THE IMPACT OF AGRICULTURE ON ECONOMIC GROWTH IN NIGERIA

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THE IMPACT OF AGRICULTURE ON ECONOMIC GROWTH IN NIGERIA

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

The study of economic history provides us with ample evidence that an agricultural revolution is a fundamental pre-condition for economic development (Eicher & Witt, 1964; Oluwasami 1966; Jones & Woolf, 1909). The agricultural sector has the potential to be the industrial and economic springboard from which a country’s development can take off. Indeed, more often than not, agricultural activities are usually concentrated in the less developed rural areas where there is a critical need for rural transformation, redistribution, poverty alleviation and socio-economic development (Stewart, 2000). Nigeria’s economic aspirations have remained that of altering the structure of production and consumption patterns, diversifying the economic base and reducing dependence on oil, with the aim of putting the economy on a path of sustenance, all inclusive and non-inflationary growth. Despite Nigeria’s vast agricultural resources both human and natural, we are still faced with acute food crisis, the intensification of poverty and massive suffering of the overwhelming majority of Nigerians. This situation is however typical of all third world countries operating within the neo colonial capitalist system (Akor, 2009).

Nigeria is generously endowed with abundant natural resources including biological and non -biological resources. Resources depend on importance attached to it, hence agriculture constitutes one of the most important sectors of the Nigerian economy. The significance of the agricultural resource in bringing about economic growth and sustainable development of a nation cannot be under-estimated. Agriculture contributes to the growth of the economy, provides employment opportunities for the teeming population, export revenue earnings and eradicates poverty in the economy.

Abayomi (1997) stated that stagnation in agriculture is the principal explanation for poor economic performance, while rising agricultural productivity has been the most important concomitant of a successful industrialization. The pervasive influence of agriculture on Nigeria’s economic and social development has also been articulated by Oluwasanmi (1996) “A strong and efficient agricultural sector could enable a country to feed its growing population, generate employment, earn foreign exchange and provide raw materials for industries”. The agricultural sector has a multiplier effect on any nation’s socio- economic and industrial fabric because of the multifunctional nature of agriculture (Ogen, 2007).

Agriculture has been defined as the production of food and livestock and the purposeful tendering of plants and animals, (Ahmed, 1995). He stated further that agriculture is the mainstay of many economies and it is fundamental to the socio- economic development of a nation because it is a major element and factor in national development. In the same vein, Okolo (2004) described the agricultural sector as the most important sector of the Nigerian economy which holds a lot of potentials for the future economic development of the nation as it had done in the past. Notwithstanding the enviable position of the oil sector in the Nigerian economy over the past three decades, the agricultural sector is arguably the most important sector of the economy.

Generally the agricultural sector contributes to the development of an economy in four major ways ;product contribution, factor contribution, market contribution and foreign exchange contribution (Abayomi, 1997; Abdullahi 2002 & World Bank 2007). The objective of this study is therefore to examine the agricultural sector as the key to the diversification of the Nigerian economy for sustainable development.

The definition of agriculture changes over time. Agriculture is the cultivation of plants and husbandry of animals. That is, the management of living things and eco systems to produce goods and services for the people. Agriculture includes farming, ranching, aquaculture, apiculture, horticulture, viticulture, animal husbandry, including but not limited to the care and raising of livestock, poultry husbandry and the production of poultry and poultry products, diary production, the production of field crops, tobacco, fruits, vegetables, nursery stock, ornamental shrubs, ornamental trees, flowers, sod or mushrooms, timber, pasturage, any combination of the foregoing, the processing, drying, storage and marketing of agricultural products. When these activities are conducted in conjunction with, but are secondary to such husbandry or production.

The sustainability of agriculture in Nigeria cannot be isolated from the sustainability of economic development. A number of other related definitions are also in common usage. The American Society of Agronomy, for example, defines sustainable agriculture as one that, over the long term, enhances environmental quality and the resource base on which agriculture depends, provides for basic human food and fiber needs, is economically viable, and enhances the quality of life of farmers and society as a whole (Uptal, 2001).

Another definition by Macrae (1990) posits that Sustainable agriculture is both a philosophy and a system of farming. It is rooted in a set of values that reflects an awareness of both ecological and social realities and a commitment to respond appropriately to that awareness. It emphasizes design and management procedures that work with natural processes to conserve all resources and minimize waste and environmental damage, while maintaining and improving farm profitability.

