International Journal of Agriculture and Economic Development, 4(2), 27-41, December 2016 27 Analysis of the Economic Impact of Agro-Allied Industries on the Rural Dwellers in Benue State, Nigeria Evelyn Oraka, Ali Ocholi Agribusiness Department, College of Management Sciences University of Agriculture, Makurdi aliocholi@yahoo.com Abstract The study was conducted to analyze the economic impact of agro-allied industries on rural dwellers in Benue State, Nigeria. A total of 366 respondents were used for the study. Data were collected through well structured questionnaire and were analyzed using descriptive statistics and inferential statistics. The result of Mann-Whitney (u) statistics showed that the average total revenue for respondents that had agro-allied industries (N38,084.27) was higher than those who do not have agro-allied industries (N37,234.04) which implied that the respondents in areas where there were agro-allied industries, made more profits from their economic activities than those in areas where there were no agro-allied industries. The study recommended that managers of agro-allied industries should improve on their employment rate and increase the wages of their workers so as to attract the rural dwellers and improve their living condition. Keywords: Agriculture, Agro-allied Industry, Benue State, Rural dwellers Introduction Todaro and Smith (2003) put it that if development is to take place and become selfsustaining; it will have to include the rural area in general and the Agricultural sector in
International Journal of Agriculture and Economic Development, 4(2), 27-41, December 2016 28 particular. Based on the historical experience of western countries, economic development was seen as requiring a rapid structural transformation of the economy focused on Agricultural activities to a more complex modern industrial and services society. The agro-allied industry is regarded as an extended arm of agriculture. Its development could help to stabilize and make agriculture more lucrative, thereby creating employment opportunities both at the production and marketing stages (NPCS, 2000). The importance of agriculture extends beyond the provision of food for man and animals, but also the provision of basic raw materials for industrial purpose, such that other products which are not directly utilized could be transformed into usable materials. Ajila (2014) further explained that the agroallied industries bring about diversification and commercialization of agriculture and also enhance the income of farmers and create food surpluses. The agricultural sector provides the raw materials for the industry which in turn, transforms agricultural commodities into different forms that add value to the product. It is in this sense that the agro-industry is an important and vital part of the manufacturing sector in developing countries and the means for building industrial capacities (NPCS, 2000). The scope of the agro-allied industry, according to Mehta (2012), encompasses all operations from the stage of harvest till the material reaches the end users in the desired form, package, quantity, quality and price. He further explained that the overall potential of agroprocessing is huge as it increases the value of crops of poor farmers and thus yield higher returns, expand market opportunities, improve livelihood of people, extend shelf-life of commodities, improve palatability of commodities, enhance food security, overcome seasonality and perishability constraints and empowers women who are often involved in agroprocessing. In the same line, Chengappa (2004) reported that agro-processing offers great scope for conversion of farm produce to consumer commodity and in the process, reduce wastage, increase the shelf-life of the commodity, thereby, resulting in value addition and
International Journal of Agriculture and Economic Development, 4(2), 27-41, December 2016 29 higher income transfer to the farmers from different classes of consumers as the processed commodities have wider market outlets. Developing agriculture is one of the means of developing the rural communities as agriculture is the primary occupation of most people in the rural areas and a major source of national income for most African countries (Mahmood, 2011). Agro-allied industries have been viewed as a safety valve that needs to be built within rural areas to absorb surplus labour and provide relief to the problem of large scale unemployment. Thus, inadequate attention paid to the agro-processing sector in the past, puts both the producer and the consumer at a disadvantage and thus hurts the economy of the country (Kachru, 2008). Rural dwellers stand to enjoy some benefits with the existence of agro-allied industries in the rural areas. The populace in the rural areas where the industries are sited, begin to enjoy benefits such as availability of market for the rural farmers, this further increases their production level and thus generate more income with which the living conditions of the people can be improved. Besides the above benefits, they enjoy infrastructural amenities like