Market Structure and Performance for Plantain and Banana

ABSTRACT

Plantain and banana are important fruit crops cultivated mainly in the southern part of Nigeria. They constitute a source of livelihood for millions of people within the production zone. Marketing plays a central role in the distribution of plantain and banana. This study, therefore, examined the market structure and performance for plantain and banana. Structured questionnaires were administered to 120 respondents using a multistage sampling technique. Data were analyzed using descriptive statistics, marketing margin, and Gini coefficient. The results indicated that 88.6% of the plantain/banana marketers in the study area were women with an average age of 46 years having 20 years’ experience. An average of 1024.29 kg and 345.20 kg of plantain and banana were traded, respectively, per week. Gini coefficient and marketing efficiency were 0.50 and 1.86 and 0.60 and 1.34 for plantain and banana marketers, respectively. This implied that in the region, plantain is being traded in higher volumes compared to banana; thus, plantain marketing is more competitive than banana. For every ₦1 invested, ₦0.86 and ₦0.34 were realized as profit by plantain and banana marketers, respectively (₦1 = $0.006 at the time the study was carried out). Plantain and banana marketing is a profitable enterprise, but it is faced with the challenges of a poor transportation system, inability to access credit facilities, and perishability nature of the produce. Efforts aimed at ameliorating transportation problems, provision of credit, and storage facilities will strengthen the marketing system to improve its effectiveness and efficiency in plantain and banana distribution in Nigeria.

KEYWORDS:

• Musa spp
• Gini coefficient
• market efficiency
• channels and conduct

Introduction

Banana and plantain belong to the same genus, Musa, which contains 30–40 species (Stover and Simmonds, 1987). The Food and Agriculture Organization and the International Institute of Tropical Agriculture, among other research institutions, use the word “banana” to refer to Musa species that are sweet and eaten raw, while “plantain” denotes Musa species that are starchy and requires cooking before consumption (EPAR, 2013). These commodities play crucial roles in strengthening food security and reducing poverty levels in many developing countries such as Nigeria (Adejoro et al., 2010; FAO, 2008). Nigeria is one of the largest plantain and banana producing countries in the world (Kainga and Seiyabo, 2012). These crops have always been important traditional staples for both rural and urban populace in Nigeria, while they have diversity in value addition to consumers (Baiyeri, 1996). Moreover, the consumption of plantain has risen tremendously in Nigeria in recent years because of rapidly increasing urbanization and the great demand for easy and convenient foods by the non-farming urban populations (Akinyemi et al., 2010). In ensuring the availability of Musa spp. and its products to millions of consumers, marketing of the commodities plays a crucial role (Idah et al., 2007).

Bananas and plantains are highly perishable and, in the absence of modern technology and advanced harvesting practices, must be consumed within 3 weeks post-harvest. To reduce perishability, they thus require rapid distribution and marketing (Fonsah and Chidebelu, 2011). Plantain and banana marketing involves the role of middlemen in getting the products, which are traded mostly in unprocessed forms, from the farms to the markets and then to the consumers. Plantain/banana distribution in Nigeria is a bit complex. Farmers, whose land lies near major roads, harvest the crop at the mature green stage and display it at the roadside or transport the crop to nearby markets, allowing small-scale wholesalers, retailers, and consumers to purchase directly (Figure 1). In some other cases, trade collectors move around farms, collect the produce from farmers, and transport it to cities where they hand them over to wholesalers who, in turn, pass the produce on to retailers or vendors for sale to consumers (EPAR, 2013). Movement and distribution to major cities and other non-producing regions are usually performed by wholesalers (Akinyemi et al., 2010).

In Nigeria, good quality plantain and banana are in season mainly during the months of October to February every year, while the demand for plantain/banana is all year round (Adewumi et al., 2009). Further, production centers are fragmented and mostly in small scale. Therefore, the system of getting the produce from thousands of small scattered farms to millions of consumers is of great importance, as it determines the prices received by the farmers and those paid by the consumers (Olabode et al., 2010). To enhance adequate supplies of banana/plantain, it is important that there be an efficient storage and marketing system (Adewumi et al., 2009). Building an effective and efficient marketing system becomes pertinent as an important long-term strategy for adapting sustainable agricultural development.

