Economic Analysis of Bread Production
CHAPTER ONE
Objectives of the Study
The broad objective of this study was to examine the economic efficiency of bread production in selected Local Government Areas. The specific objectives were to:
- describe the socio-economic characteristics of bread producers in the study areas;
- determine the costs and return associated with bread production;
- determine the resource use efficiency of bread production
- describe the constraints faced by the bread
CHAPTER TWO
LITERATURE REVIEW
Conceptual Frame work
In Nigeria bread is a staple food product prepared by baking dough of flour and water (Osuji, 2008). It has high nutritional value and its consumption is steadily on the increase due to its convenience as a ready to eat food product (David, 2006). Wheat flour is particularly well suited for bread making because of its glutamine and gladden content. These two substances combine with water to form the gluten network which is essential for dough development during bread making (Dwyer and O‟Halloran, 2009).
Bread is highly nutritious and eaten in one form or another by nearly every person on earth. As an excellent source of vitamins, protein and carbohydrates bread has been an essential element of human diets for centuries in all regions (Ryan, 2006). Bread is solid foam; typical bread has the crust with the characteristic golden brown colour and white crumbs. Bread has a short life due to its chemical composition and moisture content compared to other baked products. Nutritionally, bread contains high percentage of carbohydrate and fat both of which are needed for energy and source of calories. Other nutrients like vitamins, mineral and protein are relatively in small proportion (Dwyer and Hallow, 2009).
Fats such as butter, vegetable oils, lard, or that contained in eggs affects the development of gluten in breads by coating and lubricating the individual strands of protein and also helping hold the structure together. If too much fat is included in bread dough, the lubrication effect will cause the protein structures to divide (Nicole et al.,2012). A fat content of approximately 3% by weight is the concentration that will produce the greatest leavening action. In addition to their effects on leavening, fats also serve to tenderize the breads they are used in and also help to keep the bread fresh longer after baking (Cauvain and Young, 2005).
CHAPTER THREE
METHODOLOGY
Sampling Procedure and Sample Size
A multistage sampling technique was used to select respondents for this study. From the reconnaissance survey conducted in the study area, six locations were identified from Kano metropolis and three from Dala metropolis. The first stage involved purposive selection of Kano and Dala metropolis based on the concentration of bread bakeries in these areas. The second stage involved random selection of three locations: Kakuri, Kawo and Sabon-gariin order of proportion from these metropolises. Finally, a simple random sampling technique was employed in selecting bread producers from each of these locations from the list of sample frame. Eighty percent (80%) of the sample frame (155) was used as the sample size. In all, 124 bakeries were randomly selected.
Data Collection Techniques
Primary data was used for this study. These were collected with the aid of structured questionnaire. The information were collected on: producer‟s socio-economic characteristics such as age of the operator, educational status of the operator, amount of credit received in 2014, years spent on the cooperative and access to market; Constraints faced by the producers. The output data include the total value of bread produced by adding cash receipt from selling baking products plus those consumed at home and gave out as gifts while the input data include quantity of flour, quantity of sugar, total labour used, quantity of water, quantity of salt, quantity of fat (oil), quantity of Yeast, fuel and cost of other tools such as baking pan, oven or microwave mixer, transportation and other simple implements and problems militating against bread business.
CHAPTER FOUR
RESULTS AND DISCUSSION
- Socio-Economic Characteristics of Bread Producers in the Study Area
Age distribution of bread producers
The socio-economic characteristics of bread producers in the study areas are presented in Table 4.1. The result revealed that about 74% of the bread producers in the study areas were within the ages of 28 – 57 years with a mean age of 48 years. This means that they are still in their active productive ages, which signifies increase in the output of bread. This finding is similar to the result from Oladeebo et al.,(2012) that the average age of 46 years obtained for the cassava processors indicate that they were still in their active productive years which could lead to low level of profit inefficiency.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATIONS
Summary
This study focused on the economic analysis of bread baking enterprises in Kano and Dala metropolis of Kano State, Nigeria. Three locations were randomly selected in order of proportion from two metropolises and 124 producers were randomly selected in this area. Primary data were collected from 124 bread producers with the aid of structured questionnaire. The statistical tools used to analyze the data were descriptive statistics, stochastic production frontier function model, net farm income and profit function model.
The results of the socio-economic analysis shows that (74%) of the producers fall within the age range of 28-57years, the majority of the producers (76%) had one form of formal education. Majority of the producers (78%) belong to cooperative society for the period of 1-8 years.
The average costs incurred and revenue obtained per 50kgbag of flour for bread production were estimated to determine the profitability or otherwise of bread production in the study area (table 3). The total revenue (TR) is ₦16910 while the total cost (TVC + TFC) is
₦10640. The net processing income is therefore ₦6270. The rate of return on investment is 58percent, indicating that for every ₦1 invested in bread production in study area; a profit of ₦0.58 was made. Thus, it could be concluded that bread production in the study areas on a small and medium scale, was economically viable.
