Abstract
Groundnut, a leguminous oil seed grown in the uplands serve as food and main export crop in The Gambia. Despite a long tradition of groundnut farming, practical knowledge, favorable climatic conditions, and suitable land, recent declines in production and exports have hampered groundnut farming's contribution to poverty reduction, food security, and income generation. Revitalization of cash crop, such as groundnut has emerged as a national priority, embraced on a daily basis by rural development actors, particularly famers seeking to improve and secure their income. Thus, groundnut appears to be obvious and necessary, not only for farmers' income security, but also for the country's ability to attract foreign currency, provide livestock feed, and develop national trade. Given the country’s poor performance in groundnut exports, we deem it necessary to identify the key factors influencing that performance and study their effects on groundnut export earnings in order to draft appropriate policies aimed at increasing exports earnings in The Gambia. This paper employs the cointegration approach, with export value serving as the independent variable, to examine the country’s export performance over a 49-year period using time series data (1970-2018). Once a cointegration vector between the variables is discovered, the Vector Error Correction Model is applied. The findings reveal that nominal exchange rate, producer price are key factors affecting significantly the country’s export performance in short-run. Furthermore, in the long-run exchange rate, production, producer price, and world export price are significant factors determining groundnut export earnings in The Gambia. To increase the country’s market share and export earnings, especially in the long-run, it is recommended to ensure an effective transmission of international prices increments to farmers and to improve the production by raising yields significantly. Keywords: Determinants of Agricultural Exports, Agricultural Exports, Cointegration, Groundnut, The Gambia DOI: 10.7176/DCS/11-8-04 Publication date: October 31 st 2021
Highlights
Since time immemorial rural population in The Gambia depends on groundnut as a means of livelihood, it serves as food and main export crop, contribute to poverty reduction and food security
5.Results and Discussion 5.1 Stationarity The empirical study starts with testing the time series variables’ stationary as a precondition for cointegration, which can be done with either VAR or VECM
The null hypothesis of one cointegrating equations cannot be rejected, and the results show that the time series variables are integrated, as shown in Table 6, and the study concludes that a long run equilibrium relationship among the variables may exist
Summary
Since time immemorial rural population in The Gambia depends on groundnut as a means of livelihood, it serves as food and main export crop, contribute to poverty reduction and food security. Groundnut is Gambia's main export crop, accounting for 66 percent of the country's agricultural export earnings. Groundnut farming takes approximately 45 percent of agricultural land on an annual basis, employs approximately 80 percent of farm households, accounts for 60-80 percent of farm income, and contributes approximately 24 percent to agricultural GDP in 1960s. The groundnut sector in The Gambia possesses promising aspects including good prospects; favorable climatic conditions; availability of suitable land; availability of labor supply; traditional and practical knowledge of groundnut farming, high demand in both domestic and international markets; proximity to western Europe and other markets; availability of proven aflotoxin resistant seed and varieties; river transportation for timely evacuation of nuts; and support for private sector development of the value chain. Once groundnuts are harvested, the aerial parts (leaves and stem) of the plants are taken in large quantities and used as nutritious livestock feed, either fresh or dried (groundnut straw)
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