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AGRICULTURAL POLICIES AND THE NIGERIAN ECONOMY: A CRITICAL ASSESSMENT

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CHAPTER ONE

INTRODUCTION

1.1       Background to the Study

Agriculture in the context of the economy is tied with the various sectors and is essential for generating broad based growth necessary for development. As such, it is fundamental to the sustenance of life and however poses as the bedrock of economic development, especially in the provision of adequate and nutritious food so vital for human development and industrial raw materials.

Specifically, agriculture comprises of the main fields of human activity and basically characterizes of primary production of food and cash crops, livestock, fishing, forestry and marketing of the products realized in these activities. It contributes immensely to the development of the economy in various ways, ranging from the provision of food for the increasing population, supply of adequate raw materials (and labour input) to a growing industrial sector, a major source of employment, generation of foreign exchange earnings and, provision of market for the products of the agrarian sector (Okumadewa, 1997). The agrarian sector has a strong relationship with the economy; hence, this raises concern for the implementation of effective agricultural policies within the Nigerian economy.

Support for agriculture is widely driven by the public sector, which has established institutional support in form of agricultural research extension, commodity marketing, input supply and land use legislation, to fast-track development of agrarian sector to achieve the aim of economic development. The importance of the agrarian sector, also suggests the intervention of the private sector through sponsorship of research and breakthrough on agricultural issues in Universities, capacity building for farmers and, most importantly, the provision of fund for farm businesses. In addition, international governmental and non-governmental agencies including the World Bank Fund and Agricultural Organization of the United Nations, also contribute through on-farm and off-farm support in form of finance, input supply, strengthening of technical capacity of other support institutions, among others.

For developing countries, agriculture plays the role of promoting economic development by increasing availability of food and provision of raw materials for industrial production. Also, it expands the size of the domestic market for industrial goods; raises the level of savings and capital formation, and also earning foreign exchange from exports. In the case of Nigeria, the attention given to the agricultural sector has also given room for capital development, revenue generation and job creation, since most economic activities are predominantly agricultural. Indeed, as observed in some quarters, the country received its principal stimulus for growth from agriculture in the 1960s and 1970s (Anyanwu, 1997; Central Bank of Nigeria, 1997).

In the light of the above reality, the Nigerian economy, during the first decade after independence could reasonably be described as an agricultural economy, because agriculture served as the engine of growth of the overall economy (Ogen, 2003). From the standpoint of occupational distribution and contribution to the GDP, agriculture was the leading sector. During this period Nigeria was the world’s second largest producer of cocoa, largest exporter of palm kernel and largest producer and exporter of palm oil. Nigeria was also a leading exporter of other major commodities such as cotton, groundnut, rubber and hides and skin (Alkali, 1997). The agricultural sector contributed over 60% of the GDP in the 1960s and despite the reliance of Nigerian peasant farmers on traditional tools and indigenous farming methods, these farmers produced 70% of Nigeria's exports and 95% of its food needs (Lawal, 1997).

However, at the dawn of the 1970s, agriculture lost its dominant position to crude oil and natural gas production, in terms of contribution to GDP, the export basket, foreign exchange earnings, government revenue and so on. Output deteriorated and the sector generally stagnated. The food situation became disturbing and almost alarming to the extent that, Nigeria, once one of the leading producers of certain agricultural goods, became an importer of some of the same products, especially food grains.

In order to reverse this trend, the country adopted series of agricultural revival strategies and programmes targeted at different activities in the agricultural sector, ranging from finance, pricing, infrastructure, institutional development, marketing, storage and so on. The efforts were further boosted by increased earnings from crude oil sales. Massive funds were invested in the sector, several institutions were created and the work force developed. In spite of all this, agricultural production remained low and lagged behind other sectors. Food supply was still below the demand and the food import bill continued to grow. The sector was also seen as a drag on the other sectors of the economy.

According to Prabuddha and Babu (2010), Agricultural policies in Nigeria have undergone four main phases: The first from 1960 to 1969; the second from 1970 to 1979, the period of the oil boom; the third from 1980 to the late 1990s, during the structural adjustment program (SAP); and the period of the NEEDS framework. On the contrary, Ayoola (2011) classified agricultural policies and programmes in Nigeria into four categories, namely: agricultural policies and programmes in the colonial era, the post-colonial era, the military era and the present Fourth Republic.

