implication of financial viability and value chain analysis of agro-processing industries for...

7/28/2019 Implication of Financial Viability and Value Chain Analysis of Agro-Processing Industries for Development Women E

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European Journal of Business and Management www.iiste.org

ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)

Vol.5, No.12, 2013

225

Implication of Financial Viability and Value Chain Analysis of

Agro-Processing Industries for Development: Women Experience

in Oyo State, Nigeria

Olagunju, F.I.

* E-mail of the corresponding author: [email protected]

Abstract

The dynamic role of Small and Medium scale Enterprises (SMEs) in developing countries has been highly

emphasised. These enterprises have been identified as the means through which the rapid industrialization and

other developmental goals of these countries can be realised. This paper therefore explores the structure and extent

of value addition by women in different agro-processing units in Oyo State, Nigeria. It has also examined thefinancial viability of agro-processing industries in the state. A multistage random sampling method was used to

select a sample of 160 agro-processing units of different types from each selected local government areas through

proportional allocation method. The data were analysed using descriptive (narratives), such include measures of

profitability, use of percentages, tables and mean. The break-even analysis has shown enough leverage for

processing units to stay in the business even at low capacity utilization. The extent of value addition has been about

34 per cent in the cassava mill sector. The maximum value addition has been observed in fruits/vegetable

processing (103 per cent), followed by cashew based units. The financial viability ratios computed from financial

accounts have revealed high current ratio but lower quick ratio (acid test) in most of the processing industries,

showing that many industries have substantial unsold inventories. However, financial ratios have been found

favourable for most of the processing units. There was under capacity utilization in almost all types of

processing industries in the state. It was mainly due to lack of adequate supplies of raw material as well as

bottlenecks in market penetration and marketing strategies to woo the consumers. It is revealed thatbreak-even

output is very low hence most of the agro industries in the state were running into loss due to low capacityutilization.

Keywords: Financial viability, Value Chain, Value Addition, Women, Oyo State

1. IntroductionThe dynamic role of SMEs in developing countries as engines through which the growth objectives of

developing countries can be achieved has long been recognised. It is estimated that SMEs employ 22% of the adult

population in developing countries (Daniels & Ngwira, 1993; Robson & Gallagher, 1993). In both developed and

emerging economies, promoting a favourable environment for the development of small and medium scale

enterprises (SMEs) is seen as critical. SMEs are a primary driver for job creation and GDP growth. They greatly

contribute to economic diversification and social stability and also play an important role for private sector

development (Knight, 1998).

Increase in volume of production, the optimal use of agricultural resources, the creation of a stable foodmarket, the achievement of greater level of productivity, increase the competitiveness of agricultural products and

implementation of integrated agricultural and rural development are some of the strategic objectives of the

development. Small and medium sized enterprises in agribusiness have an important role in the realization of these

goals. Favorable natural conditions as well as tradition in the production and processing of agricultural products, a

relatively favorable geographic position, qualified and relatively cheap workforce, good transport infrastructure,

as well as a relatively unpolluted environment, are just some of the stimulating factors for the development of

small and medium sized enterprises in Nigeria.

In the last decade or two there has been a resurgence of interest in value-added agriculture, driven by

consumer characteristics and the desire of farmers to capture a larger share of the consumer dollar. As interest in

on-farm processing (and value-added activities more generally) has grown, governments at the national and

regional levels have determined that there are benefits to supporting various types of value-added agricultural

activities. The main motivations of governments are enhancing or stabilizing farm-household incomes, creating

rural employment and economic development, and maintaining land in agricultural (or open) use (Streeter and

Bills, 2003).


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The relative importance of SMEs in advanced and developing countries has led and would continue to

lead to a reconsideration of the role of SMEs in the economy of nations. The development of many countries is

often measured by such indices as the level of industrialization, modernization, urbanization, gainful and

meaningful employment for all those who are able and willing to work, income per capital, equitable distribution

of income, and the welfare and quality of life enjoyed by the citizenry. There are various multiplier effects ofagro-processing industry such as spread of industrialization in rural areas leading to more livelihood options to

teeming millions, nutritional supplements, stable prices of agricultural commodities and many other effects due to

backward and forward linkages. The economic prosperity of rural farmers in particular was achievable only with

an effective integration and synergy between agriculture and agro-based industries (Tripathi, 2006).

