ABSTRACT

In recent decades, the main and potential contribution of agriculture
to economic growth has been a subject of much controversy among
development economists. As some contend that agricultural development is
a pre-condition for industrialization, others strongly object it and
argue for a different path. Taking advantage of ordinary least square
method (OLS), the research carried out by means of secondary data and
using the independent variables. Agricultural Development (AGD), Capital
Formation (CFN) Inflation Rate (INF), and Interest Rate (INT) to
re-examine the question of whether agriculture could serve as an engine
of Economic growth in Nigeria. The result gotten from the empirical
analysis shows that the productivity in agricultural sector has
appreciably impacted positively on the economic growth in Nigeria.

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Agriculture is the foundation and bedrock upon which the development
of stable human community has depended on throughout the whole universe
such as rural and urban communities. It is concerned with the husbandry
of crops and animals for food and other purpose. The study of the
history of economics provides us with ample evidence that can
agricultural revolution is a fundamental pre-condition for economic
development. The agricultural sector has the potentials 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
need for rural transformation, redistribution, poverty alleviation and
socio-economic development.

The agricultural sector has the potentials to shape the landscape,
provide environmental benefits such as conservation, guarantee
sustainable management of renewable natural resources, preserve
biodiversity and contribute to the viability of rural areas development.
Through its spheres of activities at both the macro and micro levels,
the agricultural sector is strategically positioned to have a high
multiplies and linkage effect on any nation’s quest for socio-economic
and industrial development. The growth of the agricultural sector in
Nigeria was not smooth. Anyanwu (1967) held that during the colonial
period between 1861 to 1960, attention was given to agricultural
research and extension services. Among the activities that were done was
the establishment of a research station in Lagos by Sir Claude
Mc.Donald in 1893: Landmark of 10.4 km was acquired by the British
Cotton Growing Association (BCGA) in 1899 for experimental purpose
strictly for cotton and was named “Moor Plantation” in Ibadan. In 1912,
the Department of Agriculture was established in each of the then
southern and Northern Nigeria, but the activities of the department were
virtually suspended between 1912 and 1921 as a result of the First
World War and its aftermath. The period between 1929 and 1945 was a
difficult one for the agricultural sector of Nigeria. This was the
period of great depression when the world princes on commodities
fluctuated. This affected the agricultural sector negatively because the
volume of agricultural product increased but the value did not increase
proportionally.
The period 1945 to 1945 marked the period of expert boom, because
counties were just recovering from the Second World War and these
countries needed to develop. They depended on primary production for the
beginning stage of industrialization. They needed to revitalize their
industrial sector by demanding primary goods. Prices of primary products
rose higher again because there were speculations that there would be a
third world war due to the outbreak of the Korean War. However, after
this period, there came another period of price instability. This made
the reliance on agriculture and its products to fall, leading to the
establishment of a market board. This board bought these products from
the local farmers and sold them overseas.
In spite of all the period, Nigeria made great revenue from agriculture.
In the pre-independence era, the agricultural sector contributed most
to the GDP of Nigeria. Helleiner (1966) said that in 1929, export
production amounted to 57% of Nigeria’s revenue of which agriculture
contributed about 80% of the export. On attainment of political
independence in 1960, the trend was still very much the same, the
Nigeria economy could reasonably be described as an agricultural
economy, because agriculture served as the engine of growth of the
overall economy (Ogen 2003). According to Alkali (1997) Nigeria was the
world’s second largest producer of cocoa, largest exporter of palm oil
during the period. And was also a leading exporter of other major
commodities such as cotton, groundnut, rubber and hides and skins.
Between 1964 and 1965, agricultural output accounted for 55% of GDP and
employed 70% of the adult workforce (Matton, 1981). In 1970,
agricultural export crops like cocoa, groundnut, cotton, rubber, palm
oil, palm kernel, etc. accounted for an average of between 65% and 75%
of Nigerian foreign exchange earnings and provided the most important
source of revenue for the federal as well as state government through
expert products and sale taxes (Ekund are 1973). Despite the reliance of
Nigerian peasant farmers on traditional tools and indigenous farming
methods, these farmers produced 705 of Nigerian’s exports and 95% of its
food needs (Lawal, 1997).
However, the 1967 to 1970 civil war in Nigeria coincided with the oil
boom era, which resulted in extensive exploration and exportation of
petroleum and its strong agriculture in favour of an unhealthy
dependence on oil (United States Department of state, 2005). Ever since
then, Nigeria has been witnessing extreme poverty and insufficiency of
basic food items. The agricultural sector contributions now accounts for
less then 5% of Nigeria’s GDP (Olagbaju and Fashola, 1996). It is
against this backdrop that we set out to research on the impact of
agricultural development on Nigeria economic growth. As noted earlier,
the neglect of the agricultural sector and the dependence of Nigeria on a
mono-cultural crude oil based economy had not augured well for the
well-being of the Nigerian economy. It becomes therefore imperative to
study the impact of agricultural development on the Nigeria economic
growth. 1.2 Statement of Problem The agricultural sector has suffered
from years of poor management, inconsistent and poorly implemented
government policies, government neglect and lack of basic
infrastructure. Agriculture accounted for 30% of the GDP in 2010 (World
Factbook, January 9, 2012).
Nigeria is no longer a major exporter of cocoa, groundnut, rubber and palm products. Coca production
mostly from obsolete varieties and over-aged trees are stagnant at
around 150,000 tones annually. There is also a decline in groundnut,
palm oil and other major export crops (United States Department of
State, 2005). The decline in agricultural production was largely due to
the rise of oil shipments (A.B Sekumade 2009). Because of this backdrop,
agriculture has not kept up with the rapid population growth and
Nigeria once a large net exporter of for now imports most of its food
requirements. Dependence on oil is not only the cause of the
under-development of the Nigerian agricultural sector, but also:
1. The Nigerian agriculture is characterized and surrounded by bunch of
illiterate farmers who live in rural areas, producing over 90% of the
total food consumed and other agricultural products and with regards to
their educational status giving little or no room for improvement
through scientific research.
And also more than 90% of the consumed food in Nigeria is provided by the small-scale farmers.