Contrarily, sustainable agricultural development is propelled by agricultural policies. The first national policy on agriculture was adopted in 1988 and was accepted to remain valid for about fifteen years, that is, up to year 2000. Also, in year 2001, a new policy document on agriculture, was lunched. The new policy document has most of the features of the old ones, but with more focused direction and better articulation (Uche, 2011). However, the Fourth Republic has witnessed the emergence of several policies and programmes channeled towards agriculture, and these range from the National Economic Empowerment and Development Strategy (NEEDS)National Special Programme on Food Security (NSPFS), and the Root And Tuber Expansion Programme (RTEP) of the Obasanjo administration; the 7-Point Agenda of Yar’Adua administration which anchored on land reforms and food security; the Agricultural Transformation Agenda of Jonathan administration, and the Agricultural Promotion Policy (APP), otherwise referred to as the “Green Alternative” which represents a policy document of the present administration of President Muhammadu Buhari that seeks to build upon the goals of the ATA.

Furthermore, agricultural policies are supported by sub-policies that facilitate the growth of the sector. As such, the implementation of agricultural policies is however moderated by macro-economic policies which provide the enabling environment for agriculture to grow alongside other sectors. These policies usually have major impact on profitability of the agricultural system and the welfare of farmers as they affect the flow of funds to the sector in terms of budgetary allocation, credit, subsides, taxes and therefore, must be in harmony and mutually reinforcing with the agricultural policies. The macro-policies comprise the fiscal, monetary, trade budgetary policies and other policies that govern macro-prices.

In a nutshell, agricultural policies provide for among others, the adequate financing of agriculture. As such, the role of the agricultural sector in the diversification of the economy cannot be over emphasized, given that it guarantees food security of any nation.

It is against this background that this study seeks to undergo a critical assessment of the impact of agricultural policies on the Nigerian economy.

1.2       Statement of the Research Problem

Agriculture no doubt remains the main-stay of the Nigerian economy. Studies revealed that about 80% of the Nigerian population engage in agricultural-dominated activities. In other words, the agricultural sector in Nigeria from the right sense of judgment is supposed to be the major source of revenue to government, as well as to the Nigerian citizens. This was exactly the case in the 1960s to 1970s, considering the achievements made from the earnings of the agricultural sector in the then three regions of Nigeria, namely, Eastern, Western and Northern regions. A cursory look at the activities of the marketing boards of that era showed that the earnings from the major commodities in the three regions recorded considerable growth in their export earnings.

The Eastern Nigeria Marketing Board, whose main office was located at Port Harcourt, handled the following commodities: palm kernels, palm oil, cocoa, copra, beniseed, soya beans, and groundnuts. Here, the oil palm produce accounted for the enormous profits which boasted the agricultural sector in the first decade after independence.

The Northern Nigeria Marketing Board, whose main office was located at Kano, was responsible for the purchase of the following commodities: groundnuts, cotton, beniseed, soya beans, cocoa, and palm produce. Of these products, groundnuts produced the most revenue, and groundnuts and cotton provided the majority of all purchases and sales. However, in the late 1960's, oil-palm produce showed a considerable increase in its contribution to the trading account and these earnings further accounted for the boast seen in the agricultural sector at that time.

The Western Nigeria Marketing Board with its main office at Ibadan handled the following commodities: cocoa, oil palm produce, cotton, and fresh fruit. Cocoa served as the major commodity which contributed immensely to the growth recorded in the agricultural sector.

Specifically, the exports handled by the Marketing Boards accounted for 63 % of the value of total exports recorded in the agricultural sector. Groundnut exports (including groundnut oil equivalents) grew at 5.2% compound annual growth rate in 1964 - 1966. Groundnut processing further increased rapidly in that era. About 450,000 tons of groundnuts were processed in 1968. Also, 15% of the world exports of oil palm was shipped from Nigeria between 1964 -1965. The corresponding figure for palm kernels was 56 %, while the value of raw cocoa exports from Nigeria was 22.1% of the value of all domestic exports in 1964 (Osuala, 1970).

Generally, Nigeria was, indeed, a leading agricultural nation in the 1960s and 1970s. The sector once dominated the economy, accounting for well over 60% of the GDP. Its output in the food sub-sector was also enough to meet local demand. The sector employed, and still employs, over 75% of the population, especially in the rural areas. In terms of contribution to external trade and government revenue, it also accounted for between 66% and 73% of the total foreign exchange earnings as it dominated the export basket and helped ease pressure on the country's balance of payments. Most of the foreign exchange was earned through the export of various cash crops including palm produce, rubber, cocoa, cotton, groundnut, beniseed and coffee (Anyanwu, 1997).

However, despite the dominant role of the petroleum sector as the major foreign exchange earner, agriculture remains the mainstay of Nigeria’s economy. In addition, to contributing the largest share of the country’s GDP, it is the largest non-oil export earner, the largest employer of labour, and a key contributor to wealth creation and poverty alleviation, as a large percentage of the population derives its income from agriculture and agriculture-related activities.

