Profitability of Oil Palm Production and Processing in Edo State, Nigeria

Abstract

This work presents a comprehensive literature and studies conducted on the economic point of oil palm cultivation and processing and the factors that influences profitability of the sector as well as its contribution to the socioeconomic development of the farmers in Edo state. The study highlights the importance of oil palm production and processing in Edo, a major oil palm producing state in Nigeria. It looked at the economic indicators and the cost structure that are linked to oil palm production and processing. The study used primary data collected from oil palm farmers and processors using multistage sampling procedure. Questionnaire was distributed to 365 respondents and the questions tried to ascertain those that are farmers alone, farmers and processors and processors alone. Descriptive statistics was used to describe the socioeconomic characteristics of the respondents, while budgetary analysis was used to determine the profitability of the subsector. Findings showed that the mean age of the respondents was 52 years. Majority (53.9%) of the farmers, farmer/processors (61.8%) in Edo obtained seedlings from the Nigerian Institute for Oil Palm Research. Majority (71.8%) of the farmers, processors (89.5%) and farmers/processors (97.6%) had no access to extension services. Majority (100.0%) of the farmers, processors (92.1%), farmers/
 processors (97.6%) had no access to credit. Furthermore, majority of the farmers (51.3%) and farmers/processors (89.4%) had less than 1,500 palm trees. Gross profit margin ratio of the farmers, processors, farmers/processors were 0.37; 0.39; and 0.43 in respectively. This shows that oil palm production and processing is a profitable venture, however, it shows that those involved in both farming and processing made more profit than those involved in only one enterprise. The study recommended that there should be investment in oil palm production and processing due to its viability, the farmers and processors should be encouraged to join cooperatives to enable them have easy access to loans from financial institutions, there should be more access to extension services to ensure that the farmers are better informed about better and improved agricultural practices that will further increase their profits.