Market structure refers to certain characteristics of the market, which are believed to influence the nature of competition and the process of price formation while market performance is the assessment of how well the process of marketing is carried out and how successfully its aims are accomplished. The two approaches to estimate marketing performance are marketing margin and the analysis of market efficiency (Amao et al., 2011). Marketing margins indicate the relative cost of marketing at a particular time and can be used to determine the profitability of a business (Adetunji and Adesiyan, 2008). The size of market margins is largely dependent on a combination of the quality and quantity of marketing services provided, the cost of providing such services, and the efficiency with which they are undertaken and priced (Ayelech, 2011). To the farmer, marketing efficiency may mean selling his produce at the highest price, while to the consumer, it may mean getting commodities at the lowest price. Therefore, an efficient market produces the maximum possible output from the input used, given location and environmental constraints, and it minimizes resource inputs for any given output (Ayelech, 2011). Adeoye et al. (2013) identified the dominance and role played by the marketers in the distribution of these crops adding that they are faced with a lot of problems that may have a negative effect on their profits, efficiency, and productivity. In a situation where the production and consumption of plantain and banana keep increasing and the link between the producers and the consumers constitute the market as reported by EPAR (2013) and Oladapo et al. (2007), it thus becomes imperative to examine market structure and performance in shaping the marketing systems and development process for plantain and banana. The specific objectives of this study, therefore, are to describe the socioeconomic characteristics of the marketers, analyze the structure of the plantain/banana market, determine market performance of plantain/banana, and identify the major marketing constraints.

Materials and methods

This study was conducted in Oyo State, which is located in the southwestern part of Nigeria and lies at latitude 8.1196°N and longitude 3.4196°E of the Greenwich meridian covering an area of 28,454 Km². According to the NPC (2006), Oyo State had a population of 5,591,585 people within her 33 local government areas. The state has two distinct ecological zones (rainforest to the south and derived savannah to the north), which are well suited for food (staple) crop production. Food crops grown in the area include yam, maize, cassava, cowpea, sorghum, plantain, and banana. Rainfall in this area varies from 155 mm to 1800 mm per annum. The area has a mean annual temperature of 26.2 °C, and the humidity is high between July and December and low between December and February. There is a distinct wet season from April to late October and the dry season runs from November to March. The Oyo State Agricultural Development Programme has grouped the state into four zones, namely, Ibadan/Ibarapa, Ogbomosho, Saki, and Oyo. The target population of the study area was plantain and banana marketers.

The study employed a multistage sampling technique. A purposive sampling technique was employed in the selection of six local government areas in Oyo State, i.e., Ibadan North-west, Ibadan South-west, Ido, Ibadan North, Akinyele, and Afijio. The second stage involved the selection of one fruit market in each of the local governments. The selected markets included Oje, Ayeye, Omi-adio, Bodija, Atan, and Fiditi and were chosen because of their prominence in fruit (plantain and banana) marketing. Also, a random selection of 20 plantain and banana marketers in each market was done, making a total of 120 respondents. However, 105 questionnaires were found useful for data analysis. Structured questionnaires and personal interviews were used to obtain primary data, which include the socioeconomic characteristics of the respondents, market structure and conduct, cost and returns, as well as the constraints encountered in the marketing of the commodities. Data collected were analyzed using descriptive statistics and quantitative analysis techniques. The Gini coefficient and market margin and efficiency analysis was calculated as used by Eronmwon et al. (2014) and Amao et al. (2011).

Results and discussion

Socio-economic characteristics of respondents

The results of the analysis revealed that plantain/banana marketing is a female (88.6%) dominated business (Table 1). The result is similar to the findings of Aina et al. (2012) and Adewumi et al. (2009), who reported that 84% of plantain marketers in Ondo State were women while 82% of plantain and banana marketers were women in Lagos State. Data compiled by the International Food Policy Research Institute revealed that African women perform about 95% of the work of marketing food crops as reported by Mafimisebi (2007). The respondents were in their economic active age and could engage in physical activities involved in plantain/banana marketing as most of them were between 21 and 50 years with an average age of 46 years. Further 98% of them were married, showing that many of the respondents were responsible and could take care of their families with income from a plantain/banana business. Most of the respondents were literate and could easily adopt innovations in plantain/banana marketing as 71.4% of them acquired a formal education. The respondents had an average of 20 years’ experience showing that the marketers had spent long years in plantain/banana marketing and could predict possible problems and likely solutions that may result in higher profit with regards to the business (Ben-Chendo et al., 2013).

Table 1. Socio-economic characteristics of respondents.

Characteristics		Frequency	Percentage
Sex	Male	12	11.4
	Female	93	88.6
Age (years)	<20	1	1.0
	21–30	8	7.6
	31–40	29	27.6
	41–50	36	34.3
	51–60	25	23.8
	61–70	6	5.7
	Average age = 46 years
Marital status	Single	2	1.9
	Married	103	98.1
Educational background	No formal education	30	28.6
	Primary education	31	29.5
	Secondary education	40	38.1
	Tertiary education	4	3.8
Experience (years)	<6	13	12.4
	6–15	32	30.5
	16–25	29	27.6
	26–35	24	22.9
	36–45	5	4.8
	46–55	2	1.9
	Average experience = 20 years
Source of fund	Self (personal savings)	72	68.6
	Relative	18	17.1
	Cooperative	11	10.5
	Ajo/Esusu	30	28.6
	Bank loans	6	5.7

Source: Field survey (2014).

