Background of the Study
Agriculture has been an important sector in the Nigerian economy in the past decades, and is still a major sector despite the oil boom; basically it provides employment opportunities for the teeming population, eradicates poverty and contributes to the growth of the economy. Economic history provides us with ample evidence that agricultural revolution is a fundamental pre-condition for economic growth, especially in developing countries (Woolf and Jones, 2007; Oluwasanmi, 2006; Eicher and Witt, 2014). Ukeji (2003) submits that in the 1960‟s, agriculture contributed up to 64% to the total GDP but gradually declined in the 70‟s to 48% and it continues in 1980 to 20% and 19% in 1985, this was as a result of oil glut of the 1980‟s. Historically, the root of the crises in the Nigerian economy lies in the neglect of the agricultural sector by the Federal Government towards developing dependence on a mono-cultural economy based on oil.
The objective of this paper is to investigate the contribution of domestic savings, government expenditure on agriculture and foreign direct investment on agriculture and the general impacts of agricultural sector on the Nigerian economy bearing in mind that the sector is fundamental to the sustenance of life and the bed rock of economic growth.
According to Jerzy W. (2013) agriculture is that kind of activity which joins labour, land or soil, live animals, plants, solar energy and so on; the Minister of Agriculture is the Minister of the beginning of life. So people who are involved with that kind of activity are involved in something special. In recognition of this prominent role the Minister of Agriculture and Federal Government of Nigeria has taken a giant stride to treat agriculture as serious political, economic and investment issue in Nigeria. Majority of people in Nigeria live and work in rural area. Almost 75% are rurally based compared to less than 25% in urban area. Similarly, over 58% of the labour force engaged in agriculture. In Nigeria, the sector contributes about 55% of gainful employment and almost 40 % of the share of GDP, before the discovery of oil, this sector contributed as high as between 75 – 80% of the GDP. Nevertheless, this current figure for the GDP share of agriculture sector is quite high when we compared it with the average of 27% for low income nations in Sub-Sahara Africa (WDI, 2010).
In terms of pace of the sector development and contribution to the industrialization, the agricultural sector in this part of the world is still lacking behind because of its failure to produce the food to the level of marketable surplus to feed itself, the other sectors (above subsistence level) and provide the inputs required for the industrial development of the nation and consequent growth in foreign exchange earnings through export and conservation of foreign exchange through imports substitution of competitive imports. As long as it has been established that developing countries like Nigeria has comparative advantage over the other countries in the production of agricultural output than the industrialized countries, it is important to emphasize that there is need for such economy to focus its attention on the agricultural sector liberation so that it can support development of the nation. This is the only sector that provides the ready-made means for country like Nigeria to facilitate industrial development because all the other sectors directly or indirectly depend on agriculture output either for food to sustain their workforces or as crucial input in their production process. Meanwhile, the sector can do this by supplying relatively cheap food to the urban industrial sector which will go a long way in checking inflationary tendency of workers‟ wages where inadequate food supply may lead to rising food prices as a result industrial unrest as workers continue to demand for increase in wages to meet basic needs of life. Important of food is not viable for any ambitious country for several reasons which might be political, economical and strategic. So, it is needful of agricultural sector to provide food beyond the subsistence level (marketable surplus). In a nutshell, the prominent roles expected to be of agricultural sector in developing country like Nigeria cannot be over emphasized. There is no gain saying that agriculture plays significant role in the growth and development process. Consideration of the reality that the sector plays the role of a way of life in the developing countries like Nigeria and the fact that this sector of the economy, as imperative it is, has not been receiving adequate attention by Government officials, political office holders and policy makers to the extent that there is excessive reliance on the non-renewable crude oil as the means of sustaining the national needs demand serious attention of the researchers in one hand. At the other hand, to the best of the researchers knowledge, many studies that have worked on this issue suffered one methodological problem or the others most especially omission of variables bias by excluding the important variables in the analysis of agricultural productivity viz a viz the growth which are Labour and Capital (Adegbenro H., 2010; Onunze M. T, 2012; Olajide et al, 2013; Olajide, 2013; Muhammad L. and Atte O., 2006; Abogan O. P. et al., Uma K.E. et al., 2013 etc).
Statement of Problem
The agricultural sector has suffered from years of poor management, inconsistent and poorly implemented government policies, government neglect and lack of basic infrastructure. Agriculture accounted for 30% of the GDP in 2010 (World Factbook, January 9, 2012).
Nigeria is no longer a major exporter of cocoa, groundnut, rubber and palm products. Coca production mostly from obsolete varieties and over-aged trees are stagnant at 150,000tones annually. There is also a decline in groundnut, palm oil and other major export crops (United States Department of State, 2005). The decline in agriculture production was largely due to the rise of oil shipments (A.B Sekumade 2009).
The Nigerian agricultural sector is faced with numerous problems but few will be discussed, Nigerian agriculture is characterized and surrounded by bunch of illiterate farmers who live in rural areas, producing over 90% of the total food consumed and other agricultural products and with regards to their educational status giving little or no room for improvement through scientific research. And also more than 90% of the consumed food in Nigeria is provided by the small-scale farmers. The Nigerian agriculture lacks storage facilities and these have led to so much wastage and high cost of storage. This hinders the availability of some perishable agricultural produce through the year, therefore hindering agricultural development. Another negative force is Dependence on weather which affects the increase in agricultural supplies water all through the year.
The problem of finance, the agricultural sector is poorly financed in Nigeria. They do not get credit easily from financial institutions, like commercial banks. The agriculturists find it difficult to finance projects which are capital intensive. The commercial banks cannot grant loans easily to a small scale farmer because of low produce and low profit which results to a failure in paying back the loan.
Food processing problem is estimated that about 20 to 40% of the yearly harvest is lost during processing. The primary cause is the lack of efficient harvesting techniques. According to and with the information above, it is quite clear that the agricultural sector, as one of the Nigeria economy has really got a lot to contribute to the economic growth of the country.
Objectives of the Study
The broad objective of this study is to determine the impact of agricultural development on economic growth in Nigeria. The specific objectives are as follows:
1. To determine the impact of agricultural sector on the economic growth in Nigeria.
2. To access the effect of agricultural sector on employment creation in Nigeria.
3. To investigate the role of agriculture in the attainment of food sustenance in Nigeria.
(i) What is the effect of agricultural on economic growth?
(ii) What is the effect of agricultural sector on employment creation?
(iii) What is the role of agriculture in the attainment of food sustenance in Nigeria?
Statement of Hypothesis
For the purpose of this study, the following hypothesis is tested;
H1: Agricultural development has significant impact on economic growth in Nigeria.
H0: Agricultural development has no significant effect on employment creation in Nigeria.
Significance of the Study
The significance of this study depends on the fact that with improved economy Nigeria stands to gain in its effects toward development. This work attempts to answer the question: What is the relevance of agriculture in economic growth? The cause of agricultural backwardness and how the present state of our agricultural productivity will be improved. This will form the basis upon which suggestions and contributions will be made as to how the full potentials of agriculture can be harnessed. This work stands to benefit:
i. Nigeria as a whole: The research work intends to bring firth ways to increase agricultural output both for the purpose of consumption and exportation which ultimately will bring an increased favorable balance of payment (BOP) for the nation.
ii. This work will be advantageous to schools (staffs and students) and will help them understand the importance of farming no matter how small the scale of production may be.
Scope and Limitations
This research work focuses on the impact of agricultural development on the economic growth of Nigeria between the period of 1980 to 2010. In the process of carrying out this research work, some problems were encountered. The problems include the following, time factor, poor finance, environmental constraints like free movement to research outside the school premises etc.