IMPACT OF SELECTED MACROECONOMIC VARIABLES ON AGRICULTURAL OUTPUT IN NIGERIA (1981 – 2017).
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ABSTRACT
In the past 3 decades (1981-2017), the Nigerian government has set out various policies targeted at stimulating the macroeconomic variables and consequently affecting the agricultural outputs positively in the economy, but have inadequately achieved these goals. This is evidenced in the annual agricultural outputs which are always insufficient to cater to the rising population of the country. Hence, this study examined the impact of selected macroeconomic variables onNigeria’s agricultural outputs (aggregate and dis-aggregated) over the time under review(1981-2017). The Cobb-Douglas Production theory formed the theoretical framework for the study. After reviewing relevant works of literature, the suitable analytical techniques (Johansen cointegration(long-run relationship), Fully Modified OLS(FMOLS(long-run impacts) and Error Correction Model (ECM)(short-run impact)) were chosen and employed. The five (One aggregate and four disaggregated) estimated Johansen results all indicated a long-run equilibrium relationship. Furthermore, the coefficients of the FMOLS results for aggregate agricultural output, in the long run, reveals that credit and Non-oil importsaresuitable macroeconomic variables that can be used to positively and negatively impact the aggregate agricultural outputs in Nigeria respectively. In the short run, non-oil exports impact much positively with a 24.6% increase for any 10% increase. While Non-Oil Imports impact much negatively to aggregate agricultural output with -20.6% for any 10% increase. For the sub-sectors, the FMOLS results for crop production suggested credit to be a more suitable variable to use to rapidly increase the sub-sector's outputs with a 2.07% increase to the output for a 10% increase; while Non-Oil imports can impose the most negative impact with -0.41% reduction the sub-sector’s output for any 10% increase. And in the short run, Non-oil exports impact much positively with 0.804% for any 10% increase; while non-oil imports impact much negatively to the sub-sector with -0. 8.15% for any 10% increase. Again for a quick and much positive response in fish production, in the long run, the result suggests credit be the most suitable variable with a 2.323% increase in fish output for any 10% increase; while Non-Oil exports can impose the most negative impact with -1.996% reduction of fish output for any 10% increase. And in the short run, Non-oil imports impact much positively with a 0.990% increase in fish output for any 10% increase. While non-oil export impacts much negatively with -1.013%. reduction for any 10% increase. Considering the result obtained from the FMOLS estimation for the forestry sub-sector, to achieve the quickest and positive response in forestry production, in the long run, the result suggests Non-Oil export as the most suitable variable with a 0.616% increase to the forestry output for any 10% increase; while credit can impose the most negative impact with - 0.716% reduction of forestry output for any 10% increase. In the short run, Non-oil exports impact much positively with a 0.322% increase in forest output for any 10% increase; while Non-Oil imports impact much negatively with a -0.255% reduction for any 10% increase. Finally, to achieve a fast and much positive response in livestock production, in the long run, the FMOLS result suggests labour as the most suitable variable with a 0.514% increase to the livestock output for any 10% increase; while public debt servicing can impose a quick and more negative impact on livestock output with -0.140% reduction in the output for any 10% increase. In the short run, labour impacts more positively with a 0.307% increase in the output for any 10% increase. Thus, the results obtained suggest that macroeconomic variables still affect the sector’s outputs; and practical policy recommendations by policymakers to help and rapidly boost the sector output’s growth is by helping farmers via the good provision of credit and helping them to market their produce at the international markets which can help them earn foreign currencies and thus, stimulate them to produce more and consequently lead to expansion of the whole sector vis-à-vis the Nigerian economy.
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