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A CRITICAL ANALYSIS OF THE IMPLICATION OF FUEL HIKE ON FOOD PRODUCTION AND SUPPLY IN NIGERIA

CHAPTER ONE

INTRODUCTION

BACKGROUND OF THE STUDY

A historical examination of the Nigerian economy and its development reveals agriculture as the economy’s main artery and the source of foreign cash. Agriculture accounted for more than 80% of export earnings and wages in the 1960s, but around 65 percent of economic growth decreased with time.

In 1970, agriculture accounted for 34% of GDP, while in 2003, it accounted for 50% of GDP (Daramola, 2004). Agriculture currently accounts for 41% of the economy, while crude oil accounts for 13%. In 1970, agriculture accounted for nearly 50% of GDP; in 2003, it accounted for 34%. 2004 (Daramola) Agriculture also dominates in terms of jobs and ties to the rest of the economy, as Abayomi points out (1992). Agriculture is the primary source of income for the great majority of Nigerians, employing two-thirds of the workforce and accounting for one-third of the country’s GDP. (2002, Agro-Ind). The growth of Nigeria’s oil sector in the early 1970s resulted in significant systemic changes in the economy. As a result of the oil boom, government expenditure has increased, promoting a variety of other economic activities such as infrastructure construction, the creation of new institutions, the expansion of existing institutions, and the importation of consumer goods. These advancements have favored the appreciation of the naira (Dutch disease), but commercial agricultural items have not grown at a commensurate rate (Kwanashie et al.). Human and animal forces account for the majority of the energy demand for agricultural output. The usage of petroleum products in agricultural production has been documented. The usage of motorized water and diesel-powered tractors for agricultural mechanized operations demonstrates this limited yet vital resource when contrasted to human and animal power (Sambo,2005). Meanwhile, a strong and productive agriculture sector allows a country to feed its growing population, create jobs, trade, and offer raw materials to businesses. Agriculture has a multiplier effect on the socioeconomic and industrial fabric of any country because of its multifunctional nature.

STATEMENT OF PROBLEM

Nigeria is one of the countries whose domestic oil prices have been rising since the 1970s (Adenikinju, 2012). This is because, despite having three major refineries, Nigeria still imports petroleum products to meet domestic demand. The downstream crisis in Nigeria’s petroleum industry was thus a major issue for the majority of the population. This is because the country’s constant rise in fuel prices was caused not just by bunker vandalism, oil spills, and the activities of a few vendors, but also by refinery inefficiencies. This has a negative impact on the country’s economy due to ongoing fuel shortages, which lead to environmental and economic difficulties. Nigeria’s farm output has benefited and suffered as a result of the finding of crude oil. On the negative side, this has implications for the people who live in the areas where petroleum wells are used. Any of those communities is also subjected to environmental devastation, resulting in a lack of agricultural produce, primarily for sustenance. It also has an impact on other social and economic factors.

OBJECTIVES OF THE STUDY

The key objectives are as follows:

To look at the reasons for the increase in fuel costs in Nigeria.

To see if the causes of the increase in gasoline prices have an impact on Nigerian agricultural and food production.

To see how great of an impact it has had on the country’s economy.

RESEARCH QUESTIONS

What are the reasons for the increase in Nigeria’s fuel prices?

Does the increase in gasoline prices have an impact on agriculture and food production in Nigeria?

How much of an impact has it had on the country’s economy?

SIGNIFICANCE OF THE STUDY

This research will be extremely useful to the government as it seeks to find solutions to the threat of rising fuel prices. This study will also act as a resource for students and academics who wish to conduct additional research on the subject.

SCOPE OF THE STUDY

This research will look at the impact of a gasoline price increase on food production and supply in Nigeria, as well as the potential harm it will cause in the future. The sample responder for this study will be a Lagos resident.

LIMITATION OF THE STUDY

Finance, unavailability of materials, and the time factor to combine both research and academic work were the key limitations the researcher encountered while conducting this research.

DEFINITION OF TERMS

A FUEL HIKE is a significant increase in the price, rates, or amount of fuel that occurs suddenly or unexpectedly.

FOOD PRODUCTION: In the home or in the food processing industry, this is the process of preparing food by transforming raw materials into finished products.

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