THE IMPACT OF AGRICULTURAL DEVELOPMENT ON NIGERIA ECONOMIC GROWTH, 1980ïÂ�Â� 2014

By

Author

Presented To

Department of Agriculture

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Agriculture continues to play a dominant role in economic development. Agriculture is the basic foundation of any industrial economic revolution in that, aside providing for the food needs of man, it supplies the raw materials that are inputs in the production process. The World Development Report (2013), Agricultural growth was the precursor to the industrial revolution that spread across the temperate world, from England in the mid-18th century to japan in the late 19th century. The report also noted that the recent rapid agricultural growth in countries like China, India and Vietnam as the precursor to the rise of industry. In countries where agricultural activity is at an increasing level, it generates taxable surplus that compliments government revenue. It is then no doubt to say that in many developed countries of the world, agriculture stood as the foundation for their development.

In the African circle, agriculture holds a great potential to serve as an engine of faster growth and poverty reduction in the region. This is because Africa is blessed with cultivable land, huge population and favorable climate which when fully utilized can plunge most of the countries on the pedestal of economic growth and development. A fact sheet published by the International Food Policy Research Institute in 2009 revealed that , 'in most African countries, agriculture is the engine of economic growth, and agricultural growth is the corner stone of poverty reduction. Approximately sixty-five percent of Africans rely on agriculture as their primary source of livelihood. Small scale farmers are responsible for more than ninety percent of Africa's agricultural production'. In the contemporary, agriculture accounts for 30 to 40 percent of Africa's Gross Domestic Product (GDP), and almost 60 percent of its total export earnings. Agricultural sector has no doubt contributed to the economic growth and development witnessed in Africa today. This was put in retrospect by Fan (2009), stating that agricultural growth rates have increased modestly from about 2.4 percent a year in 1980-1989 to 2.7 percent in1990-1999 and 3.3 percent a year since 2000. This is impressively outstanding and factual to note that the level of growth in agricultural productivity increased in response to the level of government expenditure in the sector.

Nigeria is obviously not left out of the statistics; agriculture remained a dominant aspect of the Nigerian economy, though it has experienced a worsened decline in the wake of crude oil. Prior to the discovery and subsequent exploration of crude oil in the seventies, agriculture gave Nigeria a pride of place among the committees of Nation. In spite of the growing importance of crude oil, Nigeria has remained essentially an agrarian economy, with agriculture still accounting for shares in the GDP and total exports as well as employing the bulk of the labor force (Talabi, 2014). The agricultural productivity and contributions to national economic growth has been on the decline. Available data shows that agriculture which contributed over 60 percent of the GDP in 1960 was contributing about 25 percent between 1975 and 1979. This study does not seek to identify the factors affecting agricultural productivity in Nigeria; rather, it seeks to evaluate the impact of agriculture in economic growth in Nigeria from 1980-2014.

1.2 Statement of the problem

Besides oil, the major strength of the Nigerian economy is its rich agricultural resource base, its human resource and its huge markets. However, these resources have to be effectively mobilized so as to diversify the economic base and reduce dependence on oil and import. The economy remains vulnerable to external shocks emanating from fluctuation in the world prices of crude oil and the rising prices of imports. The resulting external and internal in balances are manifested in the adverse balance of payment position, unemployment and low capacity utilization in virtually all sectors as well as the deteriorating purchasing power of the populace.

The contribution of agriculture to the Nigerian economic growth is very low compared to what it used to be in the past 14 years. Nigerian agriculture to a large extent still possesses the characteristics of a peasant economy that was prominent in the pre-independence period.

1.3 Objectives of the Study

The purpose of this study is to assess the impact of agriculture on economic growth in Nigeria.

However, the study will:

1. Examine the effect of agricultural practice in Nigeria on agricultural productivity.

2. Assess the impact of budgetary allocation and agricultural policies on agricultural productivity.

3. Estimate the trend of growth of agricultural sector in Nigeria since 1980 up to 2014.

4. Determine the relationship between agriculture and economic growth in Nigeria.

1.4 Research Questions

The following questions will guide the study.