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GOVERNMENT EXPENDITURE AND AGRICULTURAL PRODUCTION IN NIGERIA

CHAPTER ONE

INTRODUCTION

1.1   BACKGROUND OF THE STUDY 

The socio-economic development of any nation is usually dependent on many factors, which combine to ensure the successful attainment of set development goals.  One of such factors is agriculture.  Its discovery dates back to 800 BC period regarded as the new Stone Age, when man began to till soil and grow crops using crude implements made out of stone (Anderson, 1995).  According to Maslow, 1954, food is one of the physiological needs of man, which must be satisfied before other needs could be attained.  Supporting Maslow’s assertion, Morgan and Henson (1085) argue that agriculture will remain an indispensable factor until the end of human existence.

The importance of agriculture in the socio-economic development of every nation has made many countries of the world (i.e. developed and developing) to place more emphasis on its development.  This is evident in the number of programmes that have been introduced by both international agencies and individual countries to ensure improvement in agricultural activities.  In Nigeria for instance, successive governments have introduced and implemented programmes in this regard.  Such programmes include Operation Feed the Nation (O.F.N.), Agricultural Research Policy, Agricultural Development Project, Agricultural Credit Government Scheme, The Green Revolution, River Basin Development Authorities (RBDA), National Agriculture Land Development, Nigeria Agricultural and Co-operative Bank (NACB), The Structural Adjustment Programme (SAP), Directorate of Food, Roads and rural Infrastructure (DFRRI), (Anyanwu, 1960-1997).  It is however, disheartening that despite the laudable nature of these programmes and the huge financial resource expended on them, their impact on the economy remains as infinitesimal.

However, the problem, which the Nigeria agricultural sector suffers till date, could be traced to the discovery of crude oil.  The discovery of crude oil deposit in various parts of the country in commercial quantities in mid 1960’s coupled with the oil boom of 1974 as a result of the America, affected adversely the agricultural sector.  The economy therefore, became heavily dependent on oil.  For instance, oil sector provides 20% of GDP, 95% of foreign exchange earnings, about 85% of total export and 65% of budgetary revenue (Anyanwu, 1997).

Agricultural contributions to the economy were instrumental in sustaining economic growth and stability, stable growth in agricultural exports was the backbone of favourable balance of trade.  Primary processing of raw materials from the agricultural sector hence helped in the sectors through the imposition of taxes and accumulation of marketing surpluses, which were used to finance many development project.

Agricultural sector notwithstanding is more else degenerating to a type of peasant agriculture, which is caught in vicious cycle of poverty where destination caused by low income, and disguised employment lends to poor saving and little investment in technology.  This therefore, calls for the attention of the government for the development of the sector.  The development of agricultural sector is one of the crucial requirement for moving the economy forward.  This study therefore, tends to investigate government expenditure on agricultural production in Nigeria and how to increase its productivity and role in the economy.

1.2       OBJECTIVE OF THE STUDY

The broad objective of this study is to analyze the relationship between government expenditure and agricultural production in Nigeria, the specific:

i.            To identify the problem of agricultural financing in Nigeria.

ii.           Proffer policy recommendations on how to improve agricultural sector in Nigeria.

iii.         To determine the effectiveness of government expenditure on agricultural production in the Nigeria economy.

1.3       STATEMENT OF PROBLEM

In recent years, especially since the inception of the present democratic government in Nigeria, the agricultural sector of the economy has continued to perform below expectation despite the huge sums of money being allocated to the sector in each year’s budget.  In 2002, about N9.874 billion was mapped out for the sector.  In the same 2002, over 72 million dollars donated by Food Agricultural Organization (FAO) was distributed to the 36 states of the federation in addition to that year’s allocation.  According to Iheagu (2002) the money cannot be said to have a justifiable use.  Rather, what one sees is the prevalent “Lack Luster” attitude of government to the total execution of the programme.  He said that every thing is one side with increasing number of jobless youths roaming about.  He also pointed out that across the state of the federation, warning signals are booming on the possibility of a butcher National Food Security programme, which may result in a situation similar to what are being continued on daily basis by price of food item in the market and the crude system of farming being practiced in the country.  The situation raises questions as to the effectiveness of the various agricultural programmes in the country, thereby making it necessary and imperative to examine the effectiveness of government expenditure on agricultural production in the Nigeria economy.

1.4       SIGNIFICANCE OF THE STUDY

The study is significant because it will help resolve the issue of the need for the federal government to finance and boast the sector and provide agencies for monitoring and maintenance of policies periodically for significant growth and development of the economy.  Also, it will help resolve the serious attention as well as raw materials for infant industries in the country.

1.5       SCOPE OF STUDY

This study is designed to assess the impact of government expenditure on agricultural development in Nigeria (1970 – 2010).  This study will also examine the performance made by agriculture to the development of the economy over the years as stipulated above.

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