JOURNAL OF AGRICULTURE & SOCIAL SCIENCES ISSN Print: 1813–2235; ISSN Online: 1814–960X 08–019/AKA/2009/5–1–2–23–26 http://www.fspublishers.org Full Length Article To cite this paper: Oluwadare, D.A., P.B. Imoudu and K. Ogundari, 2009. Structure and performance of palm oil marketing in Ondo State, Nigeria. J. Agric. Soc. Sci., 5: 23–26 Structure and Performance of Palm Oil Marketing in Ondo State, Nigeria D.A. OLUWADARE, P.B. IMOUDU AND K. OGUNDARI 1 † Department of Agricultural Economics and Extension, Federal University of Technology P.M. 704 Akure, Ondo State, Nigeria †Department Für Agrarökonomie Und Rurale Entwicklung, Georg-August Universitat, Platz Der Göttinger Sieben 5, D- 37073 Göttingen, Germany 1 Corresponding author’s e-mail: ogundarikolawole@daad-alumni.de; kogundari@yahoo.com ABSTRACT This study examines the structure, conduct and performance of palm oil marketing in Ondo State, Nigeria. Data used in the study were collected from 120 palm oil sellers with the aid of well structured questionnaire using random sampling technique in 2006. The collected data were analyzed using descriptive statistics; gross-margin analysis, measures of market concentration and regression analysis. Two measures of concentration; the Hirschman-Herfindahl index (HHI) and the concentration ratios (4-firm & 8-firm) were employed in measuring the market concentration structure of palm oil market. Results revealed that the market structure for palm oil is perfectly competitive. About 91.70% of the respondents identified cost of purchase plus margin as the main method of price determination. The analysis of market performance revealed that palm oil marketing is profitable in the study area though in the face of few constraints. Result of the production function revealed that the regressors explained about 84% of the variation in the regressand (gross margin). Key Words: Palm oil market; Structure; Performance; Gini co-efficient; Perfectly competitive INTRODUCTION The oil boom of the 70s led Nigeria to neglect her strong agricultural and light manufacturing bases in favour of an unhealthy dependence on crude oil. Agriculture has suffered from years of mismanagement, inconsistent and poorly conceived government policies and the lack of basic infrastructure. Still, the sector accounts for over 41% of Gross Domestic Product (GDP) and two-thirds of employment in the country (CBN, 2002). Nigerian government is currently preoccupied with various challenges of diversifying its economy structure in order to reverse the poor performance trend of the agricultural sector. These include different agricultural policies targeted at improving performance of agricultural sector and reviving export trade in semi-processed agricultural commodities. At present, Nigeria is experiencing supply shortages of all grades of vegetable oil, especially red oil (USDA, 2003). Local market prices are currently more than double the international price levels. Palm oil is marketed in the country throughout the year and majority of the population keep demanding for it. Marketing of palm oil is encumbered with its attendant problems such as price fluctuations, lack of/-or inadequate transport facilities, low level of marketing experience, lack of knowledge (by buyers & sellers) of type of competition operating in the palm oil market, poor storage facilities and non-uniformity in the scales used, which largely affect conduct. All of these have been largely responsible for the poor marketing efficiency of palm oil as regards price mechanism, price collusion and discrimination in the market (Ohen et al., 2007). The Nigerian forests and farmlands are replete with a wide variety of tree-/shrub species providing an array of non-timber products. These products individually and collectively contribute significantly to the GDP share and rural livelihood of the country. One of such products is palm oil. This study intends to analyze marketing of palm oil in Ondo State, Nigeria because marketing is the prime mover of the products to prospective consumers in the country. MATERIALS AND METHODS Study area. The study was carried out in Ondo State, Nigeria. Ondo State is bounded by Ogun State to the West, Ekiti and Kogi State to the North, Edo and Delta states to the East and the Atlantic Ocean to the south. Geographically, the state lies between longitude 4 o 3 ' and 6 o East of the Greenwich Meridian and latitude 5 o 45 ' and 8 o 15 ' North of the equator. The mean annual temperature ranges from 21 o C to 29 o C with relatively high humidity. The state is characterized by raining season (April to October) and dry season (November to March). This study focuses on the