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Abstract

The  study  was  carried  out  to  determine  the  Government  (Management), Employees, Producers and Consumers perceived effects of  disintermediation in palm oil distribution in Rivers and Bayelsa States. Four research questions were developed and answered by the study while four null hypotheses were formulated  and tested at P ≤ 0.05 level  of significance  and 276 degree of freedom (df). The study was carried out in Rivers and Bayelsa States. It made use of survey research design. The population of the study was 1,393; made up of 21 management (government) staff, 125 employees, 1127 producers and

120 consumers respectively. The sample on the other hand was 278  which

was also made up of 12 management (government) staff, 23 employees, 221 producers and 22 consumers respectively. Proportionate sampling  technique of twenty percent (20%) was used to draw the sample from the population. A structured questionnaire was used to obtain data from the respondents for the study.  The  questionnaire  was  validated  by  three  experts  from  Business Education unit of the Department of Vocational Teacher Education, University of  Nigeria,  Nsukka.  Cronbach’s  alpha  method  was  used  to determine  the reliability  coefficient  in  which  a   coefficient  of  0.93  was  obtained.   The questionnaire  was  administered  by  the  researcher  with  the  help  of  two research  assistants  across  the  two  States.  The  entire  278  copies  of  the questionnaire administered were retrieved representing 100% retrieval of the questionnaire.  The data collected  were analysed using mean and  standard deviation to answer the research questions while t-test statistics was used for testing  the null hypotheses  (Ho) at P ≤ 0.05 level of  significance  and 276 degree of freedom (df). Analysis of Variance was used to analyse the mean rating of the various groups. The study found out that on the whole, the three groups of the respondents agreed on 33 out of the identified 36 as perceived effects  of  disintermediation  in  the  distribution  of  palm  oil  in  Rivers  and Bayelsa States. It was therefore recommended inter alia that the government of the two States should make efforts to formulate policies through their state ministries of commerce to reduce the number of middlemen in the distribution of Agricultural produce especially palm oil at the advantage of the poor rural farmers in the area.

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CHAPTER I

INTRODUCTION

Background of the Study

A motivated person whether male or female is always ready to act. How the motivated person actually acts is influenced by his or her view or perception of the situation.  Kotler and Keller (2007) defined perception or how one perceives a thing as the process by which an individual selects, organizes, and interprets information inputs to create a meaningful picture of the world. Different people have different ways  they  perceive  and  interpret  the  effect  (result  produced)  of  a  particular phenomenon. One of these Areas is that of agricultural produce distribution.

Agriculture is the largest sector of the Nigerian economy.  It is the first line of defence for any nation as it ensures food security and provides employment and raw materials for industries.  In Nigeria, agriculture accounts for 88% of the non-oil foreign exchange earnings and employs about 70% of the active labour force of the population.   The sector provides most of the stable foods consumed by Nigerians, the population of which has been put about 140 million (Dada, 2003).  The produce of agriculture is distributed by the intermediaries.

The intermediaries also called middlemen in the channel of distribution has been in charge of the distribution of product for centuries which now makes them pillars that cannot be surmounted.  The global market faces a complex problem in designing globally coordinated channels through which to  market their products.

  rthe  

The distributors and agents used for initial entry may not be suitable any longer

1

when  global  expansion   proceeds  fu      r  and  new  channels   may  be   found

(Johansson,  1997).   This is as a result of the fact that technology has made the world a global village and changes take place every day.  These changes affect every

facet of life which include the channel of distribution of goods and services.   The changes in technology and the explosive growth of direct marketing are having a profound  impact  on the nature  and design of marketing  channels.    One major trend is toward disintermediation.

Disintermediation is a new concept in Nigeria. According to Hinchliffe (2006) disintermediation is the removal of the middlemen from the transaction process.  It is  the  removal  of  the  middlemen  and  giving  the  consumer  direct  access  to information that would otherwise require a mediator.  Kotler and Armstrong (2006) opined that disintermediation  is the displacement of traditional resellers from the marketing  channel  by new types of  intermediaries  or going directly  to the final buyers   or  consumers.      Disintermediation   is  the  removal   of  intermediaries (middlemen)  in a  supply  chain, instead of going through  traditional  distribution channels   which   had  some  types  of  intermediaries   (such   as  a  distributor, wholesaler,   retailer,  broker  or  agent).  Companies  may  now  deal  with  every customer directly as a way of cutting costs of buying goods and services, thereby increasing profits for the company.

