CHAPTER ONE

INTRODUCTION

1.1      Background of the study

Nigeria
ranked sixth among the poorest countries in the world with over 70% of the
population living below poverty line in 2007 (Central Intelligence Agency,
2012) while 46% lived below $1.25 daily in 2010 (World Bank, 2014).
Okonjo-Iweala (2014) noted that Nigeria is one of the five countries in which
two-thirds of the world’s extreme poor are concentrated; the others are India,
China, Bangladesh, and the Democratic Republic of Congo. The poverty in Nigeria
is largely rural (poverties.org, 2013) where the effects of macro-economic
shocks in terms of fiscal adjustment and monetary policy reforms are felt much
more. Thus, whereas poverty is expected to decline by 40% in the urban centers,
it would increase by 7% in rural areas which inhabit almost 80% of the population
living below the poverty line and depend on agriculture for food and income
(International Fund for Agricultural Development, IFAD, 2009). Consistent
economic growth and prosperity are central to poverty alleviation and the oil
palm industry has been identified as one effective avenue for rural income
generation, especially among the women who process and sell palm oil in local
and national markets, food security and economic stability (Partnership
Initiatives in the Niger Delta, PIND, 2011).

A huge
percentage of farmers in Nigeria are small scale farmers. Small-scale farming
involves growing crops, at least in part, to be used by an individual family,
with farming being a significant source of their livelihoods (Lininger,
nd.)Small Scale farming is usually characterized by intensive labour and in
most cases, animal traction, limited use of agrochemicals and supply to the
local or surrounding markets. Unlike large-scale commercial agriculture, it
plays a dual role of being a source of household food security as well as
income from sale of surplus. Although some claim small-scale agriculture is
less efficient in output as compared to commercial agriculture (Kirsten &
Van Zyl, 1998), it is ecologically friendly in that less land is cleared for cultivation,
there are less emissions due to less use of fuel-driven machinery and the
market is usually local implying less carbon miles (Kutya, 2012).

The
oil palm (Elaeisguineensis) is
the dominant source of vegetable oil consumed in the world (USDA, 2006), in the
form of palmoil (mesocarp oil) and kernel oil (seed oil). Palm oil is the main
edible vegetable oil produced and consumed in Nigeria where the oil palm tree
features regularly in the natural vegetation of the lowland humid to sub-humid
areas in a belt that covers almost 24 million hectares (ha) (Opeke, 2003).
Dispersed smallholders harvest fruits from the wild/semi-wild palms and process
them to produce 80% of the palm oil output and through which Nigeria accounted
for 43% of global palm oil production up till the mid-1960s. The performance
has declined such that the annual output at 850,000 metric tonnes (MT) leaves
an overall supply gap of 0.5 million MT currently met through imports (Omoti,
2001).

Palm
oil production starts with the oil palm trees whose cultivation has formed the
farming culture and a means of livelihood for millions of families in the rural
landscape. Palm oil production is a major vocation which has played significant
roles in poverty alleviation in some countries, especially in Malaysia and
Indonesia (BusinessDay, 2013). The huge potentials for generating rural income
and providing employment have enabled the poor to be part of the solution to
the scourge of widespread poverty.AkwaIbom State which has been listed among
civil service state in Nigeria is also one of the 24 palm oil-producing states.
This implies that the potentials in palm oil production to transform the lives
of the small-scale farmers in the rural sector of AkwaIbomState need to be
harnessed. This study was carried out to evaluate the impact of the distribution
and utilization of oil palm industry to the socio-economic development of the
rural inhabitants of Oruk Anam LGA.

1.2 STATEMENT OF THE PROBLEM

Price
of palm oil is largely affected by production or output of the palm oil within
the year and general inflation (Fly, 2003). Past policies have aimed at
increasing agricultural productivity through increased investment in agronomic
and production system research. The discovery of petroleum in the late 50’s and
its exploitation and export in the early 70’s changed the economic scenario in
favour of oil as the chief revenue earner for the nation. The global economic
recession of the mid-80’s however exposed the inherent structural weakness of
import substitution as a strategy for industrialization. With the coming of the
Structural Adjustment Programme (SAP) in 1986 and the concomitant devaluation
of the naira, Nigeria manufacturers found it’s difficult to import the needed
raw materials and machinery to produced profitable policy formulation has
failed to take cognizance of the fact that production and marking constitute a
continuum and that the absence of the development in one retards progress in
the other (Olayemi, 1972).It in view of this that the researcher intends to
investigate the impact of the distribution and utilization of oil palm on the
socio-economic development in Oruk Anam LGA.

