Module 1 Revision

CHAPTER 1: Agricultural Development Process and Land Use, Tenure and Conservation in Nigeria 

Introduction

Farming is the nucleus of agriculture. Processing, Transportation and storage are collectively referred to as agricultural marketing activities.  Agriculture therefore, is more than just farming. It includes a wide range of activities many of which do not occur on farms and are not managed by farmers.

Roles of Agriculture in Economic Development

1. Provision of food: Have you ever thought about the source of the food you eat? Of course, its from Agriculture. When a country cannot meet the food requirement of her teeming populace locally, it then becomes necessary to import to supplement the  inadequate local food production 

2.Provision of raw materials to agro-allied industries.The industrial sector especially the Agro-allied industries depends on Agriculture for survival and growth. This butresses the popular slogan “If agric. Should remain stagnant, industries will not grow” says Lewis in 1954

3.Provide employment opportunities:agriculture performs dual roles of employer and supplier of labour to other sector of the economy

4. Contributes to foreign exchange earnings through exports of cash crops

5.Contributes significantly to the GDP of our country(about 41% in 2002).  See table 1 on page 2 of GES105 textbook for more on the share of GDP from Agriculture

6. Increase the income of the rural people and this leads to increase standard of living

7.It has led to rural devt. through various agric devt programmes such as   RBDA, ADP, DFRRI etc

8.Provides market for industrial products and so induces industrial growth

RECENT TRENDS IN AGRICULTURAL PERFORMANCE

Table 1 on page 2 of GES105 textbook shows that Agricultural performance is not too impressive in recent times. This you can see in the share of Agric to the GDP. Thus we have to import to supplement the shortfalls in local production. However there is a slight growth in the use of non-traditional inputs and a growing class of medium and large scale farmers

CONSTRAINTS OF AGRICULTURAL DEVELOPMENT IN NIGERIA

1. Inadequate physical infrastructures such as feeder roads, water, electricity,telephone lines and storage facilities

2.land tenure system which is not favorable to increased agric production

3.Rural-Urban drift of able-bodied farm youth as a result of inadequate incentives e.g farm power

4. Poor or rudimentary farm credit system

5. Inefficient agric research system to generate new technology practices and management

6. Poor extension services to disseminate available new technologies

7 Inadequate incentive: for instance, no adequate  price support system  in place to offset the imbalances caused by off-farm opportunity cost of labour

MAJOR AGRICULTURAL POLICIES AND PROGRAMME EFFORTS IN NIGERIA  

We shall consider the policies and programmes under 3 eras

1^st era (pre 1970)

2^nd era (1970-1984)

3^rd era or the SAP era(post 1984)

NB: PRE means before; POST means after

1^st era or era of laisez faire

What are the features of this era ? There is minimum govt intervention; the private sector produced the bulk of the food export crops; govt efforts were largely supportive in terms of agric research, extension, exporting crops, marketing and pricing; Farm Settlement Scheme(FSS) policy was worthy of note during this era ; the impressive performance of agric during this era was not due to FSS policy but due to favorable socio-economic climate that encourage food and cash crop production. Infact the FSS was formerly declared a failure in 1972.

See page 4 to see what FSS is all about. 

2^ND ERA FEATURES

-maximum govt intervention

-both macro and micro policies were instituted

Macro policies include:

establishment of the fiscal and monetary policies which were basically expansionary especially with respect to agriculture. The policies promote greater flow of credit to agriculture. The interest rate with respect to agric was low compared to other sectors of the economy. NACB was established in 1973. Similarly, RBS and ACGS were launched in 1977

other macro economic policies not favorable to agric during this period include import liberalization, wage and salary policies. The import liberalization did not encouragehome or local production. The wage and salary awards by the then govts cause a rural-urban migration of farm labour as a result of wide differences in rural and urban salaries. People move from rural areas to urban centres in search of white collar jobs thereby causing acute shortage of farm labor

Micro economic policies include

-establishment of 6 national commodity boards in 1977. The commodities are cocoa, groundnut,palm-produce, cotton,rubber grains

-fertilizer procurement and distribution centralized in 1975 and policy on manufacture of fertilizer formulated

- the national seed service(NSS)was created in 1972

- agro-service centers and NAFPP launched in 1973

- this era  witnessed the establishment of agric input subsidy policy in which prices of fertilsers, seeds, agro-chemicals, nad tractor-hire services were subsidized

NB: All these policy instruments is with respect to farm inputs and to promote the use and acceptance of these inputs

Other policies and programmes aimed at influencing agric activities during this era include

i)ADPs which started in 1972 ii)Tree crop mgt. iii)Agric research institutes iv)RBDA established with a decree in 1976 v)Strategic grain reserves vi)Federal govt parastatals

see the details on these programmes and full meanings of abbreviations on pages 4-7

The ineffectiveness of these policies during this era led to instituting SAP in 1986

THE POST 1984 ERA OR 3^RD ERA OR THE SAP ERA

The philosophy of SAP is that agric is essentially a private sector business where market forces are allowed to direct the economy and that govt plays the role of a facilitator.

