Evaluation of Consumer behaviour on Retail Prices of Rice in Imo State

Evaluation of Consumer behaviour on Retail Prices of Rice in Imo State

Eze, E. U¹., Effiong, J. A. L¹, Osuji E.E² and Maduike I. A³

¹Departmentof Agricultural Technology, Federal Polytechnic Nekede, P.M.B 1036,Owerri,Imo State

²Department of Agricultural Economics, Micheal Okpara University of Agriculture, Umudike ³Department of Agricultural Economics, Federal University of technology, owerri

E–mail: emey4jesus@yahoo.com

Corresponding Author: Eze, E. U.

ABSTRACT

The study evaluates consumers’ behaviour on retail price of rice in Imo State of Nigeria. Data were drawn from the three agricultural zones in Imo State, namely Owerri, Orlu and Okigwe. A functional market in each zone was randomly selected. A multi stage sampling technique was used for the study. Primary data were obtained by means of interview schedule (questionnaire) administered to consumers of rice at retail shops. Data were analyzed using descriptive techniques and ordinary least square (OLS) method of multiple regression analysis. Empirical result reveals that the mean weekly budget share for rice was N1345.20 but the actual weekly expenditure was N1638.89. The differential of 21.8% increases in expenditure from the budget share of rice could be attributed to variability in prices of rice in the market. About 63.3% of rice consumers have a weak bargaining index of 0.67 indicating that consumers’ influence on the food product is weak. It could be deduced from the result that quantity demanded of rice (Qty) has negative relationship with its own price but consumers’ bargaining power has a positive effect on price. There is need for consumers to be encouraged to form co – operative societies through which they can buy food products in bulk to reduce retail price thereby reducing the price margin between their budget share and actual expenditure in view of the fact that their bargaining power is weak. This will also reposition them to play a key role in price formation and sharing market information in order to increase their bargaining power as majority of retailers are only interested in profit maximization to the detriment of consumers. Consumers of rice should be ready to make adjustment on their weekly budgets of rice because of price variability.

Keywords: Consumer behaviour, retail prices, budget share, price flexibility