1.1 Background to the Study
One of the important objectives of macroeconomic policy has been the rapid economic growth of an economy. Economic growth is defined as “the process whereby the real per capita income of a country over a long period of time.” Economic growth is measured by the increase in the amount of goods and services produced in a country. A growing economy produces more goods and services in each successive time period. Thus growth occurs when an economy’s productive capacity increases which in turn is used to produce more goods and services. In its wider aspect, economic growth implies raising the standard of living of the people and reducing Inequalities of income distribution. Economic growth is a desirable goal for a country. But there is no agreement over the annual growth rate which an economy should attain. (Jhingan, 2000).
Generally, economists believe in the possibility of continual growth .This belief is based on the presumption that innovations tend to increase productive technologies of both capital and labour over time. But there is every possibility that an economy may not grow despite technological innovations. Topicion might not increase further due to lack of demand which may retard the growth of the productive capacity of the economy. The economy may not grow further if there is no improvement in the quality of labour in keeping with the new technologies.
Economic growth is usually measured in terms of an increase in real gross national product (GNP) or gross domestic product (GDP) over time or by an increase in income per head over time. GDP measures increase in total output to a change in population. Thus, if total output rises higher as compared to population, then theirs an improvement in the average living standards. Growth is desirable because it enables the community to consume more private goods and services and the provision of a greater quantity of social goods and services such as health, education, etc. in this manner improving living standards. Government can also stimulate economic growth by increasing its current spending in the economy and through tax cuts (fiscal policy), and by increasing money supply and reducing interest rates (monetary policy).
Principally, there are three main determinants of economic growth, which are; the growth of its labour force, the growth of capital stock, and technical progress.
Nigeria used to be heavily dependent on the agricultural sector prior to the oil boom. In the early 1950’s up to the early 1970’s before the discovery of crude oil, agriculture was the mainstay of the economy, employing 70 per cent of the total population. Although subsistence farming was predominant, it was a major revenue earner for the country. In the early 1980’s, it became more apparent that the agricultural sector could no longer perform its traditional role of meeting domestic food requirement, raw materials for industry and started to decline as a major foreign exchange earner through exports due to economic , social and political problems.
Nigeria’s soils and climate allow cultivation of a wide variety of food crops, including cassava (of which Nigeria is the largest world producer), millet, sorghum and maize. Agriculture is Nigeria’s biggest employer of labour, accounting for about 60 per cent of the workforce, working mainly in small-holdings using basic tools. Together with livestock rising, it provides a third of gross domestic product.
Growth in agricultural output averaged 3.5 per cent over 1993-1997, higher than the population growth rate, 4.0 per cent, 5.2 per cent, 2.9 per cent, 5.1 per cent from 1998-2000 respectively (CBN 2000). This compares with a period of stagnation in the first half of the 1980’s when growth averaged just 0.5 per cent, due to low producer prices, marketing restrictions and a drought. Agriculture picked up after the economic reforms introduced in 1986, which included trade liberalization, dissolution of price-fixing marketing boards and improved producer prices facilitated by devaluation of the naira. Growth in the sector averaged 3.8 per cent in 1986-92, and there was a burst of activity in the cash crop sector, with many farmers returning to previously abandoned fields. However, the renewed interest was not sustained, nor did it result in increased investment in cash crop production, mostly carried out by smallholders. Improved food crop production contributed to a sharp fall in food imports, from 19.3 per cent of total imports in 1983 to 7.1 per cent in 1991, although this crept back up to 13.1 per cent in 1996. Much of the increase in agricultural output in recent years has resulted from expansion of the area under cultivation, rather from increased productivity. The sector has been hampered by lack of investment in improved farming technology. Over-farming of fragile soil has worsened.
The share of agricultural products in total exports has plummeted from over 70 per cent in 1960 to less than 2 per cent today. The decline was largely due to the phenomenal rise of oil shipments, but also reflected the fall in the output of products like cocoa, palm oil, rubber and groundnuts, of which Nigeria was once a leading world producer. For example, production of cocoa, currently Nigeria’s biggest non-oil export earner, has remained around 160,000 tonnes per year since 1995, compared with an annual average of 400,000 tonnes at its peak before the oil boom. The government has made some effort to encourage private investment in agriculture and agro-industries by providing incentives, including tax breaks, finance credit and extension services, but without much success
This area of study is quite broad and as such various studies have been carried out in the area in general and other sub-sectors, highlighting the relevance of the sector towards economic growth. With the understanding been identified, many researchers, scholars have developed models on improving and developing the agricultural sector especially in developing countries. However the study will attempt to review available literatures within its reach.
1.1.0 Socio-economic and development challenges in Nigeria’s agriculture
Nigeria is one of the largest countries in Africa, with a total geographical area of 923 768 square kilometres and an estimated population of about 126 million (2006 estimate). It lies wholly within the tropics along the Gulf of Guinea on the western coast of Africa. Nigeria has a highly diversified agro ecological condition, which makes possible the production of a wide range of agricultural products. Hence, agriculture constitutes one of the most important sectors of the economy. The sector is particularly important in terms of its employment generation and its contribution to gross domestic product (GDP) and export revenue earnings. Despite Nigeria’s rich agricultural resource endowment, however, the agricultural sector has been growing at a very low rate. Less than 50% of the country’s cultivable agricultural land is under cultivation. Even then, smallholder and traditional farmers who use rudimentary production techniques, with resultant low yields, cultivate most of this land. The smallholder farmers are constrained by many problems including those of poor access to modern inputs and credit, poor infrastructure, inadequate access to markets, land and environmental degradation, and inadequate research and extension services.
Since the collapse of the oil boom of the 1970s, there has been a dramatic increase in the incidence and severity of poverty in Nigeria, arising in part from the dwindling performance of the agricultural sector where a greater majority of the poor are employed. Furthermore, poverty in Nigeria has been assuming wider dimensions including household income poverty, food poverty/insecurity, poor access to public services and infrastructure, unsanitary environment, illiteracy and ignorance, insecurity of life and property, and poor governance. In response to the dwindling performance of agriculture in the country, governments have, over the decades, initiated numerous policies and programs aimed at restoring the agricultural sector to its pride of place in the economy. But, as will be evident from analyses in the study, no significant success has been achieved due to the several persistent constraints inhibiting the performance of the sector. From the perspective of sustainable agricultural growth and development in Nigeria, the most fundamental constraint is the peasant nature of the production system, with its low productivity, poor response to technology adoption strategies, and poor returns on investment. It is recognized that agricultural commercialization and investment are the key strategies for promoting accelerated modernization, sustainable growth and development and, hence, poverty reduction in the sector. However, to attract investment into agriculture, it is imperative that those constraints inhibiting the performance of the sector are first identified with a view to unlocking them and creating a conducive investment climate in the sector.
The development challenges of Nigeria’s agriculture are, therefore, those of properly identifying and classifying the growth and development constraints of the sector, unlocking them, and then evolving appropriate strategies for promoting accelerated commercialization and investment in the sector such that, in the final analysis, agriculture will become one of the most important growth points in the economy.
In spite of the existence of a well-articulated agricultural policy document for Nigeria since 1988, the country has never established a systematic focus in her agricultural planning history that shows a conscious effort to purposely prioritize her agricultural development based on the generally identified components that constitute modern agriculture. Over the years, there has been the development and adoption of programs that tended to generally support only increased production of commodities in the country. Such programs have included, among others :