LECTURE 3

The Nigerian Economy and its Agricultural Sector

Introduction
 This lecture lays the foundation for understanding the structure of the Nigerian
economy, zooming in on the agricultural sector out of the 46-activity sectors
considered in the valuation of the economic worth of the entire economy as
presented in the GDP of the National Bureau of Statistics (NBS).

 The Nigerian economy is of the mixed market type, comprising a relatively

small private sector and a large public sector with Government, particularly the
Federal Government exercising control over all major primary national
resources, crude oil, gas and minerals.

 As in other developing countries, and the belief that the private sector is not well
developed, large public bureaucracies and capital intensive state-owned
enterprises provide the bulk of goods and services for the people. The Nigerian
economy is no exception.
The Nigerian Economy
 The geography of Nigeria is a blessing from natural environment perspectives. It is
bounded by four countries Benin, Niger, Chad and Cameroon. The southern border
is the Atlantic Ocean. It has a large population of about 200 million people, the most
populous and dominant socio-economic entity in Africa, in general and the
ECOWAS sub-region in particular making it a large local and international market.
 Furthermore, the Atlantic territorial waters extend 48kilometres off-shore, providing
a large potential for fishing and mineral exploration, particularly crude oil and gas.
In addition, the sea bottom is rich in silt and heavy mud deposits coup0led with
negligible coral deposits making it trawable for deep fish exploration.
 Equally by gift of nature, the country is blessed with three drainage systems, namely
the Niger-Benue rivers, with many tributaries, the Komandugu-Yobe rivers with
their tributaries draining into Lake Chad and numerous coastal and north-south
flowing rivers, of which River Ogun, Osun, Owena, Hadeja, Jemare, Rima and
Sokoto are examples.
The Nigerian Economy

Equally by gift of nature, the country is blessed with three drainage systems, namely
the Niger Benue rivers, with many tributaries, the Komandugu-Yobe rivers with
their tributaries draining into Lake Chad and numerous coastal and north-south
flowing rivers, of which River Ogun, Osun, Owena, Hadeja, Jemare, Rima and
Sokoto are examples.
From the coastline in the south to the north the topology rises and become undulating
with scattered hills with moderate elevation and with a tropical climate typified by high
temperatures and humidity the growth of several tropical crops is favoured.

There are two marked seasons, wet and dry seasons and the determines the crop growing seasons, with the south with
more of the wet seasons and vise versa for the north.

Nigerian soils are of the ferralitic types and underlying rocks of the p0re-Cambian Basement coupled and crystallic
rocks with ranch deposit of solid minerals like gold, germstones, limestone, coal quartz, granite, lithium ore, cotton etc.

Ecologically, the climatic and vegetation cover makes the Nigeria land suitable for crop production as well as human
and farm animal habitation as well as a host of many farm animal and human parasites.

The country is blessed with a large land mass of about 98 million hectares of which over 75% are arable coupled with
about 38 million hectares of forest of which about 9 million are under resources. The land is also blessed with several
small rivers all making Nigeria a potentially strong agricultural country.

The country currently has an average GDP figure of about 450 billion US dollars and a good potential for growth with
improved agriculture, solid mineral extraction, manufacturing, trade and supporting functional economic, social and
institutional items of infrastructure.
Agriculture constitute about 30 percent of the GDP from a height of about 70 – 80% at independence
in 1960. Crude oil is the main source of foreign exchange with agricultural export of cocoa, sesame,
palm produce and rubbers contributing less than 10 percent. Agriculture however is the major source
of employment engaging 60 – 70 percent of the labour force.

The Agricultural Sector

Agriculture remains the dominant sector of the Nigerian economy presently close to 25
percent of the GDP, a far cry from the over 80 percent in the pre-crude oil oil years of
the 1960s, it is the major employer of labour, contributes relatively to the country’s
foreign exchange earnings and most importantly the main source of food to the 200
million persons in the country and a major supplier of raw materials to the agro-
industrial sub-sector.

Crop production, in terms of arable and tree crops, dominate production in the sector
with the country producing a variety of arable crops, particularly food crops such as
sorghum, millet, rice, maize, yam and cassava. Some minor food crops such as
cocoyam, sweet potato, plantain and melon are also produced.
The country also produce a wide range of fruits and vegetables, notably banana, sweet citrus varieties,
mango, pineapple, pawpaw, cashew, avocado, sheanut, beetroot, carrot, spinach, cabbage, water melon,
cornflower, pepper, onion, tomatoe, okro and several typ0es of leafy vegetables. Other arable crops that
double as industrial and food crops include groundnuts, cotton seed, beanseed and soyabeans.

