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JOURNAL OF RESEARCH IN NATIONAL DEVELOPMENT VOLUME 5 NO 2, DECEMBER, 2007

PROFITABILITY ANALYSIS OF NATURAL RUBBER TAPPING IN SOUTHERN NIGERIA

D.Y.Giroh 
Farming Systems Research and Extension Department, Rubber Research Institute of Nigeria, Benin City
and E.F.Adebayo
Department of Agricultural Economics and Extension,  Federal University of Technology, Yola

Abstract
The study was a conducted to  analyse cost and returns to rubber tapping in Southern Nigeria .Structured questionnaires were administered to a random sample of  129  tappers . Data collected were analysed using descriptive statistics and budgetary  technique.  The result indicated that  males dominated rubber tapping, all of the tappers were literate for they have one form of formal education or the other and all  of them were trained before tapping. A mean of 387  trees were tapped per day  with  output per man day of 14.02 kg and an annual output of 2,550.53 kg of dry rubber respectively. The result of the budgetary   analysis show that total revenue (TR) and gross margin (GM)  and net farm income (NFI)/ hectare were  of   N148,592.50,159.50 , N102,953.58 and  N 14,214.11  respectively.  The study also identified rubber plantation management problems which include, poor maintenance of plantations, irregular wage payment, inadequate transport, inadequate housing near plantation and inadequate salary/ wage. The study recommended an increased wage package, prompt payment of wages, provision of transport and maintenance of plantation to overcome the identified problems..
Keywords: Profitability, natural rubber, Southern Nigeria.


Introduction
The history of rubber production in Nigeria of natural rubber began in 1894 with the exploitation of indigenous wild rubber of Funtumia elastica.  The wild trees that yielded rubber were however ruined by poor tapping system and the export of wild rubber produced dropped sharply. In a search for sources of natural rubber to supply the demand of a rapidly expanding automobile industry, Heavea brasiliensis( Muell Arg.) was found  to be the best source of plant because of its singular ability to renew its bark and thus ensure sustained harvest. It was introduced into Nigeria from Kew Gardens, England around 1895 with the first rubber estate planted at Sapele in 1903 and a second one at Nkisi in the then eastern region in 1912. By 1925, some 1000 hectares of European owned estates existed in the South – western Nigeria.(Uraih, 1980)
Rubber is grown in Edo, Delta, Ondo, ogun,, Abia, Anambra, Akwa Ibom, Cross River, Rivers, Ebonyi and Bayelsa States where the amount of rainfall is about 1800 mm to 2000 mm per annum ( Aigbekaen et al., 2000). Natural  rubber  performs three main functions in our national economy;  these are the provision of  raw materials for the agro- based industries, it provides foreign exchange earning and places Nigeria in the world map as a net exporter of rubber and lastly, it offers  employment  to a sizeable segment of the Nigerian farming rural population  (Abolagba et al., 2003).
The Nigerian rubber industry has enormous potential for its sustainable growth and development. Williams et al., (2001) suggested the use of improved productivity of rubber by introducing clone rubber trees instead of traditional seedlings with low yield potentials. Breeding programme at Rubber research Institute of Nigeria has made impact on Nigerian rubber yield having advanced from  200 to 400 kg per hectare per year of  local groove to 3500 kg per hectare per  of Rubber Research Institute of Nigeria ,( RRIN) developed clones  which are higher than tha adapted clones introduced to Nigeria  ( National Agricultural Research Project,   NARP 1998). 

