
crops, rational utilization of agricultural technologies for the improvement of
life of its citizens. The study found that agriculture contributed minimally
during the period in terms of output, market, foreign exchange and capital
formation or transfer as a result of policy instability, poor coordination of
policies, poor implementation and mismanagement of policy instruments and lack
of transparency. Little attempt, if any has been made to explore how to expand
agricultural sector frontier view the application of marketing principles.
The Need for
Marketing
The contribution of marketing to economic
development is no in doubt. Finch and Michalopoulos (1988) had observed that
“by introducing greater market competition, it encourages a more efficient
utilization of resources and greater growth in productivity in the whole economy.
Moreover, open trading policies permit quicker adaptation to new technologies
and greater flexibility in responding to global economic developments”.
To support this, Haberler (1988) said: “Experience
has clearly shown that development policies that pay little attention to the
vital contribution of trade, private enterprise and direct foreign investment,
do not yield sustained and efficient industrialization and growth”.
Realizing that the dynamic benefits of marketing
explain why marketing is crucial to economic development he further said:
i.
Marketing provides
material means (capital, goods, machinery, and raw materials finished and
semi-finished materials) indispensable for economic development.
ii.
Marketing is the
means and vehicle for the dissemination of technological knowledge, the transmission
of ideas, for the importation of knowhow, skills, managerial talents and
entrepreneurship.
iii.
Marketing is also
the vehicle for the international movement of capital and resources especially
from the developed to the developing countries.
iv.
International
marketing is the antimonopoly policy and the best guarantee for the maintenance
of a healthy degree of free competition.
Marketing activities:-
Agricultural marketing involves asking and
answering certain vital questions religiously and judiciously. Among these
questions, according to Abbott Makeham (1979:24) are:-
-
How does food, which
may be produced on thousands of small separate farms, reach the consumer?
-
How is it graded,
prepared and packaged for the consumer to cook and eat?
-
Who buys the excess
that the farmer grows beyond his own family needs?
-
Who provides storage
space for produce that is not immediately required by the consumer, and why?
-
The purchase,
transport and storage of produce, cost money; where does the money come from to
finance the activities?
-
What kind of
enterprises transport foods from the producer to domestic consumers?
-
How do the produce
reach markets in other countries?
-
How do processing
plants obtain their raw materials?
-
What can farmers do
to improve the prices they receive from their products and services from the
marketing system?
-
What can consumers
do to obtain a better service?
-
What should the
government do to improve the working of the marketing system as a whole?
-
What is a marketing
system and why is it necessary?
-
What information
does the man who want to run an agricultural marketing or supply enterprise
require?
-
What are the
problems he will face and how can he solve them, among others?
Implicit in these questions and answers
relationship, is that as agriculture changes or revolves from one stage to the
other, from one form to the other, and follows one government policy and the
other etc. marketing plays vital roles and performs numerous functions to
service such resolutions and development.
Iyanga (2008) noted that a combination of
agriculture as a business, and marketing, will result in agricultural marketing
(which means different things to different people at a different period, place
and circumstance). To an average housewife, agricultural marketing means
shopping for food items at the local market, to a farmer it means selling his
agricultural produce, while to a fertilizer producer it means transporting his
farm inputs to the farmers in the farm.
Government may have a number of objectives with
regard to agricultural marketing policy such as efficient economic development,
economic stability, an equitable distribution of income, food security, and
nutritional well-being. They may pursue these objectives, which are not
necessarily compatible, in a number of ways such as investing in agricultural
development, stabilizing agricultural development, stabilizing agricultural
producers’ and consumers’ incomes and expenditures, regulating input and output
prices, directly controlling and marketing of food, establishing alternative
marketing system, and rationing but in all a compromise has to be reached for
the interest/benefits of all concerned.
Realizing that agriculture provides food to our
people, raw materials to various industries, contributes to the export sector
of the economy (foreign exchange), the output constituting more than 50% of the
national product as well as enlarging the size of the domestic market and domestic
savings, etc. an efficient agricultural marketing policy should generate large
agricultural surplus from the farm sector in order to augment the financial
resources of the state for further development.
Various authorities have described marketing
differently, the term marketing has been defined by Kotler (1980) as a social
and managerial process by which individuals and groups obtain what they need,
and want, through creating offering and exchanging products of value with
others. The chain of distribution in agricultural marketing includes the
producer, middlemen, wholesalers, government, retailers and cooperative
societies. While the producers (manufacturers and suppliers of agricultural
goods) operate the dual system of distribution i.e selling directly to
wholesalers and retailers, the middlemen who are also called the truckers
provide essential roles in the channels of distribution as they finance the
crops of farmers, supply them seeds, fertilizers and other necessary inputs.
In most countries, government acts through the
various agencies and corporations for agricultural marketing which are supposed
to buy directly from farmers, guaranteeing minimum prices for most commodities,
it also finances the crops and supplies agricultural products to retailers.
