Agricultural Policies and Economic Growth in Nigeria

1.1 Introduction

Agricultural policies refer to government interventions, regulations, programs, and initiatives aimed at influencing agricultural production, marketing, trade, and related activities. These policies can include subsidies, price controls, input subsidies, land reforms, agricultural extension services, and investment in agricultural infrastructure. Agriculture has been a fundamental sector driving the economy of Nigeria, contributing significantly to employment, GDP, and food security. Agriculture is known as the engine and panacea for economic growth in most developing nations of the world. It is also regarded as the basis for economic growth, development and poverty eradication in the developing countries.

According to Okoro (2011), in fact to further buttress the pivotal role the agricultural sector plays in the Nigerian economy, the agricultural sector is part of the Millennium Development Goals program of poverty reduction in Nigeria. In most developing countries, the agricultural sector remains, food, employment opportunities, provision of foreign earnings from exportation of the surpluses, and more importantly the enormous advantage of the value added in the various production process (Okoro, 2011).

As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are Significance of the study, Scope of work, Research hypothesis and questions, Limitation of the study and Definition of terms.

1.2 Background of Study

Nigeria's economy has long been reliant on its agricultural sector, which historically has been the backbone of the nation's economy, providing livelihoods for millions and contributing significantly to its GDP. However, despite its potential, the sector has faced numerous challenges ranging from low productivity to inadequate infrastructure and policy inconsistencies. Agriculture has been the backbone of the economy in Nigeria providing employment and source of livelihood for the increasing population it accounts for over half of the GDP of the Nigerian economy as at independence in 1960. However, the role it plays in the regional and economic development of the country has diminished over the years due to the dominant role of the crude oil sector in the economy. Originally an agriculture dependent country, Nigeria shifted focus to oil exports in the 1970s and decades of slow economic growth later; there is a need to refocus on agriculture. With the pressure to attain the MGDs, it is important to investigate the contribution of the sector to Nigeria's economic growth. Agriculture contributes 40% of the Gross Domestic Product (GDP) and employs about 70% of the working population in Nigeria (CIA, 2012). Agriculture is also the largest economic activity in the rural area where almost 50% of the population lives.

Agriculture contributes significantly to national food self–sufficiency by accounting for over 90% of total food consumption requirements, its helps to maintain a healthy and peaceful population and also a source of food and nutrition for households. Furthermore the ultimate objective of interest of economists in productivity should be to find ways of increasing output per unit of input and attaining desirable inter-firm, intra-firm and inter sector transfers of population resources thereby providing the means of raising the standard of living. With the increasing food demand in Nigeria, the country has available natural resources and potential for increasing the volume of crop production towards meeting the food and nutritional requirement of the rapidly increasing population and guarantee food security in the country.

Iganiga and Unemhilin (2011) and Oji-Okoro (2011) found that agricultural output is significantly influenced by government capital expenditure. Iyoha and Oriakhi, (2002) identified the sources of economic growth in Nigeria using the growth accounting model and found that agriculture contributes more than expected to GDP growth.

Agriculture indeed has remained the major sources of income to the economy. About 90% of the rural population is involved in activities related to the crop sub-sector which provides the bulk of agricultural income. Similarly the crop sub-sector supports the processing industry by providing raw materials. The agriculture sector has been the mainstay of the economy since independence and despite several bottlenecks; it remains a resilient sustainer of the populace. in the 1960s, Nigeria was the world's largest exporter of groundnut, the second largest exporter of cocoa and palm produce and an important exporter of rubber, cotton (Sekunmade, 2009). More recently, agriculture employs about two-thirds of Nigeria's labour force, contributes significantly to the GDP and provides a large proportion of non-oil earnings (CIA, 2013; Sekunmade, 2009). Therefore, in Nigeria where the research was carried out, the activities that was conducted is to know the Agricultural Policies and Economic Growth.

1.3 Statement of Problems

Investigation revealed that there is lack of consistent and coherent agricultural policies has resulted in uncertainty for stakeholders and inhibited long-term planning and investment in the sector. Also, there is poor infrastructure, including transportation networks, storage facilities, and irrigation systems, limits the efficiency of agricultural production, distribution, and marketing.

Furthermore, many smallholder farmers and agribusinesses struggle to access affordable credit and financial services, constraining their ability to invest in modern technologies and expand their operations. Nigeria's agricultural sector is highly vulnerable to the impacts of climate change, including erratic weather patterns, droughts, floods, and pests, which pose significant risks to crop yields and food security. Understanding and addressing these challenges are essential for designing effective agricultural policies that can promote sustainable economic growth and development in Nigeria.

