GOVERNMENT EXPENDITURE AND AGRICULTURAL PRODUCTION IN NIGERIA (1970 – 2010)
abstract
This study critically examined the roles of government expenditure in agricultural production in Nigeria from 1970 to 2010. Data on relevant variables were gathered from the Central Bank of Nigeria’s statistics Bulletin. The OLS method and multiple regression analysis were used to specify and estimate a functional relationship between agricultural output and other explanatory variables, one of which is government expenditure. It was discovered that the adjusted R2 for the relationship was 85% and that government spending had a positive impact on agricultural development. Other significant findings were that the rate of inflation was very low throughout the period and had little impact on low productivity. The quantity of Rainfall was very low during the period, and it had no effect on agricultural output. Another observation was that rising agricultural product prices increased the sector’s performance because more people were drawn to it. Again, low interest rates encouraged investors to increase their investments in agricultural products.
CHAPTER ONE
1.0 INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The socioeconomic development of any country is usually dependent on a number of factors that work together to ensure the successful achievement of set development goals. Agriculture is one of these factors. Its discovery dates back to the 800 BC period, known as the New Stone Age, when man began to till soil and grow crops with crude stone implements (Anderson, 1995). According to Maslow (1954), food is one of man’s physiological needs that must be met before other needs can be met. Morgan and Henson (1085) argue that agriculture will remain an indispensable factor until the end of human existence, thereby supporting Maslow’s assertion.
Because of the importance of agriculture in every nation’s socioeconomic development, many countries around the world (i.e. developed) and developing) to put more emphasis on its growth. This is evident in the number of programs launched by both international organizations and individual countries to improve agricultural activities. In Nigeria, for example, successive governments have introduced and implemented such programs. Operation Feed the Nation (O.F.N. ), Agricultural Research Policy, Agricultural Development Project, Agricultural Credit Government Scheme, The Green Revolution, River Basin Development Authorities (RBDA), National Agriculture Land Development, Nigeria Agricultural and Co-operative Bank (NACB), The Structural Adjustment Programme (SAP), Directorate of Food, Roads and Rural Infrastructure (DFRRI), and others are examples of such programs (Anyanwu, 1960-1997). It is, however, disheartening that, despite the laudable nature of these programs and the significant financial resources invested in them, their economic impact remains minimal. as insignificant.
However, the problem that the Nigerian agricultural sector is currently facing can be traced back to the discovery of crude oil. The commercial discovery of crude oil deposits in various parts of the country in the mid 1960s, combined with the oil boom of 1974 as a result of the America, had a negative impact on the agricultural sector. As a result, the economy became overly reliant on oil. For example, the oil sector accounts for 20% of GDP, 95% of foreign exchange earnings, approximately 85% of total exports, and 65% of budgetary revenue (Anyanwu, 1997).
Agricultural contributions to the economy were critical in maintaining economic growth and stability, and stable growth in agricultural exports was the foundation of a favorable trade balance. Primary processing of agricultural raw materials as insignificant.
However, the problem that the Nigerian agricultural sector is currently experiencing can be traced back to the discovery of crude oil. The commercial discovery of crude oil deposits in various parts of the country in the mid 1960’s, combined with the oil boom of 1974 as a result of the America, had a negative impact on the agricultural sector. As a result, the economy became heavily reliant on oil. For example, the oil sector accounts for 20% of GDP, 95% of foreign exchange earnings, 85% of total exports, and 65% of budgetary revenue (Anyanwu, 1997).
Agricultural contributions to the economy were critical in sustaining economic growth and stability; stable growth in agricultural exports was the foundation of a favorable trade balance. primary processing of agricultural raw materials
OBJECTIVE OF THE STUDY
The overarching goal of this research is to examine the relationship between government spending and agricultural production in Nigeria, with the specific goal of identifying the problem of agricultural financing in Nigeria.
Make policy recommendations on how to improve Nigeria’s agricultural sector.
To assess the efficacy of government spending on agricultural production in the Nigerian economy.
SIGNIFICANCE OF THE STUDY
Despite huge sums of money allocated to the agricultural sector in each year’s budget, the agricultural sector of the economy has continued to perform below expectations in recent years, particularly since the inception of the current democratic government in Nigeria. The sector was budgeted for N9.874 billion in 2002. In addition to the allocation for that year, the Food and Agriculture Organization (FAO) donated over 72 million dollars in 2002, which was distributed to the 36 states of the federation. According to Iheagu (2002), the money has no justifiable purpose. Rather, what one sees is the government’s prevalent “Lack Luster” attitude toward the program’s total execution. He stated that everything is one side with an increasing number of sides. of jobless youths roaming about. He also stated that across the federation, warning signals are blaring about the possibility of a butcher National Food Security program, which could result in a situation similar to what is being seen on a daily basis by the price of food items in the market and the crude farming system being practiced in the country. The situation calls into question the effectiveness of the country’s various agricultural programs, necessitating an examination of the effectiveness of government expenditure on agricultural production in the Nigerian economy.
SCOPE OF STUDY
The purpose of this study is to assess the impact of government spending on agricultural development in Nigeria (1970 – 2010). This study will also look at agriculture’s contribution to economic development over the years as specified above.
STATEMENT OF HYPOTHESES
Ho: Government spending on agriculture will not result in agricultural development in Nigeria.
VS
Hi: Government spending on agriculture will result in agricultural development in Nigeria.
1.7 LIMITATION OF STUDY
This work was not all that economical; the problem of allocating time between the research study and other academic work was a significant limitation because the two activities occurred concurrently. Another major limitation was the one due to financial constraints to fund all the aspects of the work.
DEFINITION OF TERMS
As a result of their involvement, the following terms will be used:
AGRICULTURE: This term refers to the cultivation of land resources, as well as the raising and rearing of animals for the production of food, feed, and raw materials for human, animal, and industrial use.
FARMER: This is a collective term for those who have worked in agriculture, either as cultivators or harvesters.
INDUSTRY: This term refers to the various institutions that use agricultural output to produce secondary or final goods for economic purposes.
BOOM: This simply means a surge in trade activity, particularly when money is being made quickly.
PRODUCTION: The act of putting goods and services on the market to the general public.
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