Research Proposal on Trading in Gum Arabic

Research Proposal on Trading in Gum Arabic

Before the discovery of oil in 1956, the Nigerian economy was primarily agrarian with 97% of exports consisting of agricultural produce like cocoa, rubber, cotton just to mention a few, but sad to say that a shift in focus to oil has led to a decline in the production and exports of these produce which presently constitutes just 26.8% of GDP. With the growing need for a sustainable development of the Nigerian economy, there has arisen a need to shift spotlight away from oil and concentrate on other income generating sectors of the economy that can help the foreign exchange position of the country. From 1981, there was a policy shift towards export promotion and a move to intensify the use of local raw material in industrial production. However the increase in the value of imports led to a worsening of the balance of payments (with, in addition, the backdrop of the collapse in world oil prices), which forced the government to promulgate the economic stabilization (Temporary Provisions) act in April 1982[Inye, 2007].

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However, some incentives have been put together to encourage investment in agriculture, some of which are; Finance credit Tax Holdings, Reduced Customs Charges on Imported Inputs, Technical Support through Research Institutions, Export Financing and Guarantee, Agricultural Insurance Scheme, as Export Processing Zones (EPZs), Export Processing factories (EPFs), Export Processing villages (EPVs) and Extension Services. But most diversification initiatives had not made much headway until recently; they were mainly hampered by poor administration and ineffective trade policy strategy while some are still in their early stages so their impact is yet to be significant. In 2003, a lot of funds was injected into the presidential initiatives on cassava which was introduced to mobilize Nigerians to fully and profitably tap the potentials of cassava which hitherto had remained largely unharnessed, its strategy was to boost the production of cassava for both domestic consumption and for export, this development led to an increase in the production and export of ethanol. Presently,Nigeriaranks as the largest cassava producer in the world with estimated annual production of about 40million metric tons, of which about 90% is consumed as food [Yisa 2009]

In Nigeria, agriculture engages majority of the poor so the improvements in the sector is paramount to income generation, welfare enhancement, poverty alleviation, food stabilization and industrialization. With so many resources left unharnessed like; bitumen, cocoa, cassava cocoa, palm oil, yams, cassava, sorghum, millet, corn, rice, livestock, groundnuts, cotton, Gum Arabic. A boost in the supply side of these agricultural produce will invariably increase the country’s foreign exchange position, create employment opportunities and reduce overdependence on oil. This paper focuses on one of these unharnessed resources that have the potential of serving as a good source of foreign exchange, Gum Arabic.

Gum Arabic is an organic adhesive produced from a tree called Acacia Senegal it is a natural gum that exudes from the exterior of Acacia trees in the form of dry, hard nodules, with over 1,100 Acacia species worldwide, it produces a natural gum made of hardened sap mostly taken from three species of the acacia tree; Acacia senegal (Grade 1) which is the highest grade, Acacia seyal (Grade 2) and Combretum. In Nigeria, the major Acacia utilized for commercial Gum Arabic production are Acacia Senegal and Acacia seyal. The produce is used as a thickener, suspender, emulsifier, stabilizer, flavor carrier, binder and encapsulating material, so it is therefore needed in industries such as the textile, food, beverage, dairy and ice cream, cosmetic, confectionary and pharmaceutical, thereby making the market for it quite robust. The gum has binding or adhesive properties and as such is used as a good emulsifying agent. In food products, it serves as a stabilizer, emulsifier, and binding agent for chewing gums, ice cream and jams. In pharmaceuticals, the gum is a binder in lozenges, tablets, pills, throat pastilles and cough drops. In textile industry, it is used for fabric stiffening and as a binder for textile printing gums. In miscellaneous industries it is used in producing ink, water colors, paints, carbon papers, pottery glace; it is also used in the plastic industry. In confectionery industry it is used for, hard gums, soft gum and gum pastilles.

The Gum Arabic tree is usually ready for tapping 4-7 years after its establishment, tapping can then continue every year for at least ten to twelve years then they are finally coppiced for fire-wood and charcoal when the trees are about 15 years old. The tree’s extensive rooting system protects the land and has high potentials of improving soil fertility through inter-cropping with arable crops and its pods are valuable sources of livestock feeds. Due to the ability of the tree to withstand adverse environmental conditions, is now seen as a potent weapon in the continued fight against desertification and environmental degradation in the Sahelian belt of the country, Edward (1992) stated that it can be planted as a windbrake or shelterbelt to reduce soi………………………..