Nigerias agricultural sector is made up of many subsectors, including crops (staple and industrial), livestock,

fisheries and forestry subsectors. Each of these subsectors interacts with the rest of the economy through backward

and forward linkages. These linkages add value in both the agricultural sector and other sectors of the economy.

The value addition in agriculture derives from the value chain which encompasses all activities involving

agricultural input and production, processing, storage, marketing and distribution, household and industrial

consumption and export. All along the chain many problems and constraints persist. Agricultural input constraints

include those relating to availability and quality of supply (e.g. land, seeds, fertilizer etc.). Production problems

include those related to scarcity and high cost of inputs, technical production problems (low yield, pest anddiseases problems) and unstable agro-climatic conditions that aggravate farmers production risks. Others

include socio-economic problems (low level literacy, pervading poverty and aging farming population).

Processing and storage problems include those of poor technology, high wastage, inadequate infrastructure (energy)

and poor quality of primary products. Marketing and distribution constraints include those of poor infrastructure

(access roads), inadequate market information, lack of quality control and safety standards and weak market

linkages. The key problem of exports is mainly the un-competitiveness of many commodities in the international

market (high cost of production and poor quality control). Consumption problems relate to household poverty, low

industrial capacity utilization and inadequate quality control and safety standards. Common to all nodes of the

value chain are financial constraints which include poor financial intermediation and high interest rates.

But, it is disheartening to note that despite large and diversified agricultural base, commercial processing in

Nigeria is quite low (Aremu and Adeyemi, 2011). As such, agricultural development may not go very far unless

there is development of agro-based industries not only to take up surplus labour force from agriculture but also to

provide a solid technical base to modernize agriculture. Added to this, SMEs in Nigeria suffer from very poor inter

and intra-sectoral linkages, and as a result lose benefits synonymous with economies of large-scale production.

Hence the weak inter industry relationship badly affects to weaken the value chain thereof low value addition.

Therefore, development of agriculture and agro-based industries should go hand in hand. This is perhaps the most

critical factor that planners and policy makers have ignored in the past and that is why the burden of workforce

down the ladder in primary sector has not diminished. This clearly shows lopsided development wherein changes

in sectoral output composition have not led to the proportionate changes in structure and occupation of workforce.

Consequently, the disparity between per worker income in agricultural vis--vis non-agricultural sector has

widened over the years. Therefore, rapid growth of agro-processing industry close to agricultural production

centres can bring about the desirable shift in employment structure without moving people from rural to urban

areas (Aremu, 2004).

There is need to promote small-scale industries in other to Improve their efficiency and quality by

upgrading skills, better product design, more efficient use of materials and improve marketing organizations.These are areas where state assistance can make a significant positive contribution towards development of

agro-processing. In this backdrop, it was considered pertinent to examine the performance of agro-processing

industries in Oyo State, where the Government provided loanable fund to promote industrial development in the

state. In the hindsight of promotional packages and incentives given by the local and state governments, the

agro-processing sector has started making discernible progress. The specific objectives of the study were:

(i) To study the structure, capital investment and extent of value addition in various types/sizes of agro-processing

units in Oyo State and

(ii) To examine the financial efficiency/viability of different categories of commodity specific agro processing

units in the state.