Agricultural development, a subset of economic development, implies a sustained increase in the level of production and productivity over a reasonable length of time and the subsequent improved wellbeing of farmers as reflected in their higher per capita income and standard of living. Rural development relates not only to a sustained increase in the level of production and productivity of all rural dwellers, including farmers, and a sustained improvement in their wellbeing, manifested by increasing per capita income and standard of living, but also leads to a sustained physical, social and economic improvement of rural communities.

The colonial government recognized the potential of the agricultural sector to improve the Nigerian economy and therefore put in place policies aimed at increasing output and to extract surpluses in the sector. The main focus of development in this period was the surplus extraction philosophy or policy whereby immense products were generated from the rural areas to satisfy the demand for raw materials in metropolitan Britain (Ayoola, 2001). This early interest of the extractive policy was on forest resources and agricultural exports like cocoa, coffee, rubber, groundnuts, oil palm, and cotton. The capitalist agricultural policies of Nigeria since 1900 have remained basically intact. No efforts have been made to fundamentally change them. The nature of these agricultural policies and their impacts led to Nigeria’s agricultural disorientation and the food crisis (Akor, 2009).

Meanwhile, most of these policies were made without proper institutional arrangement, programs, specific projects, strategies, goals or targets and specific objectives geared towards the realization of these dreams of the policies. This can be proved by the fact that there was only one documented agriculture scheme that evolved towards the end of the era (early 1960s) called the farm settlement scheme (Iwuchukwu & Igbokwe, 2012). The imperialistic theoretical framework of the notions of development and modernization have decisively influenced the Nigerian agricultural policies since the colonial era. The rate and direction of Nigeria’s agricultural development were therefore, determined by the British colonialist and taken over by the neo-colonial Nigerian ruling classes since 1960 (Akor, 2009).

The Nigeria’s agricultural development was fully de-centralized with the regions and states carrying out all activities while support was provided by the federal government and this enabled a state/region specific approach. This approach involved the combined efforts of small scale farmers/the private sector and the government. This approach was very successful during the period and thus with agriculture remaining the mainstay of the Nigerian economy; providing employment, raw materials for industries, the main source of foreign exchange earnings and also sustaining the food security status of the populace. The appropriation and utilization of Nigeria’s economic surplus by the colonial and neo colonial imperialist powers is central to the analysis of the structural distortions in the agricultural sector and Nigeria’s food crisis. The central point in the imperialist relationship was the transfer of economic surplus to strengthen the capitalist class and the capitalist mode of production in Europe and North America (Akor, 2009).

However, with the onset of the 1970’s, there was a national neglect of this sector due to oil boom which practically led to a decline in the sector (Abimiku, 2009). Despite the drastic decline, no matter how much development and structural transformation will be achieved in Nigeria, agriculture will continue to retain its relative dominance in the economy for many decades to come. More importantly, it is from agriculture and in particular from agricultural exports that the country received its principal stimulus for economic growth in 1950s and 1960s. It will remain a key factor in Nigeria’s economic development as the largest employer of labour (about 72% of the labour force in 1970-1971), the principal source of food and raw materials for the population and industries and a significant though relatively declining earner of foreign exchange. The acceleration of agricultural growth is therefore crucial for the country’s future progress (Akor, 2009).

In the 1970’s, the policy instrument that was introduced by government included a series of development plans at the national level. The Structural Adjustment Program (SAP) in 1986 came up after this and efforts were made at making the agricultural sector commercially competitive and remunerative and also tried to redress Nigeria’s defective mono-economic imbalance by diverse diversifying programs in order to reduce dependence on the oil sector and also on imports. This policy package focused on a rapid improvement of domestic food production, the domestic supply of agricultural raw materials, the production of exportable cash crops and also rural employment. The client status of Nigeria in the international capitalist system is the fundamental structural basis for imposing the abuses of underdevelopment on the country (Akor, 2009).