The non-arable are mainly the tree crops of cocoa, oil palm, rubber, cotton, coffee and
coconut. The crop sub-sector contribute over 93 percent of the agricultural sector.

The next important sub-sector is the livestock sub-sector which contributes next to the
crop sub-sector which contributes about 5 percent to the overall GDP and 10 percent
of the agricultural sector. In the sub-sector we have large ruminants like cattle,
donkeys, horses and small ruminants like sheep and goats; monogastric farm animals
like pigs and poultry birds like chickens, ducks, turkey and guinea fowls.

Most of the animals form part of the diet of Nigerians except for horses, donkeys and
camels which serve as work, sports and transportation animals.
The forestry and wildlife sub-sector is small but significant as the chief source of timber logs for the
house-construction industry and wild animals which Nigerian relish for consumption. It contributes
about 41 percent of the GDP, employs a relatively large rural labour and income to foresters, saw
millers, construction workers (carpenters) and hunters.

The sub-sector is important to the economy of high forested states of Ondo, Ogun, Edo, Delta,
Akwa Ibom and Cross River. The forest also serve the production of ply woods veneer and
particle board.

Finally, there is the fishery sub-sector which contributes about 2 percent. Fishery products,
particularly, fishes and crustaceans are found in the marine and fresh waters of oceans,
lagoons, creeks, rivers and lakes of Nigeria providing employment for millions of fishermen
and women who also explore the waters and principally processors and traders.

The important feature of the Nigerian agricultural sector, except for the export crop, food crop
production which dominates the sector is minimally affected by external shocks. It consumes
insignificant portion of the country’s foreign exchange earnings so less responsive to foreign
exchange gyrations.
The sector is dominated by small holders cultivation small parcel of land or rearing small
numbers of farm animals and rarely using modern production technologies and largely
insensitive to government policies, budgets and political institutes but affected by ethnic
insensibilities and unwholesome behaviours (insurgence, banditary and kidnapping).

The stability of the agricultural sector unwittingly or wittingly bestows resilience on

the Nigerian economy.

The Nature of Agricultural Production

There are four distinctive agro-ecological zones in Nigeria, humid, sub-humid,
highlands and semi arid that these zones have distinctive agricultural endowments
that dictate the types of agricultural products and production potentials in each zone
so also is the technology of production that predominates in each zone. A summary
of this distinction is coughed in the annotated table shown in Table 3.1.
 Table 3.1: Main Features of Nigerians Agro-Ecological Zones

Features/Zones` Humid Sub Humid Highland Semi-Arid

Average Rainfall/
month/year 2030 1250 1140 200-750
Average Rain Days
(Days/Year) 140 129 121 50
Temperature Range 20 – 32 22 – 50 6 – 28 10 – 45
[00]/Vegetation types Forest/Derived Guinea Wood lands Sudan and
Savanah Savannah Sahel
Pattern of Agriculture Tree crops or Grains and Temperature Grains and
wood extraction Livestock Horticultural Livestock
plants
Location within
Nigeria South Central Central North
Technology of Production
The diverse uses of farm inputs particularly labour, modern farm inputs and farm equipment determines the technology
of production on Nigerian farms. Six production technologies are discernible in the Nigerian agricultural space.
*Traditional Manual Technology (TMT)

*Improved Manual Technology (IMT)

*Improved Animal Traction Technology (IATT)
*Improved Semi-Mechanical Technology (ISMT)
*Improved Fully Mechanised Technology (IFMT)
*Improved Irrigation Technology (IRT)
Small holder farmers dominate Nigeria’s agriculture in all agro-ecological zones
using Traditional Manual Technology (TMT) to bring forth agricultural produce;
both crops and farm animals. TMT relies mainly on labour input from the farms
and his household members and a medium of hired labour with rudimentary hand
tools, mainly hoes, cutlass, pegs and stakes from scrubs and trees branches as well
as unimproved or local planning materials and without the use of fertilizers agro-
chemicals and other growth enhancing inputs.
Land is a major input into TMT operation. It is either owned, or leased or borrowed. The outcome of
TMNT is limited quantity or produce that makes marketable portion small.

Unlike TMT, Improved Manual Technology (IMT) forms use improved and untraditional inputs like
High-Yield Varieties (HYVs) or planting materials or young farm animals.

Output is much bigger than under TMT but still moderate under the Improved
Semi-Mechanical (ISMT). Some farm operations such as land clearing and
cultivation (ridging and harrowing) are carried out by mechanical tools rather than
by hand and improved planting materials and modern inputs are still used. More
economics of scale is enjoyed under ISMT, productivity increases, larger farms are
cultivated and better results obtained that IMT and TMT.

