ASSESSMENT OF ECONOMIC POLICY VARIABLES THAT MODELED AGRICULTURAL INTENSIFICATION IN NIGERIA

Abstract

Evidence has shown that, sustainable agricultural intensification amidst stable economic environment offers workable options to eradicate poverty and hunger. This study examined the trend in agricultural intensification and determined the influence of some macroeconomic variables from 1960 to 2014 in Nigeria. The result showed that, all series were integrated of order one. The exponential trend analysis of agricultural intensification revealed an average annual negative growth rate of 1.60%, 2.10% and 0.10% in Herfindahl, Ogive and Entropy intensification indexes respectively. The long-run and short-run elasticity of the agricultural intensification were determined using the techniques of co-integration and error correction models. The estimation of the error correction model supported the long run stability of agricultural intensification in Nigeria. The empirical results revealed that, in the long run; inflation, industrial output, external reserves, per capita income, and energy consumption were negative drivers of agricultural intensification; whereas crude oil prices, lending rate of Bank, foreign capital in agriculture and non-oil import works in opposite direction. However, in the short run, inflation, external reserves and industrial output retards agricultural intensification; while lending rate of Banks and crude oil price were stimulants. A ten-year out sampled forecast of agricultural intensification showed a steady declined. The empirical results were further substantiated by the variance decomposition and impulse response analyses. It is recommended that, the Nigeria government should re-aligned its macroeconomic policies to achieve stability in inflation rate, external reserves, industrial production, electricity consumption, agricultural credit institution to achieve sustainable agricultural intensification in the long run.