ABSTRACT
This research work investigates the Roles of Agricultural sectors on Economic Growth and Development in Nigeria using the multiple regression analysis method. The data utilized spanned between 1981 - 2010.
The research work analyses and describes the past methods of agricultural development In Nigeria and this helps to know the current dispensation and the possible direction that could be followed in the future.
From the finding of this research work, it was observed that if the sector is well funded, itwill provide the needed raw materials for the industrial sector, increase capacity utilization, reduce unemployment rate in the economy and will guarantee food security. Also, the revenue from the sector has influence on economic growth in Nigeria.
Thus, the paper conclude by recommending that government needs to participate and play major roles in the agricultural sector in other to promote and enhance the performance of the sector and invariably add to economic growth of the nation
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
The role of agricultural sector in an economy cannot be overemphasized. The forward and backward linkages to the rest of the domestic economy, to the international market and with poverty alleviation are very strong. A bad year for agriculture due to natural calamities, like drought has extremely adverse effect on GDP growth, living standard of the population, manufacturing output, industrial output, price level, exportable surplus and balance of payments.
The primary purpose of agriculture to development and growth is to feed the people of the country. This role in food production is irreplaceable because the availability of adequate food supply disables scarcity that leads to higher prices and also most people must work to produce enough food for the population (Begg, 2003). Also maintaining a good food supply implies good health for the people hence increased, productivity which will promote economic growth. Output from the agricultural sector serves as input for the activities of the manufacturing, external and the industrial sector - which contributes greatly to economic growth. For example timber from trees is used to make paper, furniture, etc. Also secretions from some plants and trees have healing capabilities and are used to make medicine for the sick. Agricultural products include export goods like cash crops which serve as a source of foreign revenue for the country. In fact these other sectors need the agricultural sector in order to thrive. Agriculture also employs a greater percentage of the inhabitants of the area that is before the discovery of petroleum in Nigeria. This is largely because of the transition from subsistence agriculture to commercial agriculture which is concerned with the production for food for the growing population, provision of raw materials for agro-allied industries (like those engaged in textiles, tobacco, sugar, leather, etc.) and generation of foreign exchange earnings.
The agricultural sector is a prominent feature in the Nigerian economy and it has basically remained the same since 1960. This was before the discovery of oil. Sustaining agricultural production is one of the pre-requisites for improving the living standard in any economy. "The Nigerian economy underwent profound structural changes during the 70's and 80's. It was once an agriculturally-based economy and a major exporter of cocoa, peanuts and palm products. Today, Nigeria relies mostly on oil for more than 90% of its export earnings, 30% of its GDP, and 70% of its federal budget resources. Neglected sectors like agriculture has caused the Nigerian economy to be in economic stagnation and decline" (Todaro and Smith, 2003).
From the mid-1970s, crude oil became the main export product of the Nigerian economy. The economy has said to be suffering from the Dutch Disease because of the over-reliance on the oil sector at the expense of other sectors hence the need for the diversification of the economy. The diversification is especially important because of the volatility of the international oil market on which we solely depend on. This has necessitated the examination of the role of the agricultural sector in our country. Despite the huge amounts invested in agriculture and the various policy measures aimed at the re-activation of agriculture, such as the Operation Feed the Nation and the Green Revolution by various governments since the 1980's, no meaningful headway was observed. Food production has not been keeping pace with the rapid population growth rate. The introduction of the Structural Adjustment Programme (SAP) in 1986 by the Babangida administration laid much emphasis on sustaining agricultural production in which several measures were taken to revive this sector, to which no sustainable growth has been recorded. The purpose of this study therefore is to examine the role of agriculture in economic development of Nigeria.
1.2 STATEMENT OF THE PROBLEM
Although the impact of agriculture in an economy is great, the neglect of this sector in Nigeria especially by the government, has led to many problems ranging from increased food prices to unemployment, low standard of living, low national income. The neglect of this sector is evident in the various problems that plague the agricultural sector including farm mechanization, primitive implements, transportation and storage problems, low productivity, inadequate infrastructure, little or no credit/finance facilities, land tenure system etc.
It is regrettable that after about 37 years of oil and gas exploration in Nigeria, the country has not been able to effectively develop other resources/sectors to complement the role of crude oil in the economy. The backbone of the economy plus the other sectors, including the manufacturing and industrial sector, have been neglected to cause the total reliance on the oil sector. The volatility - unstable and unpredictable nature of the crude oil market specifically the declining oil prices - has been known to impact the economy adversely. Experience has also shown that the nation cannot continue to rely on a single resource for its economic development. Hence the challenge is how to develop and harness the potentials of Nigeria's agricultural sector towards economic growth.
The agricultural export earnings have been falling, virtually continually from a level of $389.58million in 1961, a rate of 2.45% per annum to $218.41million in 2008 which is below 2%. (CBN Annual Report 2008 and Statistical Bulletin 2008). The fall became rapid in the mid-seventies of the oil-boom era. The foreign exchange earnings in millions of Naira were more or less stagnant until after 1985 when the Naira depreciated considerably against the US dollar and other foreign currencies. So the nominal growth in earnings represented a fall in real terms, as inflation rates exceeded this growth. Hence there is the need for revolutionary change In policy formation and implementation in this sector.
1.3 OBJECTIVES OF THE STUDY
The broad objective of this study is to evaluate the role of the agricultural sector in the economic growth and development in Nigeria. The specific objectives of the study are:
v To examine the impact that the agricultural sector plays in the Nigerian economy.
v To assess the trend of government expenditure on agricultures in Nigeria
v To examine the role that banks' loans and advances on agricultural sector plays in the growth of the agricultural sector
v To proffer policy recommendations for economic growth through the agricultural sector.
1.4 RESEARCH QUESTIONS
The research questions relevant to this study are:
1. How does the agricultural sector affect economic growth?
2. How do banks' loans and advances affect the agricultural sector?
3. What is the trend of government expenditure on agriculture in Nigeria?
1.5 STATEMENT OF HYPOTHESIS
.