PROFITABILITY ANALYSIS OF BLACK SOAP PRODUCTION IN EKITI STATE, NIGERIA

The study examined the profitability of black soap production in Ekiti State, Nigeria. Primary data were collected using structured interview schedule from 90 respondents in a 3-stage sampling technique covering three local government areas of Ekiti State. Descriptive statistics was used to describe the socio-economic characteristics of producers, while soap profitability was computed using Gross Margin analysis. Factors affecting soap production was determined using multiple regression analysis. The results from the findings showed that majority of the respondents were females, married, experienced with average age of 56 years. It also revealed that they sourced credit from personal savings. The profitability analysis showed that a black soap producer incurs an average Total Cost (TC) of N21, 404.67 and makes average Total Revenue (TR) of N23, 724.67 with an average profit of N2, 320.00 per production cycle. Therefore it can be concluded that black soap production is profitable in the study area. Results of multiple regression analysis showed that cost of production materials including palm kernel, packaging materials, ashes and fire wood were significant at different probability levels indicating that an increase in each variable leads to an increase in sales revenue. The estimated coefficient of multiple regressions (R2) indicates 75% in the variation of sales revenue. The major constraints to black soap production were lack of capital, inadequate raw materials and non availability of water. The study recommended appropriate training and capacity building for soap producers as well as provision of facilities and other critical infrastructures to mitigate the constraints