Marketing Boards and Domestic Stabilization in Nigeria

Abstract

PpTHE conventional wisdom on the subject of marketing boards in primaryexporting economies has long been that their principal function is that of domestic stabilization.' It has been argued elsewhere that the performance of Nigerian marketing boards should be evaluated instead on the basis of their roles as revenue earners (through the earning of trading surpluses) for the development effort.2 It is worth considering, nevertheless, what exactly has taken place with respect to domestic stabilization through marketing board action in Nigeria. It is difficult to discuss the stabilization issue in isolation from other related policy issues. There may, after all, be several policy targets, (including for example, the maximization of export receipts or of trading surpluses), of which stabilization is only one. Stated still more broadly, there may be legitimate doubt as to the possibility of separating stabilization from development issues. Overall development will, after all, ultimately bring the flexibility of factor use and the diversification of the output-mix which are the best guarantees against extreme economic instability. It has also been argued, though never proven, that the degree of instability found in an economy, of itself, has effects upon the pace of development. Thus 4. ..a full case [for stabilization] only exists when it can be shown that a scheme can be devised which will remove some or all of the harmful effects of instability without itself having even more harmful effects on the longrun economic welfare of the community.7 3 Still, interrelationships between growth and instability are, at least in the short run, not sufficiently important that they make a pure discussion of stabilization 'illogical or uninteresting. It will be helpful, for the purpose of evaluating the success of interseason stabilization efforts, to have summary measures of the degree of instability of producer prices, producer incomes, world prices, and export receipts potentially distributable to the producer (potential producer income). With these, one can begin to compare actual experience with that which would have been obtained in the absence of the marketing boards. The simplest such measure is average percentage annual change, always expressed, for the sake of yearto-year comparability, as a percentage of the higher of the two observations. That is,