2. The Nigerian agriculture lacks storage facilities and these have
led to so much wastage and high cost of storage. This hinders the
availability of source perishable agricultural produce through the year,
therefore hindering agricultural development.

3. Another negative force is Dependence on weather which affects the
increase in agricultural produce. Nigeria Agriculturists or farmers
still depend on rainfall only to produce instead of the use of
irrigation that supplies water all through the year.
4. The problem of finance: The agricultural sector is poorly financed in
Nigeria. They do not get credit easily from financial institutions,
like commercial banks. The agriculturists find it difficult to finance
projects which are capital intensive. The commercial banks cannot grant
loans easily to a small scale
farmer because of low produce and low profit which results to a failure in paying back the loan.

5. In addition, the dependence on imported foods has disincentive
investment in local farming. Also, soil infertility is one of the
problems of agriculture in Nigerian. Most of the farmable land in
Nigeria contains soil that is how to medium in productivity. According
to the food and Agricultural Organization of the United Nations (FAO),
with proper management, the soil can achieve medium to good
productivity. The movies problem that affects soil fertility is soil
erosion. Wind erosion, strong winds expose seeding lings and crops root
system by blowing away loose, fine grain soil particles in drifts, which
can cover crops.
Another type of erosion that affect soil fertility is water erosion.
There are two types of water erosion: Splash erosion and rill erosion.
Splash erosion occurs when rain drops impact the soil and rill erosion
occurs when channels of water carry soil downstream. This (water
erosion) is reduced when the soil is covered with a canopy. 6. Food
processing problem is estimated that about 20 to 40% of the yearly
harvest is lost during processing. The primary cause is the lack of
efficient harvesting techniques. According to and with the information
above, it is quite clear that the agricultural sector, as one of the
Nigeria economy has really got a lot to contribute to the economic
growth of the country. This research work therefore is aimed at
answering the following questions:

(i) What is the effect of agricultural output on economic growth?

(ii) What is the effect of agricultural sector on employment creation?

1.3 Objectives of the Study

The broad objective of this study is to determine the impact of agricultural development on economic growth in Nigeria.

1. To determine the impact of agricultural sector on the economic growth in Nigeria.

2. To determine the effect of agricultural sector on employment creation in Nigeria

1.4 Statement of Hypothesis For the purpose of this study, the following hypothesis is tested;

1. H0; Agricultural development has no significant impact on economic growth in Nigeria.

2. H0; Agricultural development has no significant effect on employment creation in Nigeria.

1.5 Significance of the Study
The significance of this study depends on the fact that with improved
economy Nigeria stands to gain in its effects toward development. This
work attempts to answer the question: What is the relevance of
agriculture in economic growth? The cause of agricultural backwardness
and how the present state of our agricultural productivity will be
improved. This will form the basis upon which suggestions and
contributions will be made as to how the full potentials of agriculture
can be harnessed. This work stands to benefit:

i. Nigeria as a whole: The research work intends to bring firth ways
to increase agricultural output both for the purpose of consumption and
exportation which ultimately will bring an increased favorable balance
of payment (BOP) for the nation.

ii. This work will be advantageous to schools (staffs and students)
and will help them understand the importance of farming no matter how
small the scale of production may be.
1.5 Scope and Limitations

This research work focuses on the impact of agricultural development
on the economic growth of Nigeria between the period of 1980 to 2010.
There are some factors or constraints which hinder my achieving the
whole intension of this work, these constraints are; time factor, poor
finance, environmental constraints like free movement to research
outside the school premises etc.

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