Agricultural Supply Response to Trade and Exchange Rate Reforms in Nigeria

Table of Contents

1. Introduction

1.1. Problem Statement

1.2. Objectives of the Study

1.3. Justification for the Study

1.4. Scope of the Study

1.5. Outline of the Study

2. Background to the Study

2.1. Introduction

2.2. General Overview of the Nigerian Agriculture

2.3. Structure of the Nigerian Agriculture

2.3.1. Nigerian Agricultural Production

2.4. Agricultural Sector Performance in Nigeria

2.4.1. Agricultural Output Performance

2.4.2. Agricultural Trade in Nigeria

2.4.3. Agricultural Pricing in Nigeria

2.5. Agricultural Subsector: Crop Production

2.5.1. Cocoa

2.5.2. Palm Produce

2.5.3. Palm Kernel

2.5.4. Groundnut

2.5.5. Rubber

2.5.6. Cotton

2.5.7. Cassava

2.5.8. Maize

2.5.9. Yam

2.5.10. Rice

2.6. Policy Environment for Agricultural Production

2.6.1. Trade Policy Reforms

2.6.2. Exchange Rate Policy

2.6.3. Agricultural Policy Reforms

2.6.3.1. Farm Settlement Programme (FSP)

2.6.3.2. National Accelerated Food Production Programmes (NAFFP)

2.6.3.3. Agricultural Development Programmes (ADPs)

2.6.3.4. Operation Feed the Nation (OFN)

2.6.3.5. River Basin Development Authority (RBDAs)

2.6.3.6. Green Revolution (GR)

2.6.3.7. Directorate for Food Roads and Rural Infrastructure (DFRRI)

2.6.3.8. National Agricultural Land Development Authority (NALDA)

2.6.3.9. National Fadama Development Project (NFDP)

2.6.3.10. National Economic Empowerment and Development Strategy (NEEDS)

2.6.3.11. National Special Programme on Food Security (NSPFS)

2.6.3.12. Root and Tuber Expansion Programme (RTEP)

2.6.3.13. Agriculture in 7-Point Agenda

2.6.3.14. Bank of Agriculture

2.6.3.15. National Agricultural Research Project

2.6.3.16. Agricultural Transformation Agenda (ATA)

3. Literature Review

3.1. Introduction

3.2. Conceptual Issues

3.3. Review of Theoretical Literature

4. Theoretical Framework and Methodology

4.1. Introduction

4.2. Theoretical Framework

4.3. Exchange Rate, Trade Policy, Price and Supply Response

4.4. Model Specification

4.5. The Structural Factorisation

5. Analysis of Empirical Results

5.1. Introduction

5.2. Descriptive Statistics

5.3. Time Series Properties

5.4. Empirical Result

5.5. A Synthesis of Empirical Results and the Study Objectives

5.6. Summary of Findings

6. Summary, Conclusion and Recommendations

6.1. Introduction

6.2. Summary

6.3. Conclusion

6.4. Policy Implications of Findings and Recommendations

6.5. Limitations of the Study and Suggestions for further Studies

Research Objectives and Themes

This study assesses the response of agricultural commodities' prices and outputs to trade and exchange rate policy reforms in Nigeria between 1970 and 2013, investigating the extent to which these reforms have served as incentives for farmers to produce for domestic consumption and export.

• Agricultural supply response to trade and exchange rate policy shocks.
• Dynamic analysis using Structural Vector Autoregression (SVAR) modeling.
• Evaluation of pricing mechanisms, input costs, and trade liberalisation impacts on key cash and food crops.
• Analysis of institutional and policy environments affecting the agricultural sector.
• Transmission mechanism of macroeconomic policy variables into the agricultural sector.

Excerpt from the Book

Summary of Chapters

Chapter One: Introduces the study, presents the problem statement regarding agricultural supply response in Nigeria, outlines research objectives, and discusses the scope and structure of the thesis.

Chapter Two: Provides background information on the Nigerian agricultural sector, including its structure, performance metrics, and the historical policy environment from 1960 to 2013.

Chapter Three: Reviews theoretical and empirical literature related to trade policy, exchange rate impacts, and methodologies for analyzing agricultural supply response.

Chapter Four: Details the theoretical framework, specifying the SVAR model, data requirements, and sources used for the empirical investigation.

Chapter Five: Analyzes the empirical results, including stationarity tests, structural VAR estimates, impulse response functions, and variance decomposition for various crops.

Chapter Six: Summarizes the findings, provides conclusions, highlights policy implications, and discusses limitations along with suggestions for further research.

Keywords

Agricultural supply response, Trade reforms, Exchange rate reforms, Structural Vector Autoregression, Cash crops, Food crops, Commodity prices, Nigeria, Agricultural policy, Export performance, Macroeconomic policy, Production function, Output elasticity, Agricultural productivity, Economic liberalization.

Frequently Asked Questions

What is the core focus of this research?

The research examines how changes in trade and exchange rate policies in Nigeria from 1970 to 2013 have influenced the supply response of selected agricultural commodities, both in terms of output and domestic prices.

Which crops were analyzed in this study?

The study purposively selected ten major agricultural products: cash crops (cocoa, palm produce, palm kernel, groundnuts, rubber, and cotton) and food crops (cassava, maize, yam, and rice).

What is the primary goal of the study?

The primary goal is to assess whether trade and exchange rate reforms effectively incentivized farmers to increase production for both domestic consumption and international export, and to determine how these responses differ across various crops.

What methodology was utilized?

The study employed a Structural Vector Autoregression (SVAR) model. This was chosen for its capability to analyze the impulse response of endogenous variables to structural shocks, allowing for an examination of the adjustment paths of agricultural prices and outputs.

What is covered in the main body of the work?

The main body covers the historical context of Nigerian agriculture, a comprehensive literature review of supply response theories, the theoretical framework and model specification, and an in-depth empirical analysis of results, including impulse response functions and variance decompositions.

Which specific variables characterize the agricultural supply model?

Key variables include domestic prices of commodities, real exchange rate (REXR), degree of commercial openness (DCO) as a proxy for trade policy, international prices, cost of agricultural machinery, acreage, and labor.

How does exchange rate volatility impact export earnings?

The empirical analysis suggests that exchange rate volatility exerts a high level of negative impact on export volumes, though it can have different effects on export earnings depending on the specific commodity and the period under study.

What is the significance of the "Structural Factorisation" in the SVAR model?

Structural factorisation is critical as it imposes identifying restrictions based on economic theory to retrieve structural shocks from the reduced-form VAR model, enabling meaningful economic interpretation of the results.