Furthermore, in time of scarcity it is the only one
allowed (or using concession to private organizations) to impart foodstuffs and
in time of glut it subsidizes farmers and arranges for the storage of the
surpluses. The government also sets maximum retail prices for a variety of
staples.
Of paramount importance among the marketing mix
variable is pricing. In agricultural marketing, price is not only used to
determine profitability of the product, but also contains margins associated
with other cost aspect of the product such as storage, promotion,
transportation and delivery services. It is also associated with quality or
grade of a particular produce i.e the higher the grade the higher the price.
On the promotional aspect, efficient market
information can have a positive benefits for farmers and traders. Up to date
information on prices and other market factors enable farmers to negotiate with
traders and also facilitate spatial distribution of products from rural areas
to towns and between markets. Modern communication techniques open up the
possibility for market information services to improve information delivery
thorough sms on cell phones and the rapid growth of FM radio stations in many
developing countries offers the possibility of more localized information to
farmers.
Majority of Nigerians are engaged in farming on small
holidays. Getting customers to purchase the produce is the purpose of
marketing. Production and marketing are important for satisfying customers
needs and also enable farmers to make some profits. More satisfied customers
mean more sales and higher turnover which results in sustainable profits.
Successful marketing activities (satisfying customers, increasing sales and
making profit) as noted by Nnabuko (2004) involves:-
-
Finding out what
producer or service people need and providing the products or services to meet
this need;
-
Selling them in
place/location where people can get them to buy;
-
Selling prices that
people are willing to pay;
-
Informing and
attracting them through promotional activities to buy the products or services.
To achieve economic growth and development through
application of marketing principles to agricultural activities through must be
maintenance of products aimed at preserving quality of commodity (including
organic materials of crops, livestock, fish, wildlife and marine origin) until
they are available to prospective buyers. These facilities include silos,
refrigerators, warehouse, storage facilities, meat processing plants and
provision of transportation/distribution which make the product available to
the consumers at right place at the right time.
To achieve this, there should be establishment of
workable grades and standard of products and packages for purchases at all levels of the marketing channels; improves
extension services to disseminate marketing information needed for efficient
performance of different marketing functions among the producers, intermediaries
and consumers; data gathering and processing; training of personnel to
facilitate efficient operations; research on physical characteristics of
products, inspection of facilities at terminals and wholesales markets are all
essential.
Foreign Trade and Economic Growth
Presently, Nigeria is predominantly a consumer
nation, as such, if its foreign trade is not properly tackled may lead to
perpetual dependence with devastating consequences on the economy. Its trade
structure would continue to suffer if the country’s major produce apart from
oil, which are agricultural continue to face different types of manipulations
by industrialized nations of the world.
Foreign trade refers to international transactions
and payments between nations of the world through the import and export of
goods and services in which one national currency can be exchanged for another
in an international market (Dorubush and Fischer, 1994). Similarly, Lispsey and
Chrystal (2004) described foreign trade as sales and purchases of goods and
services that take place across international boundaries, with the purpose of
achieving economic growth and higher standard of living. As succinctly observed
by case, fair and Oster (2009), trade has potential benefits for all nations
but some countries are likely to lose from free trade, suffer from ruinous competition
of a rival who apparently works under superior technology and condition of
globalization, overcoming the plight of production and flooding the
international market with product at an increasingly low price.
Furthermore, export trade is foreign demand
dependent and capacity of any economy to produce for export, proxies by Gross
Domestic Product (GDP),is an important determinant of export growth (Yusuf,
2000). No country has ever grown without trade, and Nigeria can only benefit in
trade if it address the problem of (agricultural or) manufacturing sector
(Aliyu, 2010). In this study therefore, agricultural marketing is seen as an
economic force that has spurred commerce and investment, promoted technological
revolution, encouraged exploration and propelled civilization, which can
stimulate growth and induce development to global players that embrace the
forces of globalization. This implies that marketing plays a vital role in
shaping economic and social performance, and prospects of countries around the
world.
Conclusion and Recommendations
In conclusion, effective marketing of agricultural
products are dependent on the creation of conducive circumstances as well as
the provision of resources and services. The circumstances required are those
supportive aids like commercial bargaining and exchange which consist of institution
and structure to maintain, in this regard we hereby recommended that
i.
Constant and
continuous managerial management and technical training for farmers with
facilities at reduced costs is necessary. The facilities should be in the areas
of tractor mechanics, bulk seed growers, rural survey supervisors, managers of
integrated project, etc. the trainees and trainers should be highly remunerated
to make them stick to the programme.
ii.
Government should
give priority to the needs of agricultural development in the allocation of
scarce foreign exchange and federal and state budget revenue allocations to the
sector.
iii.
Government support
and investment in biological research, and socio-economic studies is needed and
the produce of the agricultural research findings made available to the rural
farmers at reduced prices.
iv.
