Given its use as a source of food and farm revenue, palm oil is a valuable commodity in the Nigerian economy. Together, palm oil and palm kernel oil account for around 70% of the nation's total vegetable oil consumption requirements, while also supporting approximately 4 million jobs directly and indirectly (Nkongho et al, 2014). Since then, the Nigerian palm oil sector has expanded tremendously in spite of recent neglect. Its significance has influenced every aspect of the country's economy.
To support families and communities, different geographic areas have different needs when it comes to managing natural and agricultural resources. To give producers and their communities viable livelihood prospects, for example, governments, non-governmental organizations, and civil society organizations are implementing a number of programs. In this regard, palm oil has become more well-known as one of the main products made in West Africa's tropical rain forest region.
Palm oil accounted for about 36% of the world's oil crops and produced oil (Ritchie and Roser, 2021). Palm oil and its byproducts have found applications in a wide range of downstream industries, such as food and beverage, cosmetics, pharmaceuticals, oleo chemicals, biodiesel, renewable energy, and cutting-edge materials like carbon nanotubes. Palm oil is the most accessible and least expensive edible oil. Therefore, it appears that as the commodity's price rises, the cost of food as a whole rises as well, contributing to inflation. A study that was done revealed a significant and positive relationship between inflation and CPO price (Isa et al, 2020).
A country's economy depends heavily on the palm oil subsector for a number of reasons, the most significant of which is the sheer number of people it employs. It employs significantly more people than all other industries or sectors put together, between 60 and 70 percent of the workforce in a developing country. Related to this is the reality that most countries carry out their agricultural activities in rural areas, where the majority of the impoverished reside. As a result, a well-developed subsector of the palm crude oil industry has a significant potential to reduce poverty, making it imperative for a country's strategic interests to expand its domestic palm oil industry as opposed to depending on imports. Thus, it is impossible to overstate the significance of palm price variation for Nigeria's goal of achieving sustained growth.
As a value addition business, palm oil pays specific supply chain participants for tasks that downstream industries previously completed or for completing tasks that producers thought valuable but had disregarded (Amanor, 2003; Sarku, 2017; Cucagna and Goldsmith, 2018). It should be noted that the United States Department of Agriculture (USDA) defined value addition as altering a product's state or form, producing goods in a way that increases their value, and physically separating agricultural products in a way that increases their value. Most people agreed that the primary goals of palm oil are frequently to maximize the net farm income and wealth of producers (Anderson and Hanselka, 2013). Expanding the activities in value addition palm oil processes is crucial if they are to benefit from economies of scale and ensure that they don't just produce for the benefit of downstream participants in their supply chain. Products that result from processing oil palm can be easily divided into three categories, according to Beveridge (2009). Firstly, fruit-based products, such as crude palm oil, fiber, and sludge; secondly, nut-based products, like palm kernel oil, palm kernel cake, and empty shell; and lastly, trunk-based products. These products (cooking and frying oil, margarine, cocoa butter substitute, etc.) are used as food.
Oleochemicals (particle board, pulp, paper, fertilizer, energy, feedstock, starch, and soap, salad oil, detergent, lubricant, and biodiesel, among others). Processing oil palm and its benefits could improve national food security and lessen poverty in rural areas. Extra-value products like vegetable oil, palm kernel oil, and local soap can be sold for a profit in the commercial sector. Additionally, small-scale producers' processing of palm kernels has the potential to boost revenue, lower rural poverty, unemployment, and waste in the processing of oil palm (Sarku, 2014). Prior to the petroleum (oil) boom of the late 1970s, Nigeria was the world's largest producer and distributor of palm oil, according to Bassey (2016). The production of palm oil, which provides a significant amount of employment and income for a sizable portion of the rural population in the southern part of the country, has either generally stagnated or been subject to critical fluctuations, according to data from Gourichon (2013), Statista (2017), Palm Oil Analytics (2017), and many other sources in Nigeria and other West African countries. But the nation's economic development is not aided by the drop in agricultural output and export, especially when it comes to oil palm processing and value addition.
Government arrangements and market transactions are the two ways that businesses and individuals can access production resources. Nigeria has not implemented specific sustainability measures (like those used in Indonesia), but it does have a patchwork of environmental and land regulations that apply. As of right now, market transactions are the most significant way that businesses in Nigeria can access resources.
Farmers must, however, find ways to get access to resources for production, including traveling to villages and making cash payments up front as part of required purchases. The likelihood of a consistent supply is highest for dominant classes in the palm oil processing industry, such as those with access to grants, loans, and contract money. Going back to the study's background, resource access analysis aims to clarify and look into how productive resources are accessed in the palm oil sector.
The concept is that women in the study area process palm oil primarily on their own, but because they share a processing location, they identify as a group. The relationships that processors have with traders, oil palm farmers, and fruit sellers may affect their ability to obtain a steady supply of palm fruits and the palm oil market with regard to the pricing of palm fruits and palm oil. Ekpe, (2013) asserts that markets determine how resources are allocated, which in turn affects the decisions made by economic agents regarding the production and consumption of goods. As a result, palm oil's economic activity is based on prices and markets. This is so because the marginal economic desirability of various consumption options and the marginal profitability of various production options are determined by markets. Markets, however, are fallible and may provide inaccurate information regarding the worth of palm oil.
The knowledge generated by this research study is expected to support the development of appropriate strategies for maximizing the benefits associated with palm oil processing. Additionally, it will facilitate the government and development organizations' comprehension of the workings of the palm oil sector with respect to pricing and availability of palm fruits, strengthening the advocacy for improved institutional and policy frameworks that are necessary to ensure the palm oil industry's profitability and viability.
Knowing the seasonal price variation is essential for palm oil producers and traders to make well-informed decisions about when to purchase and sell the commodity. For them to maximize their profits and properly manage their risks, they must foresee changes in supply and demand. In order to take advantage of lower prices during the peak season, consumers can plan their purchases and modify their consumption patterns by understanding the seasonal price variation. The study aims to identify the study area's seasonal price variations, examine the elements that influences the cost of palm oil and finally describe how processors interact with each other and specific buyer types to decide on price during the season. In the other words, to describe the relationship of processors to certain types of buyers to determine price at time of the season.