(Dt.· 01.o~ HEDONJC-PRICE ANALYSIS OF THE AK~ DEMAND FOR GRAIN CROPS IN NIGERIA: £J 4-1 ~ THE CASE OF RICE AND COWPEA . BY BOLADALE OPEYEMI AKANil B.SC. AGRIC. ECONS (IBADAN) M.SC. AGRIC. ECONS (IBADAN) A Thesis in the Department of Agricultural Economics Submitted to the Faculty"of Agriculture and Forestry in Partial fulfillment of the Requirements CODESRIA-LIBRARYfor the Degree of DOCTOR OF PHILOSOPHY UNIVERSITY OF IBADAN FEBRUARY 1996 ABSTRACT The observed price spread between different .. varieties or market samples of the same variety of grain crops motivated this study. The objective was to identify the desirable/undesirable physical attributes of selected grains, estimate the relative influences of ' such traits on market price, rank them in order of importance and to find out if the preferences are significantly different across socio-cultural blocks in Nigeria. The Consumer Goods Characteristic Model employed in this study is based on the hedonic principle which views the pleasure/satisfaction/utility derived from the quality of a product as a priced commodity. The marginal rate of substitution between income and a unit change in each of some identified quality characteristics of cowpea and rice or Marginal Implicit Price (MIP) was thereby derived. The discriminant analysis was used to test for the presence of sub-markets or diagnose the extent of ·market segmentation. The degree of price-quality integration was assessed via analysis of the parameter estimates of the hedonic functions. One-shot data was collected on all available market samples of cowpea and rice in three markets - Ibadan, EnuguCODESRIA-LIBRARY and Nguru. These represent three major geo-cultural populations of the Yoruba, Igbo and Hausa/Fulani ethnic groups respectively in Nigeria. Component characteristics such as seed colour, seed configuration, seed weight, grain length, grain purity, milling quality, swelling ability, cooking time and so on were evaluated and scored for the quantity of each characteristic induced through genetic, on-farm or off-farm As a test of market efficiency, the study found considerable price-quality integration in the different cowpea markets except Enugu. The ricy markets (except lbadan) were considerably less integrated. The rank· order of the relative pricing and net marginal value product of each grain sample was used to derive three systems of grading grain crops in Nigeria. These are the Hyslop Scale which is based on the nominal order of%whe characteristic scores(MIPs), the Martin scale which identifies the five most important crop attributes (Premium Attributes) from a given market's hedonic behaviour and the Knapp Scale which rates the magnitude of the net marginal value product of all available 'grades'. These grading systems provide the basis for prioritizing crop improvement research objectives for sub-populations, with respect to each of the technological processes that confer quality on the final market samples of a grain crop. In conclusion, the findings demonstrate that a viable framework exists for grading grain crops in Nigeria but that a uniform grading system for the whole country may be unrealistic. They also show that current pricing structures for cowpea and rice in various markets reflect hedonic behaviour among consumers, attesting to quality responsiveness of grain prices. This quality responsiveness calls for strategic research into crop quality improvements that take into consideration the ~dentifiedCODESRIA-LIBRARY regional disparities in consumer preference. iv ACKNOWLEDGEMENT The actualization of this thesis is due to the love and support of many people. First, I wish to acknowledge the funding assistance of CODESRIA's Small Grants Programme. I thank the organisation for counting the project worthy of the support. I would like to express my sincere thanks to Prof. J. A. Akinwumi who supervised the thesis. Throughout the duration of the work, he showed immense understanding and patience for a student and a woman with multiple roles. Without his kind of encouragement, I doubt whether I could have scaled many of the hurdles towards this end. He painstakingly edited all my drafts and gave deep insights into the conceptual framework which remain invaluable to the work. My deep thanks also goes to my co-supervisors,Professor J. K. Olayemi and Dr J.T.Atobatele. Professor J. K. Olayemi gave me the last twist of thought that crystalized the proposal for the thesis, although he may not realise it. Also, his patient perusal of the draft report and tacit endorsement of my efforts has given me the ultimate confidence in this piece of work. Dr. J. T. Atobatele, despiteCODESRIA-LIBRARY his busy schedule, found the time to read the draft and gave very practical suggestions for its improvement. Dr. Saa