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.
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.
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.
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.
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.
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.
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.
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