2. Value chain: Concept and IssuesThe value chain concept is introduced by Michael Porter in his book. The value chain can break downthe activity of the company into a sequence of elementary operations and identify potential sources of competitive

advantage. According to Adetonah et al (2010), the value is the amount that customers are willing to pay for the


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product that is offered. The value chain is a concept which can be simply described as the entire range of activities

required to bring a product from the initial input-supply stage, through various phases of production, to its final

market destination. The production stages entail a combination of physical transformation and the participation of

various producers and services, and the chain includes the products disposal after use. As opposed to the

traditional exclusive focus on production, the concept stresses the importance of value addition at each stage,thereby treating production as just one of several value-adding components of the chain. It resulted from different

activities performed by suppliers, the firm and distribution networks. According to Giertz, et al (2008), the value

chain includes all activities undertaken by transforming raw materials into semi-finished or finished goods for sale

or consumption. Value Chain describes all the activities required to bring a product or service from conception

through production stages (involving a succession of physical and uses of various services), distribution to final

consumers and its destruction after use. The overall performance of the value chain can be enhanced both by

strengthening each link and by strengthening the connections between the links

In reality, value chains tend to be more complex, to involve numerous interlinked activities and industries

with multiple types of firms operating in different regions of one country or in different countries around the globe.

For instance, agro-food value chains encompass activities that take place at the farm as well as in rural settlements

and urban areas. They require input supplies (seeds, fertilizers, pesticides, etc.), agricultural machinery, irrigation

equipment and manufacturing facilities, and continue with handling, storage, processing, packaging anddistribution activities. Other elements, such as power generation, logistics, etc., which form the chain environment,

are also important factors affecting the performance of value chains.

Value chain analysis is a useful analytical tool that helps understand overall trends of industrial

reorganization and identify change agents and leverage points for policy and technical interventions. It is

increasingly used by donors and development assistance agencies, including UNIDO, to better target their support

and investments in various areas such as trade capacity, enterprise competitiveness, income distribution and equity

among value chain participants. Value chain analysis is the process of breaking a chain into its constituent parts in

order to better understand its structure and functioning. The analysis consists of identifying chain actors at each

stage and discerning their functions and relationships; determining the chain governance, or leadership, to

facilitate chain formation and strengthening; and identifying value adding activities in the chain and assigning

costs and added value to each of those activities. The flows of goods, information and finance through the various

stages of the chain are evaluated in order to detect problems or identify opportunities to improve the contribution

of specific actors and the overall performance of the chain.

In many parts of the world, agriculture continues to play a central role in economic development and to be

a key contributor to poverty reduction. However, agriculture alone will not be sufficient to address the poverty and

inequality that are so pervasive in todays world. It is becoming increasingly crucial for policy makers to focus

immediate attention on agro-industries. Such industries, established along efficient value chains, can

increase significantly the rate and scope of industrial growth. Agro-industrial products offer much better prospects

of growth than primary commodities. In addition, the marked trend to break down production processes into

specific tasks opens up new opportunities for developing countries to specialize and take a more profitable part in

global trade provided they meet increasingly stringent market requirements. (UNIDO, 2009).

3. Data and Methodology

The study was carried out in Oyo State, located in the Southwest geopolitical zone of Nigeria. The State

lies between longitude 2.5o E and 5 E and latitude 7o N and 19o N of the equator and covers an area ofapproximately 26,500 km

2. The state has a total population of 5.6 million going by provisional figures of the

National Population Commission (2008). It has a land area of 27,140,000sq.km. The State enjoys a tropical humid

climate with two climatic seasons, the rainy season that prevails from April to October and the dry season that lasts

from November to March. The Southern part of the State is dominated by the tropical rainforest while the guinea

savannah belt dominates the remaining parts (Agboola, 1979). The settlement patterns show that so many people

of different Nigeria ethnic background reside in Oyo state. However Nigerians with Yoruba ethnic background

constitutes the majority of the population living in Oyo state. There are also non Nigerians who live in Oyo state.

Tropical rainforest exist in the southern part of the state while the guinea savannah predominates in the northern

part (OYSADEP, 2007) which makes it possible for different cropping patterns like mono cropping, mixed

cropping and intercropping.