1.3     
OBJECTIVE
OF THE STUDY

The
main objective of the study is to investigate the impact of distribution and
utilization of oil palm on the socio-economic development of Oruk Anam LGA  ofAkwaIbom State. But to aid the completion
of the study, specific objective includes:

i)            
To investigate the impact of oil palm
distribution on the socio-economic development of Oruk Anam

ii)          
To ascertain the role of oil palm
distribution on the socio-economic development of Nigeria.

iii)         
To evaluate the benefit of oil palm
production on the economic development of Nigeria

iv)        
To ascertain the role of government in
aiding effective production and distribution of oil palm in Oruk Anam LGA

1.4     
RESEARCH
HYPOTHESES

To
aid the completion of the study, the following research hypotheses were
formulated by the researcher

H0:oil
palm distribution does not play any significant role on the socio-economic
development of Nigeria.

H1:oil
palm distribution does play a significant role on the socio-economic
development of Nigeria.

H02: government
does not play any role in aiding effective production and distribution of oil
palm in Oruk Anam LGA.

H2:government
does play a significant role in aiding effective production and distribution of
oil palm in Oruk Anam LGA

1.5     
SIGNIFICANCE
OF THE STUDY

It
is believed that at the completion of the study, the findings will be of great
importance to the rural farmers as the study seek to help them explore the
benefit of oil palm production and distribution to the farmers, government,
consumers and the general public. The study will also be of great importance to
the government as the study seek to explore tha untapped potentials of oil palm
production in Oruk Anam LGA and its contribution to economic growth. The study
will also be of great importance to researcher who wants to embark on research
on similar topic as the findings will serve as a reference point to them.
Finally the study will be of great importance to the academia and the general
public as the study will add to the pool of knowledge.

1.6     
SCOPE
AND LIMITATION OF THE STUDY

The
scope of the study covers the impact of the distribution and utilization of oil
palm on the socio-economic development of Oruk Anam LGA of AkwaIbom state. In
the cause of the study, there were some factors which limited the scope of the
study

a) AVAILABILITY OF RESEARCH MATERIAL:
The research material available to the researcher is insufficient, thereby
limiting the study       

b) TIME:
The time frame allocated to the study does not enhance wider coverage as the
researcher has to combine other academic activities and examinations with the
study.

c) Organizational privacy:
Limited Access to the selected auditing firm makes it difficult to get all the
necessary and required information concerning the activities

1.7 DEFINITION OF TERMS

Oil palm

Palm
oil is naturally reddish in color because of a high beta-carotene content.
It is not to be confused with palm
kernel oil derived from the kernel of
the same fruit, or coconut
oil derived
from the kernel of the coconut palm

Economic development

Economic development is the process
by which a nation improves the economic,
political, and social well-being of its people. Whereas economic development is a policy
intervention endeavor with aims of economic and
social well-being of people,economic growth
is a phenomenon of market productivity and rise in GDP

Distribution

Distribution (or place) is one of
the four elements of the marketing mix. Distribution is the process of making a product or service
available for the consumer or business user that needs it. This can be done
directly by the producer or service provider, or using indirect channels with
intermediaries.

1.8     
ORGANIZATION
OF THE STUDY

This
research work is organized in five chapters, for easy understanding, as follows

Chapter
one is concern with the introduction, which consist of the (overview, of the
study), statement of problem, objectives of the study, research question,
significance or the study, research methodology, definition of terms and
historical background of the study. Chapter two highlight the theoretical
framework on which the study its based, thus the review of related literature.
Chapter three deals on the research design and methodology adopted in the
study. Chapter four concentrate on the data collection and analysis and
presentation of finding.  Chapter five
gives summary, conclusion, and recommendations made of the study.

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