ECONOMIC EFFECTS OF CRUDE OIL EXPLOITATION ON CASSAVA PRODUCTION IN DELTA STATE

ABSTRACT

This study examined the economic effects of crude oil exploitation on cassava production in Delta State. Specifically, the effect of crude oil exploitation on land productivity, farm income and cassava yield was explored. The costs and returns, and hence profitability of cassava production as influenced by oil pollution, the farming systems and socio-economic characteristics of cassava farmers were critically examined. Copies of well structured questionnaires were used to collect primary data from a sample of 204 small scale cassava farmers drawn using stratified and simple random sampling techniques from the three (3) agro-ecological zones of Delta State between October 2007 and February 2009. Data were analyzed using descriptive statistics, costs and returns analyses, net margin and regression analyses. The results revealed that total fixed cost per cassava farmer was N27,624.49 while total variable cost per cassava farmer was N19,108.68. Total output of cassava product (garri) before and after oil spill incidents were 48,636kg and 40,549.22kg with an average yield of 328kg and 274kg respectively per cassava farmer. A net margin of N27,846.43 and N19,206.43 before and after oil spills incidents per cassava farmer, indicating a 31% reduction in profit, was also revealed. Using the Ordinary Least Square (OLS) multiple regression method to estimate the effect of crude oil exploitation on the major dependent variables, the linear functions had the best fit with adjusted R2 of 0.432 and DW- statistic of 2.08 for land productivity, adjusted R2 of 0.953 and DW-statistic of 1.537 for farm income and adjusted R2 of 0.950 and DW-statistic of 2.015 for cassava yield. The results of the regression analyses and all the hypotheses tested using the paired t- test statistic at 1% and 5% probability levels, indicated that crude oil exploitation had a negative and statistically significant effect on cassava production in consonance with a prior expectations. Thus, it is recommended among other measures that government at all levels should take pragmatic steps at enacting and enforcing stringent environmental laws that will protect the oil producing farming communities as well as guaranteeing the people a better means of livelihood.

CHAPTER ONE
INTRODUCTION
1.1      Background Information
One of the most discussed issues in Nigeria in recent time is that of sustainable development. Sustainable development, according to the Bruntland commission, is development that meets the needs of the present generation without compromising the ability of future generations to meet their own needs (World Commission, 1987).

Agriculture plays fundamental role in the development of any economy. Thus, according to Uwakah et al, (1991), agriculture is the bedrock of the economic development of most developing nations. Edordu, (1986) put it succinctly as follows: “experience has shown that no modern developed country around the world achieved rapid industrialization without having previously or simultaneously attained a marked increase in agricultural production”. The contribution of agriculture to development, most especially in the developing countries includes provision of food supplies, employment, capital formation, release of labour for industrial development and fibre needs of industries (Okorie and Eboh, 1999; Njoku, 2000; FAMRD, 2002). This implies that agriculture is very crucial to the social and economic development of Nigeria.


Agriculture is a vital business enterprise having various components. One of these components that is productive in nature is crop production-a component that dominates largely the Nigerian agricultural scene. It is noteworthy that agriculture in Nigeria is dominated by small scale farmers who are responsible for about 90 percent of the total production (Olatunbode, 1990). The small holder farmers usually have farm sizes ranging between 1-4 hectares and cultivate mainly staple food crops (Obinne and Mundi, 1999).

In recognition of the importance of crop production in the Nigerian economy, successive governments in Nigeria have undertaken various policy measures to revitalize the agricultural sector. However, none of these measures has yielded adequate fruitful result. This is an evidence of the fact that the bulk of Nigeria’s foreign currency earning presently comes from crude oil and gas. NNPC, (2004) reports that the national budget depends heavily on the revenue expectation from oil and gas and this will remain for a while. Thus, the dominant role of crude oil has pushed agriculture, the traditional mainstay of the economy from the early fifties and sixties, to the background.

According to Onwudiwe, (2003), there are eighteen oil companies operating currently in Nigeria. These companies operate over 159 oil fields and produce from over 1,481 oil wells. Of this figure, the Shell Petroleum Development Company (SPDC), controls about half (83 oil fields and 748 oil wells). All of these are almost exclusively in the Niger Delta region.


Oil production in Nigeria has come a long way from the early days of the 1950s. Today, of Africa’s proven crude oil reserves of some 66 billion barrels, Nigeria accounts for 25 billion barrels, more than 35 percent of the total. Therefore, the significance of oil in Nigeria’s political economy has grown considerably. From accounting for one percent of Nigeria’s export earning in 1958, it now accounts for up to 98 percent of export earnings; and from accounting for some 70 percent of total government revenue in 1970, it now accounts for between 80 and 90 percent. This phenomenal rise is attributable to crude oil output, which grew from 1.88 million barrels in 1958 to 822.75 million in 1974 and to 547.08 million in 1985 (NNPC, 1985). This figure rose significantly to 751.8 million barrels as at 1996 (CBN, 1996)......

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Item Type: Project Material  |  Attribute: 106 pages  |  Chapters: 1-5
Format: MS Word  |  Price: N3,000  |  Delivery: Within 30Mins.
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