An appraisal of subsidy expenditure and requirements in cocoa production in Nigeria 1969/70–1983/84

Abstract

Subsidy on cocoa-spraying chemicals started in the early 1960s and has continued till today, though the modus operandi of the scheme has changed since the establishment of the Nigerian Cocoa Board in 1977. This paper analyses subsidy expenditure from 1969/70 to 1982/83 in order to find out whether by fund allocation the Federal Government has put any emphasis on cocoa production. Our analysis showed that subsidy expenditure has been generally on the decline in real terms since 1976/77 and there has been no increase in nominal terms since the 1980/81 season. This means that less and less chemicals were subsidized at the prevailing subsidy levels every year. Even worse, producer prices in real terms have also been on the decrease since the 1977/78 season. At present, the government allocation can only meet 60% of the needs of farmers even at their very low use rate. The ▪4 million subsidy can also meet 32% of what is needed at the farmers' ‘required’ use rates and only 14% of what is recommended by CRIN even at 50% subsidy levels. For minimum effectiveness of the subsidy scheme (at 50% subsidy level) on cocoa production, the Federal Government subsidy allocation should not have been less than ▪12·48 million during the 1982/83 season and should not be less than ▪12·85 million during the current (1983/84) season.