IMPACT OF E-COMMERCE ON AGRIBUSINESS MARKETING

(A SURVEY OF AGRIBUSINESS)

ADAJAMES IBIASO ORMSLEY

ADP 15/16/H/7043

A RESEARCH PROJECT SUBMITTED TO THE DEPARTMENT OF

MANAGEMENT AND ACCOUNTING, FACULTY OF BUSINESS

ADMINISTRATION, OBAFEMI AWOLOWO UNIVERSITY ILE-IFE, OSUN

STATE.

IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD

OF THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION (MBA)

SEPTEMBER 2017

CERTIFICATION

This is to certify that this Research Project was carried out by ADAJAMES IBIASO

ORMSLEY, ADP 15/16/H/7043 in partial fulfilment of the requirements for the award of

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Master of Business Administration of Obafemi Awolowo University, Ile-Ife, Osun State,

Nigeria.

----------------------------------- ------------------------------
DR. O. O. OLASANMI Date
Supervisor

---------------------------------- ------------------------------
PROF. K.O. OSOTIMEHIN Date
Head of Department
Management & Accounting

DEDICATION

This work is dedicated to God almighty who gave me the life, strength, inspiration and supply to embark

on this project and to my parents Senibo Adajames Duke Banigo, Mrs. Atesipaomie Adajames, Mrs. Linah

Momoh for their relentless support towards my academic success.

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iii
 ACKNOWLEDGEMENT

My sincere gratitude is to God almighty for the life, supply, protection and inspiration He gave

to me to begin and complete this journey.

My sincere appreciation to my supervisor DR. O.O. OLASANMI for her direction, advice and

emphasis to do the work right, I really appreciate your time and attention given to me to ensure

the success of this project. Thank You.

My sincere appreciation to DR.T.O. SIYANBOLA for her kind effort and support. I am very

grateful, Thank You.

I acknowledge the good works of all lecturers, especially in the Department of Management

and Accounting for the knowledge you have shared to me, the training and development.

My gratitude to my friends and course mate ARIOYE MUSA A. ADERONKE P.

ADENIGBA, EZEIGWE CHIDIEBERE, FATEMEHIN KAYODE, OJO OLAWALE,

VICTOR ATOYEBI, ADEBESIN SEUNFUNMI, AKHAINE GODWIN, SOJOBI ABIOLA,

TAIWO TOLULOPE, etc. for the friendship, exchange of ideas, and support during the

programme and especially the completion of this project.

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 TABLE OF CONTENT

Title Page………………………………………………………………………………………i

Certification ................................................................................................................................ i

Dedication ..................................................................................................................................ii

Acknowledgement .................................................................................................................... iv

Table of content ......................................................................................................................... v

List of Tables ............................................................................................................................ ix

List of Figures ............................................................................................................................ x

Abstract ..................................................................................................................................... xi

CHAPTER ONE : INTRODUCTION

1.1 Background to the Study ................................................................................................ 1

1.2 Statement of the Problem ............................................................................................... 4

1.3 Objectives of the Study .................................................................................................. 6

1.4 Research Questions ........................................................................................................ 6

1.5 Justification for the Study .............................................................................................. 7

1.6 Scope of the Study ......................................................................................................... 7

1.7 Operational Definition of Terms .................................................................................... 8

CHAPTER TWO: LITERATURE REVIEW

2.1 Conceptual Review of Literature ................................................................................... 9

2.1.1 Conceptual Review of E-commerce............................................................................... 9

2.1.1.1 Definition of E-commerce ........................................................................................... 9

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2.1.1.2 Difference between E-commerce and E-business ..................................................... 10

2.1.1.3 Historical Background ............................................................................................... 11

2.1.1.4 Types and Categories of E-commerce ....................................................................... 12

2.1.1.5 Why E-commerce Matters ......................................................................................... 14

2.1.1.6 Limitations of E-commerce ....................................................................................... 15

2.1.2 Conceptual Review of Marketing of Agricultural Products ........................................ 16

2.1.2.1 Marketing Concept .................................................................................................... 17

2.1.2.1.1 Characteristics of Marketing Organization ........................................................... 18

2.1.2.1.2 Marketing Process ................................................................................................. 20

2.1.2.2 Agricultural Marketing .............................................................................................. 21

2.1.2.2.1 Difference in Marketing of Agricultural and Manufactured Goods ..................... 23

2.1.2.2.2 Importance of Agricultural Marketing .................................................................. 24

2.1.2.2.3 Agricutural Marketing Funtion ............................................................................. 26

2.1.2.2.4 Agricultural Marketing System ............................................................................. 28

2.1.2.2.5 Agricultural Marketing and the Internet ............................................................... 30

2.2 Theoretical Review of Literature ................................................................................. 31

2.2.1 Theoretical Review of E-commerce............................................................................. 31

2.2.2 Theoretical Review of Agricultural Marketing ............................................................ 35

2.3 Empirical Review of Literature .................................................................................... 40

2.3.1 Review of Empirical Literatures in E-commerce in Agriculture ................................. 40

2.3.2 Review of Empirical Literatures in Agricultural Marketing ........................................ 46

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CHAPTER THREE: METHODOLOGY

3.1 Area of Study ............................................................................................................... 51

3.2 Sources of Data ............................................................................................................ 52

3.3 Population, Sampling Size and Sampling Technique .................................................. 52

3.4 Measurement of Variables ........................................................................................... 52

3.5 Research Instrument ..................................................................................................... 53

3.6 Validity and Reliability Research Instrument .............................................................. 53

3.7 Data Analysis Techniques ............................................................................................ 54

CHAPTER FOUR: PRESENTATION, ANALYSIS AND INTERPRETATION OF

DATA

4.1 Analysis of Socio-economic Characteristics of Respondents ...................................... 55

4.1.1 Agricultural Products of Respondents ......................................................................... 55

4.1.2 Respondents Types of Agribusiness ............................................................................ 56

4.1.3 Respondents Years of Involvement in Agribusiness ................................................... 56

4.1.4 Current Position of Respondents.................................................................................. 57

4.1.5 Educational Background of Respondents .................................................................... 57

4.1.6 Age Distribution of Respondents ................................................................................. 58

4.1.7 Gender distribution of Respondents ............................................................................. 59

4.2 Analysis of Objectives ................................................................................................. 59

4.2.1 Level of Information Technology use among farms and agribusiness ........................ 59

4.2.2 Adoption of E-commerce and or tendency to adopt E-commerce as Marketing tool by

farms and agribusiness ............................................................................................................. 61

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4.2.2.1 Technological Factors influencing the Adoption of E-commerce ............................. 61

4.2.2.2 Organizational Factors influencing the Adoption of E-commerce ............................ 63

4.2.2.3 Environmental Factors influencing the Adoption of E-commerce ............................ 65

4.2.2.4 Summary of Factors Influencing the Adoption and Level of Use of E-commerce

among Agribusiness and farms ................................................................................................ 68

4.2.3 Impact of E-commerce Adoption on Company’s Performance ................................... 68

4.3 Limitations of the Study ............................................................................................... 70

CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1 Summary ...................................................................................................................... 71

5.2 Conclusion ................................................................................................................... 72

5.3 Recommendations ........................................................................................................ 73

Bibliography ........................................................................................................................... 74

APPENDIX ............................................................................................................................. 87

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 List of Tables

Table 4.1.1: Agricultural Products ........................................................................................... 55

Table 4.1.2: Types of Agribusiness ......................................................................................... 56

Table 4.1.3: Position of respondents in agribusiness ............................................................... 57

Table 4.1.4: Age distribution ................................................................................................... 58

Table 4.1.5: Gender distribution .............................................................................................. 59

Table 4.2.1: Level of ICT use in farms and Agribusiness within the study area ..................... 59

Table 4.2.2: Summary of the Level of Information Technology use....................................... 60

Table 4.2.3: Frequency Distribution of Technological factors ................................................ 62

Table 4.2.4: Central Tendency Measure of Technological Factors ......................................... 63

Table 4.2.5: Frequency Distribution of Organizational Factors .............................................. 64

Table 4.2.6: Central Tendency Measure of Organizational Factors ........................................ 65

Table 4.2.7: Frequency Distribution of Environmental Factors .............................................. 66

Table 4.2.8:Central Tendency Measure of Environmental Factors ......................................... 67

Table 4.2.9: Summary of E-commerce Adoption Factors ....................................................... 68

Table 4.2.10: Agribusiness and farm Current Performance .................................................... 69

Table 4.2.11: Effect of E-commerce Adoption on farms and agribusiness ............................. 69

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 List of Figures

Figure 4.1.1: Years in Agribusiness ……………… ........................................................................ 57

Figure 4.1.2: Respondent level of education………………………………………………………………………………58

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 ABSTRACT

This study investigates the effect of e-commerce on agribusiness marketing. Its specific

objectives were to; identify the current level of information technology use by selected

agribusiness, investigate the adoption of e-commerce or tendency to adopt e-commerce as a

marketing tool by agribusiness and examine its effect of adoption on the financial and

marketing performance of agribusiness.

The study population consist of various forms of agribusiness such as service providers, food

processors, marketers, etc. from which a sample of 302 was drawn using the simple random

sampling technique, the use of well-structured questionnaire based on TOE framework to

solicit information from respondents and analysis of data using frequency distribution, central

tendency and percentages to provide answers to research questions.

The study revealed low level (71.7%) of Information Technology use, as majority of farms and

agribusiness use Information technology mainly for communication rather than e-commerce

activities. The technological, organizational and environmental factors that influences adoption

was found to be very low and inactive in farms and agribusiness surveyed, on a mean scale of

5, the factors fall below average at 2.16, 2.13, and 1.97 respectively. E-commerce was found

to have very weak impact resulting from low adoption.

The study concludes that the level of ICT use by farms and agribusiness influences their

decision to adopt e-commerce as it contributes to the technological factors that influences e-

commerce adoption, and that as adoption among farms and agribusiness grow, the benefits of

e-commerce will be experienced in the agricultural sector.

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 CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

Information technology has continuously transformed the way businesses are conducted today

and particularly how businesses and people buy and sell goods and services that are of utmost

importance to them, not forgetting its role in government, health and other areas of life. Its

continuous development especially as it affects commerce and other business transactions

introduced the electronic business and commerce otherwise referred to as e-business and e-

commerce. There is almost no business transaction done today without the use of information

technology as well as any business successfully managed today without the use of information

technology in one form or the other.

E-commerce refers to conducting business transactions by means of computer

telecommunication networks, also, refers to the use of internet and other telecommunication

networks and technology to conduct commerce (buying and selling of goods and services) and

other business transactions. OECD(2001) defined e-commerce as an electronic transaction

consisting of the sale or purchase of goods and services between businesses, individuals,

governments and other private or public organizations in which computer mediated networks

are used to order goods and services while payments and ultimate delivery of the goods and

services may be conducted on~ or offline. Ecommerce take various forms such as business-to-

business (B2B), business-to-customers(B2C), customers-to-customers(C2C), busines-to-

government(B2G) and vice-versa depending on the partners involved in the transaction and the

purpose.

The technological backbone of ecommerce include the internet, intranet, extratnet,

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EFT (electronic fund transfer), EDI (electronic data interchange), fax and other related

information technology that facilitates and enhance electronic business transactions, among

these technologies the introduction of the internet and World Wide Web from early 90s have

made electronic business transactions more cheaper and easier as such the continuous growth

in ecommerce withnessed around the world. Ecommerce is today further expanded and its

adoption and use in a recorded high because of a growing rate of internet penetration and

access, it is safe to say that increased internet access leads to increased ecommerce transactions.

According to ITU (2016) the world has over 3.4 billion internet users representing 47% of the

World’s estimated total population of 7.3 billion as at 2016, of which developing world

comprising Nigeria has 40% internet users and developed world including US, UK, Russia,

etc. has 81% internet users, whereas on regional basis only 25% of the African population has

internet access, on country basis about 46.1% of Nigeria’s estimated total population have

internet access consisting over 86 million users, while in march 2017 the world has over 3.7

billion internet users i.e 49.6% of the Worlds estimated total population (Miniwatts Marketing

Group, 2017). Similarly, may 2017 telecommunication sector report released by National

Bureau of Statistics puts the number of internet users in Nigeria to over 90 million representing

about 48.8% of its estimated population, of which 59.9% subscribed through GSM, and 13.93%

through CDMA and the remaining 26.17% from other sources as at March 2017, (NBS, 2017).

The increased access to internet have also impacted on ecommerce transactions worldwide this

is shown in Asendia Global B2C E-commerce report published in october 2016 which indicates

that 26% of the world’s population shop online noting that in 2015 global ecommerce was

worth over 3.11% of global GDP, (Asendia, 2016). Similarly, Emarketer worldwide retail

ecommerce sale report indicates that retail ecommerce sale will make up 7.4% or $1.671 trillion

of total retail market worldwide in 2015 and that by 2019 that share will jump to $3.578 trillion

making up 12.8% of global retail sale (Emarketer, 2015). UNCTAD reports shows that Global

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e-commerce market is worth $22 trillion in 2015 with China and US leading the rest of the

world (UNCTAD, 2016). In Nigeria online shopping rose to ₦78 billion as at 2012 indicating

a 25% growth rate between 2010-2012 according to Philip Consulting Online Shopping report

2014 (Philips Consulting, 2014), similarly Oxford Business Group reported that Nigeria

ecommerce industry recorded $1.9b in 2016 and is expected to reach an estimated $3.9b in

2020, (Oxford Business Group, 2016).

Ecommerce provides several benefits such as promotion of information flow, market and price

transparency, reduction or elimination of transaction costs, increase in online cooperatives and

collaboration among partners, allows for 24/7 and 365 days business operation without down

time, enable businesses operate easily by overcoming physical limitations affecting their

businesses, reach a wider target market which directly affect sales and production as identified

by (Ferentinos, Arvanitis, & Sigrimis, 2006), and (Nanehkaran, 2013). Several reports on

ecommerce across the world indicates that the extent of adoption varies according to country

and sector of application, largely contributed by the rate of internet penetration and access in

such country, Nigeria as indicated by several reports show promising internet peneration

growth as such the adoption of ecommerce is expected to grow beyond retail sales into other

industries.

Recent developments in ecommerce have withnessed the adoption of ecommerce in marketing

agricultural products, both input and output as such the benefits of ecommerce are brought into

agricultural sector to facilitate growth in cultivation, harvesting, livestock, crop production and

sale, etc. especially in large agricultural economies such as China, USA, and India, etc. report

in these countries indicate increase in both production and sale in agriculutural sector resulting

from adoption of ecommerce in agriculture other wise known as Agricommerce, AAFC’s

Global Analysis reports on China indicates $1.4b online groceries sale in 2015 and a 92%

growth rate between 2011-2015 (AAFC, 2016).

