Response of Nigeria’s Agricultural Sector to Selected Macroeconomics Policy Variables

Abstract

This study analyzed the growth rate (output) of the agricultural sector in terms of the selected crops (cocoa and rubber) and the effect of macroeconomic variables on output of cocoa and rubber in Nigeria. The study covered the period between 1986 and 2010. Data were generated from secondary sources, including CBN, FAO and World Bank. Data were analysed through the use of descriptive statistics and the Ordinary Least Square regression analysis. The study shows that the production level of cocoa and rubber have been fluctuating over the period under review. Cocoa production rose to its peak between 1991 and 1995 with average output of 278.4 tones and fell to 189.3 tonnes between 2001 and 2005. Rubber production consistently increased throughout the period under review. Its average output in 1986-1990 was 172 tones, this rose to its peak of average output of 294.68 between 2006 and 2010. From the regression result, Output price affected the production output of Cocoa at the 0.05 level, while for Rubber production, capital and recurrent expenditures on agriculture are the main determining factors on output. While the capital expenditure is significant at the 10% level the recurrent expenditure on agriculture is significant at the 5% level. Based on the findings it is recommended that government percentage share of expenditure on agriculture should be increased and sector-specific and there should be incentive geared towards encouraging increased participation of the organized private sector in commercial agriculture. This will guarantee continual flow of investment resources, technologies and entrepreneurial skills in agriculture.

Keywords: Cocoa, Rubber, Macroeconomic variables, Agriculture, Nigeria.