Background Of The Study

Agricultural development is considered to hold the key to economic development for most Sub-Saharan countries including Nigeria. In Nigeria, there are several sectors that contribute to the total output of the economy. In practice, these are grouped into four major sectors, namely agricultural, manufacturing, oil/petroleum, and services. The agricultural sector is further disaggregated into crop production, livestock, forestry and fishing

In spite of the various agricultural programmes and policies initiated by different administrations for the development of Agriculture in Nigeria, there has not been any phenomenal growth in agricultural output since the 1970s. Agriculture’s contribution to the non-oil gross domestic product (GDP) was stable at about 40 per cent in recent years (FDA/FMARI, 2005). The index of agricultural output declined from 75.5 in 1970 to 35.2 in 1979. Although the index increased steadily from 35.2 in 1979 to 40.10 in 2005 – 2016, the growth rate shows complete absence of sustainability. For instance, the growth rate was negative throughout the 1970s; declined from 6.34 to 3.04 between 1982 and 1986, and then fluctuated to 8.33 in 2003 and -3.24 in 2005. The rate was worsened in 2010 (4.2) due to the high price of oil. The question agitating the minds of scholars is why agricultural output is low amidst the huge expenditure via the different programmes implemented in Nigeria.

Consequently, there has been a dramatic increase in the incidence and severity of poverty in Nigeria, arising in part from the dwindling performance of the agricultural sector where a preponderant majority of the poor are employed. Furthermore, poverty in Nigeria has been assuming wider dimensions including household, income poverty, food poverty/insecurity, poor access to public services and infrastructure, unsanitary environment, illiteracy and ignorance, insecurity of life and property, and poor governance. Arising from this backdrop, this paper is poised to investigate the nexus between food export and import on agricultural sector performance. Also, the study is apt to assess the relationship between agricultural credit financing and the sector’s productivity, while attempting to unravel the major determinants of agricultural output in Nigeria.

Agriculture is the bedrock of economic growth, development and poverty eradication in the developing countries. Agriculture has also regarded as the engine and panacea to economic prosperity. In the words of Gunner Myrdal (2014), the battle for long-term economic growth will be won or lost in the agricultural sector. However, how this path leads to economic prosperity is still subject to debate among development specialists and economists.

Nigerian economy in past decades strives on the agricultural sector. The sector is reputed as the mainstay of the economy in the early 1960’s. It is seen as the key driver for growth and development. In fact, to further buttress the pivotal role the 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 (low and middle-income countries), the agricultural sector remains, the largest contributor providing inputs, food, employment opportunities, raw materials for other industries, provision of foreign earnings from exportation of the surpluses, and more importantly the enormous advantage of the value added in the various production process (Izuchukwu, 2011).

Besides, some researchers (Gardner, 2005 ; Chebbi, 2010) have raised a lot of questions regarding the impact of agricultural sector on economic growth. Lavorel et al. (2013) addressed the question raised by Gardner (2005) for 85 countries “is agriculture an engine of growth” by investigating causality relationship between agricultural value added per worker and gross domestic product (GDP) per capita. Though, their findings revealed enormous claim. According to them, they find a causality relationship between agricultural valued added and growth for the developing countries while that of developed countries remained unclear. This fact, buttress the assumption stated earlier, that agricultural sector has been a backbone of developing economies.

Moreover, Matahir (2012) took a different stand on his study on the role of agriculture on economic growth and how it interplays with other sectors in the economy. Time series Johansen cointegration techniques was employed to investigate the non-causality relationship between agriculture and other economic sectors of Tunis. From their findings, it was posited that, policy makers should see agricultural sectors as vital tools in their analysis of inter-sectorial growth policies. Though, agricultural sectors has not benefited immensely from the growth of service and commerce sector of Tunisia but it contribution to economic growth of the economy can never be overemphasized. This lend support from the study carried by out on Thailand economy by Jatuporn et al. (2011). They are also of the opinion that, policy makers should embrace agriculture and see it as a major contributor to Thailand economy.

Furthermore, despite the political issues in a small island of Northern Cyprus, Katircioglu (2006) in his analysis on the impact of agricultural sector on the economy of Cyprus posited the importance of the agricultural sector on the economy of Northern Cyprus. According to his findings, agricultural sector has a crucial role to play in the development of any economies, especially that of a tiny island of Northern Cyprus. His study revealed that, there exist bi-directional and long-run dynamic causality relationships between the macroeconomic variables. That is, the feedback from agricultural sector has a huge role to play in the development of the economy.

However, studies revealed that (Katircioglu, 2006; Dim and Ezenekwe, 2013; Jatuporn et al, 2011; Tiffin et al., 2013) most developing countries of the world are predominantly agrarian and rural in nature. A substantial proportion of the Nigerian population dwells in the remote areas, and this brought the countryside to the attention of policy and decision makers.

According to Alene et al. (2005) Nigeria is endowed with a large deposit of agricultural resources, arable land for the cultivation of crops and rearing of animals. In the 1960s and 1970s the agricultural sector constituted over 65% of total export. The Nigerian agricultural sector was renowned for the export of cash crops (agricultural crops and produce with export value) namely cocoa, rubber, hides and skin, groundnut palm among a host of many others. The agricultural sector holds an enormous potential for the growth and economic development of the country.