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The present government in Nigeria is putting more emphasis on agriculture as a means to

diversify the economy, reduce dependency on oil and gas, ensure steady economic growth and

create the much needed employment opportunities to reduce the high rate of unemployment in

the country, adoption of ecommerce in agriculture can facilitate the attainment of the Federal

government goal in improving agricultural growth by creating and expanding markets for

agricultural products, both input and output, although ecommerce is still at its early growth

stage but the focus is mainly on merchandise retailing and estate than in any other sector of the

economy with ecommerce platforms such as olx, konga, jumia, wakanow, jiji, etc. as major

players very little is done in adopting ecommerce in agriculture in Nigeria.

Therefore, this study examined the impact of e-commerce on marketing of agricultural products

in nigeria, and seek to investigate the rate of ecommerce adoption by both farms, farmers and

customers alike.

1.2 Statement of the Problem

Agricultural products are known to have domestic food and industrial value, and export

potential as they can provide food for the entire population, income to farmers and

intermediaries involved in marketing agricultural products (Olukunle, 2013). Agriculture

sector is at the forefront in govt economic policies to diversify the economy and make it less

dependent on oil. The sector has promising potential to grow and stabilize the Nigerian

economy, create employment opportunities, reduce prices of food and ensure sustainable

economic growth as noted by policy makers and economic analyst, 2016 GDP report published

by NBS indicates that the sector contributed over 24.43% to GDP and has a 4.11% growth rate

(NBS, 2016), yet the Nigerian economy depends largely on oil for public revenue generation

and foreign exchange earnings. Olukunle (2013) noted that in spite of the efforts of several

government to revitalize agriculture to its preeminent position of providing food for human

consumption and raw materials required by industries to operate effectively, as well as provide
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foreign exchange earnings and employment to the growing population, the capacity utilization

of agro-allied industry in the country has been declining partly as a result of inadequate and

irregular supply of the much needed raw materials.

Several challenges have been identified as obstacles limiting agriculture sector from becoming

a more viable sector compared to oil, etc. Olukunle (2013) identified marketing problems such

as those that impact on getting agricultural products from farmers to target consumers and

industries alike, storage and processing problem, infrastructural inadequacies, unstable input

and output prices, agricultural labour , technical constraints, etc. as challenges facing

agricultural development in Nigeria. Similarly, Ojeka , Effiong , & Eko (2016) asserts that

while exchange rate and food export are determinants of agricultural output; food imports,

diversion of funds budgeted for agricultural products and low technology use in agriculture

are among factors limiting agricultural development in Nigeria. Oluwaseyi supporting the

views of Olukunle also identifed marketing as a key problem among others affecting

agriculuture in Nigeria (Oluwseyi, 2016). As Liu & Hao (2015) pointed out that the traditional

model of marketing agriculutural products i.e. Producer-Wholesaler-Retailer-Consumers

which involves the sale of agricultural products at the original production site (Farm, barn,

ponds, forest, etc.) and reaches individual consumers through supermarkets and local farm

markets have a number of problems associated with it, which include; poor information

exchange between farmers and consumers, inability of farmers to capture market information,

constraints in optimizing agricultural production structure, quantity and time, long circulation

cycle, reduction in quality of agricultural products caused by too many middlemen and

ultimately results in high price to consumers or low price as a result of quality reduction to

farmers. These problems are experienced by farmers worldwide including Nigeria, hence the

drive towards ecommerce as a marketing tool to resolve most of these problems, supporting

Carpio, Isengildina-Massa, Lamie, & Zapata (2013) views, that ecommerce offers an

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alternative model for marketing agricultural products with benefits of reaching larger target

markets and obtaining detailed production information at a relatively low cost compared to the

traditional model hence the need for this study to investigate the impact of ecommerce on

marketing agricultural products within the Nigerian context.

1.3 Objectives of the Study

The purpose of the study is not to duplicate previous works done to establish the impact of

ecommerce on agri-product marketing but to contribute to the growing knowledge in this field

by conducting this study in the Nigerian agricultural sector focusing primarily on selected

farms and agricultural firms within Nigeria.

Specifically, the study objectives are to:

1. assess the current level of information technology use by selected agribusiness

2. investigate the adoption of ecommerce or tendency to adopt ecommerce as a marketing

tool by selected agribusiness.

3. determine the effect of ecommerce on financial and marketing performance of

agribusiness

1.4 Research Questions

The research questions to assist in achieving the stated objectives are;

1. What is the current level of information technology use by agribusiness

2. To what extent do agribusiness adopt ecommerce as a marketing tool or have the

tendency to do so.

3. To what extent has ecommerce influenced the financial and marketing performance of

agribusiness

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1.5 Justification for the Study

It is hoped that the study will be of benefit to the farmers and farm owners, managers and

leaders of agricultural intermediary firms, marketers of agricultural products, agro-allied

industries, information technology service providers, government, consumers of agricultural

products and various food processing companies. Specifically, the outcome will;

1. Assist farmers and farm owners to make better decision regarding the marketing of

agriproducts to reach larger markets and overcome the limitations of geographical

distance between farms and consumers of farm produce(output).

2. Assist them in collecting and sharing market information more reliably as well as make

better decisions and access low cost farm input required to maintain crop production,

livestock, etc.

3. Provide intermediaries and marketers with alternative medium for marketing

agriproducts to close the gap between demand and supply for such products.

4. Support procurement decision makers in agro-allied industries in finding alternative

source of low cost input and raw materials required to maintain production and achieve

maximum capacity utilization.

5. Assist government in designing policies targeted at improving agricultural development

in Nigeria.

1.6 Scope of the Study

The study is limited to the impact of ecommerce on marketing of agricultural products, though

it was intended to cover farms and farmers in Nigeria, but for time constraint, finance and other

logistical limitations, the study is narrowed down to few selected farms and farmers in Osun

7
State, Nigeria; the financial constraint consists of transport cost from one city, farm and farmers

location to another, photo copying and typing multiple questionnaires to identified farms and

farmers. Time constraint consists of the time frame within which the study was conducted,

were too short to conduct such study, as it requires enough time to take a survey of farms and

farmers alike in Nigeria.

1.7 Operational Definition of Terms

To ensure that ideas are easily expressed. Clarification of some terminology will be necessary.

Terms here, are defined according to there use within the study

Impact: impact as used here, refers to influence, effects; that is the influence or effect of

ecommerce on marketing of agricultural products.

E-commerce: here it refers to the use of internet and other telecommunication networks and

technology to conduct commerce (buying and selling of goods and services) and other

business transactions.

Marketing: as used here is defined as a set of institutions, and processes for creating,

communicating, delivering, and exchanging offerings that have value for customers,

clients, partners, and society at large.

Agricultural Products: as used here refers to both input and output resulting from the four

sub-activities of agriculture; crop production, livestock, forestry and fishing and their

processed form.

Agricommerce: as used here refers to agricultural ecommerce, agricultural electronic

commerce.

Agriproducts or Agri-produce: as used here refers to agricultural products

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 CHAPTER TWO

LITERATURE REVIEW

This chapter examines some literatures on ecommerce and marketing of agricultural products

(agriproduct marketing). These literatures are reviewed to provide a theoretical framework,

hence the need for this study.

The chapter is divided into two sections, the first deals with the review of literature on

ecommerce and the second, reviews literature on agriproduct marketing.

2.1 Conceptual Review of Literature

This section reviews literature on ecommerce particularly provides a conceptual, theoretical

and empirical review of ecommerce and agriculture.

2.1.1 Conceptual Review of E-commerce

2.1.1.1 Definition of E-commerce

As Drucker (2002) rightly pointed out that e-commerce would significantly impact the way

that business is done, which has become a reality today, recently there has been a growing

dominance of research on the subject matter of internet and ecommerce adoption across

different businesses and sectors largely contributed by its perceived benefits of reduction in

costs and transaction times (Baourakis, Kourgiantakis, & Migdalas, 2001). Ecommerce has

been defined differently by different scholar; Turban et al (2015) defined ecommerce as the

use of internet and intranet to purchase, sell, transport or trade data, goods or services.

Similarly, Treese & Stewart (1998) defind it as the use of the global internet for purchases and

sale of goods and services, including after sale service and support. In a broader term Ferentinos

et al (2006) defined ecommerce as business transactions conducted over the internet or more

generally through digital communications which supports other authors that have defined

ecommerce on a wider perspective of information technology and telecommuncation networks,

9
in this papper e-commerce is defined as the use of the internet and other communication

technology to buy and sell goods and services as well as facilitate other business transactions.

2.1.1.2 Difference between E-commerce and E-business

E-commerce and E-business are terms used interchangeably but are not the same as Turban et

al (2015) have opined that e-business have a broader definition compared to e-commerce, as it

goes beyond buying and selling of goods and services over the internet to focus on the conduct

of all kinds of business online which includes servicing customers, collaborating with business

partners, delivering e-learning and other electronic transactions within an organization, they

went further to state that while others view e-business as comprising only activities that does

not include buying and selling over the internet, that e-business complements e-commerce as

e-commerce can be seen as a subset of e-business. Bartels (2000) in support of this view noted

that while e-commerce focuses on the external processes of the business that directly affects

customers, suppliers and other external partners and includes activities such as sales,

marketing, order processing and delivery, customer service and support, procurement of raw

materials and supplies with the objective of achieving growth in revenue, e-business comprises

e-commerce but focuses mainly on internal business processes such as production, inventory

management, product development, finance, HR, etc. with the goal of achieving cost savings,

improvements in efficiency and productivity. Similarly, Bachu (2015) pointed out that while

e-commerce consist of commercial transactions done using the internet, e-business is the

conduct of business processes on the internet. Just as the above authors have pointed out, in the

context of this paper, e-commerce is regarded as the subset of e-business using a narrow

definition centered on buying and selling of goods and service and other facilitating

transactions using the internet and related technologies.

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2.1.1.3 Historical Background

Ecommerce has been growing continuously since its inception in the 1970’s about more than

42 years ago, its history dates back to the introduction of Electronic Data Interchange (EDI)

which allows for seamless transmission of data free from human intervention which replaced

traditional mailing and faxing of documents as it enabled business partners to transfer

documents such as orders, invoices and other business transaction data using a predefined data

format in USA, the introduction of the Electronic Funds Transfer (EFT) used by banks for fund

transfers between 1960-1980, which subsequently led to the introduction of the teleshopping

i.e shopping through telephone by Michael Aldrich in 1979, followed by the era of Personal

Computers (PC), World Wide Web and the Internet between 1982-1990 which contributed

largely to the increased number of computer network users, the introduction of URL, HTML,

HTTP, TCP/IP, and the National Science Foundation lifting of its restrictions on commercial

use of the NET in 1991, subsequent registration of domain names, the introuction of Secure

Socket Layers (SSL) by Netscape in 1994 to safe guard data transmission on the internet, these

events and technological advancement in Information technology layed the foundation upon

which the first ecommerce platform Amazon (online Market Place) came into operation in

1991, followed by Ebay and other online retail platform in 1995, search engines and advertising

platforms such as Yahoo in 1995, and Google in 1998 and their subsequent ecommerce

platforms, also online payment services such as Paypal in 1998, and other ecommerce

facilitating services (Yan & Stewart , 2006), (Miva, 2011), (Mirescu, 2010). Today more than

26% of the earths’s total population shop online consisting over 1.5 billion people (Asendia,

2016), as at 2015 e-commerce contributed 3.11%, i.e. $22.1 trillion of the global GDP

(UNCTAD, 2016) as earlier stated in the literature and it is projected to grow at 19.42%

between 2016-2020 (Wood, 2016), ecommerce is growing tremendiously across various

medium of access to internet, the continuous growth of internet penetraion is positively

11
impacting on ecommerce growth round the world, though the rate and extent of adoption varies

among region, countries, sector of application and nature of partners involved (Baourakis,

Kourgiantakis, & Migdalas, 2001) for example, e-commerce contributed 4.48% of Asian-

Pacific GDP, 3.12% of North America, 2.59% of Europe, 0.77% of Latin America, and 0.71%

of MENA, similarly it contributed 7.05% to China GDP compared to 3.3% to USA, with major

ecommerce platforms such as Alibaba, Ebay, Amazon, (Abraham, 2017). UNCTAD (2016)

B2C e-commerce index report 2016 shows that Nigeria is ranked 100 among other nations with

an ecommerce index value of 30.4, based on criteria such as share of individuals using internet,

credit card, secure internet servers per 1 million people and postal reliability indicating that

there is a very large vacum to be filled and strong market potential for ecommerce growth as

these factors are impoved upon.

2.1.1.4 Types and Categories of E-commerce

E-commerce is classified into types and categories depending on the nature of transactions

conducted and partners involved, to this end various types of e-commerce have emerged;

1. Business-to-Business (B2B): This refers to e-commerce transaction between

businesses or between one company and another company such as suppliers,

distributors, and other partners. Businesses use B2B e-commerce to achieve cost

savings, improve efficiency, increase speed of service delivery, reduce transaction

errors and eliminate manual processes and activities. It allows suppliers to access online

inventory status, refill needed products in a timely manner, business processes such as

purchase orders, invoices, inventory, shipping logistics and business contracts are

handled directly on the network to reduce cycle time, the result is improved supply

chain management among business partners, other benefit include; lower production

cost, timely dissemination of information, increased accuracy, etc.

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 2. Business-to-Consumer (B2C): an e-commerce transaction between business and

consumers, designed to enable businesses sell directly to their consumers, an example

is online marketplace and storefront such as Amazon, Konga, Ebay, Jumia, Alibaba,

etc. This kind of e-commerce supplements the traditional commerce as it offers

products and services using electronic channels as opposed to the physical channels

used by traditional commerce. B2C e-commerce provides electronic storefront that

offers information, goods and services as well as help desk for customer service and

support. Its advantage includes; revenue growth, increase in market share as

geographical and distance limitations are removed, provides adequate information to

consumers to enable them to make informed decisions, etc.

3. Consumer-to-Consumer (C2C): e-commerce transaction in which consumers sells

directly to another consumer, using this type of e-commerce individuals sells a wide

variety of products and services on the web and online auction sites such as Ebay. It

makes it easy for consumers to sell fairly-used products, products that are no longer in

use or products bought, but, not needed anymore to other consumers that have more

need and use for the product.

4. Consumer-to-Business (C2B): e-commerce transaction between consumers and

businesses that allow consumers to sell products and services to businesses.

