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SPATIAL DISTRIBUTION OF LOCAL MARKET AND VARIATIONS IN PRICES OF VEGETABLE IN LAGOS STATE

(A CASE STUDY OF OJO LOCAL GOVERNMENT)

ABSTRACT

The study examines the spatial distribution of local market and variations in vegetable prices in Lagos state using Ojo local government as a case study. Also the way in which effective distribution channels can be used to increase customer satisfaction and the spatial interaction in Ojo local Government as a whole.The major source of data collection was questionnaire administration using stratified-random sampling techniques. SPSS 17.0 was employed to analyze the data, while chi-square statistical index were used to test the hypothesis of the research and correlation was used to test for the variation in prices of vegetable in the study area.

TABLE OF CONTENTS

CONTENT                                                                                                    PAGES

Title page                                                                                                                  i

Certification                                                                                                                ii

Dedication                                                                                                                  iii

Acknowledgements                                                                                                    iv

Abstract                                                                                                                      v

Table of contents                                                                                                        vi

CHAPTER ONE:     INTRODUCTION

1.1       Background to the Study                                                                               1

1.2       Statement of the Problem                                                                               5

1.3       Aim and Objectives                                                                                        6

1.4       Theoretical Foundation                                                                                   6

1.5       The Study Area                                                                                               9

1.6       Methodology                                                                                                  12

1.7       Hypothesis                                                                                                      13

1.8       Significance of Study                                                                                     13

References                                                                                                      14

CHAPTER TWO

2.0       Literature Review / Conceptual Framework                                                   15

2.1       Introduction                                                                                                    15

2.2       Spatial Marketing Integration                                                                         15

2.2.1    The Concept of Spatial Market Integration                                                    18

2.2.2    Empirical Estimation Methods                                                                       20

2.2.3    A Fragile Empirical Foundation for Guiding Policy                                      21

2.3       Agricultural Marketing Systems in Nigeria                                                    21

2.4       Distribution Channels for Foodstuff in Nigeria                                             24

CHAPTER THREE:                        RESEARCH METHODOLOGY

3.0 Introduction                                                                                                          28

3.1. Methodology of Study                                                                                        28

3.2. Research Design                                                                                                  29

3.3 Sample Procedure                                                                                                 29

3.4 Data Instrument                                                                                                    29

3.5 Analytical Techniques                                                                                           30

CHAPTER FOUR:  ANALYSIS OF DATA AND PRESENTATION OF RESULT

4.1       Introduction                                                                                                    31
4.2       Socio-Economic Background of Marketer/ Retailer                                       31

4.3       Data Analysis and Results on Market Products                                             33

4.4       Testing of Hypotheses and Discussion of Result.                                          47

CHAPTER FIVE:    SUMMARY, RECOMMENDATION AND CONCLUSION 

5.0       Introduction                                                                                                   50

5.1       Summary                                                                                                         50

5.2       Recommendation                                                                                           51

5.3       Conclusion                                                                                                      51
Bibliography                                                                                                   53

Appendix                                                                                                        57

CHAPTER ONE

INTRODUCTION

1.1       BACKGROUND TO THE STUDY

Agricultural market is a key component of the economy where agriculture forms a resource base of economy. Thus they play a very important role in economic development of the region. Geographers are mainly concerned with the spatial distribution of geographical phenomena. In case of marketing centres their origin, growth, development and spatial distribution are the combined effect of various factors. Therefore, correlation between number of such phenomena with area, population, inhabited villages, and net sown area etc, may give more elastic picture (Gharpure and Pawar 1981).

Agricultural market also helps in increasing social contact and serves as centre’s of diffusion of innovation and ideas and become focus for political and other activities. The potentials contribution of agricultural marketing towards improved rural incomes in developing countries has been a source of concern to both businessmen and to researchers.

African agriculture improved dramatically in the 1960s and 1970s, due to strong public investment in research and extension, combined with market interventions such as guaranteed prices and subsidized inputs and credit (Stringer and Pingali, 2004). However, these interventions also had their limitations: government institutions often are not very efficient, and their interventions tend to be expensive and also tend to reduce the involvement of the private sector.

Over time, government intervention in agricultural markets began to be seen as a major problem (Crawford et al., 2003).As a reaction, and strongly encouraged by the donor community, many countries adopted Structural Adjustment Plans (SAPs), starting in the 1980s. These SAPs focused on creating a conducive environment for private sector involvement, by liberalizing markets for agricultural inputs and outputs, letting market forces determine the prices of these products, and reduce government’s role (Gisselquist and Grether, 2000; Gisselquist et al., 2002). The Nigerian government, faced with tight budgets and pressure from donors liberalized the vegetable marketing, lifting trade and transport controls, reducing the interventions of the marketing board, and liberalizing prices (Wangia et al., 2004).