Natural rubber takes five to seven years before the commencement of tapping and the spacing of 6.7m x 3,34, which gives about 450 plants/ hectare. The introduction of intercropping with arable crops before canopy closure ensures effective utilization of the avenue and labour for maintenance. The intercropping can be practiced during the first 2   to 3 years, provided the crop is not too near the line of young rubber plants. It has been observed that the multiple cropping in the  vast inter row of young rubber plantation holds key to attracting small holders to rubber farming due to the long gestation period of rubber. It has been found to be economically feasible in that the farmer obtains revenue from the sales of crops while waiting for maturity of the trees before commencement of tapping. Similarly, when canopy closes, integrated farming( mini livestock, apiculture, rearing of snails can be introduced). Production of shade tolerant crops such as coco yam and edible mush room can be practiced under matured rubber( Esekhade et al.,1996).The planting of rubber with food crops has also been reported to be compatible in Indonesia and Brazilian Amazon forests( Dove, 1993; Gouyon etal.,1993; Michon and de Foresta, 1999; Schroth et al.,2004).
Tapping is defined as the controlled wounding of a matured rubber tree with the aim of extracting from it  the economic fluid called latex while at the same time ensuring that the economic life of the tree is preserved.16 to 25 years( age of plantation) is  considered economical and if not rehabilitated would lead to decline in yield hence reduction in income. For profit maximization, it is advisable that the plantation be opened for tapping when 70 to 75 percent of the trees in the plantation have reached tappable girth of 50 cm, this gives 315 to 338 trees/ hectare. Criteria to be observed include: seedling trees should be attain a girth of 50 cm taken from a height of 75 cm and for budded trees, a girth of 50 cm and from a height of 150 cm from the base of the tree. A girth measuring caliper is used for this determination.
The conventional system of tapping expresses the frequency of tapping as a fraction of daily tapping on a full circumference; alternate daily tapping denoted by 1/2Sd2 is adopted by many plantations in Nigeria. This means that half the circumference of the tree is cut during tapping and is done on alternate days and ideal for older plantation(Tappan and Okogie, 1970). Schroth et al.,(2004) agreed that the system improves the general health of the trees as compared to tapping all round the trunk, reduces bark consumption and liberate time to tap perhaps 50 percent more trees without any reduction in per – tree yields. Empirical evidence suggests that yields derivable from Hevea tree is controlled by several factors such as tappers skill, level of field maintenance, clonal characteristics, climate, degrees of exploitation, tapping efficiency and socio- economic factors( RRIN, 1983). Bark consumption and depth of cut is another factor affecting yield/ tree. Tapping cut should penetrate deep enough very near the cambium layer but should not touch the cambium. If the cambium is damaged, it will result to irregular bark regeneration and frequently lead to bark bursting, hence the need for efficient exploitation as the bark of the rubber tree is the economic reserve of the farmer. Removal of 1 to 1.5 mm is ideal ( Delabarre and Serier, 2000).  Ehika and Onyeanakwe( 1998) reported that an ideal tapping system is expected to maximize yield, minimize costs, give satisfactory growth, ensure good bark regeneration and reduce incidence of disease attack especially bark burst.
 On aspect of clones and field maintenance RRIN (1983) reported that unselected clones have lower yields of 200 t0 300 kg/ha, but Williams etal.,(2001) suggested the use of improved clones. However, for quality control, the plantation must be slashed regularly to ground level. Wind  broken trunks and branches should be removed as soon as they occur. This is done to create airy and less humid environment. Tapping panels should also be cleaned, pieces of barks, leaves should  not be allowed into latex as these introduce impurities with consequences such as poor pricing of output and production of inferior automobile products( Ehika and Onyeanakwe, 1998).
Studies have indicated that several factors affect net return from tapping of natural rubber in Nigeria. Product adulteration by farmers is one factor. World market price affect expected revenue as indicated in Table 1.Aigbekaen and Alika (1984) in their studies found out an average daily output of 9.56 kg/ day of dry rubber/ tapper. With the price of 70 kobo per kilogramme, net revenue of N1.88 per tapper was realized after adjusting for tappers’ wage  of N N4.81, this according to the authors is uneconomical as the rubber industry depends solely on tappers  daily output.
Suyanto et al.,(2001) in a study to identify  the impacts of land tenure institutions on the efficiency of farm management based in customary land areas osf Sumatra, identified age and ownership systems as determinants of gross revenue and residual profit. Age of rubber trees is a major factor affecting profit, which peak at 32 and 34 years. They further stated that profits are also higher under borrowing and renting through share tenancy, counter to the familiar argument that share tenancy is inefficient because tenants shirk from their tasks. Since both borrowing and renting tend to be short term agreements in the study area, temporary operations may seek to squeeze much output from rubber tree as possible in the short run. This over tapping can have detrimental effect on profitability over time, since tapping intensity is negatively related to future latex production. They suggested a close – knit social relation in these areas to prevent overtapping
Cost of production of natural rubber in many rubber producing countries have continued to be on the increase over the years, but despite these, profits are still reasonable. Rubber Research Institute of Sri – Lanka, RRIS( 2002) reported a tapper’s daily productivity of 7.6 kg, which is low. This was attributed to intermittent wet weather, which also affected tapping days. The report indicated that total tapping days of 186, 208, 204 and 302 respectively. And yields per hectare of 728, 820, 838 and 879 for 1999 to 2002 production periods.
Abolagba etal.,(2003) in a study conducted on farm gate marketing of natural rubber in south east Nigeria discovered a positive correlation between world  market prices and local prices of rubber in Nigeria. Schroth et al., (2004) also found out that Brazilian rubber tappers earn about R$200( minimum salary) by tapping 1000 trees in two days and a  world market price of $0.30/ kg. Rubber Asia( 2006) identified price volatility and unseasonal rains disrupting tapping as factors that affect profit.
The objectives of the study were describe socio- economic characteristics of rubber tappers, estimate cost and return associated with rubber tapping and to identify problems affecting rubber tappers.