5. Government E-commerce: e-commerce transaction between governments (G2G),

government and businesses(G2B or B2G), in which government agencies buy or

provide goods and services or information from or to businesses and other

governments, etc.

other types of e-commerce includes intrabusiness e-commerce, business-to-employess

(B2E), mobile commerce (Mcommerce), etc. (Turban, King, Lee, Liang, & Turban, 2015),

(Yan & Stewart , 2006), (Chaffey, 2002), (Nanehkaran, 2013), (Mirescu, 2010). The

13
understanding therefore is that as nature of transactions, partners, adoption of e-commerce

evolve so also will be the emergence of new types and categories or forms of e-commerce, in

this paper attention will be given more to the B2B and the B2C types of e-commerce.

2.1.1.5 Why E-commerce Matters

Turban et al (2015) grouped the benefits of e-commerce into three categories;

1. The business organization which includes; improved supply chain management, cost

reduction, efficient procurement, improved customer service and relationship, 24/7

business operation, competitive advantage, etc.

2. The consumers benefit which are; access to shop anytime, self-configuration of

products and services, find bargains by comparing prices, real time delivery,

comfortable shopping, varieties of inventory items to choose from, etc.

3. The society benefits such as close the digital divide between rural areas and urban areas,

increase standard of living, etc.

(Baourakis, Kourgiantakis, & Migdalas, 2001), (Chaffey, 2002), (Ferentinos, Arvanitis, &

Sigrimis, 2006) also supports this view noting that adoption of e-commerce leads to direct gains

including reduction to operating costs in areas such as effective collection and evaluation of

data for management decision making, enhances the development of processes for quality

assurance and regulatory compliance, facilitates direct feedbacks from customers and

consumers, improve supply chain management, etc. also Lucking-Reiley & Spulber (2000)

noted that e-commerce enables firms to find greater number of suppliers, communicate and

engage with larger number of companies in their supply chain and unlimited access to

customers anywhere with internet access and connection. Similarly, e-commerce being a

system that facilitate the exchange of information reduces the sacrifices involved in a buying

and selling transaction as it largely depends on exhange of information between buyers and

14
sellers (Mueller, 2001). Wigand (1997) identified disintermediation i.e the elimination of the

so many middlemen involved in the traditional buying and selling of goods and services, and

reintermediation i.e a creation of central meeting point such as an online marketplace where

buyers and sellers meet to transact businesses directly as a key importance of why e-commerce

matters, Khan et al (2014) identified ; availability of goods and services anywhere, enablement

of cross boundary transations, cost reduction and increased quality, ability to personalize

marketing messages, involvement of consumers as co-participants, etc. as the growing

importance of e-commerce in today market, e-commerce is essentially about providing

convenience for customers and obtaining competitive advantage (Interoute, 2015). Gupta

(2014) summarized the importance of e-commerce into three namely; transaction cost

consisting of search cost, processing cost, management and logistics cost, disintermediation

and transaparency in pricing. Increasing internet penetration further strenthen the importance

of e-commerce in businesses as online sales are growing faster than offline sales, buying

decisions are largely influenced by the web, a large number of customers conduct research on

products and prices online before making purchases as such the more reason e-commerce

matters in business today (Dhalla, 2011). The benefits of e-commerce to business, consumers

and the society at large is enormous, hence the increase in its adoption across different sectors.

2.1.1.6 Limitations of E-commerce

E-commerce is not without limitations and disadvantages, several researchers have identified

different limitations and disadvantages attributed to e-commerce that both hinders its adoption

as well as development, a number of such limitations and disadvantages are highlited in this

study; Nanehkaran (2013) identified the disadvantages of e-commerce to include; security

issues, inability to guarantee product quality, social relationship limitation as transactions are

done on the internet void of any physical contact, and went further to point out barriers limiting

e-commerce development and adoption by businesses to include; lack of necessary information

15
for e-commerce and internet network, protection of consumers rights, lack of legal

infrastructures, lack of security and low internet speed and penetration in some countries,

confidentiality of exchanged information, lack of intermediary institutions in some countries

and regions. Similarly, (Gupta, 2014) identified lack of security, reliability and effective

communication protocol, cost of information technology equipment and internet access that

facilitates e-commerce, and lack of technical knowledge required in participating in e-

commerce transaction as limiting factors.

Generally, the limitations of e-commerce adoption and development will differ according to

the region and stage of development of the country in focus, for example while security and

privacy issues will be the limiting factors of e-commerce in developed and emerging economic

countries such as USA, Russia, China, UK, etc. lack of enabling infrastructures and services,

low rate and quality of Internet penetration and access, lack of effective legal framework, the

widening gap of digital divide between urban and rural areas, high cost of required information

technology equipment and services, lack of knowledge required for participation in e-

commerce and many others will be the limiting factors for developing country such as Nigeria

which is the focus of the study, similarly limitations exist among businesses depending on the

size of the business as such the limitation experienced by large corporations in adopting e-

commerce will not be the same for small and medium enterprises. In as much as these

limitations exist the benefits remains a driving force upon which these limitations are overcome

by businesses.

2.1.2 Conceptual Review of Marketing of Agricultural Products

This section reviews literature on marketing of agricultural products particularly provides a

conceptual, theoretical and empirical review of marketing of agricultural products.

16
2.1.2.1 Marketing Concept

Marketing remains a key challenging factor affecting agricultural sector especially in Nigeria

as authors have noted, this is true as marketing plays a vital role not just in getting the desired

input and output to the target consumers but also in the transformation of agriculture from a

household farming activity to a large industrial activity geared towards providing the needed

food for a larger population as well as the raw materials required by both agric. and non- agric.

Industries. The importance of agriculture in assuring food security rest in the equitable

distribution of its inputs and outputs as well as accessibility to all when needed, in the right

quantity and quality required as such any gap identified becomes a threat to food security,

further more; its ability to provide employment opportunity, cub poverty, and secure foreign

reserve earnings in a country like Nigeria which is the focus of the present government also

depends on increased production and distribution of agricultural produce whereby excess

becomes exportable opportunities and limits import to grow economy. Marketing of

agricultural outputs and inputs is at the centre of these objectives (Olukunle, 2013), (Nwajiuba,

2013), (Oluwseyi, 2016).

Marketing has been defined by several authors some of which are identified in this paper.

Marketing is a philosophy that encourages the organization to ensure that the needs and wants

of customers in selected target markets are reflected in all its actions and activities while

recognizing constraints imposed by society (General Electric, 1952). Building on this

definition, Anderson (1982) emphasizes that the reason for a strategic marketing philosophy is

that better performing organizations recognize the basic and enduring nature of the customer

needs they are attempting to satisfy.

American Marketing Association have defined marketing as the process of planning and

executing the conception, pricing, promotion and distribution of ideas, goods, and services to

17
create exchanges that satisfy individual customer and organizational objectives, (Bennett &

Anderson, 1988), in criticising this definition, Burnett (2003) argued that while the definition

can help us better comprehend the parameters of marketing, it does not provide a full picture

as it exclude specific transactions and relationship with other elements such as the mission

statement of the organization which is its business philosophy and functional areas.

Similarly, Kotler (1997) defined marketing as a social and managerial process by which

individuals and groups obtain what they need and want through creating, offering, and

exchaging products of value with others. Chatered Institue of Marketing UK (2015) have also

defined marketing as the management process responsible for identifying, anticipating and

satisfying customer requirements profitably, sharing similiarities with Kotler’s definition. Also

supporting Kotler’s definition, `Adetayo (2006) defined marketing as a process of identifying

, creating, delivery of satisfiers within societal contraints profitably in exchange for something

of value in the arena of business competition, this definition also points out the managerial

proces involved in marketing as well as the influence of the environment in which the business

exist. And updated definition by the American Marketing Association which closes the gap

identified in its earlier definition, they defined marketing as a set of institutions and processes

for creating, communicating, delivering and exchanging offerings that have value for

customers, clients, partners, and society at large (AMA, 2013). This definition tends to be

comprehensive as it identifies both facilitaing institutions and partners involved in marketing

transactions and its impact on the society at large.

2.1.2.1.1 Characteristics of Marketing Organization

Burnett (2003) supporting a comprehensive definition of marketing similar to the updated

definition of AMA identified the C’s characterics of a marketing organization to include;

18
4. Consumer content; which determines the existence of an organization as it identifies

the number of people who needs the product and services offered by that organization

i.e. the target market and their needs, any changes in their need for the product and

service or ability of a competition to provide or serve that need much better impacts on

the existence of the organization.

5. Company capabilities; the existing or inherent capabilities of the organization to meet

consumer’s needs at present and in the future, ability to reorganize itself to adapt to the

changes in needs, preference, taste, values and buying decisions of the consumers etc.

6. Communication; is at the center of marketing relationship, the kind of image the

company project’s affect the consumer’s perception of the products and services offered

by such organization as well as choice, an example of such communication includes;

product design, product quality, price, packaging, outlet selection, advertising , press

releases, etc. hence the emphasis on relationship marketing (CRM).

7. Competition; the ability of the organization to identify who their competitors are, their

strengths and weaknesses and the use of such information to make intelligent marketing

decisions.

8. Cross funtional contact; maintains strong interrelationship between the various

departments and funcational areas in the organization rather than allow one department

such as marketing to become self-sufficient leading to ineffectiveness as success

depends on interaction and interdependence among these funcational areas and

departments.

9. Community Contact; ability to interact with micro and macro environment in which

it operates, as the impact of environment on organization cannot be overemphasized.

19
2.1.2.1.2 Marketing Process

Organizations implement marketing by adopting a predefined process otherwise called the

marketing process or strategic marketing process, these marketing process include;

1. The Marketing Plan: The marketing plan begins with defining firm mission and

marketing objectives which sets direction on how other marketing activtivies will be

carried out in a manner that will be consistent with the firms overall objective.

2. The Marketing Strategy: Kazmi (2008) defined strategy as the course of action to be

taken to achieve an objective. Marketing strategy includes the following action;

a. Target Market Definition: The organiation defines the potential customers it

seeks to serve and the needs of these customers the firm intends to satsisfy and

the capability of the firm to satisfy the requirements of these customers.

b. The Marketing Mix: This refers to the set of tools firm adopts to achieve its

target market objectives, areas or levels of decision marking for achieving target

market objective and are broadely categorized into four, namely; 1. Product is

anything that can be offered to a market for attention, acquisition, use, or

consumption that might satisfy a want or need (Kotler, 2000), it is the primary

element that satisfies customers needs and wants, it create the value that

customers engage in exchange to obtain. 2. Place; this defines how product will

get to the final consumer, defines the distribution channel to adopt. 3.

Promotion; decisions about how to create awareness of the existence of such

product and services as well as how to obtain same and at what value. 4. Price;

The amount of money or compensation customers are willing to offer in

exchange for the product (Adetayo, 2006), (Burnett, 2003), (Bordon, 1984).

3. Marketing Budget: Having defined marketing objectives, target market and the right

blend of marketing mix to achieve such objective the firm allocates resources needed

20
 to implement selected marketing mix strategy using the budget, as Burnett (2003) notes,

that organizations must establish budget based on the required marketing effort to

influence consumers and that marketing budget represents a plan to allocate expenditure

to each components of the marketing mix. A reources organization function.

4. Marketing Implementation: This consist of executing all activties necessary to make

the marketing plan work, or activities necessary for achieving the objectives (Adetayo,

2006), in other words a resources utilization function.

5. Evaluation and Control: The constant review of what has been done, alignment of

result to plan, and correction og deviation from plan.

(Isoraite, 2009), (Gronroos, 2006) and others express these same views.

2.1.2.2 Agricultural Marketing

Agricultural products and agricultural marketing takes center stage as this paper is focused on

marketing agricultural products, this section reviews conceptual literature on agricultural

marketing and products.

Generally, agricultural industry is divided into four consisting of crop production, forestry,

fishing and livestock, industry players (firms) within this industry are grouped into input

producers, farmers, agro-dealers, agro-processors, trade and exports. Each divide of the

industry has its own primary and secondary products different from the other divide for

instance; crop production primary products includes; wheat, rice, maize, soybean, cassava,

yam, etc., similarly, livestock, forestry and fishing has both their primary products and

secondary products (FAO UN, 2016), (NBS, 2017), (MBA 13, 2016), (USDA, 2017).

Agricultural marketing in a broader sense refers to the marketing of farm products produced

by farmers as well as inputs required by farmers in the production of products, it comprises all

the marketing operations and institutions conducting them including the movement of farm

21
produced products, raw materials and their derivatives from farmers to consumers, agricultural

marketing focuses on both product marketing and input marketing and includes issues such as

marketing functions, channels, efficiency and cost, price spread and market integration,

producers surplus, government policy etc. (Acharya & Agarwal, 2006), some of these issues

are beyond the subject matter of this study as such will not be given adequate attention.

Several definitions have emerged to explain the concept of agricultural marketing few of those

are reviewed in this study.

Pritchard (1969) defined Agricultural marketing as agricultural oriented marketing that

embraces all operations and institutions involved in moving farm products from farms to

consumers in providing production and consumption incentives to producers, marketing firms,

consumers and distributing supplies, feed, seed, fuel, fertilizer and machinery to farmers.

It has also been defined as the performance of all business activities involved in the flow of

goods and services from the point of initial agricultural production untill they are in the hands

of the ultimate consumer (Kohis & Downey, 1972). Similarly, Hoque (2015) building on

(Pritchard, 1969) definition that considered both the product and input marketing, defined

agricultural marketing as the study of all activities, agencies, and policies involved in the

procurement of farm inputs by the farmers and the movement of agricultural products from the

farm to the consumers, further noting that it is an effort to estimate demand for inputs and to

ensure regular support of those and to dispose farm product to a proper consumption point.

Agricultural marketing activities include; assembling, transporting, processing, storing,

packaging, wholesaling, financing, retailing, market information, pricing, market organization,

competitive relationships, bargaining, selling, procurement, products and process innovation

and export of farm produce (Pritchard, 1969).

22
2.1.2.2.1 Difference in Marketing of Agricultural and Manufactured Goods

There is difference between the marketing of agricultural commodities and the marketing of

manufactured commodities, these difference exist in the inherent characteristics of the

agricultural sector which differs from that of the manufactured goods sector (Acharya &

Agarwal, 2006), these characteristics are:

1. Perishability of the Product: Most of the farm products are perishable in nature and the

period of perishability depends on the particular product, some perish faster than others.

2. Bulkiness of Product: large number of the farm products are bulky and as such

transportation and storage becomes difficult and expensive, and impose restriction on

location as production or processing plant has to be closer to consumption location

which results in higher price of the final product.

3. Variation in Quality of Product: Unlike manufactured products that share similiarities

in quality, there is variation in the quality of agricultural product that inhibits grading

and standardization.