The programs only succeeded in creating and raising the awareness to diversify the economy through agriculture and the catalytic and leading role the private sector must play in agricultural development which renewed a general interest in agriculture. Despite its huge potentials, the country is a net importer of food. The nation’s food import basket is made up of items which can be produced locally in sufficient amount. In addition, the economy is characterized by price volatility and high prices due to over dependence on rain-fed agricultural output. Some of the problems faced by agricultural sector include; Under-investment, low productivity, inadequate input, poor and rudimentary storage culture, unfavourable exchange rate policy among others. In addition, (Adesina, 2011), posited that only 1% of total lending in banking sector goes to agriculture despite the fact that the sector accounts for about 70% of employment opportunities and 44% of the Nation’s GDP. The promotion of capitalist agricultural development in Nigeria led to heavy reliance on imported agricultural inputs from the core capitalist countries from 1970 to 1979, while the imported agricultural inputs increased, there were no visible increase in both food and cash crop production .The rise in the importation of agricultural inputs went hand in hand with the rise in food imports, food shortages and negative output of cash crops. The poor performance records of the agriculture in the face of massive imported agricultural inputs imply that the strategy must be faulty and the solutions anticipated misconceived (Akor, 2009).

According to (Sanusi, 2011), Nigeria is incurring a total food import bill of $4.2billion about N638.4billion annually due to the neglect of agriculture and partly due to insatiable appetite of Nigerians for foods not locally produced. For instance, Nigeria is the only country in the world that does not produce wheat and yet consumes 100% wheat bread. According to Okojie & Mike (2006), the relationship between export performance and economic growth has been a subject of considerable interests to development economists especially those who believe that economic growth should be sustained and maintained. Chenery & Strout, (1994) asserted that for a long time, there was hardly any country which exhibited sustained economic growth rate higher than its growth of exports. They also claimed that growth rates of individual developing countries correlate better with their export performance than with any other single economic indicator.

Nigerian government at different times have formulated and implemented several agricultural policies aimed at addressing the myriads of problems confronting the sector and ensuring food availability and foreign exchange earnings for the country. However, for a policy to have a meaningful impact, it must have strategies (that is, programs or projects) geared towards the accomplishment of specific objectives and the ultimate goal of the policy. To this extent, various policy programs and projects have been initiated in Nigeria. Some of these policy programs recorded substantial success while some were huge failures. Similarly, Offiong, (1980) opined that the general obstacles that has frustrated the African match towards economic freedom remained imperialism and dependency. Another impact of imperialism is seen through the process of making and unmaking leaders .As illustrated by Onimode, (1988) “there is no gain saying that most coups carried out in the African continent were planned by the colonial imperialist powers to achieve their purpose of dominance”.

1.2 STATEMENT OF THE PROBLEM

Nigeria is yet to attain the ranks of a developed country due to lack of structural changes among other factors. Also, it was observed that a factor crucial to this lack of economic progress is the lack of economic diversity which caused the economy to rely heavily on crude oil for revenues and as a major export commodity in the economy (Osuntogun, 1997). Prior to the 1970’s, Nigeria’s exports were predominantly non-oil commodities with agricultural commodities accounting for a lion share. However, in the 1970’s when the price of crude oil in the international market skyrocketed, the share of agricultural exports began to fall and have remained low ever since. This is majorly due to the money spinning nature of oil export which makes it more profitable to export oil and less profitable to export non-oil commodities.

This has caused a rather heavy dependence on the oil sector and the proceeds from exportation of crude oil. This heavy reliance subjects the country to difficulties when the price of crude oil, the major exports commodity is low in the international market (as it is case presently). In light of this, the government adopted various strategies to boost agricultural exports and stabilize the economy. In spite of these efforts, the performance and contributions of the agricultural sector has remained low. The sector has continued to perform below its full potentials. This research is therefore carried out to address the following issues/questions.

What are the factors responsible for low agricultural output in Nigeria?

Why the less emphasis on agricultural sector and much dependence on petroleum sector?

What measures should be taken by government to enhance the performance of the agricultural sector towards diversifying the economy for sustainable development?

Has petroleum impacted positively or otherwise on the agricultural sector and the development of the Nigerian economy?

1.3 OBJECTIVES OF THE STUDY

In spite of Nigeria’s rich agricultural endowment, there has been a gradual decline in agricultural contribution to the nation’s economy. Low agricultural output has a negative effect on the Nigerian economy as a whole. This research work is aimed at examining the agricultural sector as the key to the diversification of the Nigerian economy for a sustainable development. Other aims include:

To see how Agriculture can be used for the diversification of the Nigerian economy in order to achieve sustainable development.

To identify the constraints hampering Agriculture as a tool for the diversification of the Nigerian economy for sustainable development.