Table 1:  World Price of Natural Rubber  1988 – 2003


Year                                                                           World market price( N /kg)

1988                                                                                                   1.50
1989                                                                                                  2.00
1990                                                                                                  1.40
1991                                                                                                  5.30

1992                                                                                                 12.52
1993                                                                                                  24.10
1994                                                                                                 34.40
1995                                                                                                 34.78
1996                                                                                                 59.92
1997                                                                                                 56.72
1998                                                                                                    NA
1999                                                                                                 57.89
2000                                                                                                  59.40
2001                                                                                                 69.80
2002                                                                                                  95.67                            

2003                                                                                                 113.89


                                                     

Source:           Abolagba et al.,( 2003), CBN Annual Reports and Statement of Accounts(  various issues)


Materials and Methods
The study Area
The study was carried out at RRIN main station, Iyanomo, Benin City, Edo State. It falls within Latitude 60 and 70 North of the Equator and Longitude 50 and 60 East of the Greenwich Meridian. It is within the humid rainforest zone with mean annual rainfall of 2000 mm. Rainfall has two peaks in the month of July and September but highest in July and there is drought in August. The soils of this humid forest belts are mainly ultisols with pH range between 4.0 and 5.5. The soils have been described as the “acid sand belt” derived from unconsolidated grits and stones containing clay beds in varying proportions (Vine, 1956).
Sources of data and Sampling technique
Data for this study was obtained from primary source. The primary data were obtained through the use of structured questionnaires that were distributed to the respondents.  Daily record of productivity of respondents was obtained from the tapping division of the Institute. Data on the respondents’ salaries was also obtained at the salary unit for analysis. Price of dry rubber per kilogramme was obtained at the sales unit of the Institute for the determination of revenue from tapping.
Random sampling technique was adopted for the study. Information on the population of tappers was obtained from tapping division of the Institute. A total of 150 respondents  were served with the structured questionnaires. However, a sample of 129 tappers  was eventually used. These were the tappers who provided adequate information required for the study.
Methods of Data Analysis
Descriptive statistics and  budgeting technique were employed for data analysis.


Descriptive statistics used include frequency counts, means and percentages. Budgeting technique was used to estimate income generated from rubber tapping. The specific type of budgeting technique used was the gross margin.  Gross margin is the difference between gross income and the total cost of production. The gross margin analysis is manually used to study the performance of an enterprise that is the productive components of a firm to obtain information about the business strength or weakness( Bucket,1988). The item of tapping income considered were cost of inputs like labour, formic acid, ethephon( ethrel) and fuel ( diesel and petrol) while fixed costs considered included depreciation values on tapping equipment such as tapping knives, cup hangers, spouts, sharpening stones, buckets, churns( bulking containers), coagulating pans, rain boots, rain coat, Avarice weighing balance, metrolac or latexometre and tractor. The straight- line method was adopted in the computation of depreciation on fixed cost items. This method according to Adegeye and Dittoh( 1985) is easy to compute and despite the advantages which other methods have over it, it is usually used for most planning purposes. When compared with other methods carefully, it yields similar results. The model used for the estimation of the Gross margin was explicitly stated thus:

The budgeting technique adopted for the study is the Gross margin stated thus:
Gross margin (GM) = GI – TVC                                                                                                     (1)

Where: GM = Gross Margin, GI    = Gross Income, TVC = Total variable cost.
NP   = GM – TFC                                                                                                                          (2)
Where: NP = Net profit, TFC = Total fixed cost.

Results and Discussion

Socio- economic characteristics of respondents
            Table 2 shows the socio- economic characteristics of the respondents. The preponderance of young tappers in the tapping profession means that their productivity is expected to be high since they are expected to be active and energetic. This result is in line with the findings of Wuranti(2004) who noted in his study that farmers in their active years are productive and can easily adopt agricultural innovations.
The above  analysis implies that men participated more in rubber tapping than their female counterparts. The percentage of women participating in tapping is low and this may be explained by socio- cultural barriers affecting women and not as a result of technical and managerial inefficiency. As a result most of the women spent most of their times in housekeeping and taking care of their children. Respondents have large family size which could serve as a vital source of labour for agriculture and other productive activities. Large family size can put pressure on household heads in devising means of obtaining income to meet family needs.


