Analysis of Factors, Cost-Benefit Analysis and Effects of Value Addition Strategies on Cashew Products Processed in South-East Zone, Nigeria
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Date
2022
Authors
Eze, Victor Anayochukwu
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Abstract
Nigeria government has over the years come up with different agricultural policy interventions which emphasize value addition to export crops including cashew as a means of job and wealth creations. Despite these interventions, it is still unclear why processors have not been able to exploit this opportunity to enhance value addition to cashew products. It is against this backdrop that this study analysed factors, cost-benefit analysis and effects of value addition strategies on cashew products processed in the South-East zone, Nigeria. The choice of South East zone is based on its antecedent as a major cashew producing zone in Nigeria. Specifically, the study set out to: (i) determine the factors that influence value addition to cashew products processed in South-East zone, Nigeria; (ii) determine the effects of value addition strategies on the competitive advantage of cashew products processed in South-East zone, Nigeria; and (iii) determine the cost-benefit analysis, rate of return on investment, and net income of cashew products processed in South-East zone, Nigeria. The study adopted a cross-sectional survey design using a structured questionnaire to obtain data from 353 randomly and purposively sampled participants. Multinomial logistics (MNL) regression and probit regression were used to analyse objectives (i) and (ii) respectively while ratio statistics, benefit cost ratio, gross margin and rate of return were applied to analyse objective (iii). The findings of the MNL regression reveal that income, type of markets, cashew physiognomies and perception about cost of processing technology have a significant influence on value addition to cashew products in both models at 1% while the coefficients of perception about government policy on cashew processing as well as market facilities show significant at 5% in the second model. Thus confirming the hypothesis that these factors influence value addition to cashew products processed in South East zone, Nigeria. The relative risk ratios for education attainment, age of processor, monthly income, experience from cashew processing, type of markets, market, processors‘ perception about policy of government on cashew processing as well as market infrastructure being greater than one (RRR > 1), suggest that variation in any of these variables will likely influence the processors‘ favouring to add value to cashew kernel and both cashew products over cashew nut and vice versa. Furthermore, the probit regression result shows that quality improvement strategy and packaging strategy have a significant and positive effect on the competitive advantage of value-added cashew products at 1%. Meanwhile, the average net income from 1kg of value-added cashew products is profitable with cashew kernel yielding the highest net income (N2,724.4 (US $7.6) > cashew nut (N2,547.9 (US $7.1)) > both cashew products (N2,340.4 (US $6.5)). The benefit-cost ratios for 1kg value-added cashew nut and cashew kernel products were slightly higher (1:1.4) respectively as against 1:1.3 for both cashew products, suggesting that value-added cashew products deliver positive net income to the processors. Equally, the rate of returns (RORs) for 1kg of value-added cashew products yield the highest (38.1 percent) in cashew kernel > cashew nut (37.4 percent) > both cashew products (34.1 percent). More so, the variable costs account for > 96 percent in cashew kernel and both cashew products to ≤ 98 percent in cashew nut of the total cost of value addition to cashew products in South-East zone of Nigeria. The coefficient of dispersion (COD) in revenue/cost of value-added products shows the least variability in cashew kernel (0.097) and
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highest in both cashew products (0.122). Confirming that it is least risky to add value to cashew kernel and riskier to add value to both cashew products. The study recommends that government should develop a specific cashew policy for driving value addition programmes across the cashew value chain. Government should come up with programme that will encourage more people to engage in cashew value addition activities because of its high rate of return on investment; and the processors are encouraged to explore training programmes that will enable them to improve quality of value-added cashew products while innovating cashew packs to ensure sustainable competitive advantage from value-added cashew.
Description
A Thesis Submitted in Partial Fulfillment of the Requirements for the Degree of Doctor of Philosophy (Agribusiness Management), School Of Agriculture And Enterprise Development, Kenyatta University, June, 2022.
Keywords
Cost-Benefit Analysis, Value Addition Strategies, Cashew Products, South-East Zone, Nigeria