To suggest ways of removing these constraints.

To suggest other measures necessary for improving agriculture as a tool for the diversification of the Nigerian economy for sustainable development.

1.4 METHODOLOGY OF THE STUDY

This research is geared towards understanding the role of agriculture in the diversification of the Nigerian economy for sustainable development. This study will employ the use of quantitative statistical tools and econometric method of analysis. An econometric multiple regression model will be adopted to determine the impact of agriculture on Nigeria’s economic growth. With the appropriate model, the following tests will be conducted to test the statistical reliability and the significance of the estimated parameters: the standard error test, t-statistics and f-test.

For the purpose of data analysis, a multiple regression model will be used to show the relationship between the dependent variable (GDP) as a proxy for economic growth and the explanatory variables, the revenue from agricultural output, unemployment rate and inflation rate. The hypotheses to be tested in this study are:

HO: There is no significant impact of agricultural output on Nigeria’s economic growth.

H1: There is a significant impact of agricultural output on Nigeria’s economic growth.

The hypotheses are to be tested at 5% level of significance.

This can be represented mathematically as:

GDP = f (X1, X2, X3,)

This can be further expressed in an econometric model as:

GDP = β0 + β1X1 + β2X2 + β3X3+µ

Where:

GDP = Gross Domestic Product

X1 = Agricultural Output

X2 = Unemployment rate

X3= Inflation rate

β0 = Constant term

β1 = Parameter estimate of agricultural output

β2= Parameter estimate of unemployment rate

β3=Parameter estimate of inflation rate

µ = Error term or stochastic variable

The a priori expectation is that an increase in the independent variable (agricultural output) will have an increase in the dependent variable (GDP) while a decrease in the independent variable (unemployment rate) will have an increase in GDP and an increase in inflation rate will have an increase on the GDP. Hence, positive β1, negative β2, and positive β3.

This research work has six chapters, with chapter one covering the general introduction, which includes introduction, background of the study, statement of the problem, objectives of the study, methodology of the study, sources of data, scope and limitations of the study.

Chapter two contains literature review which gives the Classical’s, Neo-Classical’s, Keynesian’s, Neo-Keynesian’s, and Marxian views about using agriculture for economic diversification.

Chapter three examined the Nigerian oil dominated economy and the need for diversification. This contains the declining dominance of the petroleum sector in the Nigerian economy, Alternative sources for the diversification of the Nigerian economy for sustainable development and agriculture as the main vehicle for the diversification of the Nigerian economy.

Chapter four focuses on the agricultural sector as the key to the diversification of the Nigerian economy for sustainable development; agriculture as the main tool for increased revenue generation in Nigeria, agriculture as the main tool for solving Nigeria’s unemployment problem, agriculture as the main tool for curbing inflation in Nigeria, agriculture as the main source of raw materials for industries in Nigeria, agriculture as the main tool for reducing poverty, hunger and malnutrition in Nigeria and agriculture as the main tool for remedying Nigeria’s balance of payment problems.

Chapter five deals with data presentation and analysis, model specification, model estimation, test of statistical significance, interpretation of results and discussion of findings.

Chapter six summarizes the research work. Conclusion and recommendations are also contained in this chapter.

1.5 SOURCES OF DATA

Data used in this research work are mainly secondary data obtained from textbooks, journals, newspapers, government publications and unpublished sources such as research projects of B.sc and M.sc students which served as an important guide to this research work. Also, the internet provided important and useful information that served as a source for this work.

1.6 SCOPE OF THE STUDY

This research work focused on the diversification of the Nigerian economy through the agricultural sector for sustainable development. This study covers a period 24 years (1900-2013).The study will basically focus on the agricultural sector in relation to economic diversification and sustainable development, employment generation, foreign exchange earnings, as well as the petroleum sector and its contributions to the economic development of Nigeria.

1.7 LIMITATIONS OF THE STUDY

The limitations encountered in this study include time, administrative bureaucracy in government institutions where information were sourced, limited and insufficient information. Also, there was the problem of inadequate finance as well as poor power supply in the country.

Apart from the above mentioned constraints which are capable of adversely affecting the result of this research work, all the other errors and omissions are entirely those of the researcher.

CHAPTER TWO

Literature review

Some of the major role of agriculture in economic development of a country are as follows:

Agricultural sector plays a strategic role in the process of economic development of a country.