Table 2: Socio- Economic Characteristics of Respondents.


Variable                                                          Frequency                               Percentage

Age(years)
30                                                                              49                                37.98
31-40                                                                           69                                53.48
41 and above                                                               11                                8.54
Total                                                                            129                              100
Gender
Male                                                                            112                              86.82
Female                                                                           17                              13.18
Marital status
Married                                                                        107                              82.95
Single                                                                           22                                17.05
Total                                                                            129
Family size
1- 5                                                                              73                                56.58
6- 10                                                                            53                                41.08
11 and above                                                               3                                  2.34
Total                                                                            129                              100
Education
Primary                                                                        104                              80.62

Junior secondary                                                           2                                  1.55
Secondary                                                                    23                                17.83
Total                                                                            129                              100
Training( days)
14                                                                              75                                58.14
15- 21                                                                          38                                29.46
22- 28                                                                          16                                12.40
Total                                                                            129                              100
Task( no. of trees)
300                                                                            1                                  0.70
301 – 350                                                                    46                                35.66
351- 360                                                                      6                                  4.65
361- 400                                                                      54                                41.86
401- 450                                                                      22                                17.05
Total                                                                            129                              100     
______________________________________________________________________________
Source: Field survey, 2006


One can infer from Table 2 the preponderance of the educated tappers and this would enable them adopt tapping techniques without much difficult as they are likely to learn with ease and disseminate innovations. It can thus be observed that majority of tappers were trained for 14 days with a mean training duration of 18 days. It is expected that with training, the output of the tappers will be high. It was also found out that a mean of 387 trees were tapped per day as against the 450 to 500 trees recommended by Schroth et al.,(2004).Several factors have been identified for low number of trees tapped and include the following: weedy plantations, wind damages to rubber trees and incidences of pest and diseases of natural rubber.
            Tappers’ mean annual output of 2,550.53 kg of dry rubber and output per man day of 14.02 kg were found in the study. This shows an improvement as compared to the 9.56 kg/ day as reported by Aigbekaen and Alika( 1984).. The mean tapping experience of the tappers  was found to be  8 years. This result showed that majority of the tappers are experienced and will be expected to tap efficiently.

Gross margin analysis
The gross margin analysis for  tappers is  indicated in Table 3. The average variable cost per hectare accounted for 33.96 percent of the total tapping cost while average fixed cost accounted for 66.04 percent. It can be deduced from the above result in Table 3 that rubber tapping is profitable. This may be as a result of the favourable economic climate especially in the world price of natural which has multiplier effect on many rubber producing countries of the world.


Table 3:          Average Cost and Return of Permanent and Non-Permanent Rubber Tappers


    Variable                                                                                             Value(N)                                                                                                                                                    

A. Variable cost                                                                                               45,638.92               
B. Fixed cost                                                                                                    88,739.47                               
Total cost of production                                                                                    134,378.39
C . Returns



Total output                                                      2,971.85 kg
Price/ kg                                                                                                                    50.00

Total Revenue                                                                                                  148,592.50

Gross margin (TR-TVC)                                                                                   102,953.58

NFI( GM – TFC)                                                                                                 14,214.11

Return to gross  investment                                                                                             0.11              

Source: Field survey, 2006


Major Problems Affecting Tappers Productivity
Analysis of the result in Table 4 indicates the major problems affecting tappers’ productivity.
Plantation management constraints in the study area were ranked the most important problem of tappers indicated by (81.39 percent).Weedy task fields impaired their movement thereby reducing daily output and inability to cover the 450 trees. Product adulteration may also be possible and tappers are at health risks as dangerous reptiles( snakes) might bite them as experienced by tappers in the Amazon forest of Brazil as reported by Schroth et al.,(2004).
Irregular payment of wages and salaries ranked as the second major problem experienced by tappers respectively. This could cause decline in their productivity.  Inadequate wage and salaries has been ranked the third(24.81 percent).Inadequacy of wage /salaries may reduce tappers’ purchasing ability with attendant low productivity.
Inadequate vehicles for efficient transportation ranked the  fourth major problem for rubber tappers. Inadequate means of transportation limits tappers’ early arrival at task location and may be exhausted if they trek long distances to areas of assignment. The attendant consequence may be their inability to tap the required trees hence low productivity. Inadequate housing near plantation accounted for 4.65 percent and the fifth major problem of the respondents.