1.4 Aim and Objectives of Study

The aim of the study is to examine the Impact of Agricultural Policies and Economic Growth in Nigeria. In achieving this aim, the following specific objectives were laid out as follows:

1. To examine the historical evolution of agricultural policies in Nigeria and assess their effectiveness in promoting economic growth;
2. To analyze the impact of agricultural policies on key economic indicators such as GDP growth, employment, and poverty alleviation;
3. To assess the role of institutional frameworks and governance structures in shaping agricultural policy outcomes and economic growth;
4. To identify the major challenges facing the agricultural sector in Nigeria and their implications for economic development; and
5. To propose recommendations for policymakers and stakeholders to enhance the effectiveness of agricultural policies in driving sustainable economic growth in Nigeria.

1.5 Research Questions

The study came up with research questions so as to be able to ascertain the above stated objectives. The specific research questions for the study are stated below as follows:

• Are there challenges facing the agricultural sector in Nigeria and their implications for economic development?
• What is the historical evolution of agricultural policies in Nigeria and assess their effectiveness in promoting economic growth?
• What is the impact of agricultural policies on key economic indicators such as GDP growth, employment, and poverty alleviation?
• What is the role of institutional frameworks and governance structures in shaping agricultural policy outcomes and economic growth?

1.6 Research Hypothesis

In order to pursue the objective of this study, the following generalized statements have been designed to guide and aids in obtaining the result for the experiment to be conducted. For this work, the null hypothesis will be represented with H0 while the alternative hypothesis will be represented with hypothesis H1.

Hypothesis One

• H0: There is no significant relationship between agricultural policies and economic growth in Nigeria
• H1: There is significant relationship between agricultural policies and economic growth in Nigeria

1.7 Significance of Study

Agricultural policies play a vital role in driving economic growth by impacting various facets of the economy. They not only influence the productivity and efficiency of the agricultural sector but also have ripple effects throughout the entire economy. By promoting technological advancements, infrastructure development, and market access for farmers, agricultural policies enhance productivity, leading to increased output and incomes. Furthermore, investments in agriculture create employment opportunities, particularly in rural areas where the sector is predominant, thus reducing poverty and stimulating consumer spending.

Additionally, ensuring food security through strategic policies stabilizes prices, mitigates risks of food shortages, and contributes to social stability, all of which are crucial for sustained economic growth. Ultimately, effective agricultural policies are indispensable for fostering inclusive economic development, especially in agrarian economies.

Finally, Nigeria's experience with agricultural policies can offer valuable lessons for other developing countries facing similar challenges. By studying the Nigerian context, researchers and policymakers in other regions can gain insights into effective strategies for leveraging agriculture as a driver of economic growth and development.

1.8 Scope of Study

The scope of the research is focused on the Impact of Agricultural Policies and Economic Growth in Nigeria.

1.9 Limitations of the Study

During the course of this study, many things militated against its completion, some of which are:

1. Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
2. Research Material: availability of research material is a major setback to the scope of the study.
3. Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

1.10 Definition of Terms

Agricultural Policies:

Agricultural policies refer to government interventions, regulations, programs, and initiatives aimed at influencing agricultural production, marketing, trade, and related activities. These policies can include subsidies, price controls, input subsidies, land reforms, agricultural extension services, and investment in agricultural infrastructure.

Impact:

Impact is defined as the action of one object coming forcibly into contact with another or a marked effect or influence.

Organization:

An organization or organization is an entity comprising multiple people, such as an institution or an association, which has a collective goal and is linked to an external environment.

Economic Growth:

Economic growth denotes the increase in a country's production of goods and services over time, typically measured by the growth rate of gross domestic product (GDP). It reflects the expansion of an economy's productive capacity and is often associated with improvements in living standards, employment opportunities, and overall welfare.

Agricultural Productivity:

Agricultural productivity measures the efficiency with which inputs such as land, labor, capital, and technology are used to produce agricultural output. It is commonly expressed as output per unit of input (e.g., yield per hectare, labor productivity), and improvements in agricultural productivity are essential for increasing food production, reducing poverty, and enhancing rural livelihoods.

Food Security:

Food security refers to the availability, access, and utilization of sufficient, safe, and nutritious food to meet the dietary needs and preferences of all individuals within a population.

Poverty Alleviation:

Poverty alleviation involves efforts to reduce or eradicate poverty by improving the economic, social, and environmental conditions of impoverished individuals and communities. Strategies for poverty alleviation may include income-generation programs, social welfare schemes, education and skills development initiatives, access to basic services, and targeted interventions to address the root causes of poverty.

Rural Development:

Rural development encompasses policies, programs, and initiatives aimed at improving the economic, social, and environmental conditions of rural areas and communities. It seeks to promote sustainable livelihoods, enhance agricultural productivity, provide access to basic services and infrastructure, empower rural populations, and bridge the rural-urban development divide.