Dittoh, before he left Nigeria, was a constant help, especially through the maze of econometric modelling of the work. My sincere thanks goes to Dr. Ben Arimah, a pioneer author in Hedonic-Price Analysis in Nigeria who put all his experience at my disposal to see me through the process of data analysis and write up. I owe a. debt of gratitude to several scientists of the West African Rice Development Association (WARDA) and INGER-Africa Program as well as the Grain-Legume Improvement Programme (GLIP) all based in IITA. In particular, Dr. Alluri for granting me access to IITA facilities for the quality tests; Mr. Kola Oladejo of the Grain Quality Laboratory for his technical assistance during the tests. I also thank Messrs. Lanre Ogunyinka and Solomon Adebayo of the Training Unit, Mr. Sam Korie of Biometrics Unit and Mr. Akintunde of COSCA Programme for assistance during data analysis. Messrs. Cajetan Akujobi, Kayode Adetoro, Kola Yekini and Kayode Ogunmola, all of NISER gave me invaluable assistance in the field work, data analysis and word-processing of this thesis. Mr Lere Aminu also coordinated the field work in Nguru for several months. May God Almighty grant them all the rewards that only He can give. I acknowledge the crucial role of my family in this achievement. I thank my dear husband, sponsor and mentor, Abayomi, my loving children Tomilola, Babaseinde and Opeyemi and my dear sisterCODESRIA-LIBRARY Felicia Olapade for their love, total support and identification with this project. Sp'ecial gratitude goes to Babaseinde and Felicia for their contributions to the word- vi processing of the report, even at periods when most children would rather play 'bingo' and who carried the recurrent ring of the word 'hedonic' in their sub-conscious for months. My husband remains my one constant source of academic inspiration and push. A man who delights rather than feel threatened by my academic progress, I will always be proud of his own giant intellectual status .. In total submission and thanks, I acknowledge the hand of the Almighty God in my life and in this work. For it is He who grants knowledge, understanding and success in using them to a logical end. I will forever praise Him for setting me apart for this crowning glory. BOLA 0. AKANJI. CODESRIA-LIBRARY vii CERTIFICATION I certify that this work was carried out by Boladale 0. Akanji in the Department of Agricultural Economics, University of Ibadan. I' ' ~ . ~"-"------·· · · · · · · · · · · · · · · · · · · · SUPERVISOR J. A. Akinwumi, M.Sc. Ph.D. Professor of Agricultural Economics, University of Ibadan, Ibadan, NIGERIA. FEBRUARY 1996 CODESRIA-LIBRARY DEDICATION To the memory of my late:J Father CORNELIUS AKINBOWALE TEWE (1919 - 1993) Whose deep· intellect surpassed that of his time; Who fought the repressions of truth and intellect all his life; Who imprinted my feet in the path of truth and intellect; Who so much believed in my abilities; But who never lived to see this crowning glory. CODESRIA-LIBRARY ix TABLE OF CONTENTS PAGE Title ..................................................... i Abstract . ; . ii Acknowledgement ............................................. v Certification . viii Dedication . ix Table of Contents . ; . x List of tables . xvii List of Figures . xxiii List of Acronyms . xxv CHAPTER ONE: INTRODUCTION 1 1.1 Background Setting and Problem Statements . 1 1.2 The Need for the Study ..................................... 5 1.3 Objectives and Hypotheses Statements ............................ 9 1. 4 Plan of the Report . 11 CODESRIA-LIBRARY X CHAPTER TWO: OVERVIEW OF RICE AND COWPEA ECONOMY IN NIGERIA 13 · 2.1 Rice in the Nigerian Economy . 13 2.1.1 Rice Cultivation and Research Focus in Nigeria . 13 2.1.2 Rice Processing and Post Harvest Characteristic Changes .................................... 17 2.1~3 Rice Production and Consumption in Nigeria ................................... 21 2.2 Cowpea in the Nigerian Economy ......................... 26 2.2.1 Cowpea Cultivation and Research Focus in Nigeria . 27 2.2.2 Cowpea Production and Consumption in Nigeria . 29 CHAPTER THREE: THEORETICAL FRAMEWORK AND LITERATURE REVIEW 33 3.1 Marketing Research in Nigeria and Africa · .................... 34 3.2 Consumer Choice of Crop Attributes: Implications for Marketing Research ........................ 37 · 3. 3 Market Factors Influencing Choice of Crop Varieties ... ·: . ................................ 39 3.3.1 Socio-Economic Factors ........................... 39 3. 3. 2CODESRIA-LIBRARY Physical Factors . 40 3.4 Non-Market Factors Influencing Choice: Relevance of Buyer Perception in Consumer Demand . 43 xi 3 .5 Background Concept of the Current Study . 4 7 3. 6 Theoretical Framework . 52 3. 6.1 Consumer Demand Models . 52 3.6.2 Quantification