Implication of Financial Viability and Value Chain Analysis of Agro-Processing Industries for Development: Women Experience in Oyo State, Nigeria

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 the financial 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 that break-even output is very low hence most of the agro industries in the state were running into loss due to low capacity utilization.

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