4. Irregular Supply of Agricultural Products: Dependence on natural conditions for

agricultural production negatively affects the supply of agricultural products as it

becomes both uncertain and irregular. It is reponsible for excess demand over supply

experienced all around the world contributing to fluctuations in prices of agricultural

products.

5. Small Holding Size and Scatterd Product: Agricultural products are produced

throughout the length and breath of the country and most of the producers are small in

size as well as the producers and this makes it difficult to estimate supply and creates

problems in marketing.

6. Seasonality of Production: Farm products are produced in a particular season as such

they cannot be produced throughout the year, which contributes to price falls

23
 withnessed during harvest season and increase during cultivation, whereas the supply

of manufactured products such as electronics are adjusted and made uniform throughout

the year to make prices remain almost the same throughout the year.

7. Processing: Most of the farm products cannot be consumed directly, they have to be

processed before consumption by the ultimate consumer, the processing function adds

prices to the production which is transferred to the final consumer.

These accounts for the difference in marketing approach between manufactured products and

agricultural products which is the main theme of this study.

2.1.2.2.2 Importance of Agricultural Marketing

Agricultural markeing is important not just for stimulating production and consumption but

also for accelerating the pace of economic development, its dynamic functions are of key

importance in facilitating economic development (Mamoria & Joshi, 1995). Acharya &

Agarwal (2006) identified these importance to include;

1. Optimization of Resource use and Output Management: An efficient agricultural

marketing system leads to the optimization of resource use and output management. An

efficient marketing system can also contribute to an increase in the marketable surplus

by scaling down the losses arising out of inefficient processing, storage and

transportation.

10. Increase in Farm Income: An efficient marketing system ensures higher levels of

income for the farmers by reducing the number of middlemen or by restricting the

commission on marketing services and the malpractices adopted by them in the

marketing of farm products. An efficient system guarantees the farmers better prices

for farm products and induces them to invest their surpluses in the purchase of modern

inputs so that productivity and production may increase.

24
11. Widening of Markets: A well-knit marketing system widens the market for the products

by taking them to remote corners both within and outside the country, i.e., to areas far

away from the production points. The widening of the market helps in increasing the

demand on a continuous basis, and thereby guarantees a higher income to the producer.

12. Growth of Agro-based Industries: An improved and efficient system of agricultural

marketing helps in the growth of agro-based industries and stimulates the overall

development process of the economy.

13. Price Signals: agricultural marketing system helps the farmers in planning their

production in accordance with the needs of the economy and set effective pricing

strategy .

14. Adoption and Spread of New Technology: It facilitates farmers adoption of new

industry specific scientific and technical knowledge. New technology requires higher

investment and farmers would invest only if they are assured of market clearance. These

customized and specialized knowledge and techniques accelerates production of farm

products.

15. Employment: Agriculture is known to be high employer of labour in addition to its

importance on economic development and food security, in the case of Nigeria it is seen

as the major solution for reducing the high rate of unemployment in the country, as

government increases effort to diversify into agriculture, it is expected to result into the

employment of millions across the various agricultural activities such as procurement,

assembling, processing, packaging, transporting, etc.

16. National Income & Foreign Reserve Earner : Agricultural marketing activities add

value to the product as well as increases production and distribution activities which

contributes to the nation’s gross national product and net national product.

25
 17. Better Living: Increased agricultural activties resulting from effective agricultural

marketing creates employment and provide income and source of livelihood for

members of the society as well improves the standard of living.

18. Creation of Utility: Although agricultural Marketing adds cost to the product; but, at

the same time, it adds utilities to the product. These include, form utility through

transformation of raw materials by processing them into a usable product, place utility,

time utility through storage to make the product available at all times, and possession

utility.

2.1.2.2.3 Agricutural Marketing Funtion

Marketing functions are specialized activities performed in accomplishing the marketing

process (Roy, 2006). Kohis & Uhl (1985) classified these marketing functions into: physical

function consisting of storage & warehousing, grading, processing and transportation;

exchange functions consisting of buying & selling; and facilitating function consisting of

standardization of grades, financing , risk taking, dissemination of market information.

Similarly, FAO (2006) describing it as stages of agricultural marketing, identified the stages to

include: Stage 1- Assembly, Stage 2- Transportation, Stage 3- Storage, Stage 4-Grading &

Classification, Stage 5- Processing, Stage 6-Packaging and Stage 6-Distribution and retailing.

Building on these classification among others Acharya & Agarwal (2006) identified

agricultural marketing function to include;

1. Packaging: Packing refers to the wrapping and crating of goods before they are

transported. Goods have to be packed either to preserve them or for delivery to buyers.

Packaging is a part of packing, which means placing the goods in small packages like

bags, boxes, bottles or parcels for sale to the ultimate consumers. In this context the

packaging of agricultural products.

26
2. Transportation: The movement of from point of production or processing to the ultimate

consumer, it widens the market, narrow price difference, facilitate specialized farming

and improves the mobility of factors of production.

3. Grading and Standardization: standardization means making the quality specifications

of the grades uniform among buyers and sellers over space and over time. Grading

means the sorting of the unlike lots of the produce into different lots according to the

quality specifications laid downIt is a method of dividing products into certain groups

or lots in accordance with predetermined standards. Grading follows standardization. It

is a sub-function of standardization.

4. Storage: The storage function adds the time utility to products. Agriculture is

characterized by relatively large and irregular seasonal and year – to – year fluctuations

in production. The consumption of most farm products, on the other hand, is relatively

stable. These conflicting behaviours of demand and supply make it necessary that large

quantities of farm produce should be held for a considerable period of time.

5. Processing: The processing activity involves a change in the form of the commodity.

Processing converts the raw material and brings the products nearer to human

consumption. It is concerned with the addition of value to the product by changing its

form. Its importance is derived from the fact that most of the agricultural products are

consumed in their processed forms, for instance, Rice from grains, Flour from wheat,

flour from Cassava, etc.

6. Buying and Selling: Buying and selling is the most important activity in the marketing

process. At every stage, buyers and sellers come together, goods are transferred from

seller to buyer, and the possession utility is added to the commodities. The number of

times the selling and buying activity is performed depends on the length of the

marketing channel. The buying activity involves the purchase of the right goods at the

27
 right place, at the right time, in the right quantities and at the right price. It involves the

problems of what to buy, when to buy, from where to buy, how to buy and how to settle

the prices and the terms of purchase.

7. Market Information: Market information may be broadly defined as a communication

or reception of knowledge or intelligence. It includes all the facts, estimates, opinions

and other information which affect the marketing of goods and services, these

information are important are important to the farmer, producer, market middlemen,

general economic development and the government for making policy and includes;

market intelligence and news.

8. Financing: The financing function of marketing involves the use of capital to meet the

financial requirements of the agencies engaged in various marketing activities. No

business is possible nowadays without the financial support of other agencies because

capital provided by farmers, producers and market middlemen are not sufficient.

A key function missing in (Acharya & Agarwal, 2006) list of agricultural marketing function

is the assembly function which (FAO, 2006) identified as the first stage and (Pritchard, 1969)

identified as a key activity involved in agricultural marketing. The assembly function is a key

function because the various agricultural products must be collated from their various sources

(Farms or famers) before processing, packaging and other marketing functions can be

performed.

2.1.2.2.4 Agricultural Marketing System

Marketing system is the complex network of economic exchanges that markes it possibke for

productive activities to be performed by variety of economic entities, however widely

dispersed over time and space and integrates them to create and sustain a national economy

(Jones, 1970), Jones(1970) also notes that, within the boundaries set by technology marketing

system determines the form of economic production, and that the marketing system is an
28
allocation mechanism, it exists to accellerate the equitable allocation of resources in production

and of products among uses. It is of essence that participants in agricultural marketing system

constantly adapt to the changing circumstances of deman and supply as agricultural production

is influenced by natural conditions, depletion of resources such as soil, water, vegetation, etc.,

and innovative changes in techniques for planting, growing, harvesting, processing,

transporting and storing which has direct impact on demand as changes in communication,

tastes, income, population size and structure, education and social organization.

A good agricultural marketing system must have sufficient capacity to provide regular markets

for the products of farm and factory, regular supplies of foods and a variety of other consumers

goods of desired kind and quality in both rural and urban markets, and timely supply of the

prodcutive inputs needed by farmers and of the raw material inputs needed by processors and

other manufacturers (Jones, 1970).

Jones (1970) in a study conducted in five tropical regions of Africa comprising; Freetown in

Seirra Leone, Nairobi in Kenya, Kana, Ibadan and Enugu in Nigeria summarized the general

tasks that an agricultural marketing system must perform if an economy is to achieve maximum

productivity to include:

1. Merchants must be able to command the physical means to move commodities from

place to place at moderate cost.

2. Because of the seasonality of agricultural production there must be somewhere in the

system facilities for holding commodities at modest cost.

3. There must be places where buyers can find sellers, and sellers buyers.

4. Potential buyers and sellers must be able to learn about the magnitude of supplies and

probable requirements, both present and future, at various locations in the system.

29
 5. Transport services, storage facilities, marketplaces, and market information all will be

unavailing in the absence of traders who are in a position to take advantage of the

opportunities for gain that are afforded by differentials in supply and demand over

space, time, and form, and among commodities; and finally

6. The costs of marketing, like the costs of hauling, storing, and processing, should be

moderate.

These general tasks shares similar view with the stages in agricultural marketing identified by

(FAO, 2006), the agricultural marketing function by (Acharya & Agarwal, 2006) and

agricultural marketing activities by (Bordon, 1984), etc.

Bressler & King (1978) identified two attributes of am efficient marketing system, they are;

1. To provide efficient and economical services and ownership transfers in the movement

of commodities from seller to buyer.

2. To provide an effective price-making mechanism

2.1.2.2.5 Agricultural Marketing and the Internet

Internet Marketing is the application of the internet and related information technologies to

achieve marketing objectives (Chaffey, 2002), internet marketing, otherwise called online

marketing shares some of the characteristics of both direct and indirect marketing forms, Fraser

et al (2000) identified four sources of competitive advantage that internet marketing can

provide agribusiness;

1. Reduction in intermediation costs associated with wholesale and retail activities.

2. Ability to decrease costs associated with purchasing by curbing the time and effort

involved in supply and logistics operations.

3. Improved information selection and processing which result in improved management

of the supply chain.

30
 4. Prospect of expanding market share and / or developing new markets by decreasing the

cost of selecting and processing information concerning the needs and the wants of

existing and potential customers.

2.2 Theoretical Review of Literature

2.2.1 Theoretical Review of E-commerce

Several theories and models have emerged to predict and explain reasons for e-commerce

adoption, use and impact on organizational performance as well as arguments both in academic

and professional society as to which theory of e-commerce adoption is most comprehensive.

However, in this paper attention is given to the 5 main theories commonly used which are;

Theory of Reasoned Action (TRA), Theory of Planned Behaviour (TPB), Technological

Acceptance Models (TAM), Innovation Diffusion Theory (IDT), Technological,

Organizational & Environmental Framework (TOE) (Rahayu & Day, 2015).

TRA and PBC Theory

The TRA theory developed by Ajzen & Fishbein (1980) posits that the behaviour of an

individual is determined by that individual’s intention to perform such behaviour which is

affected by attitude towards that behaviour and subjective norm (Rahayu & Day, 2015). Ajzen

(1991) argued that the TRA lacks the ability to adapt to situations in which the individual is

not under volitional control as well as its limitation when applied to situations in which

individual’s actual behavior and intentions are highly correlated, based on these limitations

Ajzen (1991) proposed TPB to accommodate the shortcomings of TRA by including a new

contruct called Perceived Behavioral Control (PBC) as such factors that influence intention to

perform certain behavior are; attitude toward that behavior, subjective norm and perceived

behavioral control. While TRA and TPB focused on the relationship between intention and

behavior to explain adoption of technology such as e-commerce , its lack of other factors such

31
as personal norms and affective evaluation of behavior which could increase its predictive

power makes it weak and unreliable theory (Rahayu & Day, 2015).

TAM Theory

Davis (1989) building on the framework of TRA and TPB prosped a new model TAM in an

attempt to predict and explain the use and acceptance of information systems and technology

by individuals. Davis identified perceived usefulness i.e. the degree to which a person believe

that using a particular system will enhance his or her job performance, and perceived ease of

use i.e. the degree to which a person believes that using a particular system would be free of

effort, as factors responsible for why people accept or reject information technology

(Surendran, 2012), just as the model have been improved upon by different researchers in

attempt to adapt it to the changing technological environment, it has also been criticised by

different researchers noting that TAM has questionable heuristic value, limited explanatory

and predictive power, triviality and lack of practical value (Chutter, 2009), similarly, Benbasat

& Barki (2007) in their criticism noted that the theory has led to a state of theoretical chaos

and confussion resulting from several researchers effort to adapt the theory to the constantly

changing technological environment, Lunceford (2009) in his critic of the theory argued that

the framework of perceived usefulness and ease of use neglected other issues such as cost and

structural imperatives that force users into adopting the technology.

IDT Theory

Away from the individual perspective which has been the focus of the previous theories above,

Rogers(1995) developed the Innovation Diffusion Theory (IDT) framework that focused on

process oriented perspective to predict and explain how innovation can be received and shared

among people. The theory identified critical technological innovation characteristics such as;

relative advantage, compatibility, complexity, observation and trialability as factors capable of

32
influencing the adoption or rejection of information technology, arguments againts these model

is centered on its exclusion of environmental factors that affect reception and rejection of

information technology adoption, the desire for a more holistic model that will inculcate other

factors by researchers led to the emergence of the TOE framework developed by (DePietro,

Wiarda, & Fleischer, 1990).

TOE Theory

The addition of the environmental factors in the TOE framework which other theories ignored

makes it a more complete model compared to others as it takes into consideration factors

beyond the individual, organization and technology which has been the focus of the other

models as Oliveira & Martins (2011) pointed out that it has a solid theoretical basis hence its

use for predicting adoption of information technology. TOE identified 3 factors that influence

adoption of organization use of technological innovation to include; the technological context

consisting of internal and external technologies with potentials to improve organizational

productivity, the organizational context consisting of firm size, scope, complexity of struture,

quality, features and availability of firm’s technology and financial resources, and the

environmental context consisting of firm’s industry and relationship with stakeholders. These

theory is widely and strongly relied upon as several research studies have shown (Hoti, 2015),

(Rahayu & Day, 2015), (Grandon, Nasco, & Mykytyn, 2011). Although several other theories

exist to explain and predict the adoption of e-commerce as well as its perceived influence on

business, they are mostly a modified version of these 5 main theories reviewed. The TOE

framework is chosen as the theoretical basis for this study based on its comprehensiveness,

wide acceptance and use by reseachers as a valid model for assessing e-commerce adoption

which is part of the objective of this study.

