Economic Analysis of Poultry Egg Marketing in Oredo and Egor Local Government Areas of Edo State, Nigeria

Economic Analysis of Poultry Egg Marketing in Oredo and Egor Local Government Areas of Edo State, Nigeria
IJAM
Economic Analysis of Poultry Egg Marketing in Oredo
and Egor Local Government Areas of Edo State, Nigeria
*Oluwatuyi Toyin Bukola1, Eronmwon Iyore2, Emokpae Osayi Precious3
1,2,3Department of Agricultural Economics and Extension services, Faculty of Agriculture, University of Benin, Benin City,
Nigeria
The study analyzed the marketing of Poultry eggs in Oredo and Egor local government area of
Edo state. It specifically described the socio-economic characteristics of the poultry egg
marketers and determined the market conduct, performance of the egg market, marketing margin,
profitability, effect of marketing cost on the magnitude of the marketing margin and the
constraints that affected egg marketers in the study area. Structured questionnaire was randomly
administered to 100 respondents in 4 purposively selected egg markets based on egg market
concentration in order to gather relevant data. Data gotten were analyzed using descriptive
statistics, budgetary techniques and the ordinary least square model. The result indicated that
egg marketing in the area was dominated by females who were mostly married and had
experience in poultry egg marketing. Results from the study also indicated a fairly good market
performance as market margin per crate of egg and market efficiency were fairly good. The
marketers were exploitative in setting their prices as the mark-up took a greater share of the total
margin. The BCR indicated that the business was viable. The result of the regression analysis
showed that marketing costs (transportation, storage, market levy and tax) greatly influenced the
marketing margin realized from poultry egg marketing in the study area. Credit and Loan facilities
should be made easily accessible to the marketers as they complained about the lack of
accessibility to loan and credit facilities.
Keywords: Poultry Egg, Marketing Margin, Market conduct and performance, Profitability.
INTRODUCTION
Poultry products provide animal protein which is essential
to mankind, their meat and eggs provide a suitable
substitute to other sources of animal protein (Olukosi et
al2007). Poultry products are consumed all over the world
and the consumption has over the last decade increased
across the globe. Their relatively low cost of production,
rapid growth rate, high nutritional value and the
introduction of many new processed products have been
attributed to the recorded increase in consumption
(Barbut, 2001). According to Oji and Chukwuma (2007),
the poultry goes a long way in providing animal protein for
the populace, because it yields quick returns and provides
meat and eggs in a very short time. In Nigeria, egg
production increased so dramatically that the west regional
government started an egg marketing scheme in 1962 to
mitigate a glut in the market (David West, 2008).
The egg as a major product of poultry is one of the most
nutritious and complete food known to man. Being the
cheapest per unit source of animal protein, eggs are more
readily affordable by the populace than other sources of
animal protein (Abanikannda et al, 2007). According to
Esingmer (1991) and Banerjee (1992) the poultry eggs
nearly approach a perfect balance of all food nutrients. The
yolk and albumen contain 17.5 and 10% protein by weight,
respectively. Egg marketing would be highly beneficial to
the society as it would eliminate the shortage in the supply
of poultry products, thereby, bridging the gap between the
demand and supply of products in the market and at the
same time serving as a source of income for those who
engage in its production (Afolabi, 2002).
*Corresponding Author: Oluwatuyi Toyin Bukola,
Department of Agricultural Economics and Extension
services, Faculty of Agriculture, University of Benin, Benin
City, Nigeria. E-mail: toyintuyi93@gmail.com. Tel:
07079712994.
Co-Author Email: 2omoyore@yahoo.com;
3osayi.emokpae@uniben.edu
International Journal of Agricultural Marketing
Vol. 5(2), pp. 194-199, November, 2018. © www.premierpublishers.org. ISSN: 2167-0470
Research/Technical Note

