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Value chain approach in analyzing profitability and competitiveness of sugarcane enterprises

Abstract

Oyins Kabaka Mathew

In Nigeria, cultivation of Industrial Sugarcane has suffered a serious setback due to poor performance of government established and owned sugar companies. Arising from over-dependence on sugar importation, development in the Nigerian sugar industry has been very slow for the past three decades while the domestic supply of sugar had lagged behind the demand for the product, inspite of the country’s comparative advantages for sugarcane production. This study is therefore necessary to examine profitability and competitiveness of sugarcane enterprises for attracting private investment and employment generation in the country. The study employed financial and economic indicators and the value chain approach in analyzing primary data collected in a sample survey of various actors across the sugarcane value chain. Results of the study revealed that every stage of the commodity chain is profitable. Domestic Resource Cost (DRC) Indices ranged from 1.8 for medium scale and 2.3for small scale operators. Thus sugarcane production is not internationally competitive. To develop the industry, investment in infrastructure and new innovative processing technology is required for the modernization and the expansion of local processing industries.

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