Effectiveness Analysis of Agricultural Protection Policy on Food Supply, Export and Farmer-Welfare in Nigeria: Generalized Method of Moment Approach

Benjamin Chiedozie Okpukpara,Chukwuemeka John Arene,Emmanuel Ejiofor Omeje

doi:10.46545/aijas.v1i1.16

Benjamin Chiedozie Okpukpara, Chukwuemeka John Arene + Show 1 more

Open Access

https://doi.org/10.46545/aijas.v1i1.16

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Abstract

This study examined the effectiveness of agricultural protection policy and other macroeconomic variables on food supply, agricultural export, and farmers welfare in Nigeria, from 1980-2016 with a special interest in their relationship with the political economy. The specific objectives were to (i) estimate the degrees of agricultural protection, domestic agricultural food supply and economic welfare to farmers in Nigeria, (ii) determine the effectiveness of agricultural protection on food self-supply, agricultural export; and farmer-welfare. Data were obtained from secondary sources. Descriptive statistics and generalized method of moment (GMM) were used. Nigeria’s self-food supply was slightly above 50% while the rest of the consumption depended on importation. The welfare measure to farmers was relatively poor and not good enough to motivate them. There was a positive and significant relationship between export and agricultural protection. A significant and positive relationship also exists between farmer-welfare and protection in the sector.

Highlights

Agriculture has been a major source of income for many Nigerian people, source of export earnings by the government and source of own food for its growing population
This study covering a 37-year period, spanning from 1980 to 2016 employed descriptive statistics aided by the use of Microsoft Excel and inferential statistics in the form of the econometric regression methods of the multiple linear regression and Granger causality test were applied as the estimation technique in evaluating the relationships and causality between the dependent variable and the political economy variables (agricultural protection level, foreign direct investment inflows to agriculture, Gross Domestic Product (GDP) inflows from the agricultural sector into the economy, political structure changes in national policy reforms and form of government in power)
Augmented Dickey-Fuller (ADF) was used to carry out the test under its traditional conditions, hypotheses and decision rules as adopted by Nwosu and Okafor (2014)

Summary

Introduction

Agriculture has been a major source of income for many Nigerian people, source of export earnings by the government and source of own food for its growing population. Asirvatham (2016) opined that agricultural protection represents an effort by the political class to increase agricultural growth by improving national food security and minimizing food dependence on foreign countries. This means that the agricultural sector has a strong relationship with the economy and the concern for agricultural policies. A coefficient of 1.10 suggests that farmers, overall, received prices that were 10% above international market levels This indicator reflects the level of price distortions and is measured by the Producer Nominal Protection Coefficient expressed as the ratio of farm price to border reference price. Any policy that puts up tariffs or other trade barriers on agricultural products so as to prevent or discourage imports or any policy that seeks to promote agriculture in a given area is termed agricultural protection policy

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