PROBLEM AND PROSPECTS OF SMALL-SCALE FISH FARMERS ABSTRACT: The study investigated the problem and prospects of small-scale fish farmers, Nigeria using primary data. Purposive and multistage random sampling technique was used to collect the data from 105 respondents using well-structured and pre-tested questionnaire. These data were analysed using descriptive statistics, concentration ratio, price spread, net profit margins, farming margins analyses and multinomial logit (MNL) models. Tests of significant differences and effects were carried out using analysis of variance (ANOVA) and t-test techniques. Research results showed that average age for the fish farmers were 38years for producers, 42years for wholesalers and 46years for retailers, and also that majority of them were married. The results further showed that majority of the fish producers and retailers had West African Senior School Certificate while most wholesalers had First School Leaving Certificate. Also, the all farmers had average household size of 5 members with 18years farming experience for the producers, and 15years for the wholesalers and retailers, respectively. Furthermore, the study found that the farmers made use of referrals, price discount and home delivery to attract customers. The results showed that the market was under weak oligopoly at concentration ratio of 47%. This implies that the activities of the largest four fish farmers affected the price and demand for fish in the market. Further results showed that fish farming was profitable with channel 2 having the highest net margin of N141,095 per annum per processing firm compared to channel 1 (N127,850) and channel 3 (N137,030) while channel 1 had the highest farming efficiency of 342% relative to channels 2 and 3 with farming efficiencies of 144% and 97%, respectively. The results indicated that these differences in farming efficiency among the channels were significant at P<0.01. This implied that the longer the chain of distribution, the higher the farming cost and hence, the lower the farming efficiency. Furthermore, the study found that smokedrying was the predominant method of processing fish at frequencies of 64% for the producers, 90% for the wholesalers and 92% for the retailers. Use of hangovers was the dominant method of storing fish at frequencies of 40% for the producers, 76% for the wholesalers and 83% for the retailers. Also, motor-cycle was the dominant method of transportation of fish for the producers and wholesalers at frequencies of 73% and 61%, respectively, while use of bus/taxi was dominant for the retailers at frequency of 76%. Further results showed that there were challenges facing fish farming at an average of 2.74 on a 4-Point Likert rating scale. Lack of capital, seasonality of fish business, lack of government assistance, produce deterioration, lack of storage facilities, poor extension services and debt were the factors indicted for challenging fish farming. More so, the results showed that socioeconomic characteristics accounted for the vertical differentiation of fish farming into channels 1, 2 and 3 by 68%, 87% and 92%, respectively. Marital status, household size, value of fish and membership of cooperative unions were the factors that significantly drove vertical differentiation of fish farming positively at P<0.05 while the effects of age and sex were significant and negative at P<0.05. Firewood splitting, fish transportation, loading/off-loading of fish, fish packaging, fish processing and fish smoking were the activities that both males and females participated in. This implied that the participation of both males and females will enhance the farming of fish. The study recommended policies that will enhance that profitability and efficiency of fish farming. TABLE OF CONTENTS Title Page ... ... ... ... ... ... ... ... ... ... i Certification ... ... ... ... ... ... ... ... ... ... ii Dedication ... ... ... ... ... ... ... ... ... ... iii Acknowledgement ... ... ... ... ... ... ... ... ... iv Table of Contents ... ... ... ... ... ... ... ... ... v List of Tables ... ... ... .... ... ... ... ... ... ... viii List of Figures ... ... ... ... ... ... ... ... ... ... ix Abstract ... ... ... ... ... ... ... ... ... ... x Chapter One: INTRODUCTION 1.1 Background of the study ... ... ... ... ... ... ... 1 1.2 Problem statement ... ... ... ... ... ... ... ... 4 1.3 Objectives of the study ... ... ... ... ... ... ... 7 1.4 Research hypothesis ... ... ... ... ... ... ... 8 1.5 Justification of the study ... ... ... ... ... ... ... 8 Chapter Two: REVIEW OF RELATED LITERATURE 2.1 Socioeconomic characteristics of agricultural produce farmers ... 10 2.2 Farming efficiency and profitability ... ... ... ... ... 13 2.3 Farming channels and vertical differentiation of agricultural produce farming ... ... ... ... ... 16 2.4 Problems of fish farming ... ... ... ... ... ... ... 18 2.5 Methods of fish processing and storage ... ... ... ... ... 21 2.6 Role off gender in agricultural produce farming ... ... ... ... 22 2.7 Theoretical Framework ... ... ... ... ... ... ... 24 2.7.1 Utility theory ... ... ... ... ... ... ... ... 