Unfortunately, the liberalization of the agricultural sector in SSA did little to increase productivity. A synthesis of relevant research finds a consensus that economic performance of the region has lagged behind that of developing countries in other regions and that the reforms have fallen short of their expected outcomes (Kherallah et al., 2002). Often, reforms studied were only partially implemented and reversal was common. Others argue that, while liberalization is necessary to accelerate productivity, it is not sufficient. Proper distribution systems need to be in place, appropriate and efficient regulatory and legal frameworks need to be in place, and infrastructure, especially for transport infrastructure, is needed to decrease the transaction costs (Tripp, 2001; Tripp and Rohrbach, 2001). Informal discussions in the different agro-ecological zones in Nigeria revealed that farmers complain that price volatility is a major problem (De Groote et al., 2004).

Vegetable is an important food crop, and also an important cash crop. But prices fluctuate heavily over time, so farmers face price insecurity that hampers investment decisions, and over space, although they have little knowledge on the latter to guide them to market their surplus.

Agricultural marketing is the performance of all business activates involved in the flow of goods and services from the pint of initial agricultural production until they are in the hands of the ultimate consumer (Kohl’s, 1967).

Income inequality between the rural and urban area draws people away from agricultural activities and places great stress upon infrastructure and social services in the cities (Dixie, 1989).

Economists and geographers have recently devoted an increasing interest in the analysis of the spatial distribution of economic activities with a special attention towards agglomeration phenomena. Researchers and policy makers have been particularly fascinated by the observation that the actions of one firm may have advantages in production and innovation activities for all firms in the cluster. Moreover, agglomeration economies have been proven to play a significant role in the analysis of regional development, regional growth and industrial location. The necessity of the distributive trade due to geographical separation of producers and consumers gives rise to the intermediation of distributors referred to as wholesalers (Adekanye, 1988). A distributive system that guarantees favourable prices facilitates the exchange of commodities for additional earnings. These improve the number of buyers and sellers as well as the price.

The study of spatial distribution of local market and variation of vegetable price is important in determining the market price of vegetables in different quantity and to determine the large extent of market size integration.

Without spatial price analysis of the markets, price signals will not be transmitted from food deficit to food surplus areas, prices will be more volatile agricultural producers will fail to specialize according to a long term comparative advantage and the gain from trade will not be realized (Chirwa,2000). In order to facilitate Agricultural development process, analysis of spatial distribution of market and pricing variation of vegetable is considered very pertinent and it is expected that favorable pricing variation will stimulate more of the product concerned to be produced.

Over the years, food shortages coupled with high prices in Nigeria have indicated that domestic output has not been able to provide most Nigerian food at affordable price (Idachaba, 1998). It is there logical to find out the factors (particularly transportation and marketing information) that are responsible for the price hike. The link between the producers and the consumers is the market. Marketing therefore plays a central role in the development process. However, the marketing system of Nigeria's food and staple failed to address prices stability from time to time due to information asymmetry (Orubu, 1994, Mafimesebi, 2002, Dittoh, 1995).

Agricultural market can easily be considered as the barometer of the Nigerian economy. Agricultural local market plays a vital role not only in the marketing system of the country but also in rural development. The spatial distribution of agricultural local market is influenced by physic-cultural, historical and many other unique qualities prevailing in the study area. In the study area the agricultural market is unevenly distributed. Even at national level there is great variation in the distribution of agricultural market.

Therefore, relating spatial distribution of local market to pricing variation in vegetable marketing will add to the growing literature in marketing efficiency analysis and again form a baseline for study in fruits and vegetable marketing. According to the Federal Ministry of Agriculture and Natural Resource (1974) the foods produced mainly in Nigeria include Cereals(millet, maize, rice and wheat), Legumes(cowpea, beans and peas), Roots and Tubers(yams, cocoyam, potatoes and cassava),Fruits(oranges, lime, lemon, mango, pear, apple and banana).They also include vegetables groundnut, soya-bean, onions, okra  and pepper.

1.2 STATEMENT OF THE PROBLEM

In Nigeria, the federal and the state governments do not give market the necessary importance it deserves. For sometimes now, food shortages coupled with high prices in Lagos have indicated that domestic output has not been able to provide most Nigerians food at affordable prices (Idachaba, 1998).Also, the issue of land availability has discouraged most marketers. In big cities like Lagos, Ibadan, there are few lands in the urban centers that are available for marketing. Spaces are at premium in cities and are accordingly expensive and difficult to secure. This is due to the rapid development that is occurring in the cities.

 Besides, there are problems of poor market organization, standardized weights and measures system, lack of or inadequate credit facilities and dearth of market information, with the result that when foods are produced, supplies are not always sent to areas with the highest demand (Adalemo, 1970; Onakomaiya, 1976) on this note, the purpose of this study is to identify why there is variation in vegetable price and the spatial distribution of local market.

The major problem confronting this sector is the fact that most individuals also see agricultural market as a job for the less privileged and unemployed illiterate individuals. This tends to discourage young and able bodied men and women from participating in the agricultural market.

