Invited paper presented at the 6th African Conference of Agricultural Economists, September 23-26, 2019, Abuja, Nigeria Copyright 2019 by [authors]. All rights reserved. Readers may make verbatim copies of this document for non-commercial purposes by any means, provided that this copyright notice appears on all such copies. Cost and returns in gum arabic marketing during peak and lean seasons in Kano state, Nigeria *Adindu, A. G. Agbonkpolor N. B, Umar H. Y., and Mkor,T. Research Outreach Department, Rubber Research Institute, Iyanomo, Edo State, Nigeria *Corresponding Author- [email protected] ABSTRACT The study analyzed cost and returns in gum arabic marketing in Kano State of Nigeria. Specific objectives were to evaluate the cost and returns to gum arabic marketers during peak and lean seasons as well as examine the possible constraints in the marketing of gum arabic in the study area. The study was conducted in Kano State, Nigeria. A multi stage sampling procedure involving both random and purposive sampling were used to select 240 respondents using well structured questionnaire. Secondary data on prices were sourced from Rubber Research Institute of Nigeria, Gashua sub-station and Kano State Agricultural Development Programme. Data obtained were analyzed using descriptive statistics, market margin analysis, and profitability analysis. Findings of the study showed a mean age of 46 years, 79.8% were married, 41.8% had no formal education while 58.2% were literate with a mean marketing experience of 20 years. The marketing of gum arabic was dominated by men in the study area. Cost and return analysis showed a net return of N2, 312,059.76 and N2, 400,563 for both peak and lean seasons respectively. The major constraints encountered by gum arabic marketers included inadequate fund, high cost of transportation, unpredictable prices, adulteration of products and poor Government support. The study then recommended that both farmers and marketers should form an association as it will give them a common front that will enable them establish industries for the processing of gum to encourage large scale sale and also create awareness on more uses of the product INTRODUCTION Background Information Gum arabic (Acacia species) is a perennial tree found growing wild in large commercial quantity in the Northern parts of Nigeria. However when cultivated, it takes about five years to mature (Rubber Research Institute of Nigeria, 2011). At maturity, the tree when struck or pierced with sharp metal object like knife oozes out whitish sticky sparkling substance. The raw gum commands high commercial value both locally and internationally. It is also called and commonly known as gum acacia, it is called gum arabic because the first traders in the gum exudates were the Arabs (Wyk and Erick, 2005; FAO, 1997). Its gum is the economic livewire of some African countries such as Sudan and Kenya. Gum arabic is mainly produced from two Acacia species, namely Acacia senegal that produces hard gum which is of a higher quality (grade 1) and Acacia sayel that produces friable gum which is of low quality (grade 2) (ACACIAGUM,2005). Acacia trees are drought tolerant and grow abundantly in about 14 states of Northern Nigeria of which Kano state is one. The high demand for the product necessitated the Nigerian Government’s interest for the development of gum arabic, especially the grade 1 and 2 (Giroh, Moses, and Umar, 2007). Rubber Research Institute of Nigeria is an agency of the Federal Government of Nigeria mandated to conduct research into the production, marketing of seedlings of natural rubber, gum arabic and other latex producing plants of economic importance. In this regard, Federal Government of Nigeria located the institute centre for gum arabic research and development in Gashua, Yobe state in 1995 as the area constitutes one of the centres of origin of the species in Nigeria. The sub-station also serves as the center for co- ordination of gum arabic research and development activities of the other fourteen gum arabic producing states of Northern Nigeria. Gum arabic provides a valuable source of income for many smallholders or itinerant labourers. Tens of thousands of people worldwide living in regions of semi-arid lands depend on the collection of gums, resins and latexes as a means of cash income (Chikamai, 2001). Most people in the producing countries make use of the product in their everyday life. The trees provide socio economic benefit to most of the producing communities in the ‘gum belt’ through the production of gum arabic. In Sudan and other producing countries, Acacia species are planted as a means of combating the process of desertification, afforestation of arid tracts and soil reclamation. Prices of agricultural products vary from month to month and even from day to day as they are affected by the seasons and places (locations) of production. Prices also differ between various grades of products; prices vary between different market locations and seasons of the year. Seasonal