In Oyo state, there are numerous small and medium sizes of agro-processing units for processing of fruits,

vegetables, cereals, oilseeds, animal products, herbal/medicinal oils/products and a variety of ancillary agriculturalcommodities. Within the State however, there are five sub-ethnic groups with distinct dialect peculiarities, they are:

Ibadans, Ibarapas, Oyos, Oke-Oguns and Ogbomosos. Two stage sampling design was followed to select the


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processing units. In the first stage of sampling, two local government areas each from the groups were randomly

selected. The local government areas selected are: Lagelu-Iyana ofa , Ibadan north-Agodi, Atiba- Ofa Mefa,

Afijio- Jobele, Atisbo Tede, Saki West- Saki, Ibarapa East-Eruwa, Olorunsogo- Igbeti, Ogbomoso North

kinnira and Ogo Oluwa Ajawa. The complete list of agro processing units in the study area were obtained from

the state ministry of commerce and industry, local government areas and federal Ministry of commerce andindustry. These units were grouped into different categories on the basis of commodity specific agro-processing

as: cereals-based (flour mills, rice mills, bakery), fruits and vegetables-based, oilseeds-based, cashew based,

cassava and poultry processing units.

In the second stage of sampling, a sample of 160 agro-processing units of different types for women was

selected randomly from each selected local government areas through proportional allocation method (Table 1).

The primary data on different aspects of agro processing were collected from the selected processing units through

survey method for the year 2010-11. The primary data comprised information on size, type, location, installed

capacity and utilization, capital investments, labour employment, sources of raw material and supply mechanism,

cost of processing, value addition, marketing of processed products, quality aspects, sales turnover, financial

accounts, profits, equity position and general constraints. Different sets of data were classified and tabulated for

carrying out detailed analysis. Tabular analysis was extensively used in the study to workout ratios, averages, and

indices to derive different parameters of performance of agro-processing sector.

Results And Discussions

Socio-Economic Characteristics of Agro-processors

Table 2 shows the age distribution of the agro-processors. Majority of the respondents (54.3%) were

within the age range of 30 39 years while 20.8% were even younger. A total of 88.1% of the respondents were

thus aged below 50 years. The mean age was 38.6 years. This indicates that most of the processors were young and

in their prime age in terms of productivity. Hence, given the necessary resources, these sets of respondents have

high potentials to attain a high level of productivity. The relatively young age of the respondents should, all things

being equal have positive impacts on enterprise size, earnings, the ability to take risks and adopt modern

innovations within the context of a familiar and clearly understood technological terrain.

All the respondents were female. Women were always involved performing such tasks as washing,

sorting, roasting, peeling, sieving and frying the products as the case may be. This confirms the view that

processing is predominantly a female enterprise in Nigeria and indeed, most African societies (Ajayi, 1995;

Olagunju, et, al., 2012). This can thus be interpreted that agricultural research and extension as well as policy

efforts aimed at enhancing food processing in Nigeria should be tailored to meet the needs and constraints of

women. These constraints will include the ability of women to call on investment funds required to purchase new

technology and the compatibility of the technology to womens physiological conditions. This is particularly

important if post harvest food losses must be minimized through adding value to the food crops especially at the

farm gate level (Oluwasola, 2010).

Only 7.5% of the processor had a family size of between 1 and 5. About 65% of the respondents had a

family size of between 6 and 10 while the remaining had more than 10. The average family size in the study area

was 9.4, which compares with similar findings from other studies conducted in the Southwestern region of Nigeria

(Olagunju and Sanusi, 2010). The large family size is typical of most rural farming communities in Nigeria where

household labour is the most dependable source of farm labour.

About 17.5% of the respondents did not go to school at all, 60.0% had only primary education, 20%completed secondary education while 2.5% attended tertiary institutions. Clearly, the level of education among

respondents was very low. In traditional societies as typified by rural areas, the education of the female gender is

not a major family priority and this was clearly manifested in the study area. This has serious implications for the

development of small-scale farm based enterprises in the rural areas. The low level of education among the

respondents could have serious implications on their ability to access information, use new technological

innovations and even access or procure credit from formal financial institutions. The tendency is to operate the

processing business using traditional methods as was done in the study area. Hence, while attempts need to be

made to access the processors to modern machines to enhance their output, it should be done within the context of

familiar, clearly understood and tested technological environment. In other words, locally fabricated technology

will serve a better purpose than imported exotic ones as a result of their scale of operation and level of education.