Over the years the rate of growth in agricultural production has stagnated and failed to keep pace with needs of a rapidly growing population, resulting in a progressive increase in import bills for food and industrial raw materials. However, with the discovery of crude oil in Nigeria, agriculture has gradually been neglected. Also, the potential of the agri-business sector as a major employer of the growing labour force and an earner of foreign exchange has also been undermined. As a result, the large majority of Nigeria’s population, many of whom live in rural areas, remain poor. Similarly, Nigerian efforts in agricultural development over the past three decades have failed to improve the country's economy. A review of the sector depicts a gloomy picture. Performance is reflected in environmental degradation, mounting food deficits, and decline in both gross domestic product and export earnings, while retail food prices and import bills have been increasing. These effects have further impoverished the smallholder farmers, locking them into a poverty web (Osemeobo, 1992).

Also, public expenditure on agriculture has, however, been shown not to be substantial enough to meet the objectives of Government agricultural policies. For a developing country with a mono-product oil economy such as Nigeria, Government’s indifference to agriculture portends great danger to the economy for many reasons. For instance, fluctuating food prices are a precursor of inflation. Secondly, from the expenditure approach to national income accounting, it is likely that Engel’s Law that a large chunk of expenditure in developing economies goes to food consumption, meaning that shocks to the domestic agricultural production and supply could be damaging to price stability. There is also the perspective of food security, in an era when food has been used as a weapon of War (United Nations Oil for food Deal in Iraq) and as a bargaining tool (North Korea- United States Food Deal). Even within Nigeria, the federal military government during Nigeria-Biafra War used food blockage as a tool of war.

Notably, the Nigeria Poverty Assessment Report (2007) attributed the galloping increase in the Nigerian poverty rate to low and declining yield or productivity in agriculture, and this contributes significantly to rural poverty. The Nigerian Poverty Assessment Report further contended that in the light of the poor state of agriculture, as the survey results show, households whose heads are engaged in the sector tend to have the highest level of poverty incidence. Based on this, scholars have contended that the neglect meted on the sector has contributed to and has hindered agricultural productivity, and reduction in income from agriculture in Nigeria is linked to poor policy formulation and implementation in the sector. Also, it was observed that most of the policies of government on agriculture have failed to address the issues of land tenure system, provision of adequate agricultural facilities to farmers, access to agricultural micro credits, access to markets for the sale of agricultural products, provision of agricultural education to rural farmers on mechanized farming, among others.

On the other hand, improving agricultural extension services as well as providing adequate agricultural infrastructures have remained poor. Over 85% of Nigerian farmers have no access to agricultural extension services and necessary agricultural infrastructure that increases productivity (Uche, 2011). Therefore, there is no empirical evidence to show for the enormous resources put into the agricultural sector as a means to diversifying the Nigerian economy from its crude oil based economy.

As a matter of fact, the initiation of these policies do not take into consideration, the Environmental Impact Analysis (EIA), the Economic Impact Analysis (EIA), and the Social Impact Analysis (SIA) which would have helped to give the problems of agriculture in Nigeria a holistic approach.

Apparently, the intended goals and objectives of agricultural policies such as: generating massive employment through agriculture and agro-based businesses, reduction of high poverty rate, ensuring sufficiency in the supply of food for the Nigeria’s teeming population, improving per capita income of Nigerians who engage in agriculture, taking comparative advantage of the Nigerian agricultural products in the international markets, among others, have remained unachievable to some extent considering some research findings on the assessment of agriculture in Nigeria.

It is therefore against this backdrop that this study will conduct a critical assessment of the impact of agricultural policies on the Nigerian economy. In view of the fore-going, the study raises the following questions:

(i)         Have agricultural policies made significant impact on the Nigerian economy?

(ii)        Have the agricultural policies impacted on the growth and development of agricultural sector in Nigeria?

(iii)What are the factors militating against the good agricultural policies in Nigeria?

(iv)       Do the formulation and implementation of agricultural policies follow stipulated guidelines and procedures?

(v)What are the measures to be adopted in improving formulation and implementation of agricultural policies in Nigeria?

1.3       Objectives of the Study

For purpose of clarity, the objectives of this study are grouped into two categories namely: Broad and specific.

-           The broad objective of the study is to undergo a critical assessment of the impact of agricultural policies on the Nigerian economy.

-           The specific objectives of this study are to:

(i)         Ascertain the progress made by agricultural policies so far on the Nigerian economy.

(ii)        Examine whether the impact of agricultural policies have reflected on the growth and development of the agricultural sector in Nigeria.

(iii)       Identify the factors militating against good agricultural policies in Nigeria.

