A STUDY ON THE IMPACT OF AGRICULTURAL MARKETING ON NIGERIA’S ECONOMY

A STUDY ON THE IMPACT OF AGRICULTURAL MARKETING ON NIGERIA’S ECONOMY

(A CASE STUDY OF FEDERAL MINISTRY OF AGRICULTURE, ABUJA)

CHAPTER ONE: INTRODUCTION

1. BACKGROUND OF THE STUDY

Agriculture remains the main stay of the Nigerian economy despite its decline in the 1970’s. Greater proportions depend on the agricultural sector for their livelihood and the rural economy is still basically agricultural. The role of the agricultural sector in the overall response of the Nigerian economy is important because given its relatively large size, a large positive response to adjustment policies was expected as means of improving the overall performance of the economy.

According to economist Ekpo. A (1994) Nigeria displays the characteristics of a dual economy, a modern sector heavily dependent on oil earning overlays a traditional agricultural and trading economy. During the colonial era, cash crops were introduced, railways and roads were developed and a market for consumer goods began to emerge. At independence in 1960, agriculture accounted for well over half of our gross domestic product (GDP) and was the main source of export earnings and public revenue, with the agricultural marketing boards playing a leading role; but today this leading role in the economy has been taken over the national oil company, the Nigerian National Petroleum Company (NNPC).

According to the Central Bank’s Nigeria’s data (2003), oil still accounts for our major revenue (gearing towards 80%) and almost 100%of our export earnings.  Bola .O (2007), although agriculture particularly forestry, livestock and fishery activity of Nigerians, is shown to serve as the major activity of Nigerians,it is clear that we indulge in agriculture purely as personal survival strategies rather than as a calculated effort to warming the engine of our country’s economy. This is really where our national economic problems lie.

Well-functioning marketing systems necessitate a strong private sector backed up by appropriate policy and legislative frameworks and effective government support services. Such services can include provision of market infrastructure, supply of market information and agricultural extension services able to advice farmers on marketing. Training in marketing at A levels is also needed. One of the problems faced in agricultural marketing in Nigeria is the hidden hostility to the private sector and the lack of understanding of the role of the intermediary. Apart from this, agricultural marketing is faced with many challenges ranging from limited access to the market information, low literacy level among farmers, poor storage facilities among others.

Agricultural marketing cannot be effective to Nigerian economy unless Nigerian government summons courage to invest and exploit its rich agricultural sector, provides loans for the farmers at low rate of interest so that they will be free from the clutches of local money lenders who squeeze them, build good storage facilities in other to provide it as at when needed. This will go a long way in enhancing agricultural marketing and developing Nigeria economy.

This research work is carried out to examine how agricultural marketing will boost the economic situation of Nigeria with proper attention in the agricultural sector.

Nigeria’s growth shows a general and steady performance in the immediate post-independence period with a healthy balance of payments position through exports of cash crops.

Marketing boards were used to extract surplus from the agricultural sector, which were used to provide basic infrastructure. The development of the economy since 1960 has witnessed a declining of the share of agriculture in the gross domestic product (GDP). At constant factor cost, agriculture which accounted for about 60% of GDP in 1958/89 was estimated at 50% in 1970/71. Part of this decline is traceable to the relatively higher growth rate of manufacturing and mining, which is consistent with the development pattern characteristics of developing countries. Agricultural export was the engine of growth prior to 1973, providing much of the revenue that the government used in developing a basic infrastructural system. Agricultural export also financed the import substitution industrialization program. Increases in import due to increasing income and the import requirements of the emerging industrial sector induced balance of payments of problems in the late 1960’s.

The oil boom of the early 1970’s relaxed the financial constraints to development. The GDP as at 1977/78 factor cost grew at an average of only 50% per annum between 1975 and 1980. One major characteristic of this growth was its very unstable nature. The growth ranged from 1-3% in 1975/76 to 9.5% in 1979/80. Generally government services recorded the highest growth of 177% in constant terms during this period, manufacturing at 13.3% while agriculture recorded a growth rate of 2.3%. the performance of the economy suggests that there was more to under development than financial constraints. The third national development plan acknowledged that the agricultural and manufacturing sectors during the period 1970-1974 performed below expectations. This informed the massive expenditure by government in the following period in an attempt to remedy these and other perceived constraints to growth.

Nigeria’s agricultural strategy is a synthesis of the government framework and action plans for achieving overall agricultural growth and development. The strategy aims at attaining self-sustaining growth in all agricultural sub-sector and structural transformation for the socio-economic development of the country as well as the improvement in the quality of life of Nigerians.