The result presented in Table 1 showed that 68% of the respondents started their business with personal savings (self-effort), while 30% used funds from “ajo/esusu” (contribution) to improve their business. Moreover, 18% received assistance from a relative, and 11% received financial assistance from a cooperative. Only 5.7% obtained a bank loan to start their business. As explained by the marketers, this was greatly due to a lack of information on how to access the loans, stiff loan conditions, and to some extent social/cultural belief.

Decision of marketers on overripe plantain and banana

Plantain/banana has a short storage life and average market life of 10 days (Aina et al., 2012; Ferris, 1997). After inquiring from the marketers what they do with overripe plantain and banana (Figure 2), it was revealed they were usually discarded (56.3%), sold at a cheaper price (34.2%), given away as a gift (8.5%), or used for family consumption (1%).

Figure 1. Typical plantain marketing channels in Nigeria. (Source: Akinyemi et al., 2010). Reprinted with permission.

Figure 2. Decision of marketers on overripe plantain and banana.

Market structure of plantain and banana

Findings from the study indicated that there were many sellers and buyers who had free entry and exit in the plantain/banana marketing business with no product differentiation. In Table 2, the distribution of marketers by the quantity of sales revealed that a lesser percentage (40.00%) of the plantain sellers sold 73,326 kg (i.e., 68.18% of total quantity sold), while the higher percentage, 60.00%, of marketers accounted for the sales of 34,224 kg (i.e., 31.82% of total sales) per week in the study area. Further, 19% of banana marketers also sold 18,756 kg (51.74% of total quantity) while about 81.0% sold 17,490 kg (48.26% of the total quantity sold) per week (Table 3). The Gini coefficients for the plantain and banana marketers were 0.50 and 0.60, respectively (Tables 2 and 3), indicating a high degree of inequality in quantity sold of both commodities. Also, inequalities in sales existed more among banana marketers than plantain marketers. In essence, it showed one group or the other among the plantain and banana marketers have control over the supply or market price in the study area. This conforms to the findings of Eronmwon et al. (2014), who obtained a Gini coefficient of 0.68 for plantain marketers in Edo State, Nigeria. Moreover, plantain is being traded in higher volumes compared to the banana (Table 4).

Table 2. Gini coefficient of plantain marketing.

Weekly sale (kg)	Frequency	% of retailers (Xi)	Cumulative %	Total quantity of sales (kg)	% of total sales	Cumulative % (Yi)	∑ XiYi
<201	—	—	—	—	—	—	—
201–400	20	19.05	19.05	5,796	5.39	5.39	0.01
401–600	16	15.24	34.29	8,352	7.77	13.16	0.02
601–800	18	17.14	51.43	12,240	11.38	24.54	0.04
801–1,000	9	8.57	60.00	7,836	7.28	31.82	0.03
>1000	42	40.00	100	73,326	68.18	100.00	0.40
Total	105	100.00		107,550			0.50
Mean				1,024.29
Gini coefficient	0.50

Note. Gini coefficient is specified thus: G = 1 – ∑ X_iY_i, where G = Gini coefficient, X_i = percentage of okra marketers, Y_i = cumulative percentage of total sales.

Table 3. Gini coefficient of banana marketing.

Weekly sale (kg)	Frequency	% of retailers (Xi)	Cumulative %	Total value of sales (kg)	% of total sales	Cumulative % (Yi)	∑ XiYi
<201	45	42.85	42.85	6,066	16.74	16.74	0.07
201–400	40	38.10	80.95	11,424	31.52	48.26	0.18
401–600	11	10.48	91.43	5,736	15.83	64.09	0.07
601–800	—	—	91.43	—	—	64.09	—
801–1,000	2	1.90	93.33	1,920	5.29	69.38	0.01
>1,000	7	6.67	100.00	11,100	30.62	100.00	0.07
Total	105	100.0		36,246			0.40
Mean				345.20
Gini coefficient	0.60

Note. Gini coefficient is specified thus: G = 1 – ∑ X_iY_i, where G = Gini coefficient, X_i = percentage of okra marketers, Y_i = Cumulative percentage of total sales.

Table 4. Market margin and efficiency analysis for plantain and banana per week.

Variable	Plantain	Banana
Average quantity purchased	1024.29 kg	345.20 kg
Average total marketing cost (ATMC)	₦81,924.08	₦15,516.74
Average total revenue (ATR)	₦152,199.25	₦20,839.72
Marketing margin (MM)	₦70,275.17	₦5,322.98
Marketing margin percentage (%)	46.17	25.54
Marketing efficiency (ME)	1.86	1.34

Note. ₦ = Naira (Nigerian currency); 1 ₦ = $US0.006 as at the time of the study was carried out. MM = ATR – ATMC and ME = ATR/ATMC.