33
There are emerging theoretical framework and models being developed in an attempt to predict

and measure the impact of e-commerce on firm performance which is the second objective of

this study, though firm performance is quite difficult to define and operationalize as a result of

conflicting views on what a firm performance is and should be, a variety of financial and non-

financial measures are used to determine the impact of e-commerce on firm performance as

shown by the works of Mukhopadhyay & Kekre (2002) adopting non-financial measures such

as operational and strategic benefits gained to examine firm performance of e-commerce

adoption, and Teo & Tan (2002) using return on investment (ROI), annual total revenue,

market shares, acquisition cost and revenue growth per customer to determine the impacts of

e-commerce adoption, these measures have been largely criticised for lack of objectivity as a

result, subjective measures have received wide adoption aming researchers for measuring

impact of e-commerce adoption on firm performance(Thi, 2006). Thi (2006) identified five

subjective measures developed by Zhuang & Lederer (2003) based on an extensive literature

review to examine the business benefits of e-commerce, namely (1) back-end efficiency, (2)

market expansion, (3) costs' reduction, (4) customer service, and (5) inventory management

and subjective measures of firm performance introduced by Khandwalla (1977) based on firm’s

managers assessment of the firm's ability compete effectively, the measures are long-term

profitability, availability of financial resources, sales growth, and image and client loyalty

among other subjective measures that have been advanced, these two measures have received

wide adoption and have been tested on several studies and proved to be effective in measuring

and prediciting the impact of e-commerce on firms performance as such will be used in this

study to achieve the second objective of assesing the impact of e-commerce on marketing of

agricultural products, these subjective measures fit’s perfectly as they contain meausres for

assesing marketing performance.

34
2.2.2 Theoretical Review of Agricultural Marketing

Several theories and models have been advanced to explain general concept of marketing and

provide theoretical foundation for it, but very few theories and models have emerged in recent

times to explain and provide better understanding on the concept of agricultural marketing,

partly because it is still a growing concept, to this extent, the theories of agricultural marketing

proposed by (Pritchard, 1969) will be reviewed and adopted as the theoretical foundation for

agricultural marketing in this study.

Pritchard (1969) proposed four theoretical framework for a comprehensive analysis of

agricultural marketing systems, supply of operational research question and method as well as

to provide better understanding of agricultural marketing principles, these theories are derieved

from both general marketing theory and related economic theories, they are; market structure

analysis, relevant economic theory, theory of effective competition and economic growth

theory.

Market Structure Analysis

Market structure is the characteristics of the organization of the market that strategically

influences the nature of competition and pricing within the market, these strategic

characteristics include; the degree of seller (buyer) concentration as measured by numbers and

size distribution of firms, the degree of product and service differentiation among sellers and

the conditions of entry into an industry and its markets (Pritchard, 1969), Market structure

analysis is a valuable tool for a comprehensive analysis of agricultural marketing system in the

context of economic growth as most economic theory is derived from marketing, market

structure analysis postulates causal relationship from industry & market structure to the

conduct of marketing firms and there performances vice versa, market structure is valuable for

studying marketing in developing countries such as Nigeria for the following reasons; 1.

35
Agricultural Industry and market structures are changing and growing, 2. Governments are

seeking to improve agricultural market performance by making specific changes in market

organization. Although emphasis on these elements of market structure is predominant in

decision making in advanced agricultural market economies such as US, China, India, Brazil,

etc. it is less likely to impact decision making in developing countries where agricultural

marketing is still growing, issues such as uniform weights, legal framework and government

policies are important structural problems compared to market structures, the limited degree

of product differentiation in a developing economy, with its limited outputs of goods and low

effective demand, may be less important than deficiencies in structure that reduce productivity.

Market conduct refers to the patterns of behavior that enterprises follow in marketing. Conduct

is what businesses do; it is their policies and strategies. Market performance is the results of

market conduct. These include prices, profits and losses, product and service volumes and

qualities, product innovation, technical and economic progress, diffusion of benefits of

progress, and other events. In market structure analysis these performance variables are related

to observed conduct and structural variables to determine lines of causation.? The next step,

with great interest for developing countries, is estimation of potential improvements in industry

and market performance resulting from a specific change in structure, such as a new food

processing plant, an improved system ,of weights and measures, new grading standards, or land

reform in agriculture (Pritchard, 1969).

Relevant Economic Theory

Pritchard (1969) notes; Agricultural marketing has no distinct body of theory of its own, its

principles and analytical framework are drawn from theories of marketing and general

economics such as theories of consumer and farmer demand, production, pricing, competition,

organizational behavior, etc. the theories of consumer and demand for farm products and

inputs and marketing services are useful for explaining and predicting how and why the

36
structures of these demands changes during development, The theory of production is also

important as most marketing operations involve the production of goods and services. They

require inputs of productive factors. Economic-engineering analyses, based on the theories of

production, firm behavior, and demand, are particularly valuable for estimating the feasibility

of the new marketing facilities needed for modernization of agricultural marketing systems in

developing countries.

Theory of Effective Competition

Pritchard (1969) assert that the theory of effective competition has several advantage for a

comprehensive analyses of agricultural marketing systems in developing economies. Its basic

assumptions are more realistic than those of pure competition. As a result, they provide more

useful, although less precise, guidelines for empirical study. Unlike the theory of pure

competition, the theory of effective competition attempts to establish attainable, as well as

desirable, standards of industry and market performance. In view of the high importance of

improving market performance in developing countries this realism has great value for

researchers, policy officials, and others. Furthermore, it enhances the usefulness market

structure analysis with which the theory of effective competition is highly compatible. Another

advantage of the theory is that it expressly allows for dynamic economic conditions by viewing

competition as a dynamic process rather than as a static, equilibrium seeking activity. The main

disadvantage of the theory of effective competition as a guide to empirical research is its lack

of refinement and precision. Its main principles cannot be expressed in the language of

mathematics (Pritchard, 1969).

Pritchard (1969) defined economic growth as a significant and sustained increase in real output

per capita or in total as measured in national accounting, noting it is the major goal of every

country. Growth always involves sweeping changes in technology, economic and social

37
institutions, structures of production, industries, markets and demand, and modes of life and

work. Significant increases in real output per capita are on the order of 15 percent, and more,

per decade. Sustained growth is expansion of real outputs and consumption over long time

periods, usually several decades, with allowance for short-run variations in rates. Economic

growth has many origins. The obvious sources are increases in the supply of productive

resources--labor, land, and investmentsin human and physical capital. But in most countries,

the primary source of economic growth per capita is improvements in the quality of resources)-

Quality means efficiency in terms of output per unit of input. Increases in efficiency come

mainly from technological advance in production, marketing, and business management, from

improvements in resource use through changes in industry structure, and from increases in

scale of economic units. Scientific research, education, and communication are the foundation

of technological advance. Improvements in the quality of the products of one industry often

increase efficiency in others, especially when the outputs of one are the inputs of others. In a

growing economy, consumer demand rises and its structure changes significantly. Pronounced

shifts in consumer expenditure patterns result mainly from important differences in income

elasticities of demand for different goods and services (Pritchard, 1969).

Pritchard (1969) further notes, new product give consumers more consumption alternatives and

the growth becomes increasingly market oriented, these changes have high significance for

agriculture, agricultural marketing, On the supply side, economic growth is marked by

significant increases in the economy's productive capacity and by equally important changes

in the structure of production, industries, and markets. Technological advance provides more

efficient production and marketing processes and new products. These are needed to satisfy

consumer demand for greater diversity in consumption and to stimulate demand enough to

assure full use of the economy's expanding capacity to produce Emphasis on marketing

increases in growing economies. Profitable utilization of larger producing and distributing units

38
depends on high sales volumes. Accordingly, marketing firms have increasing need for

influencing consumer behavior and for control over supplies of basic products. Farmers come

under increasing pressure to improve delivery schedules and the level and uniformity of quality

of outputs. The multiple, circular flows of goods, services, and credits linking agriculture,

agricultural marketing and other sectors become stronger and more complex during growth.

Pritchard (1969) in concluding on the theory of economic growth identified the following as

the reasons why agricultural marketing is considered as a distinct field of study linked to the

study of economic growth;

1. Agriculture in nearly all the countries of the world is the largest industry and much so

for developing countries where is the leading industry, it takes more than half of the

labour force, and food expenditures are more than half of consumer expenditures,

provides raw materials for other industries as such the development of agriculture and

its marketing system, especially in developing countries is key to economic growth

process.

2. Agricultural production is almost exclusively a biological process, from this fact flows

a variety of special technological, educational, and economic problems important to

agricultural and marketing development.

3. Most farm products are subject to much lower income and price elasticities of demand

than most nonfarm products 'and services. Accordingly, general economic growth

means that a declining share of the national income is spent for food and that the share

of the gross domestic product originating in agriculture falls. from this comes the

necessity to transfer resources, especially labor, out of agriculture.

4. This essential outmigration of people is fraught with more complexities, hardships, and

restraints of an economic, technical, educational, social, and political nature than those

prevailing in most nonfarm sectors of the economy.

39
 5. Agriculture, more than any other economic sector, is the bastion of small-scale, family

enterprise. This has much importance for methods and problems of stimulating and

sustaining growth and adjustment in agriculture and marketing.

In an attempt to investigate the relationship between agricultural marketing theory and general

marketing theory, Meulenberg (1986) concluded that agricultural marketing as a scientific

discipline should be based on the marketing management approach as it is practiced in general

marketing theory, noting that by taking a marketing management approach, agricultural

marketing can profit most from the findings of general marketing theory.

As stated earlier agricultural marketing is not a distinct field of study as such does not have a

distinct theoretical framework for analysis distinct from those of marketing and general

economics from which its concepts are drawn and underlying principles are drawn.

2.3 Empirical Review of Literature

2.3.1 Review of Empirical Literatures in E-commerce in Agriculture

As noted earlier in this literature that the adoption of e-commerce varies according to country

and sector of application, and that the nature of transaction and partners involved in the

transaction determines the category and type of e-commerce. This study focuses on the

application or adoption of e-commerce in the agricultural sector or industry.

In recent times, there has been a new form of e-commerce Agri-commerce (Agricultural E-

commerce) i.e. the adoption of e-commerce in agricultural sector or industry as Baourakis et al

(2001) noted that though the internet approach seems to be a one-way path for digital products

industry, it could be a significant marketing tool to integrate and complete commercial

activities in the agricultural industry, they recommended that agribusiness firms should adopt

e-commerce practices to benefit from the advantages that e-commerce offers as their study

showed increase in tendency of agribusiness and farmers to adopt e-commerce although low

40
internet penetration and lack of knowledge of the full potential of e-commerce to agriculture

still impede the rate of adoption.

In supporting this view, Ferentinos et al (2006) pointed out that in recent times e-commerce

has found its way to agriculture and finds further application among agribusiness and as such

the emergence of new types of B2B and B2C e-commerce referred to as Agribusiness -to-

Agribusiness (A2A), Agirbusiness-to-Consumers(A2C) and Agribusiness-to-Grower (A2G),

poitning out the benefits of such adoption to include; promotion of information flow, market

and price transparency, reduction or elimination of transaction costs, incrase in online

cooperatives, and further noting that the development of e-commerce in agriculture depends

largely on the adoption of the internet by farmers, and agribusinesses and are impacted by

three factors; industry structure which specifically affect development by reducing the need to

electronically coordinate fragmented marketplaces, creation of barriers that limits development

of electronic marketplaces and internal barriers to adoption, the increased complexity of

products sold in the agricultural markets driven by demands of several customers along the

value chain of such product and lastly the interplay of personal relationships in the agribusiness

environment, they conluded that the development of agribusiness e-commerce will eventually

lead to a wider adoption of e-commerce in agriculture, (William, 2000), (Poole, 2001), (Leroux,

M., & E., 2001) and others supports this view. The drive towards e-commerce application in

agriculture is based on perceived benfits that e-commerce will provide to agribusinesses and

farmers such as reduction in intermediation cost arising from middlemen activities, reduction

in cost associated with supply chain activities, effective information and communication

among supply chain partners and the prospect of expanding existing market share and

developing new markets by effectively coordinating market information between agribusiness,

farmers and target customers (Fraser, Fraser, & McDonald, 2000).

41
Another study conducted in Taiwan in 2000 indicates that less than 5% of total agricultural

produce was marketed through e-commerce, noting the great potential that exist in adopting

e-commerce in agriculure sharing similar result with a study conducted in USA also indicating

weak percentage of e-commerce adoption among farmers but with growth potential for

advancement, the study went further to note that inability of farmers to adopt e-commerce will

keep them behind and out of competition in the nearest future, while identifying relevant laws

and regulations in addition to other challenges identified by other scholars as factors limiting

the development of e-commerce in agriculture (Liu, 2000),

Similarly, Ehmke, Ernst, Hopkins, & Tweeten (2001) in their study noted that though several

studies has been done on adoption of e-commerce little is known about about the attitude of

managers & other personnel concerned about the economic reason for adoption , also noting

that agribusiness do not consider e-commerce as much as a product but a method for delivering

agricultural inputs. majority of agribusiness in their study indicated having a rethink of their

business structure caused by the application of e-commerce in agriculture, while others have

taken proactive actions to adopt e-commerce such as setting up a website, buying and selling

products online, and few others undecided despite their knowledge of the importance of

adopting e-commerce in agribusiness in the future. They identified changes for closer

coordination of the supply chain consisting of producers, seed, fertilizers, machinary suppliers,

food processors and retailers, the need to create new relationship between different and similar

agribusinesses to form a network of communication and information exchanged resulting from

development in ICT and competition as factors driving the adoption of e-commerce in

agriculture. Supporting other researchers they identified tightening of supply chain, cutdown

on marketing margins and transactions costs to facilitate transaction of large products at a

compeitive price as benefit of e-commerce adoption by agribusinesses. Supporting the views

of (Ferentinos, Arvanitis, & Sigrimis, 2006) they noted that the agricultural sector and

42
participants presents some challenges to the development and implementation of e-commerce

practice which include resistance to changing business practices as they are committed to

traditional practices, lack of exposure to ICT, industry structure and participants

demorgraphics, lack of internet connectivity in rural areas where agribusiness is and farmers

slower adoption of internet and concluded that each of these challenges require further analysis

further supporting the need for this study.