According   to   Kotler   and   Armstrong   (2006)   in  many   industries   and corporations, the traditional intermediaries are dropping by the side because these industries  and  corporations  now  sell their  products  directly  to the  consumers. With the inflow of the internet and other electronic technologies, the marketing of products  and  services  have  changed  from  the  traditional  method  of  marketing (wholesaler – retailer – consumer) to electronic marketing, where the consumer now directly makes the purchase of goods and  service from the producer via the net, telephone calls and receive delivery of these goods and services either at their door post or designated venues and centres established by producers, thereby sideling the intermediaries (Kotler and Armstrong, 2006).

Farm produce are very important in any State of which Rivers and Bayelsa States are inclusive.  Osuala (1998) classified farm produce into two types namely; the industrial raw materials and consumer goods.   He further explained that the industrial raw materials are usually sold directly to the manufacturers who process them into finished goods before selling to the consumers.   Such produce include cocoa, coffee, rubber, kolanuts, cotton, palm produce, wheat, cassava, and so on. The other group according to Osuala (1998) is the consumer goods which are used by the ultimate  consumers  or  households  and  in such  form  that  can be used without further processing.  Examples of farm produce are palm oil, yam, plantain, vegetables, cocoyam, fruits, and so on.  These farm produce require effective means of distribution.

Ibekwe  (2001)  explained  that  distribution  is  that  aspect  of  marketing concerned with moving goods from the producers to the consumers.   This is done through a channel of distribution, which involves the use of intermediaries such as producer, wholesaler, retailer and finally the consumer.  Osuala (1998) stated that a  channel  of  distribution  is  the  route  a  product  takes  as  it  travels  from  the manufacturer to consumer.  He identified some distribution channels for consumer products  as manufacturer  to  consumer,  manufacturer  to  retailer  to consumer, manufacturer to wholesaler to consumer, manufacturer to wholesaler to retailer to consumer.   These distribution channels are also used in the distribution of goods and services in Rivers and Bayelsa States.

Rivers and Bayelsa States are in southern  Nigeria in the core Niger  Delta region, with Rivers State created on 27th  May, 1967 and Bayelsa State created out of Rivers state on 1st October, 1996.  Rivers State has an area of 21,850 km square with a population of 5,689,087 (2005 estimate).   The people speak Ikwerre, Ijaw, Kana, Gokana, and kalabari.  Bayelsa State was created out of Rivers State and is

relatively small and rural in nature, still developing in areas of basic amenities that are useful to life.  She has an area of 10,773 km square with 70%  surrounded by water and a population of 1,998,349 (2005 estimate)(Wikipedia, 2009).  The people of Bayelsa State speak Epie, Nembe, Ogbia, Attisa, and Izon.  The people of Rivers and Bayelsa States are mostly farmers,  fishermen,  palm wine tappers,  palm oil producers, garri fryers, starch extractors and so on, who transport these products to the various weekly markets closest to them.

Rivers  and  Bayelsa  States  have  one  palm  oil  producing  company  each, namely: Rison Palm located at Ubimma in Rivers state and Bayelsa Palm Company located at Elebele in Bayelsa State.  However, there are various private owned palm oil  producing  establishments  in  both  states.    They  all  produce  farm  products especially  palm  oil  and  sell  to  wholesalers  and  retailers  who  in  turn  sell  to consumers at a higher price.

Palm oil is a very important  produce  in the Niger Delta region.   Virtually every tribe in Rivers and Bayelsa States makes use of palm oil for various activities. Majorly, it is for the preparation of soup and other types of food.  Owing to the fact that the major producers of palm oil in Nigeria are those in the southern part of the country of which Rivers and Bayelsa are inclusive, the cost of the produce in the market is so exorbitant.   This is as a result of the supply chain been introduced from the producer to the consumers.  The researcher observed that the cost of palm oil in Rison  Palm in Rivers  State  is  as low as N 1,800.00  for 20 litres and N

2,000.00 at Bayelsa Palm Company.  However, in the market the same litre of palm oil is sold for N 4,500.00 in Rivers State and N 4,800.00 in Bayelsa  State.   The Rison Palm Company in Rivers State and Bayelsa Palm Company in Bayelsa State sell their produce to wholesalers only.  This is done by the marketing departments

of the various companies.  Every other buyer buys through the wholesalers. By so doing the wholesalers form a block, and make more profit than the companies.

This  study  will  seek  to  establish  the  result  of  the  elimination  of  the intermediaries from the traditional chain of distribution of palm oil in Rivers and Bayelsa State.

Statement of the Problem

Rivers and Bayelsa States are predominantly  rural in economy.   They  are agrarian states where men earn their living through farming and fishing majorly. The States are still developing in providing social amenities such as  good roads. Transportation  is made  by canoes  and  engine  boats,  as a  result of this,  most farmers have resorted to producing little quantity of farm produce for their families and  immediate  communities.    In Rivers  and  Bayelsa  States,  farm  produce  are usually sold by wholesalers and retailers.  This is because the farmers who are the producers cannot afford the sum of money needed to transport these farm produce to the large market for sale due to the cost of transportation.

