Impact of Government Agricultural Expenditure on Agricultural Productivity in Nigeria

Volume 5 - Issue 3

Sebastian O Uremadu¹*, Florence O Ariwa² and Charity E Duru Uremadu³

Received: November 19, 2018;   Published:November 29, 2018

DOI: 10.32474/CIACR.2018.05.000215

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Summary

The study examined effect of government agricultural expenditure on agricultural output in Nigeria using time series data from 1981 to 2014. Having analyzed data using unit root test, co-integration test and vector error correction model, results of unit root test showed that all the variables were integrated at the first order difference. On the other hand, the Johansen co-integration tests revealed that a long-run relationship existed between agricultural output and government agricultural expenditure. Going through the vector error correction model results indicated that agricultural output adjusted rapidly to changes in total government agricultural expenditure, real exchange rate, banking system credit to agriculture, average annual rainfall and population growth rate. With respect to individual variables, average annual rainfall and domestic population growth rate were significant at 1 percent levels in affecting agricultural output in Nigeria. While domestic population growth rate lead agricultural output in Nigeria, average annual rainfall followed and then government expenditure, and finally, real exchange rate in their descending order of magnitude. As such, it was recommended that government should not only adequately fund agriculture via maintaining a healthy population but to also encourage a mechanized agricultural system by use of modern technology and inputs to boost yields in local rice production and other farm produce so as to reduce the rate of rice importation in the country. Moreover, government should ensure that meteorological agencies which forecast annual rainfalls are well funded and catered for and that their recommendations be implemented towards achieving high farm yields annually and food self-sufficiency thereby minimizing agricultural losses due to vagaries of weather in our agricultural climate.

Keywords: Agricultural Output; Government Expenditure; Gross Capital Formation

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