Oluwatuyi et al. 195
Economic analysis can be defined as the analysis done
using payments and value of all items at their value in use
or the opportunity cost to the society. It is the comparison
of cost with the benefit of a project in order to determine
which alternative project has acceptable return, Olayide
and Heady, 1982).
Olukosi et al. (2007) defined marketing costs as the actual
expense incurred in the performance of the marketing
functions as commodity moves from the farm to the
ultimate consumers. It includes the cost of transport,
handling, marketing charges, and cost of assembling,
processing, distributions, packaging sales promotion and
advertisement cost and other costs such as taxes, levies
and excise duties.
Ekunwe and Alufohai (2009) reported in their study that the
marketing of egg in Benin City, Edo State, Nigeria was
highly profitable and viable; however, their study did not
take into consideration the effects of the marketing costs
on the magnitude of the marketing margin. This study was
conducted to fill in this gap. The specific objectives of this
study were to determine the socioeconomic characteristics
of the egg marketers, to examine the market conduct and
performance of egg marketing, to determine the
profitability and marketing margin of egg marketing in the
study area, and to determine the effect of marketing cost
on the marketing margin.
METHODOLOGY
Study Area
This study was conducted in Oredo and Egor, local
government areas of Edo state, Nigeria. This study was
carried out in some of the major markets of the local
government area where poultry marketing was majorly
concentrated. Edo state is an island state in central
southern Nigeria, with Benin City as its capital. It is
bounded in the north and east by Kogi state, in the south
by Delta state, and in the west by Ondo state. Edo state is
noted for the following agricultural products; rubber,
cashew nuts, cocoa and is blessed with precious stones
like quartz, mica, dolomite, granite and lime stone used in
cement production.
Sampling Procedures, Data Collection and Data
Analysis
A two stage sampling technique involving random and
purposive selection was used to select 100 respondents.
The first stage involved the purposive selection of two
markets from each of the local governments, making it a
total of four markets. The second stage involved the
random selection of 25 marketers from each market,
making a total of 100 marketers. Primary data was
obtained using a structured questionnaire and personal
oral interview to retrieve information from the respondents.
Data collected were analyzed using descriptive statistics,
budgetary techniques and the ordinary least square
regression model.
The specific objectives were to; determine the socio
economic characteristic of the respondents, determine the
conduct and performance of the egg market, estimate the
market margin and profitability of egg sellers, determine
the effect of marketing cost on the magnitude of the
marketing margin.
Descriptive statistics, such as frequency distribution,
percentages and mean were used to analyze the
socioeconomic characteristics; market conduct was
analyzed using descriptive analysis of the egg marketers.
Budgetary techniques were used to analyze the market
efficiency and profitability of poultry egg marketing.
Profitability Analysis
Profitability analysis was estimated using gross margin
analysis, net return, and benefit cost ratio.
Gross Margin =Total Revenue – Total Variable Cost … (1)
Where: Total Revenue = Price per crates x Quantity of
crates sold and
Total Variable Cost = Total Cost – Total Fixed Cost
Net return was analyzed using the total profit and is given
as
Net returns= Gross Margin – Total Fixed cost ….. (2)
Return per naira was used in assessing the viability of the
business and is given as
Return per Naira Invested = Profit/Total Costs invested .(3)
Benefit cost ratio was also used in analysing the viability
of the business and the decision rules were
BCR > 1 – The business is viable
BCR = 1 – Break – Even point
BCR<1 – The business is not viable
Benefit Cost Ratio (BCR)
= Present value of total benefit in naira
Present value of total costs in naira …(4)
Market Performance Analysis
Market performance was estimated using marketing
margin, market efficiency and gross margin analysis, as
shown in Equations….
Marketing efficiency = (Net Profit) x 100 …(5)
Total Marketing Cost 1
Gross Margin = Total Revenue – Total Variable Cost ….(6)
Where, Total Revenue = Price per crates x Quantity of
crates sold andTotal Variable Cost = Total Cost – Total
Fixed Cost