Eight (5%) respondents were new entrants in the processing business as they had spent only between 1 and 5 years

while 63.8% had been in the business for between 6 and 10 years. The others have been involved in cassavaprocessing for more than 10 years. The mean experience of processors was 7.8 years. The experience of the

processors in various fields is sufficient for a thorough understanding of the technical procedures of doing the


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business profitably. The main source of take-off capital for the business for 72.7% of the respondents was personal

savings although some of them invested these savings in an inherited enterprise or combined it with gifts from

family and friends. About 64% got credit from formal institutions. The Small and Medium Industries Equity

Investment Scheme was established to energize the Nigerian economy by channeling funds from banks to the

small and medium industries.

Status of Agro- Processing Sector in Oyo State

The Small scale enterprises in Oyo State fall into categories such as organized and unorganized

enterprises. The organized groups have registered offices and have paid workers, whilst the unorganized ones are

mainly made up of artisans. Most of these enterprises are largely made up of family groups and individual artisans.

The activities in the small scale enterprise sector range from agro processing, pottery and ceramics to

manufacturing of spare parts and electronic assembly.

The small scale industry is acknowledged to have huge potential for employment generation and wealth

creation in any economy. Yet in Nigeria, the sector has stagnated and remained relatively small in terms of its

contribution to GDP or to gainful employment. Activity mix in the sector is also quite limited dominated by

import dependent processes and factors. The agro-processing development in Oyo State has been quite slow just as

other state in the country. In view of this, Interest in the development of SMEs and their contribution in thedevelopment process continue to be in the forefront of policy debates in the developing countries hence, the state

government had extended some fiscal reliefs to its citizens in other to promote industrial development in general

and agro-processing in particular. To reap the benefits of fiscal incentives and to promote industrial development,

the state government has established Ministry of Industry, Applied Science and Technology about 7 years ago. It

was created on the 24th of August, 2005 with staff strength of 90 for the promotion of technology driven SMEs for

rapid industrialization and technological transformation and to harness the available raw materials and mineral

resources of the state.

The classification of agro-processing units has been depicted in Table 3. It is observed that most of the

processing units were cereal-based, followed by cassava mill, livestock-based, cashew and oilseed-based. There

were only 25 registered fruits and vegetable based processing units. This clearly shows the slow expansion of fruit

and vegetable processing industry, despite the fact Oyo state is one of the leading producers of fruits and off-season

vegetables in the country. This therefore disproves our assertion and hypothesis that processing industries

expanded nearer to the potential source/ supply of raw material. The cassava mill can be said to be highly favoured

since UNIDO (United Nations Industrial Development Organization) has on going projects in Oyo State, where it

is helping to develop a cassava processing plant mainly focusing on the major problem in cassava processing

which is drying - to develop a cassava flash drier and this has been a project in partnership with the Japanese

government. It is also working at improving the quality of Nigerian products so that they can compete favourably

in the international market.

Investment Pattern

The total capital investment under different types of agro-processing units has been depicted in Table 4.

The total capital investment was highest in case of livestock (N 42.1m) followed by flour mills (N22.1m) followed

by rice mill and fruit/ vegetable processing (N18.1m). The share of land and building structures was substantial in

all the units that accounted for about 72, 78 and 74 per cent in case of cassava mill and rice mill, and in Oil seed

based units respectively. There is a different story in the case of livestock based, cashew based and fruit/ vegetableunits with just about 40, 31 and 53 % respectively.

Installed Capacity, Utilization and Break-even Production under Different Agro-processing units in Oyo

State

The processors response based on installed capacity and break-even analysis are presented in table 5.