24 2.7.2 Structure-conduct-performance approach ... ... ... ... ... 25 2.7.3 Theory of demand and supply ... ... ... ... ... ... 28 2.8 Analytical Framework ... ... ... ... ... ... ... 30 2.8.1 Likert rating scale ... ... ... ... ... ... ... ... 30 2.8.2 Concentration ratio ... ... ... ... ... ... ... ... 31 2.8.3 Market performance ... ... ... ... ... ... ... ... 32 2.8.4 Farming Margin ... ... ... ... ... ... ... ... 33 2.8.5 Multiple regression ... ... ... ... ... ... ... ... 34 2.8.6 Multinomial logit (MNL) model ... ... ... ... ... ... 34 2.8.7 Analysis of variance (ANOVA) ... ... ... ... ... ... 35 2.8.8 Student's t-test ... ... ... ... ... ... ... ... 36 Chapter Three RESEARCH METHODOLOGY 3.1 Area of study ... ... ... ... ... ... ... ... ... 37 3.2 Sampling technique ... ... ... ... ... ... ... ... 37 3.3 Data collection ... ... ... ... ... ... ... ... 38 3.4 Data analysis ... ... ... ... ... ... ... ... 38 Chapter Four: RESULTS AND DISCUSSION 4.1 Socioeconomic characteristics of fish farmers ... ... ... ... 44 4.2 Structure and conduct of fish farming ... ... ... ... ... 49 4.3 Profitability and efficiency of fish farming channels ... ... ... 50 4.4 Methods of fish processing, storage and transportation ... ... ... 51 4.5 Challenges of fish farming ... ... ... ... ... ... 52 4.6 Factors that drive vertical differentiation of fish farming channels ... 53 4.7 Level of gender participation in fish farming ... ... ... ... Chapter Five: SUMMARY, CONCLUSION AND RECOMMENDATIONS 5.1 Summary ... ... ... ... ... ... ... ... ... 57 5.2 Conclusion ... ... ... ... ... ... ... ... ... 59 5.3 Recommendations ... ... ... ... ... ... ... ... 60 5.4 Additions to Knowledge ... ... ... ... ... ... ... 62 5.5 Areas Needing Further Research ... ... ... ... ... ... 63 References ... ... ... ... ... ... ... ... ... ... 64 Appendix ... ... ... ... ... ... ... ... ... ... 72 LIST OF TABLES Table 2.1: Benefit/cost ratio and market margin of fish farmers in Yenagoa, Bayelsa State ... ... ... ... 14 Table 2.2: Farming efficiency across fish markets in Nigeria ... ... ... 14 Table 2.3: Cost and returns of respondents ... ... ... ... ... 15 Table 2.4: Farming margin of the retailers and producers ... ... ... 15 Table 2.5: Quantity of processed fish distributed/kg/month ... ... ... 16 Table 2.6: Farming channels of IMC at KLA ... ... ... ... ... 17 Table 2.7: Distribution channels in agricultural produce farming ... ... 18 Table 2.8: Problems of fresh fish farming by respondents ... ... ... 18 Table 2.9: Varimax rotated women perceived constraints on agricultural produce farming in Enugu South Area of Enugu State ... ... ... 20 Table 2.10: Sex distribution of fish retailers at Djamadjie and Petit Marche markets 24 Table 4.1: Socioeconomic characteristics of fish farmers ... ... ... 44 Table 4.2: Structure of fish farming ... ... ... ... ... ... 49 Table 4.3: Profitability and efficiency of fish farming channels ... ... 50 Table 4.4: Frequency distribution of methods of fish processing, storage and transportation ... ... ... ... 52 Table 4.5: Likert scale rating of challenges of fish farming ... ... ... 53 Table 4.6: Multinomial logit result on factors that drive vertical differentiation of fish farming channels ... ... 54 CHAPTER ONE INTRODUCTION 1.1 Background of the Study Agriculture is the major economic activity of developing economies. In Nigeria, agriculture provides food for the increasing population; supplies adequate raw materials to growing industrial sector; is a major source of employment; generates foreign exchange earnings; and provides market for the products of the industrial sector (Okumadewa, 1997; World Bank, 1998; Winters, Janvry, Sadoulet and Stamoulis, 1998; Food and Agriculture Organization, FAO (2006) as cited in Eze, Lemchi, Ugochukwu, Eze, Awulonu and Okon 2010). Fish is a very important agricultural product in the country as it occupies a prime place in the economy of the country. The term fish is a diverse group of animal that live and breathe in water by means of gill. Fish is one of the most diverse groups of animals known to man with over two thousand five hundred species. There are more species of fish than all other vertebrate (Eyo, 1992). The fishery sector is estimated to contribute about 3.5% to Nigeria’s Gross Domestic Product (GDP), and also provides direct and indirect employment to over six million people (Kwara State Government, 2010). The employment opportunities come from different fishing activities such as production, processing, preservation and transportation (Ali, Gaya and Jampada, 2008). The Central Bank of Nigeria, CBN (2005) report shows that the contribution of the fishery sector to the GDP of Nigeria rose from N76.76 billion in 2001 to N162.61 billion in 2005. Fish is a very important agricultural product in Nigeria, and is largely consumed in the country especially due to its rich nutritional and medicinal values. More so, the large coastal area and continental shelf available in the country makes diverse varieties available in different areas at affordable prices. Despite these rich coastal and continental resource base of the country, demand for fish far exceeds