Some farmers arrange with middlemen who buy these produce at a cheaper price and transport them to the capital cities to sell at an exorbitant price to the consumers.  Also,  there are no good  storage  facilities,  therefore  the farmers  are eager to sell off all produce  to these middlemen  (wholesalers  and retailers)  who know about their storage problem.  The result is that the farmers make little or no profits from the sales.  The middlemen then buy in large quantities and store to sell to consumers.   Farmers who belong to unions which are most times cooperative societies solicit financial assistance from government and do not receive favourable responses, hence could not meet their target rely heavily on the middlemen for this assistance and when given, receives directives from the middlemen.

Again, the middlemen formed unions restricting non-members  from selling their products in the market.   These unions dictate the cost at which  to sell a particular produce and where one does not abide by their terms,  they go to any extent to frustrate one’s efforts.   This becomes a problem to farmers who wish to sell their produce at a cheaper rate as they will not be allowed to do so.  According to Spore (2009) information is a vital source of life.  Most farmers are illiterates and since they cannot write or read, the middlemen take advantage of their inabilities to hide vital information that would lead to their liberation from these middlemen.

This study, therefore, becomes necessary to determine the perceived effects of disintermediation  (elimination of the intermediaries  who are the middlemen) in palm oil distribution in Rivers and Bayelsa States.

Purpose of the Study

The major purpose of the study was to determine  the perceived  effects  of disintermediation   in   palm   oil   distribution   in   Rivers   and   Bayelsa   States. Specifically, the study sought to:

1.       determine    the    government    (management)     perceived    effects    of disintermediation in palm oil distribution in Rivers and Bayelsa States.

2.       determine the employees perceived effects of disintermediation in palm oil distribution in Rivers and Bayelsa States.

3.       determine the producers perceived effects of disintermediation in palm oil distribution in Rivers and Bayelsa States.

4.       determine the consumers perceived effects of disintermediation  in palm oil distribution in Rivers and Bayelsa States.

Significance of the Study

The findings  of the study would  be of benefit  to the Rivers and  Bayelsa States Governments who are the sole operators of the Risom Palm Company and the Bayelsa State Palm Company.  The study will enlighten these companies so as not to become a prey of exploitation  by the  intermediaries  who are out to make fabulous profit from the producers and the consumer.

The producers  who are farmers will also benefit from the findings of  the study.       The  study  will  enlighten  and  educate  them  on  the  duties  of  the intermediaries  and find ways to carry out the functions  of the  wholesalers  and retailers themselves.

The intermediaries  who are the wholesalers  and retailers are not left  out because the knowledge of this study will assist them to know the eminent dangers ahead (dangers of being eliminated from the channel of distribution thereby losing their job), and take drastic steps to improve on their services so as not to drop out of business.

The consumers  will also benefit  from the study since they are the  target market.   The gain of direct access to the producers of products will cut down the cost of purchase of goods which will lead to savings and meaningful use of finance to meet other needs.

Finally, it would serve as a base to other researchers  who might want  to replicate the study in other states of the Federation.

Research Questions

The study will answer the following four research questions.

1.       To what extent do governments (management staff) perceive the effects of disintermediation in palm oil distribution in Rivers and Bayelsa States?

2.       How do employees perceive the effects of disintermediation  in palm  oil distribution in Rivers and Bayelsa States?

3.       To what extent do producers perceive the effects of disintermediation in palm oil distribution in Rivers and Bayelsa States?

4.       How do consumers perceive the effects of disintermediation  in palm oil distribution in Rivers and Bayelsa States?

Hypotheses

Ho1:   There  is no significant  difference  between  government  (management)  and employees  on  their  perceived   effects  of  disintermediation   in   palm  oil distribution in Rivers and Bayelsa States.

Ho2:   There is no significant difference between producers and consumers on their perceived effects of disintermediation  in palm oil distribution in Rivers and Bayelsa States.

Ho3:   There is no significant difference among the mean ratings of the government (management),  employees,  producers  and  consumers  on  their  perceived effects of disintermediation  in palm oil distribution  in  Rivers and Bayelsa States.

Ho4:   There is no significant difference between the male and female respondents on their  perceived  effects  of disintermediation  in palm oil  distribution  in Rivers and Bayelsa States.

Delimitation of the Study

The study was delimited to the by-passing of wholesalers and retailers in the distribution of palm produce in Rivers and Bayelsa States.  The study was also was also delimited to only palm oil distribution in Rivers and Bayelsa States.


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PERCEIVED EFFECTS OF DISINTERMEDIATION IN PALM OIL DISTRIBUTION IN RIVERS AND BAYELSA STATES

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