The table shows that the processors have not benefited in terms of timely availability of raw materials (72.7%),

very few (12.9) only benefitted from timely availability of raw materials required for processing. The results

further showed that inadequate supply of raw material was the major factor for low capacity utilization. The result

was similar to what was obtained in Himachal Pradesh (Sharma et al., 2010) For instance some of the processing

units find it difficult to run the units from local supplies and were forced to purchase raw material from other states

at higher prices. In essence, there was under capacity utilization in almost all types of processing industries in the

state. It was mainly due to lack of adequate supplies of raw material as well as bottlenecks in market penetrationand marketing strategies to woo the consumers. Most of the processors agreed that the break-even output is very

low (66.3%) hence most of the agro industries in the state were running into loss due to low capacity utilization.


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Processing and Value Addition

For farmers, value-added has a particular importance in that it offers a strategy for transforming an

unprofitable enterprise into a profitable one. In fact, there are very few items that a small farmer can produce and

sell profitably at the first level (that is, on the open wholesale market). Therefore, a value-added strategy is critical

to the long-term survival of most small farms in Oyo state. Many producers will look for ways to be economicallyviable through voluntary, incentive-based solutions. Producers greatest opportunities may lie in activities that add

value to their products and move their point of first sale downstream toward consumers. Adding value to bulk

raw commodities is one way for producers to keep a larger share of the margins associated with further processing

and market development. Progressive producers respond to market developments, determine what factors will

drive the future of their industry, and use these results to their advantage by adapting to change. The extent of value

addition was found to vary from industry to industry and product to product, depending upon the nature/ brand of

raw materials, technology, packaging requirement and extent & magnitude of selling and distribution expenses

involved. It was discovered that better training on management and technical aspects should be provided with

market information and infrastructure so that they could scale-up their production and become competitive in the

market.

The extent of value addition under different types of processing industries was estimated and is shown in

Table 6. It can be observed that Vegetable/ Fruit based (processing) used the total inputs worth N35,758 632and produced processed output value totaling toN 72740712 resulting in the net value addition of over 100 per

cent over input cost. The flour mill, on the other hand, enhanced value by about 28 per cent. In the case of rice mill,

46 per cent value addition was made with rice milling. The value addition was quite high in cashew based (72%),

oil seed based (56%) and moderately low in cassava processing (34%).

Financial Viability Ratios

The prepared broad indicators based on the revealed data by the sampled firms can be shown on Table 7.

The liquidity position of the agro-processing industries was examined by computing current ratio and quick (acid

test) ratio. The financial viability ratios computed from financial accounts revealed high current ratio but lower

quick ratio (acid test) in most of the processing industries, showing that many industries had substantial unsold

inventories rather than receivable cash holdings. The inventory turnover ratio was very low in fruits/vegetable

processing units as well as cashew units as these units had to pile up stocks of raw material due to seasonal

availability of fruits and vegetable commodities.

Many business problems can be traced back to inventory but certainly not all. The firm could be holding

obsolete inventory and not selling inventory fast enough. With regard to accounts receivable, the firm's collection

period could be too long and credit accounts may be on the books too long. Fixed assets, such as plant and

equipment, could be sitting idle instead of being used to their full capacity. All of these issues could lower the total

asset turnover ratio. The debt to equity, sales turnover and profitability ratios were quite favourable in the case of

small processing units. The solvency, operating and cost of goods sold ratios with respect to sales were also

favourable. The return on total assets and total capital for average unit came out to be 26 per cent and 42 per cent,

respectively. To sum up, the financial viability indicators revealed differential pattern of performance of

processing units.

The linkages of agro processing industries with suppliers of inputs (raw material) and prospective output

selling markets hold the key for development of this sector. Backward (supply of material) and forward (product

sale) linkages are of paramount importance for the expansion and growth of agro-processing units. The availabilityof bulk quantity and good quality of raw materials from agriculture and reasonable demand of processed products

from prospective buyers/markets determine the progress of processing sector.

Overall, the agro-processing units showed satisfactory performance on account of liquidity, profitability,

investment as well as leverage. There appears to be more prospects for small scale processing units. Different

financial ratios though differed, did testify this finding quite convincingly.