Int. J. Agric. Mark. 196
Marketing Margin = C.P – P.P …………………….. (7)
Where, C.P is consumer price andP.P is producer’s price
Ordinary least Square Regression Model
The ordinary least square regression model was used to
ascertain the effect of marketing cost on the magnitude of
the marketing margin. The implicit model employed was:
Y = f(X1, X2, X3, X4, X5, X6……e) ………. (8)
While the explicit form of the equation is
Y=b0 + b1x1 + b2x2 + b3x3 + b4x4 +b5x5+e …. (9)
Where, Y =Marketing margin, X1 = Transportation cost
(₦/month/trader), X2 = Storage cost (₦/month/trader),
X3=Market Charges (₦/month/trader), X4=Tax/Ticket
(₦/month/trader), X5= Security Costs (₦/month/trader), e =
Error term.
The various constraints affecting egg marketing in the
study area was determined using a 5 point Likert scale.
The constraints were ranked based on the level of severity
into very serious=5, serious=4, moderately serious =3,
least serious =2, not serious =1. For a given constraint, the
mean was computed by summing the scores of each item
and then dividing by the total number of responses. The
mean Likert scale point served as a benchmark to know
the level of severity of a particular constraint. If the mean
was less than three it means that the particular constraint
was not serious, while any mean equal to or greater than
3 means that the particular constraint was serious.
RESULTS AND DISCUSSION
Socioeconomic Characteristics
The result in Table 1 indicated that majority of the egg
marketers were female, very young and in their active age
, married showing that they have responsibilities and
households to cater for, this agree with the findings of
Ekunwe and Alufohai (2009) who observed that poultry
egg marketing in Benin City (Edo, Nigeria)) shows a
market dominated by female marketers (96.7%) who have
a mean age of 45 years and are married (82.1%). The
result also showed that 42.6% had obtained at least
secondary school education and also had an average
marketing experience of 5 years. This is in consonance
with the findings of Mohammed et al. (2013) who found out
a mean marketing experience of 5 years among egg
marketers in Kuje area of Abuja, Nigeria.
Market Conduct and Performance of Egg Marketing in
the Study Area
Market Conduct
Through interactions with the egg marketers in the study
area it was found that most of the marketers attracted the
consumers through open display and persuasive efforts.
The marketers determined their price by the haggling
ability of the consumers, purchase price and quantity
demanded. There was, however, no market association for
the product so the marketers acted individually.
Market Performance
From the Marketing margin per crates of egg and Market
efficiency as seen in Table 2 the result indicated a fairly
good market performance.
Market Margin and Profitability of Egg Marketing in the
Study Area
Marketing Margin
The result of the average marketing margin as presented
in Table 2 shows that there was a price difference of
N92.62 per crate of egg. Mark up accounted for 70.15% of
the total marketing margin while storage cost accounted
for 9.07% of the total margin and transportation costs
accounted for 7.81% of the total margin.
This shows that the marketers were exploitative in their
price as the mark-up took a greater share of the total
margin. This finding is in agreement with Ekunwe and
Alufohai (2009) report who realized a marketing margin of
N60.67($0.17.) and noted that it also took a greater portion
of the total marketing margin in Benin, Nigeria.
Profitability analysis of egg marketing in the study
area
The result of the gross margin analysis presented in Table
3 shows that on the average, the respondents traded 294
crates per month and this cost them N168,162.16 ($460)
which represents about 96.38% of their total variable cost.
An average egg marketer incurred a total variable cost of
N174, 478.61($477.28) per month, total revenue of
N195,393.576 ($534.49). The gross margin of an average
egg marketer was N20,914.966($57.21) for 294 crates per
month while net return per seller was N20,622.966
($56.41) per month. The findings from this study is in
agreement with the findings of Okpeye and Ellah (2017)
who reported a gross profit margin of N772,200($2112.31)
and net profit margin of N747,500 ($2044.75) per marketer
per annum in the South part of Nigeria. The result also
shows a return per naira of 0.12 which means that for
every N1 invested into the business it yielded N0.12. The
result of the marketing margin and profitability analysis
therefore shows that egg marketing is a profitable
business and should be one to be ventured into.
Viability test of egg marketing
The analysis showed that the business had a BCR of 1.12.
The BCR indicated that egg marketing is viable in the study
area. This also collaborates with Ekunwe and Alufohai
(2009) finding, where they realized that egg marketing in
Benin city is very viable (BCR = 1.10).