good roads, water supply, electricity, schools, and hospitals. All these benefits are some of the impact of agro-allied industries on rural development. An impact analysis, according to Iheanacho and Iheanacho (2012), can be carried out from three different approaches; the before and after approach, with and without approach and the benchmark or set target approach. The focus of this study, however, is on with and without approach which shows the comparison between areas where agro-allied industries are sited and areas that do not have agro-allied industries. There is, therefore, a link between agriculture, agro-allied industries and the rural dwellers in that without agriculture, the agro-allied industry will not have the availability of resources to carry out its performance. The rural communities which constitute a greater percentage of the labour force in the agricultural sector also have an
International Journal of Agriculture and Economic Development, 4(2), 27-41, December 2016 30 opportunity to increase their production because of the availability of a good market outlet brought about by the agro-industrial sector. Inspite of the establishment of agro-allied industries in the rural areas so as to enhance the life of the rural populace, the condition of living of the generality of the people in the areas where agro-allied industries are established do not appear to be different from those living in the areas that do not have agro-allied industries. It is against this background that this research work was carried out to examine the economic impact of the agro-allied industries on the rural dwellers in Benue state, Nigeria. Methodology Study Area The study area is Benue State. The State lies between Longitudes 6 0 35 and 10 0 East of the Greenwich Meridian, and Latitudes 6 0 30 and 8 0 10 North of the equator, with an elevation of 79m above sea level. It is bounded by Nasarawa State to the West and Cross River State to the South. The Southeastern part of the State shares boundary with the Republic of Cameroon. The State has total land area of 44,858 km 2, with two main Rivers Benue and Katsina-Ala. There are 23 Local Government Areas in the State with Makurdi as the Administrative headquarters. Benue State lies within the Guinea Savanna, which strikes a balance between the rainforest belt to the South and Savanna grassland to the North of Nigeria. The climate of the State can be generally described as tropical, with two distinct seasons the wet and dry seasons. The wet or rainy season begins in April and ends in October, while the dry season commences in November and ends in March. Annual rainfall and temperature range from 508 mm to 1016
International Journal of Agriculture and Economic Development, 4(2), 27-41, December 2016 31 mm and 21 0 C to 35 0 C respectively. River Benue runs from the southern to the Northwest end of the State, with several distributaries. There are other networks of rivers in several Local Government Areas of the State. According to the 2006 population census figures, the State has a population of 4.219 million (National Population Commission, 2006). There are two prominent tribes in the State namely, the Tivs and the Idomas. Other ethnic groups in the State include Igede, Etulo, Agatu, Abakpa and Jukun. There are also non-indigenes like the Hausa, Ibo, and Yoruba. The major occupation of the people of Benue State is farming. Other economic activities include fishing, done by the Etulos and Jukuns, and general trading, which are mostly carried out by the Ibos (Omale, 2006). Agro-allied industries in Benue state have the potentials to thrive well. This is mainly due to the fact that as an agrarian state, small scale farmers produce could serve as raw materials for agro-allied industries. There are several agro-allied industries in the state, but for the purpose of this study, a few will be mentioned: Miva rice Ltd, Ashi rice, Tito yoghurt company, Teragro Plc, Tomato processing plant, Taraku mills, Hule and sons Ltd, Ochai Poultry farm and Benue Brewery Ltd. Data Analysis and Model Specification Data for this study were obtained from a primary source. The data were collected with the aid of structured questionnaire. The instrument was designed to elicit response that was used to achieve the objective of the study. Specifically descriptive statistics and Mann-Whitney (U) statistics was used to analyze the objective of this study. It was specified as follows:-
International Journal of Agriculture and Economic Development, 4(2), 27-41, December 2016 32 U = n 1 n 2 + n 2(n 1 + 1) 2 n 2 R i i=n 1 +1 Where: U = Mann-Whitney statistic, n1 = number of respondents who live in areas where agro-allied industries were present; n2 = number of respondents who live in areas where agro-allied industries were absent; Ri = mean of selected social variables such as good houses, good roads, good food, availability of water, electricity, health services, good education, reduced migration, wage employment, reduced poverty, increased annual income, self-employment, increased food security, increase in productivity, and value addition.