production, resulting in the importation of over 800,000 metric tonnes of fish annually (FBS, 2007). This trend may not change in the nearby future considering the rising population of the country and the increasing distance between fish producers and consumers. This therefore calls for efficiency in fish farming. Furthermore, fish is the most important animal protein food available in the tropics, and this could account for its large consumption in the country. In Nigeria, fish constitutes 40% of protein intake (Eyo,1992: Federal Department of Fishery, FDF, 2000), while, according to Adekoya and Miller (2004), fish and fish products contribute more than 60% of total protein intake in adults especially in rural areas. Amiengheme (2005) asserts that nutrient from fish is superior to all terrestrial meats such as beef, mutton, pork and chicken being a rich source of high quality animal protein and also contains highly digestible energy. More so, it is a good source of sulphur and essential amino acids such as lysine, leucine, valine and arginie. Fish is a good source of thiamine and polyunsaturated fatty acids, fat soluble vitamins such as vitamins A, D E and K, and water soluble vitamins for example, B complex, and minerals, such as, calcium, phosphorous, iron, iodine and selenium. According to Ovie and Raji (2006), Fish contains omega 111 fatty acids that are known to reduce cardiovascular diseases, hypertension and arteriosclerosis, thus becoming a preferred source of protein for those nearing 50years and above. These fatty acids are also known to enhance good brain cell development in developing foetus,(thus vital diet for pregnant women) and intelligent quotient (IQ) in developing children (FDF,2005). Hence it is evident that fish and fisheries are crucial to the economy and health of the nation. The geography and biodiversity of Nigeria supports fishing activities. Nigerian coastal fishery sector is characterized by a rich resource base with a water area of 140,000km2 and about 42,000km2 continental shelf areas, adjacent to the country’s 853km coastline (FAO, 2007). The huge Niger Delta inland waters associated with River Niger and River Benue, their tributaries and flood plains, natural lakes and wetlands, reservoirs and purpose-built ponds, constitute the total water area in the country. Furthermore, one quarter of Nigerian States are located at the coastal zone, including Akwa Ibom. The other states include Lagos, Ogun, Ondo, Delta, Edo, Bayelsa, Rivers and Cross River state ( Bako, Atala, and Kudi, 2008). According to Federal Bureau of Statistics, FBS (2007), annual fish production in the country in 2006 was about 700,000 metric tonnes, mainly through artisanal fishery, less than 1.5 million metric tonnes annual demand of the country. Artisanal fishery is a small scale fishery activity that involves the use of relatively little capital, dugout canoes and other simple fishing facilities such as gears, nets, hooks and traps around streams, rivers and within five nautical miles in the seas. Some of the fish species found in Nigerian waters include sole, sharks, rays, catfish, bonga fish, mud fish and tilapia. In Nigeria, agriculture has failed to meet the food needs of the growing population. One of the possible reasons for this failure, as asserted by Ayinde, Adewumi and Ojehomon (2009), is the malfunctioning of farming chain of major food leading to high rate of spoilage, constant food shortage, rising farm products prices and huge importation costs. The role of farming cannot be over emphasized as production centres are fragmented and mostly in small scale. (FAO, 2009). The farming of fish has steadily changed due to urbanization. Thus, as the process of urbanization progresses in Nigeria, an increasing share of national fish consumption takes place at locations other than where fish is produced. Before increasing urbanization, fish produced were locally and domestically consumed. With increasing urbanisation and development, which has further increased the distance between fish producers and consumers, fish farming has become very important. Fish farming involves all activities undertaken in conveying fish from producer to consumers. It includes processing, storage, preservation, transportation, wholesaling and retailing. The process of fish farming is a very delicate one, if the quality and nutrition of fish is to be maintained to the highest possible value. Efficiency in fish farming system is essential for the growth and development of the fishery sector. Farming efficiency involved the movement of products from the producers to the consumers at the lowest cost consistent with the provision of the services consumers’ desire. It involves technical efficiency and economic efficiency. While technical efficiency measures the effectiveness or competence with which the physical aspects of farming (such as storing, transportation and other activities meant to reduce wastes and prevent deterioration) are performed, economic efficiency, measures the realization of maximum possible output in money terms with a given resource input, or a given level of output from the minimum possible