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 isessential for improving efficiencies in the feed industry and lowering the price ofpoultry 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 perannum, had an annual Inventory Carrying Cost (ICC) of N4,587,762 and an averageICC of N114,694 per firm. The Marketing Costs (MC) for all the firms was N16,813,860per annum while the average MC was N420,347. Major contributors to ICC werestorage; handling and security costs while storage, transportation and capital costswere major contributors to MC. Efforts to minimize costs should therefore be focusedat reducing transportation costs and optimal utilization of storage space. The AverageMarketing Costs (AMC) declined with increase in quantity marketed (QM) while unitprofit increased with QM. Firms therefore need to increase QM. Marketing Margin(MM) and MC were significantly different from each other. Also, QM was a significantexplanatory variable of MM, implying that there was no pricing efficiency in themarket. Relative efficiency increased with QM, suggesting that firms should strive toincrease the quantity of feed marketed. The major contribution of this study is that itprovides information on the components of marketing costs and size economies in thepoultry feed industry in Ondo State, Nigeria.