The Nigerian
marketing system should be re-organised to make it more effective and
efficient. Being composed of individuals, business firms, and co-operative
ventures engaged in physical and technological activities run by managers and
other decision makers, effort should be made to eliminate or reduce the
inadequacies and inefficiencies in the system by all concerned.
v.
Rural areas should
be developed and social infrastructure like good road, portable water,
electricity, health facilities, functional schools etc. provided to discourage
young productive men (farmers) from living the rural areas to enjoying city
lives, thus abandoning farming for the old and less productive farmers.
vi.
Government should
intensify the policy of export-led growth by emphasizing non-oil production to
achieve effective export diversification and reduce the current-dependence on
crude oil.
vii.
Government should review
external trade tariff policies in Nigeria in order to promote domestic
industries and protect them from unfair trade practices, since the developed
countries also protect some aspects of their own trade especially in areas
where they have comparative advantage.
viii.
Mr. President in his
speech at the public presentation of “The Green Alternative” urged all
Nigerians to return to farms with an urgent call given on the need for us to
liberate ourselves from the periodic cycle of boom interlaced with bust and
meltdown. It is an urgent call for our nation to embrace the truth that oil
dependent economy would never provide enough for 170 million people and still
grow in leaps and bounds. “The only conventional activity that our constitution
allows a public officer is farming, so we have no excuse”.
ix.
To help our economy,
the government needs to pump trillions of naira into infrastructure projects
and trillions of naira into social intervention policies so as to make more
money available to the citizens to boost their purchasing power, which if it
happens will make these cash – strapped citizens start consuming, not imported
goods and services but mostly locally made goods.
x.
Nigerians must learn
to live in peace with one another, peace and stability are pre-conditions for
business operations. Investors generally shun countries, which are unstable and
conflict prone. The first step towards building investor confidence is to
recognize neighbourhood stability as an essential requirement for investment
facilitation.
References
Abbot, J.C. and Makeham, J.P. (1979), Agricultural
Economics and marketing in the Tropics, Intermediate Tropical Agriculture
Series, London Longman Group Ltd.
Adefila, J.J. and Adeoti, J.O (2004) Improving
Agricultural Budget to enhance Rural Development in Nigeria. www.google.com.ng
Aliyu, A.S. (2010) why US trade scheme fails in
Nigeria. Business Column. Daily Must and Protectionism. 9th Edition.
London, Bath press, the McGraw Hill Companies.
Case, K.E, Fair, R.C. & Oster, S.M. (2009)
Principles of Economics. International Trade and Protectionism. 9th
Edition. New Jersey – Pearson Education, Inc.
Dornbush, R, & Fischer, S (1994) Economics, 4th
Edition. London. Bath press, the McGraw-Hill Companies.
Gollin, D. Parente, S.L. and Rogerson, R. (2002)
The Role of Agriculture in Development. American Economic Review 92(2) 160-164.
Harber, G. (1988) International Trade and Economic
Development. San Francisco, Cal: ICEG.
Inyanga, J.I.N. (2008). Marketing in the Service of
Agricultural Revolution in Nigeria. Issues in Contemporary marketing in
Nigeria. AMDEF Enugu.
Izuchukwu, O. (2011) Analysis of the Contribution
of Agricultural Sector on the Nigerian Economic Development. World Review of
Business Research vol.1(1), Pp.191-200 March.
Johnston B.F. and Mellor J.W. (1961) The Role of
Agriculture in Economic Strategies in late-developing countries, Oxford
University press, New York.
Lipsey, R.G & Chrystal, A.K. (2004). Economics.
10th Edition. New York Oxford University press, Inc.
Nnabuko J.O. (2004) marketing strategies for small
and medium scale enterprises. Empowering small and medium scale enterprises in
Nigeria ECCIMA/MANMARK ASSOCIATES LTD ENUGU Nigeria.
Obi, E.A. Nwachukwu, C.L. and Obiora, A.C. (2008).
Public Policy Analysis and Decision making, Onitsha: Bookpoint Educational Ltd.
Ogbuagu, C.S.A (1995) Nigerian Development Policies
and Programmes, Calabar: University of Calabar press.
Timmer, C.P. (1995), Getting Agriculture Moving: Do
markets provide the signals? Food policy 20(5): 455-472.
Ugwu, D.S. and Kams, I.O. (2012), Effects of
Agricultural Reforms on the Agricultural Sector in Nigeria, Journal of African
Studies and Development. Vol.4(2), Pp.51-59 March. Available online at http://www.academicjournal.org/JASD
Upkong, G. and Malgwi, U. (1991) Federal Government
Policies in Respect of Agricultural Finance. Bullion, vol.15, No.2, April/June.
Yusuf, S. (2000). Globalization and the Challenge
for Developing Countries, a paper presented at African Economic Research
Consortium (AERC), Bi-Annual Workshop Plenary, Nairobi, May, p. 144