The stochastic frontier production function was estimated for technical, allocative and economic efficiency. It was observed from the study that 19% of the producers had technical efficiency (TE) of 0.61 and above while 81% of the producers operate at less than
0.6 efficiency level. The mean technical efficiency for the 124 sampled producers in the study areas was 0.71. The producer with the best practice has a technical efficiency of 0.99 while 0.59 was for the least efficient producers. This implies that on the average, output fall by 29% from the maximum possible level due to inefficiency. The mean allocative efficiency was 0.69. The result indicates that average bread producers in the state would enjoy cost saving of about 71% while allocatively inefficient producer will have an efficiency gain of 59% to attain the level of most efficient producers among the respondents. The mean economic efficiency was 0.51. The producers with the best practice have an economic efficiency of 0.90 while 0.29 was for the least efficient producers. This implies that on the average, output fall by 49% from the maximum possible level due to inefficiency. Finally, among the constraints identified in the study area, the majority of the respondent attested to the fact that inadequate capital and high cost of raw materials were major constraints faced..
Conclusion
The study revealed that bread producers in the study area did not achieve absolute efficiency in the use of variable inputs. However, the study showed that bread production among producers was profitable, thus yield and profit were being maximized due to certain efficiencies in the use of some variable inputs.
Contribution of the Study to Knowledge
- It was found that bread production is profitable by returning 58 kobo for ever ₦1.00 spent.
- The study revealed that bread production in the study areas is profitable with net processing income of ₦6270 despite the problems
- It was revealed that bread firms were economically inefficient in the study areahaving an economic efficiency of 51%.
- The study revealed that bread producers in the study areas achieved technical efficiency of 71%.
- Age, education, producers experience and firm size were the socio-economic characteristics that significantly influence the technical efficiency of bread production in the study area at 10%, 5% and 1% levels of resources
Recommendations
From the findings of this study, the following recommendations were made:
- Flour, labour, salt and yeast that significantly affect technical efficiency of bread production should be increase in quantities in order to boost more Production
- Most of the respondents complained of high cost of farm input such as Flour, sugar, salt, fat and yeast as part of the constraints they faced. The cooperative societies could link –up the producers with sources of input production. This will enable the groups to buy inputs at factory cost thereby helping to reduce cost of
- The result of the study revealed that firewood was over-utilized. Therefore, bread producers should reduce the quantity of firewood so that they can achieve both technical and allocative efficiency in its utilization
- Problems of high cost of raw materials, power supply and untimely supply of raw materials can be minimized if more producers embraced cooperative association so that they can pool their resources together for seeking information on new technology, marketing and effective management of resources
REFERENCES
- Adeleke, O. A., Matanmi, H. and Ogunniyi, L.T. (2008). Application of the normalized profit functions in the estimation of the profit efficiency among
- smallholder farmers in Atiba Local Government Area of Oyo state, Nigeria.
- Journal of Economic Theory 2(3):71-76.
- Akinpelu, .O.R. (2010) Consumer Acceptability of Spiced Composite Bread Msc thesis Submitted to the Department of Food Science and Technology, University of Agriculture, Abeokuta, Nigeria. Pp.39
- Amaza, P.S., Abdoulaye, T., Kwaghe, P.V. and Tegbaru, A. (2009).
- International Institute of Tropical Agriculture (IITA) and Promoting Sustainable Agriculture in Borno State (PROSAB).1-40.
- Bakhsh, K. (2007). An analysis of technical efficiency and profitability of growing potato, carrot, radish and bitter gourd: A case study of Pakistani Punjab. An unpublished PhD dissertation submitted to the Department of Environmental and Resource Economics. University of Agriculture, Faisalabad, Pakistan
- Beverage and Food World (2005), Wood head Publishing Limited Abington Hall, Cambridge UK, pp 38-39
- Bhatta, G.D., W. Doppler, K.B. KC, and A. Ranabhat, 2008.Potentials of Organic Agriculturein Nepal. In P. Chaudhary; K. Aryal and D. Tharu (ed.), Proceedings of International Workshop on Opportunities and Challenges of Organic Production and Marketing in South Asia, NPG, Kathmandu, Nepal, pp.34-46.
- Bravo-Ureta B.E and Pinheiro A.R (2007).“Technical, Economics, and Allocative Efficiency in Peasant farming. Evidence from the Dominican Republic. “The Development Economics” .35 (1): 48-07,
- Cauvain S.P and L.S. Young (2005,) Baking problem solved. UK Wood head Food series No 54
- Central Bank of Nigeria (CBN) (2011). Agricultural Credit Guarantee Scheme Fund. Annual Report & Statement of Accounts. CBN Publication, Abuja, Nigeria.
- Coelli, T. J., Prasada, R. and Battese, G. (1998). An Introduction of Efficiency and Productivity Analysis. Kluwer Academic Press, Boston. 9:225-235
