AKSU Journal of Agricultural Economics, Extension and Rural Development

BUDGETARY ANALYSIS OF MAJOR OIL PALM DERIVATIVES IN SOUTH-SOUTH ZONE, NIGERIA

Author:  Udoka, S.J., Ekwere, O . J., Ini-mfon V. P., Akpan S. B., and Ugwu D.S.

Abstract
Following the negligence of agriculture and the oil palm sub-sector of agriculture after the discovery of crude oil in Nigeria, the South-South Zone that supplied a substantial quantity of palm fruit in Nigeria was upset manifesting in apathy for investment in oil palm. Knowledge of costs and returns estimates of derivatives of oil palm in the study area was lacking. This study therefore analyzed the cost and returns of fresh palm nuts, crude palm oil, un-cracked palm kernel, cracked palm kernel, crude palm kernel oil, palm kernel cake and sludge in South-South Zone of Nigeria. Beside sourcing data from focused group discussions (FDGs), primary data were obtained using structured questionnaires from 396 respondents disaggregated into 240 oil palm farmers and 156 oil palm processors through a combination of purposive and random sampling methods. Budgetary analysis was used to obtain the cost and returns of the oil palm derivatives in the study area. Result showed that 7 major derivatives of oil palm (fresh palm fruit, crude palm oil, un-cracked palm kernel, cracked palm kernel, crude palm kernel oil, palm kernel cake and sludge) were produced in South-South Zone of Nigeria. The cost per ton from producing these derivatives was based on whether they were mono or joint products. Thus, respective cost per ton from fresh palm fruits (mono product from fresh fruit bunch) was N407, 040 while, crude palm oil and un-cracked palm kernel (joint products from fresh palm nuts) was N 4,674,780.00. Similarly, cost per ton of cracked palm (mono product from un-cracked palm kernel) was N 352,155.00; then crude palm kernel oil, palm kernel cake and sludge (joint products from cracked palm kernel) was N 7,468,146.7. Respective total output per ton from fresh fruit nuts, crude palm oil, un-cracked palm kernel, cracked palm kernel, crude palm kernel oil, palm kernel cake and sludge were 64.61, 77.21, 118.46, 14.52, 51.07, 73.91 and 9.99 with corresponding output price per ton of N 31,496.06; N 509,310; N 9,740; N 103,110; N 470,000; 30,970 and N 79,000. Similarly, average revenues from un-cracked palm kernel, cracked palm kernel, crude palm kernel oil, palm kernel cake and sludge were respectively, N4, 951.93; N 11,683.7; N 1,837,194.8; N 254,332.52 and N 87,690, while corresponding net returns per naira from fresh fruit nuts, crude palm oil, un-cracked palm kernel, cracked palm kernel, crude palm kernel oil, palm kernel cake and sludge were N3; N 7.41; N 0.25; N 3.25; 2.21; 0.31 and N 0.11. It was recommended that oil palm farmers should abstain from selling fresh palm nuts but process them for higher derivatives to earn substantial gains. Moreover, oil palm processors should develop savings habit from their current earnings to accumulate capital that would in addition to enhancing their processing capacity, enable them process higher products in the processing chain Keywords: Value-chain, oil-palm, derivatives, South-South, Nigeria