IMPACT OF TRANSPORTATION COST ON CONSUMERS RETAIL GOODS PRICES

IMPACT OF TRANSPORTATION COST ON CONSUMERS RETAIL GOODS PRICES

CHAPTER ONE

INTRODUCTION

BACKGROUND OF THE STUDY

As life started mankind begin to nurse the need for basic necessities of life for physiological satisfaction as food, shelter, safety, among other things. At first man tried to provide the necessary things to satisfy his needs to engaging in hunting, fetching some selected plants for food and find shelter among tree shades as well as applying plants leaves to cover his nakedness.

In the process of advancement man learnt that he could not provide all his needs by himself.  Then the exchange process started.  This began as an exchange of goods for goods otherwise called trade by barter.  The person who has a particular product in excess of his need of that particular moment would look for the person that has a need for his excess. Produce and at the same time has the produce he lacked so that an exchange could take place. So, the earliest trading or buying and selling practices were done on retail basis through the barter process.

When a common medium of exchange could monthly was inverted the practices of trade by barter became less relevant in the exchange process.  When barter was in vogue buyers and sellers did not take a conscious account of the cost and burden of carrying the goods around in search of a market.  As money became the means of payment even the service of carrying marketable commodities tot eh market was paid for.

Price has to be put on every commodity using money as the standard of measurement.  The seller in calculating the expenses of this business has to add the cost of transporting product from the point of production to the point of consumption.

In the ancient times, man used mostly the bests of burden to carry his goods from the point of production to the point of consumption, transportation nowadays has become more sophisticated, convenient, and faster.  Some of the mode of transportation include transport on railway, motor vehicles on road, ship, boats, canoes paddling though water and the airoplane flying I the airway.  The nature of production items of the order as well as the location of the market and the type of the market will determine the mode of transportation to employ.  (Onyebunagu 1995). Transportation is involved in every level of production and distribution until the product reaches the final users. Industrial revolution came into place and led to increasing productive capacity.

Most manufacturers and sellers want to enjoy the benefit of the economy offered by large-scale production and distribution.  They also aspire to explore large markets and operate at competitive levels.  They have to manage costs and process to be able to operate with efficiency and remains a float. In the Nigerian case, these distribution cost specifically transportation costs are sometimes viewed as some of the factors that account fro increasing prices of goods.

This study “the impact of transportation cost on consumer goods retail prices”, a case study of yam prices at the Garki market Enugu south L.G.A, Enugu State will discover whether cost of transportation constitute significance proportion of the price of consumer foods, particularly yams in the Garriki market.

STATEMENT OF PROBLEM

There has been a continuous increase in the price of consumers goods in Nigeria for many years now.  These price increases have been alleged to be as a result of increase in the cost of raw materials, transportation, rent, capital and labour.  Among these variable, this study will attempt to determine the degree to which cost of transportation affects process of consumer goods, particularly this study tries to find out the following:

The consumers allege that the increasing price are indication of the profiting attitude of sellers.  On their own side, the seller level the blame of increasing prices on the increasing cost of input materials and facilitating agents. The difficulty now becomes how to determine which of the claims is the truth about increasing prices.

It has been reported that the increasing price have confirmed to make many families unable to fetch their three-square meals daily. The government, labour and consumerists have show concern and made some efforts to bring the price increase under control without making any tangible headway.