resource input (Adegeye and Dittoh, 1985). The use of wholesalers and retailers (intermediaries) between producers and consumers improves farming efficiency tremendously and, also, reduces distribution costs to all market participants (Coughlan, Anderson, Stern and El-Ansary, 2001). The farming system must develop well to provide necessary services as producers sell in markets distant from where consumers buy their fish. According to Enete (2008), the efficiency of farming system gets better as the number of intermediaries increases and vertically differentiate with specialized functions like wholesale and retail. This is in line with the earlier assertion of Adegeye and Dittoh (1985) that the overall objective of farming efficiency is to provide goods to consumers in the required form at the required time and place with the lowest possible farming costs consistent with the interests of the producers. 1.2 Problem Statement Agricultural farming is central to agricultural development and the overall growth and development of the economy. Previous studies have shown that efficient farming system stimulates agricultural production (Awoyinka and Ikpi, 2005; Adescope, Ajiebefun, and Akeremale 2005 as cited in Awoyinka, 2009). In Nigeria, the annual demand for fish far exceeds local production such that according to the Federal Bureau of Statistics, over 800,000 metric tonnes of fish are imported. This high level of fish importation is absurd considering nutritional and other economic importance of fish, and rich coastal heritage and endowment of the country. As important as farming is, most of the studies on fish have concentrated on production (Inoni, 2007: Kudi , 2008: Dagtekin, 2009: Zabbey, 2010). Available information shows that few of the studies on fish farming did not investigate the efficiency or otherwise of the process (Ali, Gaya, and Japada 2008: Gaya, Mohamed and Bawa 2010). Efficiency in fish farming has the potentials of stimulating fish production in the country in view of the huge deficit between local consumption and production. This will have a downward effect on the price of fish and thereby induce more consumption of fish by consumers. The importance of this development cannot be over-emphasized in country like Nigeria whose economy, life and wellbeing are immersed in agriculture, and fish alone constituted more than 40% of total protein intake in the country (Eyo, 1992: Federal Department of Fishery, FDF, 2000), Fish and fish products contribute more than 60% of total protein intake in adults especially in rural areas (Adekoya and Miller 2004). Major components of fish farming efficiency are profitability and farming margins of the various participants (i.e. wholesalers and retailers).Research has shown that there is continuous increase in the number of people involved in fish farming as a result of growing population of the country (Ali etal., 2008). This is an inkling of the profitability of the enterprise as only profitable activities could be attracting increasing number of participants. Similarly, market margin is a pointer to the level of market performance (Olukosi and Isitor, 1990). The middlemen involved in farming are accused of earning higher profits in the farming system (Bryceson, 1993). Vertical differentiation, according to Dijkstra (1999), has the capacity to reduce the transaction costs of farming especially for producing households. Unfortunately, studies have not been carried out to determine the profitability of fish farming as well as the farming margins of the participants, especially, in Akwa Ibom State, which is one of the nine costal States in the country. Thus there is a huge dearth in knowledge. Furthermore, the economy of Nigeria, just like other sub-Saharan African countries, is still developing. This has imposed a lot of challenges on farming of goods and services in the country, especially agricultural products like fish. It has been argued that agricultural farming is inefficient resulting in high rate of food spoilage, poverty and unaffordable food prices by consumers. However, not many studies have empirically evaluated the validity of these hypotheses in fish farming. This study seeks to analyze problem and prospects of small-scale fish farmers and in so doing address questions affecting marketability of fish. According to Adekanye (1988) and Abdullai (1983), as cited in Awoyinka (2009), farming of food in Nigeria is characterized by multitudes of deficiencies and problems. These problems cut across processing, preservation, packaging, distribution and transportation (Rural Sector Enhancement Programme, RUSEP, 2002). In fish farming, problems of shortage of supply, price fluctuations due to drying up of sources of water, and spoilage in transit, have been identified in the country (Tomek and Robinson, 1981, as cited in Ali et al., 2008). Eze, Onwubuya and Ezeh (2010), identified inadequate processing skills, produce deterioration and lack of storage facilities as the major constraints perceived by women farmers. However, this may not be exhaustive bearing in mind the paucity of research in fish farming, and also the rural nature