GOVERNMENT EXPENDITURE AND AGRICULTURAL PRODUCTION IN NIGERIA 2010-2017

GOVERNMENT EXPENDITURE AND AGRICULTURAL PRODUCTION IN NIGERIA 2010-2017

ABSTRACT

The strongest source of livelihood worldwide has shown to be agriculture over time. In the industrialized countries, agriculture has produced enormous amounts of goods, and expansion has been constant. Developed nations have paid careful attention to agriculture as their populations have grown geometrically. In Nigeria, the movement of agricultural production has been characterized by an upward and downward syndrome. Government spending is an important tool to support this movement and promote meaningful production. The resources (financial and material) that are poured into the agricultural sector in this situation are considered government expenditures.Therefore, this study was conducted to investigate what, if any, correlation there may be between government spending and agricultural productivity in Nigeria. Is the country’s agricultural output influenced by the rate of government spending? The study used data from 2010–2017 to conduct this regression using the Ordinary Least Square method in order to determine this. The level of agricultural production is strongly influenced by the resources invested in the industry, and the study established a favorable association between the two variables.

Chapter one

Introduction 

Approximately 75% of the population depends on agriculture for their living, and according to World Bank estimates, this industry grew at an average annual rate of 2.9% between 1990 and 1998 (Opportunities in Nigeria’s Agricultural Sector, 2005). It is widely acknowledged that the agricultural sector is crucial to every developing nation’s economy. This is due to the fact that it is anticipated to meet the majority, if not the entire, of the nation’s food needs, provide the majority of the agricultural raw materials required by the manufacturing sector, adequately employ and pay farmers, as well as generate a sizable amount of foreign exchange for the execution of capital projects for developmental purposes.The development of agriculture has been hampered over time by inadequate agricultural infrastructure. While most small-scale farmers cannot afford to utilize such tools as contemporary diggers, ploughs (instead of hand hoes), and non-harmful chemicals for weed containment, fertilizers, etc. It is widely acknowledged that the agricultural sector is crucial to every developing nation’s economy. This is due to the fact that it is anticipated to meet the majority, if not the entirety, of the nation’s food needs, provide the majority of the agricultural raw materials required by the manufacturing sector, adequately employ and pay farmers, as well as generate a sizable amount of foreign currency for the execution of capital projects for developmental purposes.As a result, government spending on agriculture, which is an investment in the public sector, is essential for the transformation of the industry and the achievement of development policy goals. The cost or expenses that the government incurs for its own upkeep and for the benefit of society as a result of increased state activities are hence referred to as public expenditures. Government spending on agriculture is crucial, particularly in the field of infrastructure development, which includes irrigation, input distribution, feeder road construction, research, and extension. Not just because there are few private investors ready to invest in this industry, but also because the government firmly believes that the existence of such infrastructure and advanced technologies justifies making these investments will provide a significant contribution to the achievement of the anticipated increases in productivity and output growth in the sector.Despite these, the sector’s performance has often been regarded as inadequate, particularly in the wake of the 1975 Rosette virus epidemic and the 1971–1973 droughts (Ukpong, 1993). A number of national economic and social goals were achieved with the anticipated major impact. Due to increased crude oil export revenues, there has been a significant increase in food imports, which has served to discourage major domestic cultivation. Several initiatives were developed in the years prior to the Structural Adjustment Programme (SAP) to encourage the growth and development of the sector, in keeping with the projected contribution agricultural brings to the overall development of the Nigerian economy.The establishment of institutions specifically designed to lend to the sector, funding agricultural production directly through budgetary allocation, and by establishing agriculturally oriented institutions and programs like the Nigerian Agricultural Credit Bank (NACB), Agricultural Credit Guarantee Scheme Fund (ACGSF), Agricultural Development Programs (ADPS), and River Basin Development Scheme were some of these measures (OFN). Commodity Boards were eliminated once SAP was implemented in 1986 so that higher producer prices could be used to incentivize farmers to raise their output. Additionally, the annual production of important export products including cocoa, rubber, cotton, and groundnuts decreased by 43, 29, 65, and 64 percent, respectively, from 1970 to 1982. (Olomola, 1998)In contrast to the average growth rate, the value of agricultural exports skyrocketed by 70.5 percent from 1986 to 1990 as a result of SAP’s initial effects. Due to the effect of SAP, it stayed slightly lower but still high in the 1991–95 subperiods at 68.5 percent, but as the effect of SAP waned, it dropped to a comparatively low 18.2 percent in the 1996–2000 period (Manyong, 2003). Despite the public sector’s ten years of support for agriculture, there were signs of unstable or erratic developments. In this study, an effort has been made to identify the causes of the declining trend in agriculture’s contribution to the production of food, the GDP, foreign exchange profits, and raw materials. Moreover, why has there been a mixedMoreover, why have government finance strategies and programs for agriculture in Nigeria produced inconsistent results?