International Journal of Agriculture and Economic Development, 4(2), 27-41, December 2016 33 Fig. 1: Map of Benue State Showing the 23 Local Government Areas. Source: http://benpolyonline.edu.ng Key: = Study Area
International Journal of Agriculture and Economic Development, 4(2), 27-41, December 2016 34 Results and Discussion The analysis of the economic impact of agro-allied industries on rural dwellers is presented in Table 5 (using arithmetic mean) and Table 6 was based on the concept of impact adopted in this study, using Mann-Whitney statistic to test the difference in economic indicators between respondents in areas where there were agro-allied industries and areas where there were none. Table 5 showed that the average total revenue for respondents that had agro-allied industries (^38,084.27) was higher than those who do not have agro-allied industries (^37,234.04). This showed that the respondents in the areas where there were agro-allied industries, made more income from their economic activities than those in the areas where there were no agro-allied industries. This could be attributed to the presence of the industries in those areas. This implied that the respondents where the agro-allied industries were sited were able to sell most of their produce to the industries, thereby earning more revenue. The average number of meals eaten per day in the areas where there were agro-allied industries was 2.87. This was lower than that of places that had no agro-allied industries (2.91) and this showed that the respondents in areas that had no agro-allied industries ate more number of meals per day than respondents in areas where agro-allied industries were present. This inferred that the respondents in the areas where the industries were sited ate lesser number of meals a day due to lack of time and their enormous involvement in their various economic activities. This result was consistent with Onyiriuka, Ibeawuchi and Onyiriuka (2013) when they found that the two main reasons for skipping meals were lack of appetite and time. The average number of children in school for areas with agro-allied industry was 2.78. This is higher than those of places that did not have agro-allied industries (2.17). This indicated that the people in the areas where agro-allied industries were present were able to send a greater
International Journal of Agriculture and Economic Development, 4(2), 27-41, December 2016 35 number of their children to school than those in areas where agro-allied industries were absent. The number of children not in school in the areas where there was an agro-allied industry had an average of 1.19 which was lower than the average of those in areas with no agro-allied industry (1.21). This showed that there were more children who did not go to school in the areas that did not have agro-allied industries. This variance could be explained by the presence of agro-allied industries in those areas. This showed that with more revenue derived either directly or indirectly from the industries, it was easier to send more children to school. This finding is consistent with Duncan, Magnuson and Votruba-Drzal (2014) The result on Table 6 showed that reduction in poverty for respondents in the areas where there were agro-allied industries was statistically significantly lower than those in the areas where there were no agro-allied industries (U = 14,416.00, p = 0.006). The mean rank of the two groups showed that more respondents in the areas where there were no agro-allied industries (195.82) had a lower poverty level than those in areas where there were agro-allied industries (170.49). This indicated that the rural dwellers in areas where there were no agro-allied industries had a lower poverty level than those in areas where there were agro-allied industries. This was inconsistent with Wilkinson and Rocha (2009) and Fajimi and Omonana (2011) that agroindustrial development had the potential to contribute substantially to poverty reduction. Increment in annual income for respondents in the areas where there were agro-allied industries was statistically significantly lower than those in the areas where there were no agroallied industries (U = 14,079.00, p = 0.001). The mean rank of the two groups showed that more respondents in the areas where there were no agro-allied industries (197.61) had their annual income increased than those in areas where there were agro-allied industries (168.60). This also indicated that the respondents in the areas where there were no agro-allied industries
