Economics of Palm Oil Processing in Southwestern Nigeria

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International Journal of Agricultural Economics & Rural Development - 1 (2): 2008 © IJAERD, 2008 Economics of Palm Oil Processing in Southwestern Nigeria Olagunju, F. I. Department of Agricultural Economics and Rural Development, Ladoke Akintola University of Technology, Ogbomoso, Nigeria e-mail: olagunju.fi@lautechaee-edu.com Abstract: The study was designed to investigate the economics of palm oil processing in Southwestern Nigeria. Hydraulic hand press technique was the predominantly used method in processing while the profitability analysis revealed that palm oil processing was profitable. Multiple regression analysis showed extraction cost and cost of palm fruit to be negatively and significantly associated with net return while depreciation of tools and other inputs showed inverse relationship with net return. In contrast no significant relationship was found to exist between net return and such factors as processing experience and cost of labour. Keywords: Oil, Processing, Returns, Regression, Cost INTRODUCTION The oil palm is a perennial crop that originated in the tropical rain forest of West Africa. It spread to South America in the 16th century and to Asia in the 19th century. During the 1970s, Asia overtook Africa as the principal oil palm producing region in the world. In recent decades, the domestic consumption of palm oil in West Africa has increased more rapidly than its production. After centuries as the leading producing and exporting region, West Africa has now become a net importer of palm oil. Between 1961 and 1965 world oil palm production was 1.5 million tons, with Nigeria accounting for 43%. However, since then, oil palm production in Nigeria has virtually been stagnated. But today, world oil palm production amounts to 14.4 million tons, with Nigeria which is one of the largest producers in West Africa, accounting for only 7%. Kei et al

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