Supply Response, Risk and Institutional Change in Nigerian Agriculture
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Date
2010-05-17
Authors
Ajetomobi, Joshua Olusegun
Journal Title
Journal ISSN
Volume Title
Publisher
African Economic Research consortium
Abstract
Nigeria is among many African countries that have engaged in agricultural liberalization
since 1986 in the hope that reforms emphasizing price incentives will encourage producers
to respond. Hitherto, the reforms seem to have introduced greater uncertainty into the
market given increasing rates of price volatility. This study therefore models supply
responses in Nigerian agriculture that include the standard arguments as well as price
risk. The data come from the AGROSTAT system of the statistical division of the Food
and Agriculture Organization (FAO), Federal Ministry of Agriculture statistical bulletins,
Central Bank of Nigeria statistical bulletins, Federal Office of Statistics Agricultural
Survey Manual and the World Bank Africa Development Indicators. The data are analysed
using autoregressive distributed lag and error correction models. The results indicate that
producers are more responsive not only to price but to price risk and exchange rate in the
structural adjustment programme (SAP) period than in the commodity marketing board
(CMB) period. Following deregulation, price risk needs to be meaningfully reduced for
pulse and export crops, especially cowpea and cocoa.