Effect of marketing cost on the marketing margin
The result of the F value (27.793) was significant (P <
0.05), indicating the goodness of fit of the regression. The
result of the regression analysis used in determining the
effect of the marketing cost on the magnitude margin is
shown in Table 4, the regression estimates shows a fairly
good fit for the model as shown by the coefficient of
determination (R2 = 0.597). The adjusted R2 implies that,
the independent variables (transportation cost, storage
cost, security cost, and tax and market levy) used in the
model, explained about 59.7% of the variations in the
marketing margin. The result also showed that
transportation costs (X1) and storage costs (X2) had a
positive effect on marketing margin, which means that the
increase in transportation and storage cost will cause an
increase in marketing margin while tax had a negative
effect, implying that an increase in tax would lead to a
decrease in marketing margin and vice-versa. These
findings are in agreement with Ekunwe and Emokaro
(2009) who reported that transportation cost and other
variable were the main component of income realizable
from snail marketing in Benin.
Marketing constraints faced by the egg marketers
Nine items were ranked on a five Likert type scale in order
to estimate the relevant variables that acted as constraints
on marketing of poultry eggs in the study area as shown in
Table 5. According to the marketers, Broken eggs was the
major problem affecting them, and this problem is
associated with other problems, such as Inadequate and
High Transportation, which was ranked the second most
important problem. Poor credit facilities were also
identified as a constraint, as well as too many market
charges. Theft, High Tax, Lack of market information,
Inadequate Storage were of least importance. The finding
is in consonance with the findings of Okpeye and Ellah
(2017) who found inadequate capital as a great constraint
to the marketing of poultry egg in the South part of Nigeria,
and Emokaro et al. (2016), who found finance to be one of
the major constraints affecting poultry egg production in
Benin city, Nigeria. This shows that credit facilities are hard
to obtain, discouraging poultry egg marketers and farmers
from partaking in the profitable enterprise.
TABLES
Table 1: Socioeconomic characteristics of egg marketers
Frequency Percentage
AGE
Less than 35 7 6.9
36-40 12 11.9
41-45 19 18.8
46-50 35 34.7
51-55 24 23.8
56 and above 3 5
SEX
Female 93 92.1
Male 7 6.9
MARITAL STATUS
Married 82 82.2
Single 6 5.9
Divorced 5 5
Widow 7 6.9
EDUCATIONAL LEVEL
Non Formal Education 29 28.7
Primary School 18 17.8
Secondary School 43 42.6
Tertiary Education 11 10.9
EXPERIENCE
Less Than 5 55 55.4
10-Jun 38 37.7
11 and Above 7 6.9
Table 2: Marketing Margin Analysis for the egg marketers
per crates in the study area
Items Amounts (N)
Average transportation costs per crate 7.81
Average security per crate of egg 1.39
Average storage cost per crate of egg 9.07
Average market levy 1.00
Average tax per crate 2.44
Mark-up per crate 70.15
Marketing margin per crate 92.62
Source: Field Survey, 2015
Table 3: Profitability analysis of egg marketers in the study
area
Items Amount (N) Percentage
Cost of Purchase 168,162.12 96.38
Cost of Transportation 2297 1.32
Storage cost 2668 1.53
Security Cost 346.54 0.20
Market Charges 287.33 0.17
Tax 717.62 0.40
Total Variable Cost 174,478.61
Fixed cost 292
Total cost 174,770.61
Total revenue 195,393.576
Gross margin 20,914.966
Net return 20,622.966
Return per naira 0.12
Benefit cost ratio 1.12
Source: Field Survey, 2015

Int. J. Agric. Mark. 198
Table 4: Effect of Marketing Cost on the Magnitude of
Marketing Margin
Independent
variable
Coefficients Standard
error
t-values
Constant 1.513* 0.522 2.900
Transportation 1.055* 0.077 2.536
Storage 1.110* 0.147 2.074
Security 0.222 0.235 0.943
Tax -0.011 0.005 -0.255
Market Levy 0.038 0.240 0.075
R2=0.597; F value= 27.793, Source: Field Survey, 2015
* Represents coefficients at 5% significant
Table 5: Constraints faced by the Respondents in The
Study Area
Constraints Mean Value
Theft 2.17
High Tax 1.8
High Transport 3.25*
Poor Credit Facilities 3.50*
Lack of Market Info 1
Too Many Charges 3.09*
Inadequate Storage 2.22
Inadequate Transportation 3.35*
Losses Due to Cracked Eggs 4.19* 4.19 4.19
(Mean value of > 3.00
CONCLUSIONS
The findings from this study showed that poultry egg
marketing is dominated by women who are fairly educated
and experienced in this field. The results also showed that
poultry egg marketing is a profitable business in the study
area irrespective of the problems militating against it. It
was also shown that too many market charges, poor credit
facilities and bad roads, which caused loss of eggs due to
cracking, were the problems most faced by the egg
marketers. Transportation cost and Storage costs had a
positive effect on the marketing margin. Marketing of egg
is highly profitable and can also be increased if the
problem militating against it is looked into.
RECOMMENDATIONS
Based on the findings of this study, it is highly
recommended that governmental and non-governmental
organizations set up credit facilities for the people engaged
in marketing of poultry eggs. Also, when these credit
facilities are available, awareness should be created using
agricultural extensions. The egg marketers should be
encouraged to form association or cooperative societies,
thereby, easing one of the major constraints faced, which
is lack of credit facilities, as they can collectively obtain
loans at very low interest rates to finance their business.
The government can do their own part by renovating
existing bad roads so as to reduce the major constraints
faced by the egg marketers and this will help in getting the
eggs to the market in time and in good shape.
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Accepted 21 November 2018
Citation: Oluwatuyi TB, Eronmwon I, Emokpae OP
(2018). Economic Analysis of Poultry Egg Marketing in
Oredo and Egor Local Government Areas of Edo State,
Nigeria. International Journal of Agricultural Marketing,
5(2): 194-199.
Copyright: © 2018. Oluwatuyi et al. This is an open-
access article distributed under the terms of the Creative
Commons Attribution License, which permits unrestricted
use, distribution, and reproduction in any medium,
provided the original author and source are cited.

Economic Analysis of Poultry Egg Marketing in Oredo and Egor Local Government Areas of Edo State, Nigeria

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Economic Analysis of Poultry Egg Marketing in Oredo and Egor Local Government Areas of Edo State, Nigeria