International Journal of Agriculture and Economic Development, 4(2), 27-41, December 2016 36 worked very hard to earn a living. It also shows that the presence of agro-allied industries do not have sole economic impact on rural dwellers. This result contradicted Ajila (2014) that agro-allied industries enhance the income of farmers. Wage employment for respondents in the areas where there were agro-allied industries was statistically significantly lower than those in the areas where there were no agro-allied industries (U = 15,488.00, p = 0.097). The mean rank of the two groups showed that more respondents in the areas where there were no agro-allied industries (190.12) had greater opportunities for wage employment than those in areas where there were agro-allied industries (176.51). This showed that the respondents in the areas where there were no agro-allied industries worked in other sectors to increase their income base. The mean rank of self-employment for those who have agro-allied industry was 161.90 and 203.95 for those who had no agro-allied industry. The mean difference indicated by Mann-Whitney (U) statistic (12,887.00) was statistically significant (p < 0.01). This result showed that respondents in the areas where there were no agro-allied industries were more gainfully self-employed than respondents in areas where there were agro-allied industries. This was in disparity with the findings of (Wilkinson & Rocha, 2009; Mehta, 2012; Olaoye, 2014) that in its initial stages of development, agroindustry is relatively labour intensive, thus, providing a wide range of opportunities for self and wage employment. Increase in food security for those who have agro-allied industry was 174.37 and 192.14 for those who had no agro-allied industry. The mean difference indicated by Mann-Whitney (U) statistic (15,107.00) was statistically significant (p < 0.05). This showed that despite the presence of agro-allied industries, food security was not guaranteed in the areas where the industries were situated as much as it was in the areas where there were no agro-allied
International Journal of Agriculture and Economic Development, 4(2), 27-41, December 2016 37 industries. This contradicts the findings of Olaoye (2014) who was of the view that agroindustrial development contributes to improved health and food security for the poor, by increasing the overall availability, variety and nutritional value of food products and enabling food to be stored as a reserve against times of shortages. Table 4: Economic Impact of Agro-allied Industry on Rural Dwellers Variables Have agro-allied industries Have no agro-allied industries Mean Standard deviation Mean Standard deviation Total revenue (^/year) 38,084.27 26,715.68 37,234.04 27,112.53 Number of meals per day 2.87 0.353 2.91 0.316 Number of children in school 2.78 1.185 2.17 1.105 Number of children not in 1.19 0.873 1.21 0.874 school Source: Field Survey (2015)
International Journal of Agriculture and Economic Development, 4(2), 27-41, December 2016 38 Table 5: Other Economic Impact of Agro-allied Industry on Rural Dwellers S/No Variables Mean rank Mann-Whitney p-value Have agro- Have no agro- (U) statistic allied industry allied industry 1 Wage employment 176.51 190.12 15488.00*** 0.097 2 Reduced poverty 170.49 195.82 14416.00* 0.006 3 Increased annual income 168.60 197.61 14079.00* 0.001 4 Self-employment 161.90 203.95 12887.00* 0.000 5 Increased food security 174.37 192.14 15107.00** 0.026 6 Increase in productivity 178.49 188.24 15840.00 0.277 7 Market avenue for produce 182.04 184.88 16473.00 0.751 8 Produce value addition 181.30 185.59 16340.00 0.640 *, ** and *** significant at 1%, 5% and 10% level of probability Source: Field Survey (2015) Conclusion The average total revenue for places where there are agro-allied industries was higher than those who do not have agro-allied industries which implied that people in areas where there were agro-allied industries made more profit from their economic activities than those in areas where there were no agro-allied industries.
International Journal of Agriculture and Economic Development, 4(2), 27-41, December 2016 39 Recommendations The following recommendations have been proposed based on the result of the study. 1. The right and proper policies and programmes should be put in place by the government to mandate all private and public agro-allied industries to mount up projects that would be in favour of the rural dwellers where the agro-allied industries are situated. 2. Managers of agro-allied industries should improve on their employment rate and increase the wages of their workers so as to attract the rural dwellers and improve their living condition.
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