price behaviour is a regularly repeating price pattern that is completed once every 12 months (Panda, 2011). Such a regular pattern might arise from seasonality in demand, seasonality in supply and marketing. Most agricultural products are characterized by some seasonality in production and marketing patterns. In the case of gum arabic, seasonality arises from climatic factors (dry weather) and biological growth of the crop. For some agricultural commodities the forces of demand and supply are brought together in central markets (Panda, 2011). Prices at the farm are closely linked to central market prices. However selling products at the Farm Gate prevents producers from bargaining for higher prices compared to when the commodity is taken to the market for sale. In Kano state, for instance, there is a central market- Kurmi market, where gum arabic prices are determined by the forces of demand and supply. Large exporters have agents in most gum arabic producing countries that help them buy products in local markets. Profitable gum arabic production is crucial to ensuring that farmers have appropriate incentive to cultivate and expand trade (ITC, 2010). This study is aimed at analyzing cost and returns in gum arabic marketing, variation in price of gum arabic in peak and lean seasons and determines cost/benefit accruable to marketing of the commodity. So this study carried out an analysis of the cost and returns in the marketing of gum arabic in Kano State of Nigeria, while the specific objectives were to describe the socio- economic characteristics of the marketers of gum arabic in the study area, determine the costs and returns of gum arabic marketers during peak and lean seasons in the study area and identify the constraints facing gum arabic marketers in the study area. Research methodology The study was carried out in Kano state, Nigeria. Kano is the state capital of Kano state in North-West geopolitical zone of Nigeria. Kano state was created on the 27th of May, 1967, the state originally included Jigawa state which was made a separate state in August 27th, 1991. As at 2006 Kano state has an estimated population of 9.3 million (NPC, 2006). Kano state is made up of 44 Local Government Areas. The state is historically a commercial and agricultural state known in the past for its groundnut pyramids .Geographically, Kano state is bordered by Katsina to the North-West, Jigawa to the North-East, Bauchi to the South-East and Kaduna to the South-West (Ibrahim, 2003). Industrially, Kano state is the second largest after Lagos in Nigeria, with textiles, tanning, cosmetics, plastics, pharmaceuticals and enamel industries. Kano state is a major producer of hides and skins, gum arabic, chill pepper and garlic. (CITYPOPULATION, 2014). Type and Sources of Data The data used in this study were obtained from primary and secondary sources. The primary data were collected from a cross-sectional survey of selected markets in Kano State through the use of well-structured questionnaire, which were used to gather information from marketers of gum arabic. The socio economic characteristics examined were age, sex, marital status, level of education, household size and marketing experience. The secondary data on prices were sourced from Rubber Research Institute of Nigeria (Gashua sub-station). These included average monthly retail prices (N/Kg) of gum arabic covering January, 2011 to December 2015. Sampling techniques A multi stage sampling procedure involving purposive and random sampling was adopted for the study. Stage one was the purposive selection of Kano state because it is the central market for other states for the sale of gum arabic also the city is linked to many African cities by road. Stage two involved the purposive selection of six markets in the study area. These were Kurmi, Kura, Dambata, Dawakin tofa, Takai and Sabon-gari. These markets were selected because they are the major markets for trading gum arabic in the state. The next stage involved the random sampling of 40 gum arabic marketers from each of the selected markets to be interviewed for the study. Analytical techniques Data collected were analyzed using descriptive statistics and inferential statistics. The descriptive statistics include frequency counts, percentages and mean scores. The specific objectives were analyzed as follows Objective 1: This objective was achieved using descriptive statistics such as frequency counts, mean values and percentages. Objective 2: This objective was accomplished by using gross margin analysis. Gross margin is stated thus: GM = Gross margin = Total Revenue – Total Cost ……………………………… (1) GI = gross income TVC = total variable cost. (Giroh, et al, 2010). Objective 3; the constraints in gum arabic marketing were examined using the results obtained from a five point Likert scale, which employs an ordinal level of measurement. The responses to various constraints were scored in a way that the response would indicate the most serious constraint to be giving the highest score (i.e.