of participants in fish farming. Therefore, the problem and prospects of small-scale fish farmers evaluates the structure, conduct and performance of fish farming system as indicators of the overall efficiency of the system. It is of essence in the determination of both consumers’ living cost and producers’ income and hence, the overall wellbeing and development of the country. Furthermore, the level of gender participation in fish farming has not been empirically evaluated. It is a common knowledge that agricultural activities in developing countries like Nigeria are predominantly carried out by women. According to the Federal Bureau of Statistics, over 70 per cent of agricultural activities are carried out by women in Nigeria (FBS, 2010). However, results from different studies on fish farming differ from the Federal Bureau of Statistics report. Ali et al (2008) reported that majority of fish farmers in Maiduguri were males while a similar study carried out in Adamawa State showed that majority of the farmers were females (Gaya et al., 2010). From the foregoing therefore, the following fundamental issues become expedient: a. what are the socioeconomics characteristics of fish farmers? b. what is the structure of fish farming? c. is fish farming profitable or not, and to what extent; d. what is the level of differentiation of the channels involved in fish farming? e. how efficient is the process, and what is the farming margins of the various participants; and f. what are the factors influencing the efficiency or otherwise of fish farming, as well as the problems facing fish farmers. g. what proportion of males to females are involved in fish farming; These are the many issues that this study will investigate with hope of bridging the gap in knowledge. 1.3 Objectives of the Study The broad objective of this study is to conduct an economic study of fish farming in Akwa Ibom State. The specific objectives are to: i. describe the socio-economic characteristics of fish farmers; ii. ii. determine the structure of fish farming; iii. determine the factors that drive vertical differentiation of fish farming channels; iv. determine the efficiency of the fish farming channels; v. evaluate the various methods used in fish processing, storage and transportation; vi. identify the challenges facing fish farming; and vii. assess the level of gender participation in fish farming. 1.4 Research Hypotheses The following null hypotheses were tested: H01: there is no significant difference in efficiency among the fish farming channels and H02: socioeconomic factors do not affect the vertical differentiation of fish farming channels. 1.5 Justification of the Study According to the United Nations estimate about 2.33 per cent of the world population live in Nigeria thereby making the country the 7th most populous in the world with a population of 162,471,000 in July 2011 (United Nations, 2011). Meeting the food and Agricultural needs of current and future generation present daunting challenges. The need for increased and more efficient agricultural production a sustainable basis therefore cannot be over-emphasised. To ensure continuous availability of fish for human consumption, nutrition, and wellbeing, the Nigerian economy requires effective and efficient farming systems. Fish farming serves as a medium for bridging the gap between producers and consumers of fish. This is very imperative in view of the growing human population and hence, demand for fish globally and Nigeria in particular, compared to supply, and more so, the increasing distance between producers and consumers (FAO, 2004; Ayo-Olalusi, et.al., 2010). The availability of fish to consumers at the right time and place requires an effective farming system. The farming of fish passes through various market participants and exchange points before they reach the final consumers (Ali, et. al., 2008). As such, the farming system must develop well to provide the necessary services. To ensure that machineries for enhancing farming efficiency are put in place, a study of this nature is required as it would enable the country to be self-sufficient in fish production, overcome food crises and mitigate the effects of various dimensions of food insecurity. The efficiency of fish farming therefore is derived from these variables. As such their determination will pave way for better and improved planning and organization by fish producers, fish consumers, fish farmers, government, policy makers and indeed, every participant in the fishery sector. This will fast tract increased production and consumption of fish in the country with attendant positive impact on the nutrition, health, gross domestic product and overall wellbeing of the country. It is hoped that the findings of this work will provide the necessary framework that would improve the capacity of producers and middlemen to be more efficient in all aspects of fish distribution. The result of this study will not only be useful to students, the private sector and policy makers but also to all participants in production, processing, farming of fish and will provide basis for more studies in the area..