Table 4: Distribution of tappers based on problems affecting their productivity



Problem                                                           Frequency           Percentage *       Rank order**

Plantation management constraints                     105                  81.39                           1
Irregular payment of wages/ salaries                  77                   59.69                           2
Inadequate wage and salaries                            32                    24.81                           3
Transportation constraints                                 24                    18.60                           4
Inadequate housing near plantation                      6                      4.65                           5
______________________________________________________________________________
Source: Field survey, 2006
* Multiple responses
** Ranks in descending order of magnitude


Conclusion and Recommendations
Based on the findings of the study, the following  major conclusions are drawn. A mean of 387 trees were tapped per day with annual output of 2,550.53 kg and daily output per man day of 14.02 kg of dry rubber respectively. Rubber tapping is profitable with return to investment of N0.11, a gross margin and net farm income of N102,953.58 and N14,214.11 respectively.
Based on the findings of the study, the following recommendations are made:

  1. To improve the productivity of the tappers, wages should be increased commensurate to output. Prompt and regular  payment of such wages will spur tappers to increase output.
  2. The Institute management should ensure regular plantation maintenance to facilitate easy tapping
  3. All stakeholders in the Natural rubber industry should contribute towards funding of research activities on natural rubber.

References
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Aigbekaen, E.O, Imarhiagbe, E.O and Omokhafe, K.O. (2000): Adoption of some recommended Agronomic practices of natural rubber in Nigeria, Journal of Agriculture Forestry& Fisheries 1 &2: 51-56.
Aigbekaen, E.O and Alika, J.E (1984): Analysis of the socioeconomic factors associated with rubber tappers and their productivity in some selected rubber estates in Nigeria. Journal of Plantation Crops 12(1): 47-55.

Bucket, M. (1988):  Introduction to Farm Organization and Management 2nd Edition Oxford: Pergamon Press

Delabarre, M.A and Serier, J.B (2000):  Rubber: The Tropical Agriculturalist. CTA London: Macmillan Education

Ehika , S. M and Onyeanakwe, B.I. (1998): Introduction to Tapping Techniques and Systems. Paper presented at train the trainers Workashop on Budding and Tapping Techniques held at RRIN Iyanomo. 21 – 23 September. 8p.

Esekhade, T.U, Ugwa, I.K and Aigbekaen, E.O. (1996): Suitability and Economic viability of intercropping in rubber on acid sandy soils of southern Nigeria. India Journal of Natural Rubber Research 9:36 – 39.
Gouyon, A., de Foresta, H. and Levang, P E.(1993):  Does simple rubber deserve its name? An Analysis of Rubber agro forestry systems in Southern Sumatra. Agro forest Systems 22: 181 – 206.



Kpolo, D.M. (1999): Natural rubber production in Africa, Rubber International Magazine 1:55- 61.

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Rubber Asia(2006): The Complete Magazine on Rubber. November – December.177p.

Rubber Research Institute of Nigeria Benin City, RRIN(1983): Report on Decline of Natural Rubber Production in Nigeria Causes and Recommendation. 49p.

Rubber Research Institute of  Sri – Lanka , RRIs(2002): Annual Reports

Schroth, G., Moraes, V.H. F and da Mota, M.S.S.(2004): Increasing the profitability of traditional, planted rubber agro forest at the Tapajo’s river, Brazilian Amazon. Journal Agriculture, Ecosystems and Environment 102:319 –339.

 

Suyanto, S., Tomich, T.P and Otsuka, K.(2001): Land demand and Land Management Efficiency: The case of Smallholder rubber production in Customary Areas of Sumatra. Journal of Agroforestry Systems50(2): 145 – 160.

Tappan, W.C. and Okogie, C.I. ( 1970): Advisory Circular No.8 Rubber Research Institute of Nigeria Benin City.

Uraih, O.B.C (1980): A Study of the Tapper-Training Programme in Rubber Estates of Bendel State Nigeria. Unpublished M.Sc. Thesis, University of Ibadan.

Vine, H. (1956): Studies of Soil profile at the WAIFOR Main station and some other sites of oil palm experiments, Journal of West African Institute of Oil palm Research 4: 8-59.

Williams, S.E, Van Noordwijk, M., Perot, E., Heady, J.R, Sinclair F.L and Wibawa, G. (2001): On farm evaluation of the establishment of clonal rubber in multi strata agro forests in Jambi, Indonesia, Agro forest Systems 53:227-237.

Wuranti, V. (2004): Economic Analysis of Gum Arabic Production in Yobe State, Nigeria. Un published M.Tech Thesis,  Department of Agricultural Economics and Extension, Federal University of Technology Akure, Nigeria.