1.3       AIM AND OBJECTIVES

The aim of this study is to evaluate the spatial distribution of local market and variation in vegetable prices in the study area. In order to achieve this aim, the following objectives will be pursued: 

1. Examination of the spatial distribution and size of market in the study area.

2. Analysis of market price of selected vegetables.

3. Determination of the correlation between market spatial distribution and vegetable price.

1.4       THEORETICAL FOUNDATION

In geography, an element of location theory concerning the size and distribution of central place (settlements) within a system is the central place theory. Central place theory attempts to illustrate how settlements locate in relation to one another, the amount of market area a central place can control.

The German geographer (Walter Christaller) introduced central place theory in his book entitled “central places in southern Germany (1933)”Encyclopaedia Britannica (2012). The primary purpose of a market town according to central place theory is the provision of goods and services for the surrounding market area. Such towns are centrally located and may be called central places. Market towns that provide more goods and services than other places are called higher-order central places. Lower-order central places have small market areas and provide goods and services that are purchased more frequently than higher-order goods and services. Higher-order places are more widely distributed and fewer in number than lower-order places.

Walter Christaller’s theory assumes that central [places are distributed over a uniform plane of constant population density and purchasing power. Movement across the place is uniformly easy in any direction, transportation costs vary linearly and consumers act rationally to minimize transportation costs by visiting the nearest location offering the desired goal or service. The determining factor in the location of any central place is the threshold which comprises the smallest market area necessary for the goods and services to be economically viable. Once a threshold has been established, the central places will seek to expand its market area until the range is reached. Since threshold and range defines the market area of a central place, market areas for a group of central places offering the same order of goods and services will each extend an equal distance in all direction in circular fashion.

1.4.1 CENTRAL PLACE THEORY DISTRIBUTION PATTERNS                                      

The central place theory has three orders; the first is the marketing principle and it is shown as K=3 (K is a constant). In this system, market areas at a certain level of the central place hierarchy are three times bigger than the next lowest one. The different levels then follow a progression of threes, meaning that as one moves through the order of places, the number of the next level goes up three times.

Secondly the transportation principle (K=4) where areas in the central place hierarchy are four times bigger than the area in the next lowest order.

Finally, the administrative principle (K=7) is the last system. The variation between the lowest orders and the highest orders increase by a factor of seven (7). Here, the highest order trade area completely covers that of the lowest order, meaning that market serves a larger area.

1.4.2 CENTRAL PLACE SIZE AND SPACING

Within the central place system, there are four sizes of markets. A roadside market is the smallest and is a rural community which is too small to be considered a farmer’s market. The rank order of central place for market is

•         Roadside market or stands

•         Farmer’s market

•         Wholesale market

•         Retail market

1.4.2.1ROADSIDE MARKET: - People like to stop at roadside market to buy fresh vegetable. Roadside stands can be close to your home or garden you can sell crops without traveling far, and you can make money selling only one or two crops. Example fresh-picked sweet corn, tomatoes and pumpkins sell well. Customers who stop at roadside market like to see colorful plants, gardens, animals, even clean gardening tools. They also like to see your crops growing.

1.4.2.2FARMER'S MARKET: - Many people come to the farmer's market to buy vegetables, you can sell a lot of vegetables, so you need to bring enough vegetable to last the day, you have to plan carefully. This market is popular in busy area, if you want to sell vegetables at a farmers market, you look for a market that is;

* In a busier area

* Well known by a lot of customer

* Clean and well managed.

1.4.2.3. WHOLESALE MARKET: - If you have a big farm or live far away from customers, you might want to sell your crops to one place, like a store, restaurants, food co-operation. This is called wholesale marketing. Selling your crops this way is faster than other ways of selling. It is also a good choice if you are not comfortable meeting and talking to a lot of people. Wholesale marketing will probably not make you as much money as selling directly to customer and you may not get paid right away, but it is a simple, easy way of selling.

1.4.2.4 RETAIL MARKET: - If you have a big farm or if you are a new farmer, it is a good idea to sell your crops directly to customers. This is called direct or retail marketing. Although you can make more money and get paid faster this way, you will need more time to sell. It is a good way to sell your crops if you are a good planner, have time and enjoy meeting and talking to people.

1.5 THE STUDY AREA

 Lagos is geographically positioned on longitude 2042’-4020’East and Latitude 6022’-6042’ North it is bounded on the west by the republic of Benin, in the North and east by Ogun State and in the South by the Atlantic ocean. With a population of over10million people (NPC, 2007). Lagos metropolitan area is the most rapidly growing region in Nigeria and the second Africa megacity.

 Location: The study area is in Ojo local Government which is located in between Badagry local government and Amuwo Odofin local government area of Lagos metropolis. On its western side, the Ologe Lagoon forms the boundary between it and its western neighbour, Badagry local government. In the eastern side, it is bounded by Surulere local government, while Etiosa (Apapa area) is its southern Eastern neighbour. The rest of the Southern end, ends in the atlantic ocean, latitudinally, it is located between lat.. 4° 55’N and lat.4° 17’N and long. 12° 55’ E and 13° E. The local government is elongated on east-west basis, it is about 34 kilometers in length and about 15 kilometers at its west point.

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