Market conduct of plantain and banana

Most of the plantain/banana marketers purchased directly from the farm (77.2%) followed by assemblers (15.2%) and the least being wholesalers (7.6%). The marketers purchased the products directly from the farmers, an indication that they want to maximize their profits (Aina et al., 2012). No uniform measurements were used in the marketing of plantain and banana, as cost and selling prices were determined by bargaining (91.4%) based on size (38.1%), maturity (38.1%), freshness of produce (33.3%), and bunch weight (13.3%). Plantain and banana association do not exist, but all fruit sellers have a single association. Subsequently, 77.1% of the marketers were members of a fruit association. They registered as members of the association due to certain benefits they derive, including permission to sell their products in the market, issuance of identity cards, and deriving some other assistance. In some cases, new entrants are prevented from selling their products if they do not belong to a market association (Dzomeku et al., 2007). However, 22.9% did not join a fruit association because of perceived corruption among the leadership of some these associations. Most of the marketers required information on where to purchase plantain and banana (69.7%) and many of them obtained such from other marketers (80%), followed by a market association (23.78%), the least (1.9%) being government agency and parastatal (Table 5). This is against the findings of Oyedele and Yahaya (2009) and Fawole (2008), who reported that extension agents and media, respectively, are the most consulted sources of information by citrus and pineapple farmers, respectively (Table 5).

Table 5. Market conduct for plantain and banana.

Variable		Frequency	Percentage
Source of plantain/banana purchase	Directly from farmers	81	77.2
	From assemblers	16	15.2
	From wholesales	8	7.6
Determination of price	Bargaining	96	91.4
	Size	66	62.9
	Bunch weight	14	13.3
Membership of market association	Member of market association	24	22.9
	Non-member	81	77.1
Type of information required	Price	7	6.6
	Availability	73	69.7
	Demand	25	23.7
Sources of market information	Self	6	5.7
	Friends	24	22.9
	Radio	4	3.8
	Other marketers	84	80.0
	Agency and parastatal	2	1.9
	Market associations	25	23.8

Note. Multiple responses allowed.

Market performance of plantain and banana

The result of the market margin and efficiency analysis revealed that an average of 1,024.29 kg of plantain and 345.20 kg of banana were traded by the marketers per week. The marketing margin and marketing efficiency of ₦70,275.17 and 1.86 were realized from plantain while ₦5,322.98 and 1.34 were obtained from banana respectively (Table 4). The marketing efficiency of both commodities was greater than 1, which implied that for every ₦1 invested, ₦0.86 and ₦0.34 were realized as profit by plantain and banana marketers, respectively. According to Amao et al. (2011), an efficient market system can be improved, which implies the system of marketing adopted by the marketers centeris paribus can accrue more margins for a better market performance.

Constraints identified in plantain/banana marketing

The results in Figure 3 showed that over 85% of the respondents complained of poor transportation (delay in transportation, bad roads, high transportation cost, and inadequate transportation facilities) as a major constraint facing plantain/banana marketing, 59% had the challenge of access to credit facilities while 32.4% had difficulty with perishability nature of the products. Other constraints identified by the marketers include price instability (27.7%), distance to source of plantain and banana purchase (25.7%), low market demand during the period of glut or on-season (17.1%), inadequate supply during off-season (13.3%), market levy (9.5), inadequate market information (2.9%), and inadequate marketing channels (1.9%). The respondents declared that the marketing of plantain and banana will be easier if governments could improve road infrastructure, as this will enhance accessibility to rural farms, villages, and urban markets as a means of reducing the problems of transportation; authority should provide financial assistance/loan as capital in order to ameliorate the financial constraints and provision of more market stalls for the traders.

Figure 3. Constraints identified in plantain and banana marketing.

Conclusion

In the region, plantain is being traded in higher volumes compared to banana. Also, there exist many buyers and sellers in plantain/banana marketing who had free entry and exit in the marketing business with no product differentiation. Gini coefficient indicated inequalities in sales existed among plantain and banana marketers. In essence, one group or the other has control over the supply or market price of both commodities. Marketers purchased plantain and banana directly from farmers in order to maximize profit while no uniform measurement was used in marketing of the commodities as bargaining mostly determined cost and selling price. Most marketers belonged to a fruit association rather than plantain-banana marketing association and required information on where produce are available for purchase. Plantain and banana marketing is a profitable enterprise but is faced with major constraints of transportation, which include delay in transportation, bad roads, high transportation cost and inadequate transportation facilities, followed by access to credit facilities and perishability nature of the produce. Efforts aimed at ameliorating transportation problems, provision of credit, and storage facilities will go a long way in strengthening the marketing system to improve its effectiveness and efficiency in plantain and banana distribution in Nigeria.