1.1     STATEMENT OF THE PROBLEMS    

Agriculture aims at providing food for the nation and creation of wealth and development of the general economic situation of the nation. But there are several challenges involved in marketing of agricultural product, ranging from limited access to the market information, low literacy among the farmers, multiple channel of distribution that eats away farmers and consumers, poor storage facilities, although technology has improved but it has not gone to the rural levels as it confined to rural areas alone.

There are several loopholes in the present legislation and there is no organized and regulated marketing system for marketing of agricultural products. Farmers have to face so many hardships and have to overcome several hurdles to get fair and just price for their sweat. Most times transportation poses a great problem in marketing agricultural products. This is due to bad roads, and bad vehicles. This research work will therefore look into certain measures that will provide agricultural market reforms that will boost Nigeria’s economy.

1.2    OBJECTIVES OF THE STUDY   

The general objective of this study is to examine the impact of the Agricultural sector on Nigeria’s economic growth. The specific objective includes:

1. To establish the degree of causality existing between the Agricultural sector and economic   growth in Nigeria.
2. To determine the extent to which long-run relationship exists between the Agricultural sector and economic growth in Nigeria.
3. To ascertain if the Agricultural sector can contribute significantly to Nigeria’s economic growth.
   1. RESEARCH QUESTIONS

To serve as study guide, we provide the following lead questions for which this study seeks to provide the answers:

• What degree of causality exists between the Agricultural sector and Economic growth in Nigeria?
• To what extent does long-run relationship exist between the Agricultural sector and economic growth in Nigeria?
• Does the Agricultural sector have any significant impact on the economic growth of Nigeria?

1.4STATEMENT OF THE HYPOTHESIS

As a guide of this study, a hypothesis has been drawn to allow for smoother elaboration of this research. It is therefore hypothesized that agricultural marketing is a very important factor in the development of Nigeria’s economy. This statement is formulated as follows using the null (Ho) and the alternative (Hi) hypothesis.

Ho: Agricultural marketing has serious impact on the Nigeria’s economy

Hi: Agricultural marketing has no serious impact on the Nigeria’s economy

1.5    SIGNIFICANCE OF THE STUDY

The significance of agricultural marketing on the Nigerian economy cannot be overemphasized. It therefore serve as a toll for developing the economic situation of the nation through marketing of agricultural products and developing agricultural products by providing what farmers need to start having long-standing visions that can excel in growth terms to a sustainable private and public economy and that Nigerian banks particularly should not be allowed to define their over-popularized and over-advertised universal banking without relating it to agriculture. Insurance firms have to start picking interest in the area of agriculture to give it some safety and confidence that it ensures that legislature start thinking on ways to enact economic laws that boost agricultural production as well as laws that create an enabling environment for its sustainability and safe practice, because not turning to agriculture will imply our continuous dependency on crude oil and unnecessary reliance on importation of goods that could have otherwise been manufactured in our country.

1.6     SCOPE OF THE STUDY

This study is set out to examine the impact of Agricultural marketing on Nigeria’s economy. This is how agricultural marketing is capable of boosting t e economy of Nigeria if proper attention is given to the agricultural sector.

1. LIMITATIONS OF THE STUDY

This research work which is aimed at examining the impact of agricultural marketing on the Nigerian economy is limited to some constraints such as time factor. There is not enough time for the researcher to carry out this research effectively. Also finance is another limitation of this study because; finance has necessitated the researcher to visit institutions which would have been relevant to this research work.

1. OPERATIONAL DEFINITION OF TERMS

Agriculture: Agriculture is the science, art and business of cultivating soil, producing crops and raising livestock.

Marketing: Marketing is the activity, set of institutions and processes for creating, communicating, delivering and exchanging offerings that have value for customers, client, partners and the society at large. Marketing deals with identifying and meeting human and social needs profitably.

Agricultural marketing: Agricultural marketing is the activity that directs the movement of agricultural products from point of production to point of consumption.

Economy: Economy is the wealth and resources of a country or region especially in terms of the production and consumption of goods and services.

Distribution: Is the action of sharing something out among a number of recipients or the way in which something is shared among a group or spread over an area.

Middlemen: Is a person who buys goods from producers and sells them to retailers or consumers.

Consumer: Is a person who purchases goods and services for personal use.

Questionnaire: Is a set of printed or written questions with choice of answers devised for the purpose of a statistical study