The overall macroeconomic policies of SAP were deflationary and belt-tightening. The Sap regime brings about devaluation of our naira export drive, reduction in public expenditure, credit controls etc. SAP emphasizes exchange rate flexibility, broadening the productive base of the economy and reducing dependence on petroleum.

OBJECTIVES OF SAP

1. restructuring the economy by diversifying the productive base

2. rationalising consumption pattern and reducing dependence on petroleum exports and commodity imports

3. expanding non-oil exports

4 .reducing the import content of locally produced foods

5.attaining self sufficiency in food and raw materials production within the shortest possible time

6. rationalising the country’s fiscal and monetary policies

7. liberalisation of the country’s trade and payment system

NB: The macro economic policies that directly affected under the SAP regime may be divided into fiscal, monetary, trade or exchange policies and institutional policies instruments.

Pls check the highlights of these policy instruments on pages 8-9

We also see that the success of SAP greatly depends on Agriculture. SAP was officially terminated in 1992

OVERVIEW OF THE POST SAP POLICIES

Remember that the whole idea of SAP was to restructure and diversify the countrys productive base in order to increase efficiency and reduce dependency on the oil sector. The fiscal policies, after the introduction of SAP, aimed at cutting down government expences and removing fiscal deficit. You ask me how? i)by removing subsidies on petroleum and other agricultural inputs. The implication of this is that the share of agric in the federal capital expenditure also dropped ii)rationalization of govt programmes iii)adoption of cost recovery pricing for basic infrastructures and parastatals. This was what led to privatization of many parastatals

However, in 1997, govt expenditure as a percentage of GDP rose from 10.2% in 1996 to 11.4% in 1997 due to debt service payments as well as outlays on the national Priority Projects

Also in the year 2000,federal govt expenditure increased by 25.3% and 7.3% over the level in 1999 and budget estimates respectively. This was partly due to higher personnel cost. Remember that was the time the emoluments of civil servants was reviewed upward

The year 2001 also witnessed expansionary fiscal operations by the 3-tiers of govt as a result of the proceeds from excess crude oil account and  GSM  licensing.

The monetary policies (late 90s-2000) aimed at maintaining internal and external balance including sustenance of single-digit inflation rate. Govt also ensure the  increase and flow of credit to the agric sector

Furthermore, the conditions for licensing banks was liberalized. As a result of this, the no of banks were increased from 41 in 1986 to 92 in 1999. This would eventually create a competitive environment.The lending or interest rate increased from 9.6% in 1986 to 36.1% in 1992 and dropped to 26% by 2000. With this high lending rate, assessing credit by the small scale farmers was difficult. In order to ensure that micro credit was provided to farmers and rural households and at a comparatively lower lending rate, the Nigerian Agriculture, Cooperative and Ruraal Development Bank(NACRDB) was established in 2000.

In 2001,Federal Govt established the Small and Medium Industries and Equity Investment Scheme(SMIEIS). To do what? i.stimulate growth and devt within the country ii. Develop local technology iii)generate employment. Membership of SMIEIS includes MDs/CEOs of banks in Nigeria which require all licensed banks in Nigeria to set aside 10% profit b4 tax (PBT) for the running of SMIEIS

In 2001,govt established 3 multi-commodity devts and marketing companies. 40% of the take-off grant was provided by the fed govt while the remaining 60% came from the farmers.These companies were i)Arable crops Devt & Marketing company ii)Tree crops Devt & Marketing company iii) Livestock & Fish Devt & Marketing company. The whole essence of establishing these companies was to promote increased production, better processing, modern storage & marketing of agric commodities at both domestic and foreign markets.

Trade policy during the post-sap era sought to: i) promote food and raw material production ii)promote agric exports and  iii)discourage importation of food and raw materials

What are strategies put in place by the govt to discourage importation? i)trade liberalization ii)export promotion iii)backward integration iv) partial or total privatization of govt farms so as to discontinue direct production by the government v)agric pricing policy

The 2002 monetary & credit policies ensures i)continued observance of appropriate grace periods on agricultural loans (because you cannot compare agric with any other business. It takes some time b4 apric. products mature. This is what is refered to as gestation period on page 10, 2^nd paragraph. For instance, the gestation period of cocoa or orange plantation will be different from that of vegetable or cassava)

To be continued………