PRICING AND OPERATIONAL EFFICIENCIES IN THE LIVESTOCK FEED MARKET IN ONDO STATE, NIGERIA

Abstract

The Nigerian commercial poultry sector is dependent on commercial feeds.
Evaluation of the operational and pricing efficiencies of poultry feed marketing is
essential for improving efficiencies in the feed industry and lowering the price of
poultry products. A multistage sampling technique was used to select the firms studied.
Tools used to analyze data collected included index of pricing and operational efficiencies;
and regression analysis. The firms studied handled about N251,870,000 of feed per
annum, had an annual Inventory Carrying Cost (ICC) of N4,587,762 and an average
ICC of N114,694 per firm. The Marketing Costs (MC) for all the firms was N16,813,860
per annum while the average MC was N420,347. Major contributors to ICC were
storage; handling and security costs while storage, transportation and capital costs
were major contributors to MC. Efforts to minimize costs should therefore be focused
at reducing transportation costs and optimal utilization of storage space. The Average
Marketing Costs (AMC) declined with increase in quantity marketed (QM) while unit
profit increased with QM. Firms therefore need to increase QM. Marketing Margin
(MM) and MC were significantly different from each other. Also, QM was a significant
explanatory variable of MM, implying that there was no pricing efficiency in the
market. Relative efficiency increased with QM, suggesting that firms should strive to
increase the quantity of feed marketed. The major contribution of this study is that it
provides information on the components of marketing costs and size economies in the
poultry feed industry in Ondo State, Nigeria.