(iv)       Proffer possible solutions towards improving the formulation and implementation of agricultural policies in Nigeria.

1.4      Research Hypotheses

The following hypothetical assumptions have been formulated to further guide the study:

i.         Effective implementation of agricultural policies is likely to facilitate the growth of the Nigerian economy. 

ii.        The growth of the agricultural sector is a function of the development of agricultural policies in Nigeria. 

iii.       High incidence of corruption tends to militate against agricultural policies in Nigeria.

1.5      Significance of the Study

The significance of the study presents the value or contribution which the research will make to the existing knowledge. As such, the significance of this study is presented thus:

Theoretically, this study has the potential of contributing greatly to the growth of existing theories in social sciences particularly in public administration. It will help to enrich the bank of knowledge through its reliable findings on the critical assessment of how agricultural policies affect the Nigerian economy. The study will no doubt assist in improving the frontiers of knowledge, especially in the management of the public policies and decisions which bothers on the agricultural sector in Nigeria. Also, the study will be of immense benefit and will however pose as a reliable tool which will help in the monitoring of the progress made so far by the government in improving the Nigerian economy through agriculture. On the other hand, the study will assist in unveiling the challenges or factors militating against effective implementation of government policies and programmes on agriculture, and will proffer useful suggestions that will be geared towards ensuring the successful achievement of the goals of such agricultural policies and programmes.

Empirically, this study will serve as a paradigm for future researchers who may in due time consider it imperative to undergo studies that bothers on the assessment of the impact of agricultural policies on Nigerian economy. In other words, this research will serve as a useful and veritable bibliographical reference which will stimulate research for other related studies in relation to agricultural policies and how it impacts on the Nigerian economy.

Practically, this study is considered significant because it will contribute in providing decision makers and other key actors in the government with the road- maps that will necessitate prompt, responsive and efficient policy making in Nigerian agricultural sector. It will also suggest the panacea through which frequent failures in Nigerian agricultural policies can be effectively tackled.

In a nutshell, this study has the potential to strategically improve the practical steps aimed at the implementation of government’ policies on agriculture and this will be actualized through its advocacy on reforming the public bureaucracies in Nigeria, especially those concerned with the implementation of government policies on agriculture.

1.6       Scope of the Study

The scope of analysis for this study is clearly restricted to the geographical location known as Nigeria. The focus of the study is to undergo a critical assessment of the impact of agricultural policies on the Nigerian economy. But due to the expanse nature of the study area, the study will however be limited to Abia State. The State is located within the South Eastern region of Nigeria and lies between Longitude 040 45’ and 060 07’ North and Latitude 070 00’ and 080 10’ East. Abia State is bound by Imo State at the Western border; Ebonyi and Enugu States at the North; Cross River and Akwa Ibom States at the East and Rivers State at the South. Its population stood at about 2.883,999 persons, with a relatively high density at 580 persons per square kilometer (National Population Commission, 2007); (Rotary International (2006).

Abia State is divided into administrative blocks called Local Government Areas which is grouped into three (3) agricultural Zones namely: Ohafia, Umuahia and Aba Zones. In terms of occupation, about 70% of Abians are farmers and have the potentials for the production of crops (both arable and permanent), livestock, fish and food processing (ABSG, 1992). The study will be guided by structured questionnaires which will be administered on rural farm households by the researcher. For the purposes of social inclusiveness, male and female - headed households will be selected, and this will help to constitute the sample size that will serve as a generalization of the entire population. The study will be specifically anchored on the evaluation of the performance of the Agricultural Development Programme (ADP) which represents a joint Federal - State Government collaborative effort aimed at increasing food production for rural dwellers and raising the income level of small scale farmers by making provision for improved seeds, fertilizer, pesticides, credit facilities and infrastructural facilities, shuttling between its objectives, achievements, as well as the challenges of the programme towards curbing the decrease in agricultural productivity through sustenance of domestic food production. Also, efforts will be made in assessing the level of investment made by the government in the agricultural sector and further examining the factors that account for the shortcomings in that sector.

1.7       Definition of Operational Terms

For the purpose of this study, the following terms are operationally defined thus:

·                     Agricultural Sector: The agricultural sector in the context of this study is identified as a vital sector of the Nigerian economy that is characterized by food production, animal husbandry, forest conservation, fisheries, among others. It further constitutes of the activities of land tenure system, food security, manpower development, and extension services etc.

·                     Agricultural Policies/Programmes: The agricultural policies or programmes emerges as policy documents or decisions made by government and directed towards the achievement of specific goals that will contribute positively to the agricultural sector and subsequently boasting the Nigerian economy. Here, efforts will be made in examining these policies and programmes, as well as their efforts towards revamping the Nigerian Economy.

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