In a similar study carried out by Bekun (2011) titled “Economics of Yam Marketing in Minna, Nigeria.” The study revealed that over 31.5 million metric tons of yams were produced in the study areas. This is overwhelmingly huge, enough to engage more than half of the population in the coverage area. Regardless of the vast potentials the agricultural sector possesses, the industry endowment has not been fully harnessed. There has been a downturn in the late 1970s and figures have dropped significantly to 20% at the end of the 1990s. The decline in the agricultural sectors’ contribution is explained by the oil discovery in the 1970s. The 1970s outlined the period when oil was discovered in commercial quantity. This discovery has led to the neglect of the agricultural sector and more focus on the petroleum sector (oil sector). This is one way or the other turned Nigeria into an oil dependent and a monoculture economy.

With the agricultural sector being so productive with arguably massive potential, why then has it been neglected? The answer to this question prompts the motivation for this study. Recent literature is attempting to estimate the relationship between the agricultural sector and economic growth, do so using cross-sectional data. We argued that this methodology is flawed in the sense that the relationship between the agricultural sector and economic growth is best captured over time. Given the so few studies done using time-series data, there is a gap in explaining the real effect of the agricultural sector on economic growth in Nigeria. This study aims to fill this gap.

This study seeks to estimate the effect of the agricultural sector on economic growth under the time series framework, using the vector error correction model (VECM) approach. We seek to investigate the existence of a long-run relationship between the agricultural sector and economic growth using the Johansen co-integration test. By extension, we would evaluate the possible reasons for the neglect of this sector beyond the oil boom in 1970s and the impediments to the growth of the sector in Nigeria.


Statement Of Problem

The agricultural sector has suffered from years of poor management, inconsistent and poorly implemented government policies, government neglect and lack of basic infrastructure.  Presently, it accounts for 40.6% of GDP and 65% of employment in the economy, (A.B. Sekumade, 2009, United States Department of State, 2005).  Nigeria is no longer a major exporter of cocoa, groundnut, rubber and palm products.  Cocoa production mostly from obsolete varieties and over-aged trees is stagnant at around 150,000 tonnes annually, 25 years ago, cocoa production was 300,000 tonnes.  There has been a similar decline in groundnut, palm oil and the other major export crops (United States Department of State, 2005).  The decline in agricultural production was largely due to the rise of oil shipments (A.B. Sekumade, 2009).

Because of this backdrop, agriculture has not kept up with the rapid population growth and Nigeria once a large net exporter of food now imports most of its food requirements.

Dependence on oil is not the only cause of the under-development of the Nigerian agricultural sector, but also: Alene (2005) observed that Nigerian agriculture is characterized by illiterate farmers who live in rural areas producing over 90% of the total food consumed and other agricultural products and with regards to their educational status give little or no  room for improvement through scientific research.  Alene (2005) noted that more than 90% of the consumed food in Nigeria is provided by the small-scale farmers.

–      Again, the bulk of agricultural activities are done using crude implements which are relatively less efficient when compared with modern machineries such as tractors, ploughs etc.

–      Another problem is the issue of finance.  The agricultural sector is poorly financed.  They do not get credit easily from financial institutions, like commercial banks.  The agriculturists find it difficult to finance projects which are capital intensive.  The commercial banks cannot grant loans easily to a small scale farmer because of low produce and low profit which result to a failure in paying back the loan.

–       The lack of storage facilities have led to much wastage and high cost of storage.  This hinders the availability of some perishable agricultural produce through the year, thereby hindering agricultural development.

–      Dependence on weather is another problem that affects the increase in agricultural produce.  Agriculturists still depend on rainfall to produce instead of the use of irrigation that supply water all through the year.

With all that has been said above, it is obvious that the agricultural sector, being one of the real sectors of the Nigerian economy, has got a lot to contribute to its economic growth.  But these are not attainable because of the multifarious problems besieging this sector of the economy.

This work therefore is geared towards answering the patent question:

What impact has the agricultural sector made in the face of the dire need for food security, employment creation and in all increased economic growth of Nigeria?

Objectives Of The Study

The broad objective of this study is to determine the  problem and prospect of agricultural development in Nigeria from 1980 -2016

The specific objectives is;

  1. To determine the problem of agriculatural development in Nigeria
  2. To find out the impact of agriculture on economic development of Nigeria
  3. To determine the cause of decline in agricultural production today.
  4. To profer solution on the problem facing agricultural development in Nigeria

Research Question

  1. What are the problems facing the development of agriculture in Nigeria
  2. What are the impact of agriculture on economic development of Nigeria
  3. What are the cause of decline in agricultural production today.
  4. What are the solution on the problem facing agricultural development in Nigeria


For the purpose of this study, the following hypothesis is tested;

Ho – Agricultural development has no significant impact on economic growth in Nigeria.

Significance Of The Study

The significance of this work lies on the fact that with improved agriculture, the Nigerian economy stands to gain in its efforts towards development.  This study attempts to answer the question; what is the relevance of agriculture in Nigeria, the cause of agricultural decline and how the present state of our agricultural productivity will be improved.

This will form the basis upon which suggestions will be made as to how the full potentials of agriculture can be harnessed.

The research intends to bring forth ways to increase agricultural output both for the purposes of consumption and exportation which ultimately will bring an increased favourable Balance of Payment for the nation.

–    The research will be beneficial to schools (teachers and students) and will help them understand the importance of farming no matter how small the scale of production.

Scope Of The Study

This study focuses on Nigeria and on the  problem and prospect of   agricultural development  in Nigeria from 1980 to 2016



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