Agricultural Economics and Extension Project Topics

Economic Analysis of Processing and Marketing of Cashew Products

Economic Analysis of Processing and Marketing of Cashew Products

Economic Analysis of Processing and Marketing of Cashew Products

Chapter One


The broad objective of this study is to analyze through research in the production, processing and marketing of cashew products in the study area. The specific objectives are to:

  1. Identify the cashew products;
  2. Ascertain the techniques used in cashew products processing;
  3. Access the channels in which the product  are marketed;
  4. Identify the problems of processing and marketing of cashew products and;
  5. Make recommendation based on the findings.



Agriculture occupies a key position in the Nigerian economy, judging by its critical role in employment and revenue generation as well as in the provision of raw materials for industrial development. Nonetheless, the nation’s agricultural potentials are far from being fully realized, and these have unpalatable implication for food security and sustainable economic development. The underdevelopment of agriculture is, indeed, worrisome given the fact that the country is agriculturally well endowed and has witnessed considerable efforts in agricultural planning (Olomola, 1995). According     to        McNamara,        (1990),      food production has been increasing in  Nigeria at an annual rate of 1 to 2%, more slowly than population growth which has an annual growth rate of 3.1%. FAO, 1995 also noted that the rate of growth in food demand in Nigeria was 3.7% per annum as against annual food growth rate of 2.5% indicating a supply gap of 1.2% per annum. When viewed from all angles, the Nigerian agricultural sector suffers from many disabilities that cut across production, processing, preservation and marketing (Ndubizu, 2003). Hence, among others, concern has been prompted about the efficient performance of agricultural marketing systems especially the marketing of foodstuffs including edible fruits and nuts. Works done by Arene (2003), Ojo and Imoudu (2000), on the problems and prospects of agricultural marketing systems in Nigeria have identified among others the following as marketing problems:

  • inadequate storage facilities or non-existent storage facilities
  • lack of grades and standards
  • inadequate transportation facilities
  • inadequate market information leading to price inefficiency
  • adulteration of produce
  • inadequate marketing

These problems are crucial to the performance of marketing of agricultural food products including cashew nut.




The data used in this study came from sample survey of cashew nut sellers in three purposively selected local government areas in the State. A reconnaissance survey revealed the preponderance of cashew nut market in Igboeze south, Udenu and Udi LGAs of Enugu State. Hence these LGAs were purposively selected for the study. From each LGA, two markets where cashew nuts are highly traded were selected. These are Obollo-Afor, Orba,Ibagwa, Igboeze-modern market, Oghe and 9th Mile corner markets.

Primary data were collected using structured questionnaire administered on 120 cashew nut sellers who were randomly selected from the six markets. Data were collected on Amount of maximum variable profit (_) made, and other variables/factors which have effect on profitability. These factors are, Output price (Py), Cost of purchase (Cp), Transportation cost (Tc), Credit facilities [Interest] (Cf), and Storage facility as dummy variable (Sf). The analytical tools used in measuring the cashew nut market structure are the marketing margin analysis, Lorenz curve and its adaptation of Gini coefficient analysis. The effect of the output price and input variables involved in cashew nut business on variable profit is measured using the Profit function analysis with the use of ordinary least square multiple regression under the assumption that data collected fulfilled the assumptions of multiple regression model. Among the assumptions is the absence of multicolinearity among independent variables (Thomas, 1997). The Lorenz curve which is an important tool for the measurement of income inequality relates the cumulative proportion of income to the cumulative proportion of population, after ordering the population according to increasing level of income (Chotikapanich and Griffiths, 2003).



Margin Analysis

The gross and marketing margins analysis are as presented in table 4. As shown in the table, a gross margin of 36.79% of sales receipt or 58.19% of total variable cost shows that cashew nut marketing is a profitable business in the study area. The marketing margin represents the price paid for a collection of marketing services and its size reflects the structural efficiency of the marketing system (Ahmed and Rustagi, 1985). A high marketing margin indicates inefficiency because a high cost is incurred in the provision of the marketing services. For this study, a marketing margin of 37.50% of sales receipts or 59.32% of total variable cost is very high and therefore implies that cashew nut market is structurally inefficient in the area.

Table 3: Marginal Product, Elasticities and Returns to scale (RTS)



Summary and Conclusion: The study looked at the performance of cashew nut marketing in Enugu State. It measured the effect of inputs involved in the cashew nut marketing on variable profit and also the degree of sellers’ concentration as a measure of structural efficiency. The market structure was measured using the market margin analysis and the sellers’ concentration using the Lorenz curve and Gini Coefficient.

The profit function as measured by the production function analysis showed that cashew nut marketing in the study area is in a stage of inefficient allocation and utilization of the marketing inputs. The study also revealed a high market margin of 37.50% of sales receipt or 59.32% of total variable cost. The sellers’ concentration showed a high Gini Coefficient and high income degree line. The high marketing margin, high Gini Coefficient and high- income inequality of sellers, are all associated with poor market performance (Okereke and Anthonio, 1988).


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