1.1 BACKGROUND OF THE STUDY
1.2 STATEMENT OF THE PROBLEM
In spite of Nigeria's rich agricultural resource endowment, there has been a gradual decline in agriculture's contributions to the nation's economy. The agricultural sector during the 1960s, accounted for over 70% of the total exports in Nigeria. According to Olajide, et al (2012), the agriculture sector fell to 40% in the 1970s, and got worse in the late 1990s by less than 2%. The sudden decline in the agricultural sector was largely due to the rise in crude oil revenue in the early 1970s. As a result of this, today, small scale farmers are constrained by lots of problems including poor infrastructure, poor access to modern inputs and credit, land and environmental degradation, inability to capture the financial service requirements of farmers and agric-business owners. Inadequate funding of the agricultural sector has been re-echoed by several experts as an obstacle to increased agricultural output (CBN, 2007; Bernard, 2009). However, from a nominal point of view, it is evident that in Nigeria, government spending on agriculture has continued to increase over the years while empirical evidence have revealed that the performance of the agricultural sector has been inadequate [Ekerete, 2013; CBN, 2007]. The agricultural sector in Nigeria which was the main stay of the economy is no longer performing the lead role it was known for. By mid 1970's Nigeria's agriculture started to experience problems, agricultural exports began to decline and food shortages started emerging. From 1975, emboldened by considerable increased revenue from petroleum, government assumed heavier responsibilities for agricultural production, input supply and marketing; in addition to adopting credit control and other allocative policies in favour of agriculture [Ojo and Balogun, 1991]. Agricultural production stagnated at less than 1 percent annual growth rate between 1970 and 1982. There was a sharp decline in export crop production, while food production increased only marginally. Thus, domestic food supply had to be augmented with large imports. Food import bill rose from a mere N113.88 million annually in 1970-1974 to N1,964 million in 1991 [CBN, 2007]. Since 1990 and until recently, Nigeria has been spending an average of 60 million USD on the importation of rice annually (Alkali, 1997). Indeed in 1994, the agricultural sector performed below the projected 7.2% of budgetary output [Lawal, 1997]. Theoretically, input-output theory in economics posits that input determines output. More so, Keynes postulated that increased government spending boosts economic growth. It is evident that the agricultural sector especially the small scale farmers constitute about 70% of the population in Nigeria, yet agricultural output has been very low due to government's neglect in form of financial aid, and soft loan to boost agricultural output, which in turn has a negative effect on the Nigerian economy as a whole. In the case of Nigeria, there has been a conflicting view about spending on agriculture just as we can see from various scholars cited above. Therefore there is need to examine the extent to which government expenditure as an input has affected agricultural production as an output. It is in the light of this that this research was carried out to study federal government agricultural expenditure and agricultural output on Nigerian economic growth 1981 – 2018.
1.3 AIMS AND OBJECTIVES OF THE STUDY
The major aim of the study is to examine federal government agricultural expenditure, agricultural output and economic growth in Nigeria. Other specific objectives of the study include;
1. To examine the amount of money spend on agricultural sector by government in Nigeria.
2. To assess the level of agricultural output in Nigeria.
3. To examine the impact of federal government agricultural expenditure on the contribution of agriculture to the GDP (output).
4. To examine the ways agricultural sector enhance economic growth in Nigeria.
5. To examine the relationship that exists between government expenditure on agriculture and economic growth in Nigeria.
6. To highlight alternative procedures that can be taken to impure methods of enhancing agricultural output effectively.
1.4 RESEARCH QUESTIONS
1. How is the spending on agricultural sector by government in Nigeria?
2. What is the level of agricultural output in Nigeria?
3. What is the impact of federal government agricultural expenditure on the contribution of agriculture to the GDP (output)?
4. In what ways will agricultural sector enhance economic growth in Nigeria?
5. What is the relationship that exists between government expenditure on agriculture and economic growth in Nigeria?
6. What are the alternative procedures that can be taken to impure methods of enhancing agricultural output effectively?
1.5 RESEARCH HYPOTHESES
H0: There is no significant relationship between government expenditure, agricultural output and economic growth in Nigeria.
H1: There is a significant relationship between government expenditure, agricultural output and economic growth in Nigeria.
1.6 SIGNIFICANCE OF THE STUDY
The fundamental importance of this study is to examine the relationship or correlation that exists between government expenditure on agriculture and agricultural output on Nigerian economic growth. So far, little has been done to determine the important of agricultural sector on economic growth in Nigeria, but a number of studies have been carried out on cross country analysis of less developed countries. Most studies in this area consider only a small number of variables trying to establish agricultural growth. The basic significance of this study is that it employs econometric models with strong theoretical under pinning that relate agriculture and economic growth in Nigeria and that growing concern of the agricultural sector. It would be useful to explore this and come up with results that would help in the policy building of the Nigerian economy.
1.7 SCOPE OF STUDY
This study was designed to cover a period of 37 years (1981 – 2018). Data used in this study were obtained from the Central Bank of Nigeria Statistical Bulletin, CBN Annual Report and Statement of Account, Journal of Food Research and Federal Office of Statistics.
1.8 LIMITATION OF THE STUDY
Financial constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview)
Time constraint: The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.
1.9 DEFINITION OF TERMS
Government Expenditure: It refers to the purchase of goods and services, which include public consumption and public investment, and transfer payments consisting of income transfers (pensions, social benefits) and capital transfer
Agriculture: The science, art, or practice of cultivating the soil, producing crops, and raising livestock and in varying degrees the preparation and marketing of the resulting products.
Agricultural output: is the main measure of individual crop and livestock output. It comprises: (a) Crop enterprise output, which is the total value of crops produced by the farm (other than losses in the field and in store).
Economic Growth: Economic growth is the increase in the inflation-adjusted market value of the goods and services produced by an economy over time. It is conventionally measured as the percent rate of increase in real gross domestic product, or real GDP.
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