Profitability Analysis Of Palm Oil Production In Igbo Etiti Local Government Area, Enugu State, Nigeria

Abstract

This study analyzed the profitability of palm oil production in Igbo Etiti L.G.A of Enugu State, Nigeria. Both multi-stage random and purposive sampling procedures were used to select 120 small-scale palm oil producers. A structured questionnaire was used to collect data from the participants and analysed using frequency, percentage, and gross margin analysis. The results show that more than half (55.0) percent of palm oil producers use the traditional method of palm oil processing to produce their product whereas 17.5 percent used the mechanical method. The producers sourced their palm fruits mainly from self-sourcing (65 percent), friends and relatives (55.8 percent), and the open market (44.2 percent). The profitability analysis indicates that the total cost of N2,503,100 was incurred as the production cost for palm oil in the 2021 production cycle, out of which N429,000 representing 17.1 percent was expended on the total fixed assets while the total variable cost gulped N2,074,100, representing 82.9 percent of the entire cost. The sum of N796,900 was realized as the net profit from palm oil production in the area. This attests to the profitability of palm oil production in the area. The benefit-cost ratio analysis yielded a value above one (1.3), confirming the viability of palm oil production in the area. The study recommends that the government should initiate a policy that will encourage more people to get involved in palm oil production, as well as, facilitate the transition of palm oil production from the traditional method to the mechanical method.