Agriculture - Introduction

Posted by on 12/22/2003 3:14:04 PM
Post Comment Agriculture - Introduction Nigeria

By S. O. Talabi and O. Onasanya

In spite of the growing importance of oil, Nigeria has remained essentially an agrarian economy, with agriculture still accounting for significant shares in Gross Domestic Product (GDP) and total exports, as well as employing the bulk of the labour force. Available data show that at independence in 1960, the contribution of agriculture to the GDP was about 60 percent which is typical for developing agrarian nations. However, this share declined, over time, to only about 25 percent between 1975 and 1979. This was due, partly, to the phenomenal growth of the mining and manufacturing sectors during the period, and partly as a result of the disincentives created by the macroeconomic environment. Similarly, the growth rate of agricultural production exhibited a downward trend during the period. Thus, between 1970 and 1982, agricultural production stagnated at less than one percent annual growth rate, at a time when the population growth was between 2.5 to 3.0 percent per annum. There was a sharp decline in export crop production, while food production increased only marginally

Thus, domestic food supply had to be augmented through large imports. The food import bill rose from a mere 14112.88 million annually during 1970-74 to N1,964.8 million in 1991. The advent of the oil boom reduced the share of agriculture in total exports to a mere 2 percent. Previously the world's leading producer and exporter of palm oil, Nigeria became a net importer of vegetable oils by 1976.

In the early 1980s, it became apparent that the agricultural sector could no longer meet domestic food requirements, supply raw materials for  industry and earn enough foreign exchange through exports, owing to various economic, social and other environmental problems. Consequently, the Federal Government, in the 1986 budget, proposed a programme of economic recovery which was revised into a more comprehensive Structural Adjustment Programme (SAP) by the second half of 1986.

Among the major objectives of SAP were to restructure and diversify the productive base of the economy in order to reduce dependence on the oil sector and on imports, and to lessen the dominance of unproductive investments in the public sector. With respect to the agricultural sector, the core measures were an improvement of pricing policy and encouragement of exports through trade liberalisation. The performance of agriculture since the commencement of SAP, however, has been mixed.

Average growth rate of agricultural production was estimated at 5.2 percent annually between 1990 1997. Except for fishery output which declined, crops, livestock and forestry production recorded improvements. Domestic food supply and agricultural exports also recorded remarkable improvement. Apart from the rise in the share of export crops, such as cocoa, palm kernel and rubber, in the total volume of agricultural exports from 71.5 percent in the pre-SAP era to 84.1 per cent, new commodities, including food staples, entered the export basket.

Substantial exports were recorded, with earnings realised from agricultural exports increasing from a mere N193.6 million in 1985 to 143,233.06 million annually during 1990-94 (Table 4.3.1). The increase in the value of exports was traceable mainly to the improvements in both export trade and pricing incentives since the commencement of SAP. In particular, export prices in Naira terms rose sharply, following exchange rate depreciation, trade liberalisation and the abolition of the commodity boards.