In the Improved Animal Tundown technology (IATT), animal drawn farm tools
replace mechanical hand tools used in ISMT. Furthermore, there is the Improved
Fully Mechanised Technology (IFMT) in which most farm operations resuming
physical force are carried out by farm mechanical tools such as tractors, ridgers,
harrows, cultivation, weeders, to mention a few.
Each of these improved technologies can be further enhanced by the introduction of
Irrigation water under the improved Irrigation Technology (IRRT) and greenhouse
farming for horticultural crops.

Hired labour provided a significant proportion of the labour input in farms using
improved technologies and the capital-labour ratio increases and the technologies
advanced from IMT through IFMT to IIRT.

Improved management practices are also the hall mark of these improved
technologies making output larger and available surpluses exist beyond the demands
of the farmers thereby generation of more income to owners and making them more
integrated into the farm input and farm output as well as farm credit markets but the
tradition of rural farmers who use mainly TMT.

The foregoing explains why the pursuit policies to support the use of improved
technologies engages the Governments of Nigeria more and agrees with the support
for the nations agricultural research system. The ultimate is to develop a market
In the same vein, livestock production follows the same pattern from extension grazing for ruminants
(sheep, goat, cow) free ranging in poultry (chicken, duck, guinea fowl, turkey) to keeping ruminants
in paddocks (or pens) and deep litters or cages for poultry which represent the range of technologies
from traditional to improved technologies.

In fisheries operations, the technology advances from road fishing to canoeing and finally to
trawling in oceans as the system moves from traditional to improved methods of production.

Finally in forestry operations, the technology advances from manual felling of trees with
axes and cutlasses to mechanical saws as well all the extraction of wide trunk trees to small
trunk trees.

In all the improved technologies in farm operations constitute a modern trend in farming and
makes farming attractive to the youths and investors.

A summary input utilization pattern for the various crop farm technologies are displayed in
table 3.2.
 Table 3.2: An Annotated Description of Various Crop Farm Production
Technology in Nigeria

AIFMTctivity/
Technology IATT IMT ISMT IFMT IATT IRRT
Seed use Unimproved Improved Improved Improved Improved Improved
Fertilizer use No Yes Yes Yes Yes Yes
Herbicide/Pesticide No Yes Yes Yes Yes Yes
Seed Dressing No Yes Yes Yes Yes Yes
Industrial
Cleaning/
Preparation Manual Manual Manual Machine Animal Manual
Land Clearing/
Preparation Manual Manual Manual Machine Manual Manual/
Seeding/Weeding Manual Manual Manual Machine Manual Manual/
Machine
Table 3.3: States and agricultural possibilities in Nigeria

States Agricultural Specialization

Sokoto, Zamfara, Katsina, Kano, Grains, Legumes, Cattle, Poultry, Small and big
Jigawa, Yobe, Bauchi, Borno and ruminants, Vegetables and Wuts
Kebbi
Niger, Kaduna, Benue, Gombe, Grains, Legumes, Roots, Tubers, Poultry small
Adamawa, Kwara, Taraba, Abuja, ruminants
Nasarawa and Plateau
Kwara, Edo, Borno, Oyo, Osun, Ekiti, Roots, tubers, Grains, vegetables, Fruits, Poultry,
Benue, Kogi Fisheries, small ruminants and piggery
Oyo, Ogun, Ondo, Edo, Rivers, Cross Tree Crops, Roots, tubers, Grains, Vegetables, Fruits,
Rivers, Imo, Enugu, Ebonyi and Poultry, Fishery, Small ruminants and piggery
Akwa Ibom
Lagos, Ogun, Ondo, Delta, Rivers, Fishery, Poultry, Piggery, Grain, Roots and tubers
Cross River, Akwa Ibom, Bayelsa
Farm Challenges

Farm challenges come in different forms from technical problems to economic, social/
cultural to institutional problems.
Technical Problems
Technical problems that permeate the entire agricultural sector include:
* The extensive use of low-level production technology which is predominantly TMT modern
inputs.
* The production process is susceptible to nature and over reliance of rainfall, God given facilities
making farming unproductive and unattractive.
* Low agricultural productivity, low output and low income.
* Low level of irrigation agriculture when compared with South Africa, India, China, Mexico, USA
and Netherlands, with interior of use of fertilizer and tractorisation.
*The preponderance of farmers practicing shifting cultivation which involves rotating of farms rather
crops is added technical problems, as the method comes with bush burning which is harmful to soil
fertility.
*In livestock production the keeping of unproductive indigenous tradition farm animals, the use
of tradition free range system that are not well sheltered, prone to pest and diseases all make
animal husbandry unprofitable.
*The fishing industry is run on manual and rudimentary technology making unattractive to
young persons.
Forestry operations concentrate on logging by manual technology with hand held saws on
large trunk trees with considerable poor conversion level and generation of waste as well
as overchance of traditional species. Aforestation programmes need to be pursued
rigorously and conversion of mall brund logs to finished products.