It has already made a significant contribution to the economic prosperity of advanced countries and its role in the economic development of less developed countries is of vital importance.

In other words, where per capita real income is low, emphasis is being laid on agriculture and other primary industries.

“Increase in agricultural production and the rise in the per-capita income of the rural community, together with the industrialisation and urbanisation, lead to an increased demand in industrial production”-Dr. Bright Singh.

The history of England is clear evidence that Agricultural Revolution preceded the Industrial Revolution there. In U.S.A. and Japan, also agricultural development has helped to a greater extent in the process of their industrialisation. Similarly, various under-developed countries of the world engaged in the process of economic development have by now learnt the limitations of putting over-emphasis on industrialisation as a means to attain higher per capita real income. “Thus industrial and agricultural developments are not alternatives but are complementary and are mutually supporting with respect to both inputs and outputs.”

It is seen that increased agricultural output and productivity tend to contribute substantially to an overall economic development of the country, it will be rational and appropriate to place greater emphasis on further development of the agricultural sector.

According to Prof. Kinderberger, Todaro, Lewis and Nurkse etc., agriculture makes its contribution to economic development in several ways, viz.,:

(1) By providing food and raw material to non-agricultural sectors of the economy,

(2) By creating demand for goods produced in non-agricultural sectors, by the rural people on the strength of the purchasing power, earned by them on selling the marketable surplus,

(3) By providing investable surplus in the form of savings and taxes to be invested in non-agricultural sector,

(4) By earning valuable foreign exchange through the export of agricultural products,

(5) Providing employment to a vast army of uneducated, backward and unskilled labour. As a matter of fact, if the process of economic development is to be initiated and made self-sustaining, it must begin for agricultural sector.

Role of Agriculture in Economic Development:

The agriculture sector is the backbone of an economy which provides the basic ingredients to mankind and now raw material for industrialisation.

Therefore, the role of agriculture for the development of an economy may be stated as below:

Contribution to National Income:

The lessons drawn from the economic history of many advanced countries tell us that agricultural prosperity contributed considerably in fostering economic advancement. It is correctly observed that, “The leading industrialized countries of today were once predominantly agricultural while the developing economies still have the dominance of agriculture and it largely contributes to the national income. In India, still 28% of national income comes from this sector.

Source of Food Supply:

Agriculture is the basic source of food supply of all the countries of the world—whether underdeveloped, developing or even developed. Due to heavy pressure of population in underdeveloped and developing countries and its rapid increase, the demand for food is increasing at a fast rate. If agriculture fails to meet the rising demand of food products, it is found to affect adversely the growth rate of the economy. Raising supply of food by agricultural sector has, therefore, great importance for economic growth of a country.

Increase in demand for food in an economy is determined by the following equation:

D = P + 2g

Here,

D stands for Annual Rate of Growth in demand for food.

P stands for Population Growth Rate.

g stands for Rate of Increase in per Capita Income.

2 stand for Income Elasticity of Demand for Agricultural Products.

Pre-Requisite for Raw Material:

Agricultural advancement is necessary for improving the supply of raw materials for the agro-based industries especially in developing countries. The shortage of agricultural goods has its impact upon on industrial production and a consequent increase in the general price level. It will impede the growth of the country’s economy. The flour mills, rice shellers, oil & dal mills, bread, meat, milk products sugar factories, wineries, jute mills, textile mills and numerous other industries are based on agricultural products.

Provision of Surplus:

The progress in agricultural sector provides surplus for increasing the exports of agricultural products. In the earlier stages of development, an increase in the exports earning is more desirable because of the greater strains on the foreign exchange situation needed for the financing of imports of basic and essential capital goods.

Johnson and Mellor are of the opinion, “In view of the urgent need for enlarged foreign exchange earnings and the lack of alternative opportunities, substantial expansion of agricultural export production is frequently a rational policy even though the world supply—demand situation for a commodity is unfavorable.”

Shift of Manpower:

Initially, agriculture absorbs a large quantity of labour force. In India still about 62% labour is absorbed in this sector. Agricultural progress permits the shift of manpower from agricultural to non-agricultural sector. In the initial stages, the diversion of labour from agricultural to non-agricultural sector is more important from the point of view of economic development as it eases the burden of surplus labour force over the limited land. Thus, the release of surplus manpower from the agricultural sector is necessary for the progress of agricultural sector and for expanding the non-agricultural sector.