A study carried out by (Henderson , Akridge, & Dooley, 2004) in USA, 2004 shows that

agribusiness firms were using e-commerce more with suppliers than with customers, and

perception regarding internet and e-commerce differs according to intenisty of use, hence

divers views exist of e-commerce capabilities, farmers desire for personal relationship and

customer service remained a barrier between agribusinesses and e-commerce activity with

farmers, their study futher supports the opinion of other researchers noting that firms adopting

e-commerce shows perceived benefits of e-commerce such as improved logistics, information

and market expansion more than others, have the ability to provide more product offerings

enabling easier comparison and product recommendation. They concluded that future research

is required to shed more insight into e-commerce use and its impact on agribusinesses, firms

ability to produce the benefits they expected by implementing e-commerce in their

agribusiness, a quest this study intend to pursue and fill such gap within the context of Nigeria,

(Nedyalkov & Borisova, 2005), (Manouseus, Konstartas, Palavitsinis, Costopoulou, &

Sideridis, 2009) share this same views although thier studies were conducted in a different

country but there exist similiarities between the challenges of the development of e-commerce

in agriculture as well as the perceived benefits of e-commerce to agribusinesses and the gaps

in study.

related study using the process and function view and the 5 process of supply chain;

transactions, information, negotiation, logistics and promotion to analyze e-commerce

43
adoption in agribusiness firms discovered that larger firms tend to adopt internet strategies than

small agribusiness firms and that the benfit of reduction in transaction cost influences managers

perception regarding e-commerce adoption compared to traditional cost, and that e-commerce

role in agribusiness firm’s business model are not clearly defined, noting the emergence of a

broad spectrum of e-commerce adoption (Henderson, Akridge, Dooley, & Carerre, 2005),

(Sipica, 2009).

Dan & Qihong (2014) in their study noted that there has been rapid development of China’s

agricommerce in recent years as over 260 thousand agricomerce service providers have

emerged and are expected to exceed 1million early 2014, they grouped agricommerce services

in China into; 1. Corporate website to enhance brand image and product sale using social

networking, 2. Social media post for product promotion, 3. Online ordering and physical

delivery of groceries, 4. E-commerce platforms (Marketplace) for third party sale of special

agricultural products.

Similarly, Josh & Dsouza (2014) in developing framework for agricultural e-commerce in

india stated their main intent to be the improvement of agricultural sector in india based on two

factors of increasing agricultural output by applying better farming practice and enhancing

the marketing structure to facilitate marketing of agricultural products with the aid of e-

commerce, an intent, this study aligns with as it is the core focus of both government policies

and agro-allied industries in Ngeira to improve the agricultural sector to make it more viable,

and this study advances e-commerce as a key to achieving rapid improvement in Nigeria’s

agricultural sector, just as Jamaluddin (2013) pointed out, while internet adotion by

agribusiness participants is growing , demorgraphic transition is showing greater adoption of

ICT for farming by farmers. This is evidenced in the e-commerce adoption in agriculture report

from china showing that over 100 billion Yuan turn over was achieved from adopting e-

commerce in agriculture (Hu, 2016), another report shows that over $1.4 billion grocerries was

44
purchased online in 2015 (AAFC, 2016), similar report shows that over 4000 agricultural e-

commerce platforms is in operation in China as at 2015 with over 50% growth from 2014

(Dsouza, 2016), a 2005 report in USA shows that 58% of US farms have computer and about

29% have internet access whereas among the large farms 79 % have computer, and 72% have

internet access, though only 9% is reported to have used internet for e-commerce activities

such as purchasing agricultural inputs, and among the large farms about 18% using it for

purchasing input and 23% for marketing activities (NASS, 2005), this number is expected to

grow rapidly in subsequent years indicating high growth in adoption of e-commerce in

agriculture.

Hu (2016) have advanced new types of e-commerce arising from the adoption of e-commerce

in agriculture namely Farmer-to-Consumers (F2C), Farmers-to-Business-to-Consumers

(F2B2C), Farmers-to-Business-to-Business-to-Consumers (F2B2B2C), etc. similarly

indentified new marketing channels arising from e-commerce adoption in agriculture to

include; social media promotion channel, group purchasing promotion channel, regional media

cooperation channel, offline channel such as consumers group. Several other authors and

researchers share similar views and opinions expressed by literatures so far reviewed and

include; (Wang, Zhu, & Zhang , 2016), (Islam, 2011), (Xiaoping, Chunxia, Dong, &

Xiaoshuan, 2009) among others.

The adoption of e-commerce in agriculture in Nigeria is relatively a new practice with strong

growth potentials as our rate of internet penetration continues to grow and the e-commerce for

merchandise continue to grow, as Esset (2015) rightly puts it that ICT remains a strategic and

ambitious way of modernising the agric sector as it will create more opportunities for the

farmers and ensure food security drawing from the statement of the President of National

Cashew Association of Nigeria (NCAN),

45
The literatures reviewed in this section has shown an increasing interest in the adoption of e-

commerce in agricultural sector, although available data show weak adoption among farmers

and agribusiness alike but they all emphasize the potential for rapid growth in the near future

as more agribusiness become aware of the benefits of e-commerce adoption in the sector,

increased internet penetration and access in the rural areas, supportive govt regulations and

development of strategies to overcome prevailing challenges and limitations.

Studies carried out so far in Nigeria have focused mainly on the adoption of e-commerce in

business these inlcude; (Kareem, Owomoyeta, & Oyebamiji, 2014), (Okoye & Obi, 2015),

(Chiemeke , Evwiekpaefe, Juliet, & Irhebhude, 2014) among others, there is little or nothing

written in the adoption of e-commerce by farms, farmers and other agribusinesses in Nigeria

and general adoption in the agricultural sector, hence the need for this study to contribute

towards such knowledge, similarly the literatures reviewed had repeatedly identify the need to

conduct a study that will go beyond the adoption of e-commerce to look at its impact on the

agribusiness, another important reason for this study.

2.3.2 Review of Empirical Literatures in Agricultural Marketing

Marketing of agricultural product is a key focus of this study as such review of literatures on

previous studies carried out to investigate the concept of agricultural marketing is necessary to

further establish the need for this study and to provide empirical foundation.

Marketing is the driving engine of the agricultural industry, the effectiveness of marketing

practice determines growth and decline in this industry, as Acharya & Agarwal (2006) rightly

opine, Marketing is as critical to better performance in agriculture as farming itself. Therefore,

market reform and marketing system improvement ought to be an integral part of policy and

strategy for agricultural development, the rate of growth in farming in developing countries is

still limping behind the desired levels. This has been largely attributed to the fact that not

46
enough attention has been devoted to the facilities and services which must be available to

farmers that would support agricultural sector for its development. Marketing is one of those

facilities needed for over all economic development of nations

FAO (2006) asserts that economic development itself provides more sophiscated and more

efficient marketing system, noting that as countries experience economic growth there rate of

urbanization tends to increase substantially, as a result the number of people in urban areas

needing to be fed by rural people doubles withing 16 years , increasing reliance on agricultural

production and the marketing system that direct that production and distribution, further notes;

these movement of popultion creates inequality in income between urban settlers and rural

people that will require effective agricultural and food marketing practice to create a balance.

Marketing of agricultural products is more than ensuring the flow of a product from the field

to the warehouse, or from a warehouse to a selling place. Marketing consists of several, diverse

operations and requires multiple skills (2Scale , 2014). Similarly, Lothore & Delmas (2009)

posits that Marketing improvements contribute to a significant improvement in farmers’

income and should be considered a priority action; for example, a simple improvement in the

system of measurements can improve a farmer’s income by an average of 10%. The returns

from these types of activities which improve marketing conditions are often higher than those

related to an increase in productivity or yields (more difficult to obtain). Supporting this view,

AgMRC (2007) also notes; Marketing is much more than simply knowing how to dispose of

agricultural commodities. The marketer must have a clear understanding of ever-changing

consumer wants and needs. Producers have traditionally taken whatever price they could get

while wholesale and retail distribution networks undertook the business of marketing.

In distinguishing commodities from differentiated agricultural products, FAO (2006) defined

agricultural commodities as basic agricultural products that are either in there original form or

47
have undergone only primary processing such as cereals, coffee beans, sugar, palm oil, eggs,

milk, fruits, vegetables, beef, cotton, rubber etc. and are generic and undifferentiated whereas

differentiated products are those with trade mark and are branded to communicate there

marketable difference and undergone different secondary processing based on use, within the

context of this study agricultural products refers to both differentiated and undifferentiated

products.

Agbo, Rousseliere, & Salanie (2013) in their study on agricultural marketing and direct selling

concluded that farmers can benefit from selling both to cooperatives as well as selling directly

to consumers, even though the cooper-ative does not have market power, it could have an anti-

competitive effect on the direct selling market, and thus benefit farmers. Conversely, direct

selling can create a healthy emulation and incite farmers to increase production that could

benefit the cooperative.

Walker (2007) in a study for defining models for decision making in agricultural marketing

concludes, that though, problems confronting those concerned with agricultural marketing are

complex and divers, there are variety of analytical models at the disposal of agricultural

marketing decision makers but the choice of model to use and application must be related to

the problems to be resolved, for instance; simulation models can be used for inputs and output

analysis, linear programming for analyzing long term changes in demand and its effect, and

recursive proramming for short term analysis, statistical inference for analysis of

interrelationships between dependent and independent variables of agricultural marketing, etc.

Agricultural marketing is not without problems and challenges, several authors have identified

challenges associated with the marketing of agricultural products; Karthikeyan (2016)

identified the following problems as affecting the marketing of agricultural products;

48
 1. Lack of finance; more finance are required for financing seasonal requirements of a

particular period or season as most agricultural products are seasonal.

2. Large number of middlemen; agricultural marketing has a long channel of distribution,

activities, and stages with several middlemen taken part at every point which takes

away the profit that would have otherwise accrued to the farmer and increases the prices

of goods sold to the final consumer.

3. Grading and Standardization; despite its importance on agricultural products, it is quite

difficult to grade and standardize agricultural products cconsidering the variety of

product and there varying qualities.

4. Transportation and Storage; perishability of some agricultural products requires

adequate storage for preservation of quality as well as effective transportation to

quickly bring the product to its final consumers before it deteriorates in quality, also

the effect of seasonality requires more storage facility to maintain supply of such

product.

5. Branding; branding is quite difficult to achieve in agricultural product as qualities

differs and inability to fund advertising of brands by farmers.

6. Price fluctuation; the gap between demand and supply caused by harvest and non

harvest season fluctuates prices of products in the market, lower prices in harvest

season, and higher prices in cultivation season.

7. Lack of market information; in a country like Nigeria, most of the farmers lack basic

education and resides in rural areas as such are ignorant of accurate market prices and

other market information, they depend on merchants and middlemen that will rather

keep such information secret from them for price gains.

Asogwa & Okwoche (2012) supporting these views, identified road infrastructure for

supporting effective transportation, storage facilities, lack of organized market, too many

49
middlemen as factors affecting the marketing of sorghum in their study conducted in Benue

state, Nigeria.

In another study conducted by (Mba, 2015) it was concluded that a significant relationship exist

between agricultural marketing and economic growth, further supporting the economic growth

theory of agricultural marketing as proposed by (Pritchard, 1969), findings also reveal a

significant relationship between agricultural marketing practice and agricultural produce.

In summary, agricultural marketing is notably a driving force for the growth and development

of the agricultural industry which contributes greatly to economic growth and development,

provides the needed employment opportunities and earn desired foreign reserve especially for

developing countries such as Nigeria, the challenges and problems that affects its effective

practice creates a wide gap between the benefits expected and reality. In an effort to facilitate

and improve agricultural marketing, agricultural industry players are focusing on the adoption

of technology such as the internet to limit or totally eliminate some of the problems of

agricultural marketing identified, for example, large number of middlemen, marketing

information, organized market for agricultural products, reduction in price fluctuation, and

reduction in the channel of distribution, etc. hence the push towards e-marketing, ecommerce,

mobile commerce, etc. for agriculture, which have been discussed earlier, although, literatures

reviewed so far show weakness in adoption among farmers, there are evidence of increasing

adotion and expected high growth in adoption especially among farmers in chinese, india, etc.

it is still a fast growing trend, and the increasing rate of internet penetration and growth in e-

commerce is making it a reality. The benefits of adopting e-commerce is believed to reduce

and eliminate most of the challenges faced in agricultural marketing and improve its practice

for collective growth, these notion forms the theoretical framework upon which this study is to

be conducted .

50
 CHAPTER THREE

METHODOLOGY

This chapter describes the research methodology used in the study. Research methodology has

been defined as the analysis of and rationale for, the particular method or methods used in a

given study, and in that type of study in general (Jankowicz, 2005). It includes the study area,

research population, sampling technique and size, sources of data, measurement of variables,

research instrument and data analysis techniques

3.1 Area of Study

The study area is Osun state, Nigeria. It is located in southwestern Nigeria, between latitudes

7°30′N, and longitudes 4°30′E. It covers an area of approximately 14,875 (square kilometres).

The 1996 census puts the population of state at 3.4m, the State is mainly agrarian with over

256,000 farming families and 149,478 Hectares of cultivated areas. The State is made up of 30

local government areas with over 200 towns, villages and other settlements. The state has a

considerable number of highly urbanized settlements some of which are Osogbo, Ile-Ife,

Ipetumodu, Ilesa, Ikirun, Iwo, Ede, Ila-Orangun and Ikire. Food crops grown in the area include

maize (Zea mays), yam (Dioscorea spp), cassava (Manihotesculenta), cocoyam (colocasia spp),

rice (Oryza sativa) and vegetables (Amaranthus spp). The permanent crops cultivated include

cocoa (Theobroma cacao), kolanut (Cola nitida) and oil palm (Elaeisguinensis), among other

agricultural activities, the area is selected for its agrarian based economy which bears

importance on the study, although the study is intended to cover Nigeria but for the constraint

of time, transportation and financial resources it will be limited to selected farms and

agribusiness within this study area, (Osun State Government, 2017).

51
3.2 Sources of Data

Primary data was used for this study as it seeks to collect information on the current practice

and adoption of e-commerce and its impact on farms and agribusiness.

Data was collected through the administration of well-structured questionnaire to obtain

background/demographic data of respondent, the current level of information technology use,

adoption or tendency to adopt e-commerce and its impact on marketing of agricultural

products.

3.3 Population, Sampling Size and Sampling Technique

The population of the study consist of farms and agribusiness in the study area comprising of

estimated 1395 farms and agribusiness alike, the accuracy of this figure cannot be verified for

lack of accurate and reliable public data. The choice of the area is justified by its agrarian

population. The sample size for the study is 302 obtained using the sample size formula

developed by Cochran (1977) to determine sample size at 95%

(1.96-Z value ) confidence level, 5% margin of error (C2), and 50% of Picking a choice (p) and

the finite population correction formula to determine the new sample size

from the estimated study population 1395, where n= new sample, N=Study Population, n0=ss.

