THE INFLUENCE OF TRANSPORTATION ON PRICES OF CONSUMABLE COMMODITIES

(A CASE STUDY OF SELECTED COMMODITIES MARKET IN BENIN CITY EDO STATE)

CHAPTER ONE

INTRODUCTION

BACKGROUND OF THE STUDY

The present day condition of the continuous rise in prices of consumable product all over the country are well known to the populace and thus, price increases has affected the individuals in several ways. The factors, which affect these price escalations of consumables products, are both human and natural factors. In the first place, the prices of the consumables products ca be highly due to the influences of human behaviour. For example, the price of consumables products will be high if may middle men partake in the process of distribution of the commodity. Also, it has been proved that production cost is a direct valuable an the price of goods after every producer, has a duty of not only to recover investments but also to maximize profit.

Secondly, the prices of goods can also be attributed to natural reasons, which are beyond the control of man. For instance, a period of unpleasant weather of heavy rainfall will definitely result to low production output. Thereby leading to a reduction in the supply of consumable product and consequently affects their prices. It is clear therefore that price of goods is an inverse proportion of the market supply.

Apart from the factors mentioned above, other factors such as transportation cost labour and in fact all the factors of precaution account for the high increase in the prices of consumables products. The cost of all these are added to the real cost of the product to inflate or increase the prices.

Hence, it implies that when the prices of these factors increase, indirectly the prices of the production will definitely increase and vice-versa.

In the course of this research, the main concern is transportation. The effects of transportation on prices, how does bad transportation system affect the prices of consumable commodities? Also what relationship has distance with these commodities that are transported, have on the relative prices of each products? Does good transportation system reduces the prices of consumables products in anyway? These questions above form the  background of this study.

STATEMENT OF THE PROBLEM

There are quite, a lot of contributions that this study will make. In the first instance the study will clearly show how transportation cost affect the prices of consumables precuts. It will also show the various means of transportation found in Oredo L.G.A. and the problems associated with them.

The government on their part has been insensitive about the problems of transportation in most local government areas and this has resulted in poor transportation, system. Thereby resulting in the increase of relative price of the consumable products.

In conclusion, therefore, a critical study of all the points mentioned will help the government to look at these problems of inadequate and inefficient transportation, system especially in the rural areas and find possible solution to ameliorate the situation.

AIMS OF THE STUDY

The objective of t his study is to analyzed the effects of transportation on relative prices of some selected products in Oredo L.G.A. of Edo State.

This study will also highlight on the relationship between transportation and the price of consumables products in this local government area.

Also, this study will also try to show the effects of this high prices on those that are involved in consuming the gods (the consumer).

Finally, to highlight and suggest solution or remedy to combat such price increase.

HYPOTHESIS

a.  High transportation cost affects the prices of commodities in Oredo L.G.A. of Edo State

b. High transportation cost do not have much effect on the prices of commodities in Oredo L.G.A. of Edo State

SCOPE OF THE STUDY

The scope of this study embraces the presents situation of the relationship between prices and transportation cost.

The ways in which goods are conveyed from the production centers to the various markets will be restricted, to Oredo L.G.A. of Edo State. With particular reference to the headquarter (Benin City) and the surrounding communities such as Iguosa, Egor, Ekiadolor etc.

At least, five food crops would be considered and they are yam, rice, plantain, cassava and tomatoes. The study will cover the effects of transportation and the effects of these prices on the consumers as well as finding possible solution or remedy to this problem.

METHODOLOGY

The method to be used in carrying out this research comprises both questionnaire and a visit to the market. Detail of the transport fare from the neighboring communities to the main market at Benin would be considered.

Available textbooks and published materials (both economics) relevant to this study would be used