Analysis of External Influences on Agricultural Performance in Nigeria

Abstract

The persistent slump in crude oil prices on the world market has drastically reduced government revenues, weakened currencies, and threatened growth and development of countries such as Nigeria that are heavily dependent on petroleum as a source of government earnings. Therefore, it has become imperative for the government to look beyond oil, notably agriculture to survive the present shocks. Given that agriculture is the largest non-oil export in Nigeria, this paper assesses the general performance of agriculture in the country. The article also verifies the relationship between trade, external financial flows and agricultural performance in the country, using Granger causality, IRF and VDA as well as descriptive approaches. The Granger test results reveal a unidirectional causality running from imports, openness, world prices of primary agrarian products, agricultural ODA to agricultural performance in Nigeria. The VDA results also show that a shock to agricultural exports, imports and openness can contribute to the fluctuation in the variance of agricultural performance in the country. The response of agricultural import to production records negative in almost all the periods investigated. This suggests that a substantial import in Nigeria might have hurt agricultural production in the country. The government of Nigeria should as a matter of urgency, invest heavily in agricultural production and encourage producers for domestic value added for local consumption and export. Also, more FDI and ODA should be channelled to agricultural related activities in the country. Domestic producers and exporters should be protected against foreign competitors in some commodities that can be produced cheaply at home.

Keywords

• export
• import
• trade openness
• performance
• agricultural ODA