The simple random probability technique is used to enable me reach out to a good number of

respondent within the time constraint and cost.

3.4 Measurement of Variables

This study measures the variables using nominal and ordinal scales. Questionnaires were

distributed to farms, farmers and agribusiness to a sample sufficient to form an opinion within

the study area, adoption of e-commerce is the independent variable and was measured by

52
technological, organizational and environmental factors and the impact on agribusiness

performance which is the dependent variable was measured by financial and marketing factors.

3.5 Research Instrument

The research instrument for the study is the questionnaire, which is a set of questions designed

to elicit information. The questionnaire was structured based on the questions developed and

tested by (Thi, 2006) and (Alrousan, 2014) which allows respondent to provide answers based

on facts and experience of existing practice as relates to adoption of e-commerce as a marketing

tool and its impact on farm, farmers and agribusiness. Section A is designed to elicit

background information about respondent, farm/agribusiness and identify current level of

information technology use, Section B is designed to elicit information on adoption of E-

commerce or tendency to adopt based on the TOE framework, and Section C is designed to

elicit information from respondent about their perceived influence of E-commerce on their

farm/agribusiness resulting from adopting e-commerce as a marketing tool. It was distributed

using the drop-off method to both reach out to respondent and get reliable response.

3.6 Validity and Reliability of Research Instrument

The instrument is reliable as it has accurate and consistent representation of the construct being

assessed, in other words the instrument measures what it purports to measure and gives similar

accurate results consistently. The instrument measures exactly the theoretical construct of TOE

framework for e-commerce adoption as well as its impact as have been tested by several

research scholars including (Alrousan, 2014), (Thi, 2006), (Zhuang & Lederer, 2003),

(Khandwalla, 1977), (DePietro, Wiarda, & Fleischer, 1990), (Hoti, 2015), (Rahayu & Day,

2015) . It tends to have content, construct, concurrent and criterion validity.

53
3.7 Data Analysis Techniques

Data analysis refers to the categorization, ordering, manipulating and summarizing of data, to

obtain answers to research questions (Okwandu, 2006). In this research, the data analysis

technique used for data analysis is mainly the descriptive analytical statistical tools which

include frequency distribution, central tendency, percentages, etc. to provide answers to the

research questions and achieve research objective.

54
 CHAPTER FOUR

PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA

This chapter presents data collected from the study of the impact of e-commerce on marketing

of agricultural products in Nigeria, analysed and interpret the data for the purposes of providing

answer to the research questions and attainment of research objectives, 302 questionnaires were

administered and shared to respondents in the study area, but only 273 questionnaires were

recovered and analysed. The analysis of the data is divided into socio-economic characteristics

of the respondent and the objectives of the study.

4.1 Analysis of Socio-economic Characteristics of Respondents

4.1.1 Agricultural Products of Respondents

Table 4.1.1 presents the agricultural products that respondents deals on, produces and sells to

customers. The result showed that majority of respondents transact in livestock products

(30.8%) and food processing (30.4%). while other respondents are involved in fish farming

(17.9%) and forestry such as Saw Mill industry, wood dealers representing about 11% of the

total respondents.

Table 4.1.1: Agricultural Products

Frequency Percent Valid Percent Cumulative Percent

Crop product 27 9.9 9.9 30.4
Livestock product 84 30.8 30.8 40.7
Fishing product 49 17.9 17.9 58.6
Forestry 30 11.0 11.0 69.6
Food processing 83 30.4 30.4 100.0
Total 273 100.0 100.0
Source: Author Computation (2017)

55
4.1.2 Respondents Types of Agribusiness

Table 4.1.2 presents the type of agribusiness respondents are engaged in, results in Table 2

reveals that majority, 31.5% of respondents are into farming comprising of livestock, fishing

farming and crop farming, and about 28.6% of respondents are agro-dealers involved in buying

and selling of farm products, intermediate between buyers and sellers, marketers etc. 18.3% of

respondents represent agro-processors who are involved in transforming agricultural raw

materials into other products such as food vendors, and 10% of the respondents provides

transport services and other essential trade services that facilitates agribusiness.

Table 4.1.2: Types of Agribusiness

Frequency Percent Valid Percent Cumulative Percent

Input production 31 11.4 11.4 11.4
Farming 86 31.5 31.5 42.9
Agro-dealers 78 28.6 28.6 71.4
Agro-processors 50 18.3 18.3 89.7
Trade and transport 28 10.3 10.3 100.0
Total 273 100.0 100.0
Source: Author Computation (2017)

4.1.3 Respondents Years of Involvement in Agribusiness

Figure 4.1.1 presents the years of involvement of respondents in agribusiness. Duration aids

expertise and informs understanding of strategies to embark upon to further the growth of the

agribusiness industry, the result shows that 47% of respondents have being in agribusiness for

about 5-11years and 28% have being involved for 11-15years. The result showed that majority

of respondents have being in the business for more than 5years.

56
 Years of Involvement in Agribusiness

25% 28%

47%

Less than 5 5 -- 11 11--15

Figure 4.1.1: Years in Agribusiness Source: Author Computation (2017)

4.1.4 Current Position of Respondents

Current position with agribusiness frim of respondents is shown in table 4.1.3. The result

reveals that majority (65.0%) of respondents are the owners/proprietor of agribusinesses while

15.0% were managers. 13.6% of respondents were senior managers and 7.0% were staffs or

employees in the firm.

Table 4.1.3: Position of respondents in agribusiness

Frequency Percent Valid Percent Cumulative

Percent
Owner/proprietor 176 64.5 64.5 64.5
Senior manager 37 13.6 13.6 78.0
Manager 41 15.0 15.0 93.0
Staff 19 7.0 7.0 100.0
Total 273 100.0 100.0
Source: Author Computation (2017)

4.1.5 Educational Background of Respondents

The educational status of respondents is shown in figure 4.1.2. The result indicates that

majority, 41.4% of respondents have a bachelor degree, 24.2% responded that they have a

diploma/certificate level of education while 23.4% had below high school education. This

57
indicates the high level of education among respondents and enhanced respondent’s

comprehension of questions asked in questionnaire and able to provide adequate response to

the questions.

45.00 41.39
40.00
35.00
30.00
Percentage

23.44 24.18
25.00
20.00
15.00 10.99
10.00
5.00
-
Below high school High school Diploma/certificate Bachelor degree

Figure 4.1.2: Respondent level of education Source: Author Computation (2017)

4.1.6 Age Distribution of Respondents

Age distribution of respondents is presented in the Table 4.1.4 above. The result revealed that

majority of respondents, 43.6%, falls within the sage range 40-49 years. More so, age

distribution further showed that 37.6% falls within the age of 30-39 years and about 10.6% are

less than 30 years and 8.8% more than 50years. As shown, respondents have a good number of

years of experience of to provide vital insight into the study based on accumulated experience.

Table 4.1.4: Age distribution

Age range Frequency Percent Valid Percent Cumulative Percent

18-29 29 10.6 10.6 10.6
30-39 101 37.0 37.0 47.6
40-49 119 43.6 43.6 91.2
Above 50 24 8.8 8.8 100.0
Total 273 100.0 100.0
Source: Author Computation (2017)

58
4.1.7 Gender distribution of Respondents

In this research, the gender distribution result revealed that male were more than the females
(71.1% vs. 28.9%). This shows that males are predominantly involved in agribusiness.

Table 4.1.5: Gender distribution

Frequency Percent Valid Percent Cumulative Percent

Male 194 71.1 71.1 71.1
Female 79 28.9 28.9 100.0
Total 273 100.0 100.0
Source: Author Computation (2017)

4.2 Analysis of Objectives

4.2.1 Level of Information Technology use among farms and agribusiness

The use of information technology by agribusinesses within the study area is presented in table

4.2.1 below. The result showed that 37.0% of agribusinesses has computer in their

organization. Among the agribusiness not presently using computers, 27.9% foresees

themselves using computer within a year. 22.7% of agribusiness are connected to the internet.

23.1% of agribusiness have their employees transact business via the internet while 26.0% uses

email in communicating with their customers and suppliers. 85.7% of agribusiness did not have

a website, with 14.7% having a static website for advertising while 7.3% had an interactive

website. 7.3% of agribusiness website permits procurement while none of them enables

customers to track their order and neither can they perform full online stock availability check.

Table 4.2.1: Level of ICT use in farms and Agribusiness within the study area

1. Yes No
N % N %
Do you use computer in your agribusiness 101 37.0 172 63.0
operation
If you do not use computer, do you intend to 48 27.9 124 72.1
start using computer within 1 year
Is your business connected to the Internet 73 26.7 200 73.3

59
 Do you and your employees use the internet 73 26.7 200 73.3
for business activities
Do you use email to communicate with 71 26.0 202 74.0
customers and suppliers
Do you or your business have a website 39 14.3 234 85.7
Is it a static website for presenting company's 40 14.7 233 85.3
information and advertise products
Is it an Interactive website for receiving 20 7.3 253 92.7
online orders from customers and sending
online bills /invoices to customers
Does it allow for exchange activities such as 20 7.3 253 92.7
buying and selling
Can customers perform online Stock 0 0.0 273 100.0
availability check
Can customers track their orders online 0 0.0 273 100.0
Do you perform online Procurement 20 7.3 253 92.7
Source: Author Computation (2017)

Dichotomous responses of respondents in the study area was graded as positive equals to 1 and

negative response as zero. The responses were total and percentage response score was

obtained. Respondents’ with percentage score of less than 40% were identified to have a low

level of use while scores between 40 and 60% were graded as average level of use and

percentage scores greater than 60% were graded as high. The result revealed that information

technology use among respondents involved in agribusiness is low while about 28.9% had an

average level of use as shown in table 4.2.2

Table 4.2.2: Summary of the Level of Information Technology use

1. Level of use Frequency Percentage

Low 194 71.7
Average 79 28.9
Total 273 100.0
Source: Author Contribution (2017)

60
4.2.2 Adoption of E-commerce and or tendency to adopt E-commerce as

Marketing tool by farms and agribusiness

The adoption of e-commerce and or tendency to adopt e-commerce as marketing tool by farms

and agribusiness was analysed by collecting data on TOE factors that influences the adoption

or tendency to adopt e-commerce, these data and analysis are presented below.

4.2.2.1 Technological Factors influencing the Adoption of E-commerce

Technological Factors influencing the adoption of e-commerce by agribusinesses is presented

in the table 4.2.3 below. The result showed that about 71% of respondents disagreed that e-

commerce reduces company’s overall operating cost while about 98% disagreed that e-

commerce aids in expanding company’s market share. Result showed that 8.8% of the

respondents agreed that e-commerce helps to increase customer data base while 11.0%

supported that ecommerce creates new advertising channel and 3.7% stated that it enhances

company’s image. The result also reveals that 19.0% respondents indicated that e-commerce is

compatible with their suppliers and customers. Majority, 72% of respondents’ organization

lacks adequate computer systems to support e-commerce while only 8.5% of the respondents’

firm had opportunity of trying out e-commerce applications before making a major business

decision. About 88% of respondents’ business organization has inadequate computer

infrastructure that can access internet and run e-commerce. Furthermore, 21.7% indicated that

e-commerce showed improved result over traditional way of doing agribusiness.

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Table 4.2.3: Frequency Distribution of Technological factors

1. Technological Factors Strongly Disagree Neutral Agree Strongly

Disagree Agree
N (%) N (%) N(%) N(%) N(%)
E-commerce reduces the 174(63.7) 22(8.1) 37(13.6) 40(14.7 0(0.0)
company's overall operating cost )
E-commerce helps company to 83(30.4) 185(67.8) 5(1.8) 0(0.0) 0(0.0)
expand market share
E-commerce helps company to 117(42.9) 129(47.3) 3(1.1) 12(4.4) 12(4.4)
increase customer base
E-commerce creates new 92(33.7) 146(53.5) 5(1.8) 23(8.4) 7(2.6)
advertising channel
E-commerce enhances company's 71(26.0) 187(68.5) 5(1.8) 10(3.7) 0(0.0)
image
E-commerce is compatible with 31(11.4) 72(26.4) 118(43.2) 52(19.0 0(0.0)
suppliers and customers ways of )
doing business
lack of appropriate tools to support 83(30.4) 0(0.0) 140(51.3) 40(14.7 10(3.7)
e-commerce )
Company lacks adequate computer 0(0.0) 69(25.3) 6(2.2) 166(60. 32(11.7)
systems to support e-commerce 8)
activities
Our company had the opportunity 106(38.8) 133(48.7) 11(4.0) 16(5.9) 7(2.6)
to try a number of e-commerce
applications before making a
decision
There are so many computers that 113(41.4) 128(46.9) 10(3.7) 14(5.1) 8(2.9)
people in our company can access
to use internet and e-commerce
E-commerce shows improved 131(48.0) 27(9.9) 56(20.5) 19(7.0) 40(14.7)
results over doing business the
traditional way
N= Frequency %=Percentage Source: Author Computation (2017)

The central tendency measure used in table 4.2.4 below employs the mean and measure of

dispersion used was standard deviation. Mean scores greater than 3.5 shows a high level of

presence of technological factors that aids the adoption of information technology while mean

score while mean score less than 2.5 connote a low availability of such technological factors.

The result in the table showed a poor level of availability of technological factors that ought to

62
have aided the adoption of information technology which will boost the level of use of e-

commerce in agribusiness.

Table 4.2.4: Central Tendency Measure of Technological Factors

Technological factors N Minimum Maximum Mean Std.

Deviation
E-commerce reduces the company's 273 1.00 4.00 1.79 1.15
overall operating cost

E-commerce helps company to expand 273 1.00 3.00 1.71 0.49

market share

E-commerce helps company to increase 273 1.00 5.00 1.80 0.99

customer base

E-commerce creates new advertising 273 1.00 5.00 1.93 0.96

channel

E-commerce enhances company's image 273 1.00 4.00 1.83 0.63

E-commerce is compatible with suppliers 273 1.00 5.00 2.89 1.21

and customers ways of doing business

Availability of appropriate tools to 273 1.00 5.00 3.39 1.17

support e-commerce

Company have adequate computer 273 1.00 4.00 2.41 0.99

systems to support e-commerce activities

Our company had the opportunity to try a 273 1.00 5.00 1.85 0.93
number of e-commerce applications
before making a decision

There are so many computers that people 273 1.00 5.00 1.81 0.94
in our company can access to use internet
and e-commerce

E-commerce shows improved results 273 1.00 5.00 2.30 1.48

over doing business the traditional way

Source: Author Computation (2017)

4.2.2.2 Organizational Factors influencing the Adoption of E-commerce

The organization factors that influences the adoption of e-commerce in respondents’ firm is

presented in the table 4.2.5 below. Majority, about 64%, indicated that cost of implementing e-
63
commerce applications is too high for them while about 16.0% responded otherwise. The result

further revealed that cost of internet access is highly determinant to the adoption of e-commerce

by respondents’ firm as majority agreed that internet access is a high cost. More so, the result

in the table showed that majority of agribusiness lack adequate employees that have the

knowledge and can effectively manage e-commerce and budget allocation in majority of firms

present in this research is inadequate to cater for running e-commerce.