Economic problems
In the rural farming setting, there are many economic problems hindering the agricultural
industry.
*Agricultural markets are not well developed and increasingly becoming inadequate for
our population size and changing dietary patterns.
 *Transportation problem is a major bottleneck, rural roads are very bad, rough way
system is rudimentary and the entire rural communities rely chiefly on human
transport system.
* Organised farm information system is absent as data collection processing and
transmission are absent with no mechanism for quickly transferring of price data.

* Poor marketing also manifest in poor storage system as a result of on-farm and
off-farm losses are high making farmers susceptible to price instability and
exploitation by middlemen.
* There is limited processing of agricultural produce resulting in low income and
presents the development of agribusinesses.
There is a complete absence of any standardization of farm items in the Nigerian Agricultural market,
particularly the output. A standardized system of grading and measurement, which enhanced
marketing efficiency is not a human feature of the market, except in the marketing of export crops.

Grades in the non-export market are determined arbitrarily by size, colour or smell, Measures in
different types of metals and plastic bowls, dishes, tins, baskets and calabashes.
Most measures are susceptible to manipulation to all the volume in an attempt to take advantage of
the customers. This explains why quantities of good purchased with the markets vary within
markets, across markets and from, farm to town and from time to time.

The use of weighing scales is limited which explains why prices are determined by haggling between
buyer and sellers.
In addition sorting any packaging are not carried out which further reduces the ability
canvassing a sound marketing policy to boost farmers income as well as ensure adequate
p0rotection to consumers.

Agricultural produce supply and price instability characterise the Nigerian agricultural markets
and the problems identified previously impose limitations cause the instabilities which farmers
generally adjust to allowing experience of previous planting season guide decision in current
seasons.

When price of commodities are lower than expected in a particular season due to over-supply,
farmers cut back on production and supply less to the market in the next season
 behaving in opposite direction if supply is short thereby leading to gyration if supply and prices
following a cobweb like pattern.

The pattern can be explosive or non-explosive depending on how elastic the supply side of a
commodity is. The pattern are shown graphically in figures 1 and 2.
Fig 1: Explosive cobweb pattern of supply and price Fig 2: Non-Explosive pattern of supply and price S
instabilities when supply is inelastic instabilities when supply is elastic

P0

P0

P1
P1

D
D

q
q0
q0
The phenomenon is very common with annual food supplies and prices, particularly cassava
products (garri, fufu, etc.). Rural poverty is major constraining problem to agriculture in
Nigeria. Farmers who form the majority of rural population are poor and so are the kith and
kin. Their products are poor as were their grand parents and great grand parent. With this
limited initial wealth, farmers lack a “good” start in life and therefore, are more at risk of
becoming poor like their parents, grand parents and great grand parents. And the circle of
poverty continues.
Farmers’ children also become afflicted by poverty making poverty generational by nature
making capital accumulation very limited as well as insufficient capital for farmers. The
resultant effect that farm holding are small to take advantage of economic of scale in
production.

In view of the foregoing, specialization in production is minimal with mixed cropping and
mixed farming are local ways of minimizing uncertainties which may be induced by
changing economic situation or nature (storm, drought, wind, fire, etc.).
Poor farmers cannot also take advantage of the available packages of technologies to boost
productivity which partly explains the preponderance of farmers using the TMT in production.

The rural credit market is not favourable to the poor rural farmers. The informal credit system
of money lending is exploitative and uneconomical. The long and cumbersome bureaucratic

processes in formal credit delivery system constraint the flow of credit institutional
sources. Bank loans are difficult to process by the largely illiterate farmers who have no
collaterals and live in scattered villages without title to land which is the only access they
have.

Labour constraint in rural Nigeria is becoming an issue due to rural-when migration of

able-bodied young persons causing labour shortages and pursue of reduction and glamour
of urban life. The ultimate effect is the high labour cost in the rural area where the
technology of agricultural production demands large inputs of human labour reducing the
ability of the agricultural sector in making optimal contribution to the national economy.
Socio-cultural Problems
Several socio-cultural problems limit agricultural production in rural Nigeria. The prevailing
land tenure system of ownership and control do not enable the development on a viable land
market in the country.