Creation of Infrastructure:

The development of agriculture requires roads, market yards, storage, transportation railways, postal services and many others for an infrastructure creating demand for industrial products and the development of commercial sector.

Relief from Shortage of Capital:

The development of agricultural sector has minimized the burden of several developed countries who were facing the shortage of foreign capital. If foreign capital is available with the ‘strings’ attached to it, it will create another significant problem. Agriculture sector requires less capital for its development thus it minimizes growth problem of foreign capital.

Helpful to Reduce Inequality:

In a country which is predominantly agricultural and overpopulated, there is greater inequality of income between the rural and urban areas of the country. To reduce this inequality of income, it is necessary to accord higher priority to agriculture. The prosperity of agriculture would raise the income of the majority of the rural population and thus the disparity in income may be reduced to a certain extent.

Based on Democratic Notions:

If the agricultural sector does not grow at a faster rate, it may result in the growing discontentment amongst the masses which is never healthy for the smooth running of democratic governments. For economic development, it is necessary to minimize political as well as social tensions. In case the majority of the people have to be kindled with the hopes of prosperity, this can be attained with the help of agricultural progress. Thus development of agriculture sector is also relevant on political and social grounds.

Create Effective Demand:

The development of agricultural sector would tend to increase the purchasing power of agriculturists which will help the growth of the non-agricultural sector of the country. It will provide a market for increased production. In underdeveloped countries, it is well known that the majority of people depend upon agriculture and it is they who must be able to afford to consume the goods produced.

Therefore, it will be helpful in stimulating the growth of the non- agricultural sector. Similarly improvement in the productivity of cash crops may pave the way for the promotion of exchange economy which may help the growth of non-agricultural sector. Purchase of industrial products such as pesticides, farm machinery etc. also provide boost to industrial dead out.

Helpful in Phasing out Economic Depression:

During depression, industrial production can be stopped or reduced but agricultural production continues as it produces basic necessities of life. Thus it continues to create effective demand even during adverse conditions of the economy.

Source of Foreign Exchange for the Country:

Most of the developing countries of the world are exporters of primary products. These products contribute 60 to 70 per cent of their total export earning. Thus, the capacity to import capital goods and machinery for industrial development depends crucially on the export earning of the agriculture sector. If exports of agricultural goods fail to increase at a sufficiently high rate, these countries are forced to incur heavy deficit in the balance of payments resulting in a serious foreign exchange problem.

However, primary goods face declining prices in international market and the prospects of increasing export earnings through them are limited. Due to this, large developing countries like India (having potentialities of industrial development) are trying to diversify their production structure and promote the exports of manufactured goods even though this requires the adoption of protective measures in the initial period of planning.

Contribution to Capital Formation:

Underdeveloped and developing countries need huge amount of capital for its economic development. In the initial stages of economic development, it is agriculture that constitutes a significant source of capital formation.

Agriculture sector provides funds for capital formation in many ways as:

(i) agricultural taxation,

(ii) export of agricultural products,

(iii) collection of agricultural products at low prices by the government and selling it at higher prices. This method is adopted by Russia and China,

(iv) labour in disguised unemployment, largely confined to agriculture, is viewed as a source of investible surplus,

(v) transfer of labour and capital from farm to non-farm activities etc.

Employment Opportunities for Rural People:

Agriculture provides employment opportunities for rural people on a large scale in underdeveloped and developing countries. It is an important source of livelihood. Generally, landless workers and marginal farmers are engaged in non-agricultural jobs like handicrafts, furniture, textiles, leather, metal work, processing industries, and in other service sectors. These rural units fulfill merely local demands. In India about 70.6% of total labour force depends upon agriculture.

Improving Rural Welfare:

It is time that rural economy depends on agriculture and allied occupations in an underdeveloped country. The rising agricultural surplus caused by increasing agricultural production and productivity tends to improve social welfare, particularly in rural areas. The living standard of rural masses rises and they start consuming nutritious diet including eggs, milk, ghee and fruits. They lead a comfortable life having all modern amenities—a better house, motor-cycle, radio, television and use of better clothes.

Extension of Market for Industrial Output:

As a result of agricultural progress, there will be extension of market for industrial products. Increase in agricultural productivity leads to increase in the income of rural population which is turn leads to more demand for industrial products, thus development of industrial sector.

