Spatial equilibrium modelling of the oilseeds sector competitiveness and trade policy under economic liberalisation in Nigeria
The main objectives of this study are to measure the regional competitiveness in the production and processing of oilseeds in Nigeria for efficient budgetary allocations to regions, and to quantify the gains from alternative external trade policies with a view to making an optimal, long-term policy choice. The aim of the study is to generate sufficient data and information to aid in the planning of the oilseeds economy for both private and social gain. A linear programming spatial equilibrium model of the production, trade and processing of four major oilseeds (groundnuts, palm kernel, soybeans and cotton seeds) across four resource regions of Nigeria namely, the East, North, Middle-belt and the West was built and applied to simulate three alternative external trade policies: existing limited trade, free trade and a no-trade policy options. Mill engineering economic data were collected from a 1993/94 survey of 32 oil mills using 3 alternative milling technologies, namely screw press, hard press and solvent extraction. Farm costs were collected mainly from secondary sources, and from limited farm surveys in the East and the West. From the mill survey data, mill budgets were computed. The gross and net margins per tonne of oilseeds were used as indicators of profitability of mills in the processing of oilseeds by mill technology and region. It was found that the solvent technology is the most profitable because it has the highest oil extraction efficiency, followed by the hard press and the screw press technologies. Labour, capital and foreign exchange utilisation per tonne of seeds milled were computed for each technology. The solvent technology uses less capital running costs, less labour but more labour costs due to its high skill requirements, and more foreign exchange costs because of its high imports of spare parts.