Trends and Limitations of Some Selected Macroeconomic Policies on the Nigerian Agriculture

Abstract

Nigeria is over-dependent on exports of petroleum products despite enormous efforts in policy design and implementation to encourage exports of transformed agricultural products.   It is necessary to diversify the sources of its foreign exchange earnings. In this connection, this paper examined the trends and constraints of some selected macroeconomic policy instruments on agricultural development. Findings showed that exchange rate, wage rate, interest rate and expenditure in agriculture witnessed high instability which tends to propel high cost of production. High cost of production is exemplified by rising cost of capital in terms of interest rate on agricultural loans. This has almost permanently shut the door against farm loans. Also, expenditure on agriculture represented only a small proportion and its relative share in total expenditure did not show any discernible improvement, reflecting a declining trend in investment priority in the sector.  Under this condition, high cost of production tends to make locally produced agricultural products less competitive. Policy strategy to enhance agricultural development should focus on maintaining a stable macroeconomic policy environment, providing loans at single digit interest rate, and development of rural infrastructures that will enhance market linkages, promote industrialization as a driver of economic development, revenue diversification and wealth creation.

Keywords: Macroeconomics, Policy Instrument, Trend, Constraint, Agriculture