HECTARAGE AND OUTPUT RESPONSES OF MAJOR CROPS TO MARKET LIBERALISATION AND PRICE RISK IN NIGERIA

ABSTRACT
Liberalization is part of the ongoing domestic market reforms and globalization policies that redefined government responsibility and actions, which affect agricultural development, and the welfare of farmers. This study examined hectarage and output responses of major crops to market liberalization, price risk and financial support. The objectives were to describe trends of output, hectarage and prices of these crops, as well as describe trends of non-price factors and estimate the effects of these factors on hectrage and output of selected crops. The study covered a period of 38 years from 1970 to 2007. Secondary data were obtained from the Food and Agriculture Organization (FAO) Statistics Data Base, Publications of Central Bank of Nigeria, (CBN) and National Bureau of Statistics. Data were analysed using descriptive statistics and seemingly unrelated regression model estimation. The descriptive statistics results showed that output of rice was the lowest among the cereals. It ranged from 403,000 to 4,165, 070 tonnes. Fluctuations that characterise nominal prices also marked the price risks. The nominal price risks for maize, rice and yam were the highest among the carbohydrate staples from 2005 to 2007. Time series property analysis showed that the variables satisfied criteria for estimation of ECM for the hectarage allocations and output estimates. Regression analysis showed that the coefficient of determination for hectarage and output equations accounted for about 80% and 85% of variation in hectarage and output of the majority of the crops. Price and price risks were major determinants of hectarage allocation and output of the crops. Real exchange rate had positive relationship with hectarage of yam but negative relationship with output of beans, cocoa and coffee. Volume of rainfall had positive relationship with the output of rice, yam and cocoa beans but a negative relationship with those of maize, sorghum and oil palm. Ten percent increase in rice price will lead to about 16 and 24 percent increases in its hectarage and output, respectively. Sorghum showed a similar pattern only that an increase in its output was 9 percent, which was less than that of rice. It was recommended that farmers should cultivate crops such as rice, maize, cassava and yam have positive relationship with the liberalization exercise. The Government should continue to attract FDI since it had positive impact on output of rice, yams, beans and cotton coffee and oil palm as well as increase funding of ACGSF since it had positive impact on hectarage of rice, maize, cassava, groundnut, and oil palm. Nigerians should redirect their taste to local foodstuffs and goods made from local agricultural raw material to limit the effect of market liberalization through substitution with imports. This is because the consumption of imported food products, which has local substitutes, limits demand for local production, which will, results in low hectarage allocation and subsequently lower output.

CHAPTER ONE
INTRODUCTION
1.1. Background of the Study
Okuneye, Aromolaran, Adetunji, Arowolo, Adebayo and Ayinde (2001); Alabi and Chime, (2008) have, attributed the present economic problem in Nigeria to the poor performance of the agricultural sector and have argued that the persistent economic recession in Nigeria since the post oil boom era, could be corrected with improved performance of the agricultural sector. The near collapse of the Nigerian agricultural sector during the era of oil boom (1972 – 1975) and the increasing food insecurity are as a result of inconsistent and unfocused government policies (Alabi and Chime, 2008). The small-scale farmers that dominated the production sector produce about 85% of the total output (Okuneye, 1995). The majority of the farmers are small scale producers who are affected by inconsistent and unfocussed government policies, and poor infrastructure resulting in low production, high prices of food items, and underdevelopment of the sector and poverty of farmers (Alabi and Chime, 2008). Ojo (1994) argued that the Nigerian agricultural sector was rendered less competitive over time through over-valued currency, inappropriate pricing policies and rural-urban migration, which caused the dearth of farm labour. Other factors that can militate against agricultural production in Nigeria include declining arable land area per capita, erratic rainfall and climatic change, poor input supply such as fertilizers, low capital expenditure and poor financial resources (Imahe and Alabi, 2005). Mahendra (2007) aptly noted that agricultural GDP in parts of the developed world will benefit from climatic change, whereas in many developing regions it will decrease. The present poor state of agriculture may not necessarily cause the eradication even from the mind, of the positive and significant role it played in the Nigerian economy.

The agricultural sector used to be the mainstay of the Nigerian economy. The exports of primary agricultural products dominated its external trade, especially from 1960 to 1970 when the exports of cocoa, palm produce (palm oil and palm kernel), groundnuts, cotton and rubber accounted for about 80% of total exports. It was also recorded that Nigeria was the largest exporter of groundnut, accounting for 40% of the world supply (Oyejide, 1987). The sector was the main source of food for the population and served as means of livelihood for over 70 percent of the population as well as major source of raw materials for agro-allied industries (Alabi, Aigbokhan and Ailemen, 2004). The Dutch disease phenomenon which crept into the economy as a result of the crude oil boom and the neglect of other productive sectors adversely affected agriculture. The neglect of the agricultural sector resulted in a decline in food production, increased rural-urban migration and importation of food. By the mid-seventies......

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Item Type: Ph.D Material  |  Attribute: 108 pages  |  Chapters: 1-5
Format: MS Word  |  Price: N3,000  |  Delivery: Within 30Mins.
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