statement of the problem

Due to the fact that agricultural served as a significant portion of the population’s primary source of food and employment, agriculture has played a significant role in Nigeria’s economic development. Public spending, the main source of funding for the industry, has constantly fallen short of what the public expects. For instance, a 2008 joint study by the World Bank and the International Food Policy and Research Institute (IFPRI) found that less than 2% of the federal government’s annual budget is spent on agriculture in Nigeria. This is much less than the targets established by the African Leaders’ Forum for the overall Africa Agricultural Development Programme, which include Kenya (6%), Brazil (18%), and 10%. (CAADP).Despite insufficient investment, agriculture generated an average of 32% of the nation’s GDP from 1996 to 2000 and 42% from 2001 to 2009 (CBN, 2010). Agriculture made about 40% of the country’s GDP in 2011, although it only received 1% of all commercial bank loans, according to CBN Governor (People’s Daily, 2011). Researchers have noted inadequacy in government support of agricultural initiatives and programs due to lack of convincing evidence of growth promotion externalities by worsening food insecurity, social inequality, rural poverty, and hunger (Ogiri, 2004; Ogbonna and Osondu, 2015). Therefore, the purpose of this study is to ascertain how much money the government contributed to agricultural output in Nigeria between 2010 and 2017 and to compare that amount to other countries factors that affect agricultural output. This will serve as a framework for developing policies to boost the nation’s agricultural productivity.

Objective of the study

The objective of this study is to examine the impact of government expenditure on agricultural production. Specifically, we aim at:

·      Determining the relationship between government expenditure and agricultural output.

·      Ascertaining the impact of government expenditure on agricultural production.

·      Highlighting the challenges of Agricultural production.

1.4   Significance of the study

The agricultural sector has the potential to provide employment opportunities, it has the potential to eliminate hunger, and provide alternative foreign exchange for the Nigerian economy. This study is necessitated by an attempt to analyze the effect of government agricultural expenditure on agricultural output, to aid policy makers in making policies that will enhance agricultural productivity in Nigeria.

1.5   Study hypotheses

The study developed and formulated for testing the following hypothesis:

H0: There is no relationship between government spending and agricultural production in Nigeria.

Ha: There is a relationship between government spending and agricultural production in Nigeria.

H0: There is no significant impact of government expenditure on Agricultural production in Nigeria.

Ha: There is a significant impact of government expenditure on Agricultural production in Nigeria.

1.6   Scope and Limitations of the Study

The scope of this study is necessarily limited to the period 2010-2017; within this period, some new policies on agriculture has been made following the past administration of former President Goodluck Jonathan and the Buhari-led administration in 2015. It should therefore be acknowledged that the data used are derived from the Statistical Bulletin, National Office of Statistic, Journals, etc, and they are used to portray the significance or importance of government expenditure on agricultural output in Nigeria.

1.7   Organization of Study

The study is divided into five chapters. Chapter one deals with the study’s introduction and gives a background to the study. Chapter two reviews related and relevant literature. The chapter three gives the research methodology while the chapter four gives the study’s analysis and interpretation of data. The study concludes with chapter five which deals on the summary, conclusion and recommendation.