Profitability and value addition of sawmills industry in Ijebu Division of Ogun State Nigeria

Abstract

The study focused on the profitability and value addition in sawmills industry in Ijebu Division in Ogun State. Data were collected by means of primary and secondary sources. The instrument used for the collection of primary data was a set of structured questionnaire. A multistage sampling technique was also used in sample enumeration. Descriptive and inferential statistical methods were employed in analyzing the data in the study. The finding showed that 46.7% of the sawmills were retailers and 29.3% were wholesalers of timbers. The mean operational capital among the timber traders was ₦2, 046 667.10 and the average annual income was ₦1,106 667.10 The budgetary analysis revealed that the total annual profit for timber traders ranged between ₦1,181,179.18 and ₦1,980 599.63 for 2012 to 2016. Rent, tax, cost of fuel, power and membership of association were important a determinant of profitability of sawmills business. The value added sales ratios to sawmill business were door (31%), table (34%), pupil chair (53%) and benches (39%). Pupil chair with 53% added more value to sawmill industries in Ijebu Division. High cost of energy, Inadequate credit facilities and high cost of transportation, Inadequate credit facilities and Government policy were some of the constraints faced by timber industries in the study area. The use of modern equipment and machines were needed to replace the outdated equipment in order to increase the output and profit. The level of access to credit facilities should be improved upon by encouraging respondents to form cooperative societies so that they can mobilize enough working capital for their business.

Keywords: Sawmill, profitability, value addition, timber traders