According to Dr. Bright Singh, “Increase in agricultural production and the rise in the per-capita income of the rural community, together with the industrialisation and urbanisation, lead to an increased demand in industrial production.” In this way, agricultural sector helps promote economic growth by securing as a supplement to industrial sector.

From the above cited explanation we conclude that agricultural development is a must for the economic development of a country. Even developed countries lay emphasis on agricultural development. According to Muir, “Agricultural progress is essential to provide food for growing non-agricultural labour force, raw materials for industrial production and saving and tax revenue to support development of the rest of the economy, to earn foreign exchange and to provide a growing market for domestic manufactures.”

CHAPTER THREE

3.1 Methodology and procedure

In this research the researcher among other methods used the descriptive research method. The descriptive research is concerned with the collection, presentation, analysis and interpretation of data for the purpose of describing vividly existing conditions, prevailing practices and beliefs, attitudes, on-going procures etc. the descriptive research goes beyond the description of the conditions or phenomena to include discovery of meaning. It also focuses a discovery of trends that are developing. The main objectives of descriptive research is to get detailed and factual information about issues, events, problems and describe the events as they are.

The descriptive research method enabled the researcher to describe in a systematic manner agricultural production as a measure to diversify the economy of Nigeria. The essentials of the descriptive research cannot be over-looked, it is a research that gives the true picture of the whole situation or problem. It gives the basis for eliciting possible policies for alleviating problems. It also saves time. The data for the descriptive analysis was generated through various types of data collection; they are interviews, which are structured interview and unstructured interview, also through an empirical investigation. They all will be discussed below.

INTERVIEWS:

Interviews involve eliciting information from the respondent through some verbal interaction between the interview and the respondent. It is a face to face interaction situation in which one person the interviewer questions, which are responded to orally. The questions which are properly framed, allows the respondent easy understanding of the information that are being sort for.

3.2 The empirical investigation

The researcher conducted a detailed empirical investigation in selected states in Nigeria. The method here was based on sustained participant observation approach (Scott, 1965). Data were collected through interviews, study of secondary material and observation. The observation is an investigation method used to obtain direct information method used to obtain direct information on the behavior of individuals, objects or situations. It involves watching people, situations phenomena and getting first-hand information relating to particular aspects of such people, events, situations or phenomena.

Information relating to certain aspects of human behavior can only be obtained in the particular settings where such behaviors are exhibited. Use of interviews are discussed above. Secondary materials are those source of information which other people did not participate or witness the events. The author of a secondary source material tries to collect and synthesize a pool of materials, which include encyclopedia, dictionaries, textbooks, journals and periodicals, newspapers and magazines as well as publications. Extensive use was made of personnel interviews. In this research the researcher concentrated on focused interviews. This involved the use of guided questionnaire sheet which are designed to assist the researcher to obtain desired information from the respondents. This technique was aimed at giving the respondents the freedom to answer questions asked, while the interviewer occasionally directed the discussion towards the course that will enable him obtain the required information.

3.3 Reliability of data collected

interviews used where the structured interviews and unstructured interview. The structured interview is a rigidly standardized and formal kind of interview. The questions were presented to the different respondents, in the same order and choice of alternative responses, and it is restricted to predetermined list. The structured approach allowed for reliable data analysis. In the unstructured interview, which is a flexible type of interview which contains very few restrictions on the respondent’s answers, the respondents were encouraged to express their thoughts freely.

The secondary materials that were studies were those relating to internal topic. These include textbooks, publications of government, newspapers, journals and periodicals. The textbooks were gotten from the library to provide detailed information and knowledge. Generally, the textbooks provided interpretation in the topic. The government publications like books, pamphlets, e.t.c. from different government agencies and parastatals contain very rich information concerning the topic, they included statistical reports, research reports, official reports, laws and other materials that are not readily available elsewhere.

The newspapers on the other hand provided current information concerning peoples’ views and opinions in the area of study. The formed valuable sources of information from where good ideas have been obtained to be helpful in designing and executing a very good work

3.4 RESEARCH DESIGN

In this study, the research method had great emphasis toward the descriptive sample survey. This approach was adopted here because the researcher worked with a much number of potential variable of interest with little previous knowledge of theory that would inform us on where to begin. It is considered that a more flexible and exploratory approach will be needed.

