Dr. Yahaya AT, Dr. Oladokun YOM, Dr. Ogunwolu QA and Dr. Oluwafemi ZO
The study examined the effect of price changes on competitiveness and comparative advantage of tea production in Nigeria. One hundred and two (102) farmers were randomly selected from 3 tea producing communities in the study areas. Primary data were collected from the sampled respondents with the use of structured questionnaires. The data collected were analyzed using Policy Analysis Matrix (PAM). The results from the analysis showed decreasing domestic price of output when input prices are fixed resulted to tea production becoming uncompetitive. At each successive decrease (20%, 40% and 60%) in domestic price, tea production will become less competitive (#52,483, #32,556, and #12,676). Furthermore, in this scenario, world price was kept constant hence, no effect on comparative advantage variables (SP, DRC and SCB). The protection coefficients (NPC, EPC and PC) are a smaller amount to one suggesting that national price of tea will be fewer when compares to the international value. This is indicating that producers will not be protection and this will not be beneficial to the realization of maximum profit. Decreasing change in world price led to a corresponding decrease in comparative advantage. Continuous decrease in world price will lead to decrease in social profit such that at 60% decreases, a negative value will be attained and would result into corresponding decrease in comparative advantage. At 60% decrease, tea production will no longer be socially profitable hence, making it not comparative advantageous. Protection coefficients showed that at 40% and 60% decrease in world price, producers will benefit from policy protection. There is an indication that at these levels, policy will encourage production and increase income into tea production.
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