Table 4.2.5: Frequency Distribution of Organizational Factors

1. Organisational Factors Strongly Disagree Neutral Agree Strongly

Disagree Agree
N (%) N (%) N (%) N (%) N (%)

The cost required to implement e- 14(5.1) 31(11.4) 51(18.7) 140(51.3) 37(13.6)

commerce applications are too
high for us
The cost for internet access is 22(8.1) 20(7.3) 0(0.0) 139(50.9) 92(33.7)
expensive
Employees in our company have 185(67.8) 41(15.0) 5(1.8) 20(7.3) 22(8.1)
necessary knowledge and
understanding of e-commerce
Company doesn't have sufficient 14(5.1) 30(11.0) 34(12.5) 141(51.6) 54(19.8)
budget to maintain e-commerce
system
N= Frequency %=Percentage Source: Author Computation (2017)

The central tendency measure used in table 4.2.6 below employs the mean and measure of

dispersion used was standard deviation. Mean scores greater than 3.5 shows a high level of

presence of technological factors that aids the adoption of information technology while mean

score while mean score less than 2.5 connote a low availability of such technological factors.

The result in the table showed a mainly fair level of availability of organizational factors that

64
aids the adoption of information technology which boost the level of use of e-commerce in

agribusiness.

Table 4.2.6: Central Tendency Measure of Organizational Factors

Organizational Factors N Minimum Maximum Mean Std.

Deviation
The cost required to implement e- 273 1.00 5.00 2.43 1.03
commerce applications are too high
for us

The cost for internet access is 273 1.00 5.00 2.05 1.17
expensive

Employees in our company do not 273 1.00 5.00 1.73 1.28

have necessary knowledge and
understanding of e-commerce

Company doesn't have sufficient 273 1.00 5.00 2.30 1.07

budget to maintain e-commerce
system

Source: Author Computation (2017)

4.2.2.3 Environmental Factors influencing the Adoption of E-commerce

Environmental factors that influences the adoption of e-commerce in respondents’ firm and the

level of use is shown in table 4.2.7 below. The result shows that 67.8 % of respondents’ firm

are not under pressure from competitors to adopt e-commerce. 30.4% of the respondents’ firm

customers are open to several existing services and products that are available online while

21.6% of suppliers and partners of respondents’ firm have adopted e-commerce. The result also

showed that 7.3% were under pressure from the industry at large and 31.9% of agribusiness is

under pressure from customers’ to adopt e-commerce. Government attempt to equip

agribusiness in adopting e-commerce was indicated to be unavailable and the existing

65
legislation on e-commerce isn’t encouraging the active participation of respondents’ firm in

going into e-commerce.

Table 4.2.7: Frequency Distribution of Environmental Factors

1. Environmental Factors Strongly Disagree Neutral Agree Strongly

Disagree Agree
N (%) N (%) N (%) N (%) N (%)
Our agribusiness is under pressure 28(10.3) 157(57.5) 64(23.4) 24(8.8) 0(0.0)
from competitors to adopt internet
/ e-business technologies
Our customers have easy access to 0(0.0) 150(54.9) 40(14.7) 83(30.4) 0(0.0)
several existing products / services
in the market available on the
internet
Many of our suppliers and partners 158(57.9) 20(7.3) 36(13.2) 59(21.6) 0(0.0)
have already adopted e-commerce
Our industry is pressuring us to 166(60.8) 0(0.0) 87(31.9) 20(7.3) 0(0.0)
adopt e-commerce
Our agribusiness is under pressure 166(60.8) 20(7.3) 0(0.0) 87(31.9) 0(0.0)
from customers to adopt e-
commerce
Government agencies offers 166(60.8) 107(39.2) 0(0.0) 0(0.0) 0(0.0)
training and educational programs
to our agribusiness to adopt e-
commerce
Existing governmental legislation 186(68.1) 87(31.9) 0(0.0) 0(0.0) 0(0.0)
in e-commerce in terms of buyer /
seller protection encouraged us to
adopt e-commerce
N= Frequency %=Percentage Source: Author Computation (2017)

The central tendency measure used in table 4.2.8 below employs the mean and measure of

dispersion used was standard deviation. Mean scores greater than 3.5 shows a high level of
66
presence of technological factors that aids the adoption of information technology while mean

score while mean score less than 2.5 connote a low availability of such technological factors.

The result in the table showed a mainly poor level of availability of environmental factors that

aids the adoption of information technology which boost the level of use of e-commerce in

agribusiness.

Table 4.2.8:Central Tendency Measure of Environmental Factors

Environmental Factors N Minimum Maximum Mean Std.

Deviation
Our agribusiness is under pressure from 273 1.00 4.00 2.31 0.77
competitors to adopt internet / e-business
technologies

Our customers have easy access to 273 2.00 4.00 2.75 0.89
several existing products / services in the
market available on the internet

Many of our suppliers and partners have 273 1.00 4.00 1.99 1.26
already adopted e-commerce

Our industry is pressuring us to adopt e- 273 1.00 4.00 1.86 1.10

commerce

Our agribusiness is under pressure from 273 1.00 4.00 2.03 1.37
customers to adopt e-commerce

Government agencies offers training and 273 1.00 2.00 1.39 0.49
educational programs to our agribusiness
to adopt e-commerce

Existing governmental legislation in e- 273 1.00 5.00 1.48 0.86

commerce in terms of buyer / seller
protection encouraged us to adopt e-
commerce

Source: Author Computation (2017)

67
4.2.2.4 Summary of Factors Influencing the Adoption and Level of Use of E-

commerce among Agribusiness and farms

The summary of the factor presented below shows the extent of contribution of the factors to

respondents’ firm adoption and use of e-commerce. The result showed that over a range of

mean obtainable of 5, the contribution of technological factors, organizational and

environmental factors to the adoption of e-commerce is less than average. This result shows

that for a significant adoption of e-commerce in agribusinesses, there is a need to improve the

technological, organizational and environmental factors that will facilitate and increase

agribusiness and farms adoption of e-commerce.

Table 4.2.9: Summary of E-commerce Adoption Factors

1. Mean Standard Deviation

Technological 2.16 1.15

Organizational 2.13 1.69

Environmental 1.97 0.98

Source: Author Computation (2017)

4.2.3 Impact of E-commerce Adoption on Agribusiness Performance

The result showing the change in company’s performance as a result of adoption of e-

commerce is shown in table 4.2.10 below. From earlier result which shows lower adoption of

e-commerce, the impacts of e-commerce is mainly weak in all the domain of impact seen in

the table with the highest strong impact observed in sales growth followed by financial

resources while both market share and company’s image and client loyalty have the same level

of impact.

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Table 4.2.10: Agribusiness and farm Current Performance

Very Weak Same Strong Very

weak Level Strong
N(%) N(%) N(%) N(%) N(%)
Long term profitability 267(97.8) 0(0.0) 0(0.0) 6(2.2) 0(0.0)
Sales growth 228(83.5) 0(0.0) 0(0.0) 45(16.5) 0(0.0)
Financial resources 234(85.7) 0(0.0) 0(0.0) 39(14.3) 0(0.0)
Market Share 237(86.8) 0(0.0) 0(0.0) 36(13.2) 0(0.0)
Company image and client loyalty 222(81.3) 0(0.0) 15(5.5) 36(13.2) 0(0.0)
Source: Author Computation (2017)

The perception of respondents on impact of e-commerce if well adopted, integrated and used

in agribusiness is shown in table 4.2.11 below. Majority of the respondents indicated that there

will be significant large increase in each of the domains: Sales turnover of my company,

Geographical reach of my company, Fostering customer relationships, channel of distribution

among others.

Table 4.2.11: Effect of E-commerce Adoption on farms and agribusiness

Large Small Unchanged Small Large

Decrease Decrease Increase Increase
N(%) N(%) N(%) N(%) N(%)
Sales turnover of my company 0(0.0) 0(0.0) 22(8.1) 77(28.2) 174(63.7)
Geographical reach of my 0(0.0) 7(2.6) 34(12.5) 78(28.6) 154(56.4)
company
Customer awareness of 0(0.0) 7(2.6) 34(12.5) 97(35.5) 135(49.5)
products
Fostering customer 0(0.0) 2(0.7) 56(20.5) 19(7.0) 196(71.6)
relationships
Our Standards of customer 0(0.0) 18(6.6) 54(19.8) 42(15.4) 159(58.2)
services
Operational effectiveness 0(0.0) 0(0.0) 58(21.2) 70(25.6) 145(53.1)

69
 operational efficiency 0(0.0) 73(26.7) 27(9.9) 52(19.0) 121(44.3)
order handling efficiency/speed 0(0.0) 36(13.2) 34(12.5) 51(18.7) 152(55.7)
marketing costs 8(2.9) 27(9.9) 30(11.0) 63(23.1) 145(53.1)
administration costs 0(0.0) 9(3.3) 50(18.3) 63(23.1) 151(55.3)
channel of distribution 0(0.0) 0(0.0) 29(10.6) 94(34.4) 150(54.9)
Source: Author Computation (2017)

4.3 Limitations of the Study

The study is not without limitations, to this end, the following limitations have been identified.

1. The lack of verifiable and reliable population data exposes the study to a population

specification error.

2. Although the study is intended for farms and agribusiness in Nigeria but was restricted

to those residing within the State of Osun, hence did not cover the entire area intended.

3. Lack of quantitative data from secondary sources of data for assessing the impact of e-

commerce adoption on farms and agribusiness based on evaluation of historical data

from performance that may be more accurate compared to the use of primary data that

relies on the judgement, experience and perception of respondents.

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 CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATIONS

Having presented the result of the study in the preceding chapter, this chapter contains

summary of the findings, conclusions drawn by the researcher, the researchers

recommendations and suggestions for further studies.

5.1 Summary

The study was designed to examine the impact of e-commerce on agribusiness marketing,

though for time constraint and finance it was limited to a particular study area, Osun State,

Nigeria. Discussion was centred on key e-commerce and agricultural marketing concepts as

well as review of the importance of such concepts and evidence emerging from practice of such

concepts based on empirical studies. This study is of great importance to the agricultural sector

as well as the ICT sector that provides the enabling technology and services, the government

and the citizen at large that depends on agriculture for both food security, economic

development and employment opportunities among others.

The study revealed that e-commerce adoption among farms and agribusiness is considerably

low, based on the analysis of data gathered in the study, the following are the major findings;

1. Majority of the farms and agribusiness surveyed have and use computer in their

operation that is connected to the internet but mainly used for communication than for

buying and selling activities and procurement why many more have plans to acquire

and use ICT.

2. Adoption and tendency to adopt e-commerce as a marketing tool was discovered to be

very low as the technological factors, organizational factors and environmental factors

necessary for influencing adoption is not active in the farms and agribusiness surveyed.

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 3. The low adoption of e-commerce was discovered to be responsible for the weak impact

of e-commerce on agribusiness and farms performance, although evidence from few

respondents adopting e-commerce in some form, show improved sales growth and

access to financial resources while majority agree that with improved adoption and

integration of e-commerce as well as support and low cost ICT services strong

performance in the areas of sales turnover, geographical reach, customer relationship,

enhanced procurement among others will be achieved resulting from the benefit of

adopting e-commerce.

5.2 Conclusion

It has been established by researchers and scholars that e-commerce brings with it the benefit

of achieving wider market penetration and share, offers price freedom to customers, reduce

intermediation, transaction costs, fosters customer relationship, and provide information

required by farms and agribusiness to make vital production, procurement and marketing

decisions, these benefits will in no doubt facilitate agricultural growth and development that is

most desired by both government and citizens alike as its adoption in the agricultural sector

grows and the enabling technologies becomes more accessible.

Based on the summary of the major findings the researcher concludes that;

The level of ICT use by farms and agribusiness influences their decision to adopt e-commerce

as it contributes to the technological factors that influences e-commerce adoption

E-commerce has strong effect on agriculture that will be experienced as its adoption among

farms and agribusinesses grow.

Though its adoption is currently low, with the growing desire to improve the level of ICT use

in farms and agribusiness, adoption will certainly grow.

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5.3 Recommendations

Based on the findings of this study, some recommendations considered very important have

been put forward by the researcher.

1. E-commerce is key to overcoming some of the challenges experienced in agricultural

marketing such as too many intermediators, distance between farms and markets, lack

of required information for demand and supply decision making, etc. as such farms and

agribusiness firms should make effort to adopt such technology even at their level of

operation.

2. The government should support and accelerate adoption by ensuring that essential

enabling technology is both accessible and very cheap such as the internet made

available at the rural level where agricultural activities are carried out more.

3. The development of a Marketplace platform that will provide integrated market place

services where buyers and sellers of agricultural products and services will meet and

transact similar to Ebay, Amazon, Konga, with strong security measures in place that

facilitate adoption in agricultural just as it did in retailing of merchandise.

4. Provision of basic ICT education to farms and agribusiness alike focusing on the benefit

of using such technology in their business.

5. Further studies from the findings and limitations of the study should be carried out to

further validate the impact of e-commerce on marketing of agricultural products that

will make use of both primary and secondary data and cover a wider landscape for

better scientific result.

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 APPENDIX

QUESTIONNAIRE

DEPARTMENT OF MANAGEMENT AND ACCOUNTING

FACULTY OF ADMINISTRATION
OBAFEMI AWOLOWO UNIVERSITY, ILE-IFE, OSUN STATE
Dear Respondent,

I am a Post-Graduate student of the above-mentioned university, and I am carrying

out a research on “The Impact of E-commerce on Marketing of Agricultural

Products in Nigeria” in partial fulfilment of requirements for the award of Masters in

Business Administration.

I would greatly appreciate it if you could complete the attached questionnaires – to be

used for this research purposes only.

The study will be of benefit to the farmers and farm owners, managers and leaders of

agricultural intermediary firms, marketers of agricultural products, agro-allied

industries, information technology service providers, government, consumers of

agricultural products and various food processing companies.

Thank you for giving up your valuable time to assist in the research. Your cooperation

is greatly appreciated.

Sincerely,

Ibiaso Ormsley Adajames

(Researcher)

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