A possible compromise between the exploratory research of the single participant observer and a much more systematic and standardized approach is the descriptive sample survey. In this sample survey, a premium is placed on certain kinds of standardization, here the research was concerned with the methodology areas.

This final to collect data in such a way that all respondents are confronted with rarely identical questions.This seems is concerned with sampling are the question of generalization in making results. The third is with specifying standard criterion for data analysis procedure so that different analysis may reach similar conclusion based on the available data.

3.5 Population of the study

The available population of the affected states is two hundred and fourteen (200), the information was obtained from the records of various sources.

3.6 Instrument for data collection

Two instruments where used in the study and it yields a lot of contribution and contents.

Oral Interview: The research used face-to-face interview with the interviews with the respondents to obtain the necessary information needed from the organization.
Questionnaire: The research used questionnaires to gather information from the respondents. The questionnaire contains difference questions. Some option from which the respondents were, required to choose

3.7 Validation of the instrument

The instrument was subjected to both content and face validity by supervision, after all the corrections, the validated instrument was taken back for conformation to ensure that suggestions and observation were incorporated.

3.8 Reliability of the instrument

The instrument was subjected to test, retest reliability test. The result showed a good internal consistency.

3.9 Methods of data collection

The data for this study where obtained from primary data where obtained from respondents, through direct interview and questionnaire method.

The secondary data were obtained through the stocks of material from the researchers’ friends and associates and National library. More so, an experience from observation was very helpful in this research work.

3.10 Methods of data analysis

The analysis of data was organized along the following lines. Descriptive statistical analysis was used to indicate percentage scores of all the respondents. The calculation of respondents were equally drawn up on the table.

CHAPTER FOUR

Question one

Does agricultural production have a strong impact on the diversification of the Nigeria economy?

Table one

S/N0	Respondents	Percentage (%)
Yes	178	89
No	22	11

89% of the population agreed that agricultural production have a strong impact on the diversification of the Nigeria economy. 11% said no

Question two

Is agricultural production an effective means in influencing the diversification of the Nigeria economy?

Table two

S/N0	Respondents	Percentage (%)
Yes	121	60.5
No	79	39.5

60.5% of the respondents said that agricultural production is an effective means in influencing the diversification of the Nigeria economy. 39.5% disagreed.

Question three

Is there a relationship between agricultural production and the diversification of the Nigeria economy?

Table three

S/N0	Respondents	Percentage (%)
Yes	109	54.5
No	91	45.5

54.5% of the population said that there is a relationship between agricultural production and the diversification of the Nigeria economy. 45.5% said no.

Question four

How would you categorize the relationship between agricultural production and the diversification of the Nigeria economy?

Table four

S/N0	Respondents	Percentage (%)
Strong	125	62.5
Yes	75	37.5

62.5% of the population said it is strong. 37.5% of the population said it is weak

Question five

Would you advise an increased spending on agricultural production?

Table five

S/N0	Respondents	Percentage (%)
Yes	188	94
No	12	6

94% of the population said that they advise an increased spending on agricultural production. 6% said no

CHAPTER FIVE

Summary, recommendation and conclusion

5.1 Summary

An understanding of the nexus of agricultural production and economic growth in Nigeria with a view to drawing up lessons for poverty reduction was the kernel of this research. Using time series data on the index of agricultural production, real gross domestic product, interest rate, exchange rate and inflation rate, the bounds testing (ARDL) approach to cointegration was employed to analyse the data leading to the key finding of the study. It was established that agricultural production was positively related to economic growth in Nigeria and the relationship was significant both in the long run and in the short run.

5.2 Conclusion

The trend in economic growth of Nigeria have not yielded a tangible improvement in the well-being of a larger proportion of the population especially the rural populace whose primary occupation is agriculture and therefore, an economic growth that translates into poverty reduction, enhanced food security, health status, educational capacity and empowerment of youths and women in rural Nigeria should be embraced. It is recommended that pro poor policies should be designed for alleviating rural poverty and this should be centred on diversifying the Nigerian economy with agriculture as the driver of the economy so that the benefits of economic growth will trickle down to the agro-based rural population that constitute a larger proportion of the population of Nigeria. Therefore, all tiers of government and the private sector should be fully involved in pursuing the course of agricultural development for the growth of Nigerian economy and ultimately poverty reduction.

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