CHAPTER ONE

INTRODUCTION

1.1   BACKGROUND TO THE STUDY:

 It is noteworthy that Nigeria is an agrarian country with about 70% of her over 170 million population engaged in agricultural production (NBS/CBN, 2006) and provides subsistence for two-thirds (2/3) of Nigerians who are low income earners (Usman, 2006). While the Northern region of the country can guarantee the production of cereals such as sorghum, maize, millet, groundnut, cowpea and cotton, the Middle Belt and the South have the potentials to produce root tubers such as cassava, yam, cocoyam and other crops like plantain as well as maize (Abdullahi, 2003). In addition to crops, the country is also involved in the production of livestock, fisheries, forestry and wildlife.

 Nigeria is generally endowed with abundant natural resources, numerous all-season rivers and a favourable tropical climate. Rainfall is generally adequate and fairly well distributed throughout the country. Out of the 98.321 million ha of land available in Nigeria, about 75.30% may be regarded as arable land, which 10% is under forest reserves and the remaining 14.70% is assumed to be made up of permanent pastures, built up areas and uncultivable waste. In the light of the foregoing, agriculture is still a major sector as well as remains the cornerstone of the Nigerian economy (Salami, 2006; Igboeli, 2000).

Prabuddha and Babu (2010), put that agricultural policies in Nigeria have undergone four main phases: The first from 1960 to 1969; the second from 1970 to 1979, the period of the oil boom; the third from 1980 to the late 1990s, during the structural adjustment program (SAP); and the current NEEDS framework. After independence agriculture provided most of the country’s food, earned most of the foreign exchange and generated a substantial proportion of government revenue at the early stages of economic development in Nigeria. The abundance of food and cheap labour in the rural settings across the nation during this period resulted in complacency on the part of the government thereby putting the enactment of a virile and strong policy in the doldrums for decades.

The purpose of agricultural policy is the development of favourable and sustainable guidelines for the promotion of agricultural practices that will guarantee food security, provide employment for the citizens, raw material for all agro – based industries as well as to earn foreign exchange. It is the synthesis of the framework and action plans of government designed to achieve overall agricultural growth and development (FMA, 2001).

The mild food scarcity of 1960 to 1970 stirred up the government to concentrate briefly on food production. This was evidenced in the planned expenditure (PE) of 1962 to 1968 when 9.8% of the PE was allocated to the entire agricultural sector. Between 1970 and 1982 agricultural growth stagnated at less than 1% with sharp decline in the production of export crops. Similarly, per capital calorific food supply declined from surpluses in the 1960s to a deficit of 38% in 1982 when Nigeria turned a net importer of vegetable oil, meat, dairy products, fish and grains, notably rice wheat and maize with the food import bills rising astronomically (FMA, 1984, 2001).

As part of the Federal Government of Nigeria’s effort to revamp the agriculture sector, ensure food security, diversify the economy and enhance foreign exchange earnings, the FMA under the President Jonathan administration has embarked on a Transformation Agenda with a focus on the development of agricultural value chains, including the provision and availability of improved inputs (seeds and fertilizer), increased productivity and production, as well as the establishment of staple crop processing zones.

President Goodluck E. Jonathan once submitted that “Nigeria can no longer continue to be a sleeping giant…; it has to wake up and if we wake up, we must begin to do things differently”. His agricultural policy framework is to address reduction in post-harvest losses, improving linkages with industry with respect to backward integration, as well as access to financial services and markets. The Transformation Agenda targets rural communities particularly women, youth and farmers associations as well as improving rural institution and infrastructure. This research work is therefore directed at examining the effect of Agriculture Policy and Economic Development under the Jonathan Administration with Lagos State Ministry of Agriculture as the basis of the study.

1.2   STATEMENT OF PROBLEM:

The agricultural sector has suffered from years of poor management, inconsistent and poorly implemented government policies, government neglect of agriculture and lack of basic infrastructure. Agriculture accounted for 30% of the GDP in 2010 (World Factbook, January 9, 2012).

Nigeria is no longer a major exporter of cocoa, groundnut, rubber and palm products. Coca production mostly from obsolete varieties and over-aged trees are stagnant at around 150,000 tones annually. There is also a decline in groundnut, palm oil and other major export crops (United States Department of State, 2005). The decline in agricultural production was largely due to the rise of oil shipments (Abdullahi, 2003). Because of this development, the President Jonathan’s administration initiated a policy framework to overhaul the agriculture sector. But little has the popular Transformation Agenda done to promote economic development orchestrated by sound agricultural policy for the country.

Before the discovery of oil, agriculture was given the needed attention and impetus. But all of that is now illusion, as oil extraction has become the economic mainstay of the economy with it multifaceted macro-economic twin evil of unemployment and inflation.

The FMA (2001) propounded these as some fundamental weaknesses that impede the effectiveness of agricultural policies and program implementation in Nigeria:

A hostile environment where macro – economic policies and the agricultural policy are in disharmony thus resulting in escalating costs of production and reduced  purchasing power of farmers. Inconsistency and instability in macro – economic policies which discourage medium and long term investments in agriculture. The report also showed that the Nigerian agriculture lacks storage facilities and these have led to so much wastage and high cost of storage. This hinders the availability of source perishable agricultural produce through the year, therefore hindering agricultural development.

Another negative factor is dependence on weather which affects the increase in agricultural produce. Nigeria Agriculturists or farmers still depend on rainfall only to produce instead of the use of irrigation that supplies water all through the year.

Moreover, the agricultural sector is poorly financed in Nigeria. Farmers do not get credit easily from financial institutions, like commercial banks. The agriculturists find it difficult to finance projects which are capital intensive. Scholars have specified the need to diversify the economy, as a way of promoting economic development (Ojekunle, 2011). But it is not clear how this could be done. Hence, the study is necessary to come with how agriculture serves as an instrument for economic development.

1.3   OBJECTIVES OF THE STUDY:

The main objective of this study will be to examine the effect of agricultural policy on economic development under the Jonathan’s administration. Other specific objectives include:

A.To determine the nature of agricultural policy under the Jonathan’s administration.

B.To find out the effect of government finance on agricultural output.

C.To identify challenges facing the role of agriculture in promoting economic development.

D.And to provide plausible recommendations and on how agriculture can promote economic development.

1.4    RESEARCH QUESTIONS:

The undertaking of this research work shall be guided by the following research questions:

1.Can there be any nature of agricultural policy under the Jonathan’s administration?

2.Is there effect of government finance on agricultural output?

3.Can there be challenges facing agricultural role in promoting economic development?

4.Can there be recommendations on how to promote economic development?

1.5    RESEARCH HYPOTHESES:

Presented below are formulated hypotheses to be tested in the course of the research study;

Hypotheses 1:

Ho:     There is no significant relationship between agricultural policy and         economic development under the Jonathan administration.

Hi:     There is a significant relationship between agricultural policy and           economic development under the Jonathan administration.

Hypotheses 2:

Ho:     There is no significant relationship between government finance and      agriculturaloutput.

Hi:     There is a significant relationship between government finance and        agriculturaloutput.

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