In most part of the country, agricultural lands belong to the community and land
ownership pattern and right-to-use differ from place to place and from one ethnic
group to another. In general, the land tenure systems and unprogressive and market
unfriendly. The minimum textures include:
*Land is considered sacred in rural Nigeria accommodating shrines and burial
sites or dedicated to particular use not open to use no matter how productive
they are.
*Some lands are ancestral belonging to the founders of the ground owning the
land and cannot be used by “outsiders” or strangers.
 *There are community lands belonging to everyone in the community under
the control to community leaders which cannot be bestowed on individuals
for use.
*Lands can be borrowed which can only be used for agreed length of time reverting
to the owners and such lands cannot be used to grow permanent crops.

*Lineage or individual lands can be pledged for loans which makes them
useable on temporary basis with rent paid by produce grown on the lands.
*Lands can be inherited, purchased, reclaimed or first arrival by individuals.
The main problem associated with the foregoing traditional tenure systems in that
there is no establish market for land in rural Nigeria, and hence, no market
determined land prices.
New lands are difficult to acquire for farming, particularly for strangers except as
tenants making long farm investment rare. An efficient land registration, legal
contracts and land distribution are slow in coming.
The foregoing lead to lands being sols to several persons causing long litigations with high cost.
Other consequences include land fragmentation and fractioning at holdings making farm
holding small and scattered making management costly and high transaction cost as well as
discouraging mechanization and encouraging subsistence agriculture and lack of any
specialization in production.

The family set up in rural Nigeria and belief systems create their problems. Large household
sizes, low per capital income, and general poverty that limits investment for increased production.
Wasteful, extravagant and relax spending on social ceremonies like marriages, parties for opening
new houses and bathing new babies and dead parents are without much economic benefit inhibit
the accumulation of money for investments on farm and non-farm businesses.
Farmers in rural Nigeria are largely uneducated and their customs and religious beliefs sometimes
prevent them from adopting improved methods of production.
With the belief that education has a socializing effect on people, Government has invested on rural
schools but in most of the rural areas, particularly in the Northern Nigeria, they are highly
dispersed location with security and in many cases inundated with coranic teachings rather than
secular trainings.
In many areas of rural Nigeria, new Churches and Mosques spring up than schools with more
citizens becoming priests than teachers.

Medical services in rural Nigeria are grossly inadequate in terms of the number of medical
personnel, number of clinics or hospitals and equipment making room for unqualified medical
personnel, untrained patient medicine dealers and quast chemists to rate the medical
service delivery system.

The outcome is that many diseases are endemic contributing to low productivity from
loss of many man-months of work annually on the farms.

Clean pipe-borne water is completely absent in most rural communities leaving the
villages to source water from rivers, streams, ponds and lakes which are inferted by
pathogens that transmit water-borne diseases.
Rural electricity is very slowly pursued making life unbearable and dampening the enthusiasm of
investors to establish cottage industries.

Religious beliefs in rural area hampers the use of improved agricultural practices and suppresses
productivity. An example is the preaching of the non-use of improved maltable

sorghum amongst northern muslim because it was to be cited by the brewery industry to
make alcoholic drinks.

Similarly the moslim religion support early marriages limiting girl-child education and
female agricultural labour force. Also, the cattle rearers prefer the transmission open grazing
method to improved sedentary animal husbandry despite the large production of grains in
muslem dominated Northern Nigeria.

Institutional Problems
Government on its own create many institutional problems in the Nigerian agricultural sector.
Since the Federal Government took over the control of agricultural management since
the 1970s and initiated many policies, the sector has not made much progress.

Lack of coordination between the Federal State and Local Government in the manage-
ment of agricultural despite that the fact that agriculture is on the concurrent list in the
constitution is a major problem.

The long military rule has imbibed the culture of command and control administrative
style which do not work in a democratic environment in the management of agricultural
programmes and projects resulting in conducting regulations and conflicts.

With the Federal Government control, programmes and projects are designed and
managed in Abuja far from remote rural areas therefore beneficiaries and wastage.
All these problems makes the supply side of the agricultural economy highly inelastic
creating a perpetual excess demand situation with food shortages and high food prices
which translates to high inflation and excessive food imports.

We have so far examined the problems of the Nigerian agricultural sector as a prelude
to examining the States of development and different development and models before
putting forward the different policies designed and executed to promote agricultural
development.