Economic Profitability of Marketing Fuel Wood in Ibadan Town of Oyo State , Nigeria

Fuel wood is a major forest product that serves as vital source of livelihood for large proportion of the poor and middleclass people living in or close to the forest in most tropical countries. This study carried out the economic profitability of marketing fuel wood in Ibadan town of Oyo State, Nigeria. It specifically examines the market structure and conduct for fuel wood, the profitability and type of fuel wood sellers in the study areas. A multi-stage sampling technique was used to select 50 fuel wood marketers in the study area and structured questionnaires were administered on them. Descriptive statistical tools such as frequency, percentage and table; profitability analysis, gross margin and Gini coefficient were used to analyze the data collected. The study revealed that fuel wood market is dominated by the retailers which accounted for 46% of the sellers though there were other categories of sellers such as wood fellers/ producers (16%), wholesalers (32%) and wholesalers/ retailers (6%). The profitability analysis showed that an average marketer incurred a total variable cost of ₦31, 731.82 per week but earned average revenue of ₦38,290.00 per week which implies that an average marketer earned ₦ 6,558.18 as gross margin per week. In the analysis, the marketing margin and efficiency of fuel wood were estimated to be 58.69% and 120.67% respectively. A Gini-Coefficient of 0.393 obtained in this study indicates a high level of concentration and inefficiency in the fuel wood market. It is therefore recommended that the marketers should be equipped with incentives such as means of transportation, forest subsidies inform of reduce tax, reduced forest-charges, credits and loans that will reduce the marketing cost and bring about equal distribution of sales and income. © 2016 Elixir All rights reserved. Elixir Environ. & Forestry 93C (2016) 39588-39593 Environment and Forestry Available online at www.elixirpublishers. com (Elixir International Journal) Olugbire O.O et al./ Elixir Environ. & Forestry 93C (2016) 39588-39593 39589 Giroh et al., (2010) included that market performance is also concerned with the technological progressiveness, growth orientation of firms, and efficiency of resource use and product improvement with maximum market services at the least possible cost. Marketing efficiency is the movement of products/ goods from producers to consumers at the lowest cost with the provision of services desired by the consumer. Ejiola, (2001). Market is said to be efficient when the ratio of output value to that of input value throughout the marketing system is maximized. The higher the ratio, the better the marketing efficiency (Arene,1998). Olukosi et al., (2005) explained marketing margin as the difference in price of a given commodity as it moves from the primary producers to the ultimate consumers while Adegeye and Dittoh (1985) stated that market margin is the representation of the difference in price paid to the first seller and that paid by the buyers. Gini-coefficient of zero express perfect equality (G=0) where all the respondents have equal value (income) while that of unity (G=1.00 or 100) expresses perfect inequality where one person has all the income (Gini, 1909). A low Gini coefficient indicates a more equal distribution, with 0 corresponding to complete equality while higher Gini-coefficients indicates more unequal distribution with 1 corresponding to complete inequality. Today, large numbers of rural and urban dwellers are involving more in marketing of fuel wood and it is common to see them by the road sides especially near a major market. Hence, it is necessary to focus on the income generating ability of fuel wood which is one of the major forest products and also examine its market structure so that potential investors could have an idea of the business before venturing into it. The objective of this study is to examine the structure, conduct and profitability/performance of fuel wood in Oyo State.