Impact of Inflation on Agriculture Output in Nigeria
CHAPTER ONE
OBJECTIVE OF THE STUDY
The Main Objective of the study is to appraise the impact of inflation on agricultural product output in Nigeria (1980-2017); The specific objectives include
- To determine the level of agricultural product output in Nigeria.
- To determine the level of inflation in Nigeria.
- To determine the impact of inflation on agricultural product output in Nigeria (1980-2017)
CHAPTER TWO
LITERATURE REVIEW
Theoretical Framework
According to Keynesian theory, inflation can be caused by increase in demand and/or increase in cost (Jhingan, 2010). Demand-pull inflation is a situation where aggregate demand persistently exceeds aggregate supply when the economy is near or at full employment. Keynesian theory of cost-push inflation attributes the basic cause of inflation to supply side factors. This means that according to Keynesian, rising production costs will lead to inflation Akpan and Udoh (2009) in a study on estimating grain relative price variability and inflation rate movement in different agricultural policy regimes in Nigeria, found out that inflation had a positive significant effect on relative price variability of grains and that the SAP and civilian post SAP agricultural policy regimes in Nigeria brought about a positive significant shift in the coefficient of inflation which implies an increase in the relative price variability of grains. Mesike et al. (2010) also found out that inflation has a significant positive impact on relative price variability in the short-run and long-run and that those policies that would protect the agricultural sector from the impact of inflation in the short-run should be encouraged. Murtala (2010) posited that the coefficient of inflation was negative and significant in influencing economic performance in Nigeria and noted that both supply-side policies and demand management policies such as a reduction in real broad money supply should be adopted to reduce inflation in the short-run and in the long-run. Ukoha (2007) found out that the effect of inflation on relative price variability is non-neutral for both food crops and cash crops, and that there is a significant positive impact of inflation on price variability in both the short run and the long run. The role of agribusiness has become important in the context of the challenges that global economy faces in enhancing food production to cater for increasing demand for food, fuel and feed. The impact of agribusiness on inflation is also both direct and indirect (Khan, 2012). The direct impact of agribusiness is visible in the form of food inflation. The indirect impact of agribusiness on inflation is reflected in the rise in cost of living arising from high food inflation leading to higher wages, which, in turn, contributes to generalised inflation through higher cost of production. From a policy point of view; both global and domestic, one of the channels through which inflation affect fiscal balances is that the overall cost of living increases as food prices increase, more so for low income countries where food constitutes a substantive part of the consumption basket (Canuto, 2011). The theoretical framework for this study is adapted from Leoning et al. (2009) who modelled inflation in an agricultural economy by presenting an empirical inflation model that embeds different models of inflation which makes it possible to test various hypotheses rather than imposing restrictions on the models and account for the specific circumstances of developing economies with a large agricultural sector.
CHAPTER THREE
RESEARCH METHODOLOGY
INTRODUCTION
In this chapter, we described the research procedure for this study. A research methodology is a research process adopted or employed to systematically and scientifically present the results of a study to the research audience viz. a vis, the study beneficiaries.
RESEARCH DESIGN
Research designs are perceived to be an overall strategy adopted by the researcher whereby different components of the study are integrated in a logical manner to effectively address a research problem. In this study, the researcher employed the survey research design. This is due to the nature of the study whereby the opinion and views of people are sampled. According to Singleton & Straits, (2009), Survey research can use quantitative research strategies (e.g., using questionnaires with numerically rated items), qualitative research strategies (e.g., using open-ended questions), or both strategies (i.e., mixed methods). As it is often used to describe and explore human behaviour, surveys are therefore frequently used in social and psychological research.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
INTRODUCTION
This chapter presents the analysis of data derived through the questionnaire and key informant interview administered on the respondents in the study area. The analysis and interpretation were derived from the findings of the study. The data analysis depicts the simple frequency and percentage of the respondents as well as interpretation of the information gathered. A total of eighty (80) questionnaires were administered to respondents of which only seventy-seven (77) were returned and validated. This was due to irregular, incomplete and inappropriate responses to some questionnaire. For this study a total of 77 was validated for the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain impact of inflation on agriculture output in Nigeria. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of impact of inflation on agriculture output in Nigeria
Summary
This study was on impact of inflation on agriculture output in Nigeria. Three objectives were raised which included; To determine the level of agricultural product output in Nigeria, to determine the level of inflation in Nigeria and to determine the impact of inflation on agricultural product output in Nigeria (1980-2017). A total of 77 responses were received and validated from the enrolled participants where all respondents were drawn from CBN. Hypothesis was tested using Chi-Square statistical tool (SPSS).
Conclusion
Inflation can be kept at a minimum in the country if there is good harvest of agricultural output with possible inventory absorbing mechanism in place. Hence the call for the following policy measures: Government, private institution and farmers association need to encourage farmers in times of surplus by absorbing the excesses and possibly distribute it to the appropriate quarters to curtail inflation. Government, Nongovernmental agencies and farmers association should seek ways to adjust for the change in agricultural output overtime (inventory changes). This can be done through investment in storage and processing facilities.
Recommendation
Based on these findings, it is recommended that the monetary authority of Nigeria should carefully monitor the trend of inflation and pursue policies that will ensure a single digit inflation rate as the inflationary pressure of the economy exerts significant influence on the level of agricultural production. This is necessary to ensure that the agricultural sector continues to play a major role in the Nigerian economy especially towards driving the economy to achieve the national transformation agenda
References
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