ABSTRACT

This research carried out an economic analysis of groundnut processing and determined its effects on the poverty level of the processors in Zamfara State, with main focus on groundnut oil and cake processing ventures. The multi-stage sampling procedure was used in selecting sampled groundnut oil and cake in the study area. The research adopted a survey method by using questionnaire to collect primary data from the respondents. The primary data collected for the study were analyzed using descriptive statistics, stochastic production frontier, Foster-Green and Thorbeck model and gross margin analysis. The result showed that, on the average, the socio-economic characteristics of the groundnut oil and cake processors in the study area influenced their poverty level. It was also found that the overall total costs of processing groundnut per month was N998, 220 while the overall total revenue was N1,432,500. The gross margin of N 434,280 was realized, suggesting that groundnut processing is a profitable venture in the study area irrespective of the scale of operation adopted. Also, the mean level of allocative efficiency (0.589) and economic efficiency (0.889) were found to be below the optimum level, suggesting that there is scope for increasing the level of allocative and economic efficiencies by 41 % and 11% respectively through the adoption of efficient and improved technologies. Also, education was found to have contributed in increasing economic and allocative efficiencies in groundnut processing in the study area. The result of poverty analysis showed that by engaging in groundnut processing business in the study area, the number of respondents living below the poverty line has been reduced from 39 % to 27 %. Also, the poverty line, poverty head count, depth and severity which were N 1198.40, 87 %, 29 % and 19 % respectively falls to 1173.94, 27 %, 21 % and 11 % respectively, indicating that groundnut processing businesses have positive impact on the well being of the processors in the study area. Also, inadequate capital was found to impede groundnut cake and oil processing in the area. Therefore all policy measures that build the educational capacities of the groundnut entrepreneurs and strengthen their managerial capacities will enhance greater performance of the groundnut entrepreneurs. The government and concerned organizations should effectively link groundnut cake and oil processors to available financial institutions for provision of credit facilities. These financial institutions can also provide advisory role to the processors to ensure prudent management of such facilities. In addition, the groundnut processors could help themselves by forming an interest group that can stand on their behalf and put their request before the government. Such requests should put pressure on the government to provide adequate rural infrastructure and other social amenities. This should be done in order to promote good investment climate for the commercial development of groundnut cake and oil processing in the study area.