Market Power along Channels of Distribution of Cowpea in Borno State, Nigeria

Abstract

This study analysed market power in the channels of distribution of cowpea in Borno state of Nigeria. The aims of the study were to examine the sources of power within the channels and to determine the extent of power among the channel members. Data for the study were collected from both primary and secondary sources. The primary data was collected through Structured questionnaire that were administered on producers, wholesalers and retailers of cowpea in Borno state. The secondary source of data used in this study includes journals and textbooks.  Purposive sampling was used in selecting the local government areas and the respondents that were studied. The use of purposive sampling was to capture the local government areas that are dominantly cowpea farmers and also to capture channel members that were relevant to the study. Descriptive statistics and market margin analysis were used in analyzing the data. The major findings of the study showed the sources of market power amongst channel members includes availability of market information, provision of after sales services to customers, access to credit facilities and financial capabilities of the channel members. Amongst these factors it was discovered that financial strength\capabilities was the greatest source of market power. Furthermore the study also revealed that the financial strength is obtained as a result of the accumulated market margin that the channel members get over time. The wholesalers dominate the market gaining 34% of the selling price as their margin while the farmers make only 9%. That explains why the wholesalers have more market power than the retailers and the consumers. Based on the findings of the study, it was recommended that government should reintroduce marketing boards which will protect the weaker channel members and in this case the farmers. The marketing boards will buy the cowpea from the farmers at a good price. This would strengthen the farmers financially and would also reduce the difference between the farm gate price and that which consumers pay for the produce. If this is done, farmers would be empowered and would be in a better financial position to integrate into vertical marketing channels and farmers should be encouraged to form cooperatives.

Keywords: Market power, Distribution channels, Cowpea, market margin, Nigeria