3. ConclusionsThe agro processing industries face variety of constraints. Factor availability and cost are the most common

constraints. Access to finance remains a dominant constraint to small scale enterprises in the state. Other

constraints faced by the sector include: lack of access to appropriate technology; the existence of laws, regulations

and rules that impede the development

of the sector; weak institutional capacity and lack of management skills and training. In an attempt to enable thesector perform its role effectively; a number of technical and financial support institutions were put in place by the

Oyo State government. These ranged from government institutions, parastatals, private institutions and


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non-governmental organizations.

The relatively young age of the respondents should, all things being equal have positive impacts on enterprise

size, earnings, the ability to take risks and adopt modern innovations within the context of a familiar and clearly

understood technological terrain.

The low level of education among the respondents could have serious implications on their ability toaccess information, use new technological innovations and even access or procure credit from formal financial

institutions. The tendency is to operate the processing business using traditional methods as was done in the study

area. Hence, while attempts need to be made to access the processors to modern machines to enhance their output,

it should be done within the context of familiar, clearly understood and tested technological environment. In other

words, locally fabricated technology will serve a better purpose than imported exotic ones as a result of their scale

of operation and level of education.

There was under capacity utilization in almost all types of processing industries in the state. It was mainly

due to lack of adequate supplies of raw material as well as bottlenecks in market penetration and marketing

strategies to woo the consumers.Most of the processors agreed that the break-even output is very low hence most

of the agro industries in the state were running into loss due to low capacity utilization.

In modern value chains, men are concentrated in higher status, more remunerative contract farming since they

generally control household land and labour, while women predominate as wage labourers in agro-industries.Women workers are generally segregated in certain nodes of the chain (e.g. processing and packaging) that

require relatively unskilled labour, reflecting cultural stereotypes on gender roles and abilities. Rural infrastructure

weaknesses (roads, transport, water, electricity, sanitation) disproportionately increase the burden of womens

unpaid domestic and caring tasks, reducing the time they can devote to paid work outside the home.

4. Policy Implications There should be more policy thrust and emphasis on developing industrial areas in raw material producing

regions to strengthen backward linkages with the producers, particularly with fruits and vegetable growers.

Registration of new units should be made keeping in view the potential and their financial viability, ensuring

optimum size/ number of processing units.

There should be a necessity for cost-effective and adequate supply of raw material by strengthening directlinkages through suitable contract farming models safeguarding the interests of farmers.

Liberal credit policy to modernize small-scale processing units to enable them (women) to compete withorganized industries and effective R&D support to the agro-processing sector in enterprise

development/management and marketing/exports is very essential. This will afford them more access to

funds for business development.

Improvement in basic infrastructure like developing railway links, metallic roads, cool chains, adequate/uninterrupted power supply, disposal of sewage/ industrial effluents, housing, control of traffic congestion,

etc.

Strengthening of database on agro-processing industries through regular surveys and creation of separateState Department of Agro Processing Industries to plan and monitor agro-processing industries and to

provide policy input to the government on a continuous basis.

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Table 1: Type of Sample Agro-processing Units in Oyo State

Processing units mpled Number

Vegetable/ Fruit based 10

Oil seed based 13

Cereal based 41

flour mill 20

Cassava mill 38

Livestock Based 22

Cashew based 16

Total

160

Source:Local Government Areas: Various Records, 2011


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Table 2: Socio-economic Characteristics of women Agro-processors


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Table 3: Commodity-wise Classification of Agro-processing Units in Oyo State

Processing units Number Per cent

Vegetable/ Fruit based 25 6.5

Oil seed based 32 8.0

Cereal based 102 26.5

Flour mill 46 12

Cassava mill 91 24

Livestock Based 50 13

Cashew based 38 10

Total 384 100

Source: LGAs; Ministry of Commerce and Industry, Oyo State.

Table 4: Capital Investment under Different Types of Agro-processing Units in Oyo State

Table 5: Distribution of Agro-processing Units by Installed Capacity and Break-even Analysis

Table 6: Extent of Value Addition in Different Agro-processing Industries in Oyo State


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Table 7: Financial Viability Ratios of Different Agro-processing Units in Oyo State

implication of financial viability and value chain analysis of agro-processing industries for...

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