Farm households’ input demand and output supply response to price shocks in Nigeria (original) (raw)
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Farm Households' Demand Response to Escalating Food Prices in Nigeria
JOURNAL OF APPLIED ECONOMICS, 2022
This study examined food demand response to rising food prices among farm households in Nigeria using the three waves of the General Household Survey (Panel) conducted between 2010 and 2016. Analysis was within the Quadratic Almost Ideal Demand System framework from which price elasticities and compensated and uncompensated expenditure were computed. The results show that higher prices of almost all of the food categories affected their demand by households. Harvest and location dummies as well as household demographic variables were found to influence household food demand. Poor households consumed less of all the food categories compared to their non-poor counterparts. Escalating prices result in a welfare loss of household expenditure on commodity groups such as rice, wheat, pulses, tuber and other food and non-food items. Overall, 70.1% of the households suffered welfare loss that amounted to an average of 7.52% of the household budget annually.
Welfare Effects of Policy-induced Rising Food Prices on Farm Households in Nigeria
2014
Against the background that domestic policies in Nigeria have been linked to an endemic - high, volatile and rising food prices in the country, this paper empirically examined the transmission of key monetary policy variables to domestic food prices in Nigeria. Furthermore, the study employed estimates of policy induced price changes from estimated cointegrating relations between commodity prices and policy variables, and demand elasticities from a system of household demand equations to estimate the associated compensating variation as a measure of the welfare impacts on farm households. The study found that government management of exchange rates and money supplies as well as withdrawal of subsidies from petroleum products have been the main driver of rising food prices in the country. While an average farmer was found to have benefited from the policy induced rising food prices with the mean compensated variation of -3.3% of the household budget, most of the farm households ended...
Economics of farm households' food demand in Nigeria
Western Balkan Journal of Agricultural Economics and Rural Development
In paper was used the panel data from the Nigeria General Household Survey and commodity prices from alternative sources between 2010-2016 to estimate farm households' food and non-food demand in Nigeria. The commodity bundles of all the food groups were necessities goods, as their budget elasticities were positive and also inelastic. Animal products were a luxury good. There is no strong complementary and substitutive relationship existing between the commodity groups as the cross price elasticities estimated were smaller than the own price elasticities. Households' expenditure on pulses is not affected by changes in their own prices. Policy issue such as stable food prices is important in ensuring that households are assisted in and encourage consuming balance diets.
Effects of Agricultural Commodity Prices on Agricultural Output in Nigeria
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In Nigeria, there is over-reliance on oil proceeds at the expense of revenue accrued to agriculture, which adversely affects the standard of living. The study examines the effect of commodity prices on agricultural output in Nigeria. In the empirical model, agricultural output depends on maize, wheat, soya beans, and oil prices. Data covering 1991 and 2017 from the Central Bank of Nigeria Statistical Bulletin and Food and Agricultural Organisation was analysed using a fully modified OLS (FMOLS) technique. The result shows that maize and soya bean prices positively affect agricultural output, while wheat prices and oil prices negatively affect agricultural output in Nigeria. This implies that agricultural output increases with increased agricultural commodity prices and falls with an increase in oil prices. The paper recommends the need to expand the production of agricultural commodities through a direct government partnership with farmers in the area of supply of expert knowledge, ...
2010
The study examined the factors that influence the use of purchased inputs (fertilizer, hired labour, seed and ploughing services) by smallholders in Northern Ghana. The seemingly unrelated regression technique was used to estimate a system of cost share equations of the factor inputs. The elasticities of substitution and factor demand have been estimated. The estimated results suggested that higher amount of remittance received and the attainment of basic education significantly led to higher fertilizer expenditure, suggesting that credit and basic education programmes were important for increasing expenditure on production enhancing inputs like fertilizer. The own-price elasticities of demand for the inputs were significant and had the expected negative signs. The demand for seed and ploughing services were quite price inelastic, while the demand for fertilizer and hired labour were price elastic. The estimated own-price elasticities of demand for fertilizer and hired labour indicated substantial high degrees of price responsiveness of farmers for them. The estimated cross-price elasticities suggested that smallholders would substitute relatively more hired labour for fertilizer, if the relative price of fertilizer to hired labour is increased.
Sustainable Agriculture Research, 2012
Motivated by the recent global economic crisis, this paper simulated the impact of a rise in the price of imported food on agriculture and household poverty in Nigeria using a computable general equilibrium (CGE) model and the Foster, Greer and Thorbecke (FGT) class of decomposable poverty measures on the 2006 social accounting matrix (SAM) of Nigeria and the updated 2004 Nigeria Living Standards Survey (NLSS) data. Results show that a rise in import price of food increased domestic output of food, but reduced the domestic supply of other agricultural commodities as well as food and other agricultural composites. Furthermore, a rise in the import price of food increased poverty nationally and among all household groups, with rural-north households being the least affected by the shock, while their rural-south counterparts were the most affected. A major policy implication drawn from this paper is that high import prices in import competing sectors like agriculture tend to favour the sector but exacerbate poverty in households. Thus, efforts geared at addressing the impact of this shock should strive to balance welfare and efficiency issues.
Impact of Government Agricultural Policies on Major Staple Food Prices in Nigeria (1966 - 2011)
Sarhad Journal of Agriculture, 2015
This study assessed the impact of government agricultural policies on the prices of major staple food in Nigeria. It described the trend of the major staple food prices and determined the effect of government agricultural policies on the major staple food prices in Nigeria. Secondary data were sourced from various organizations and used for this study. These data were transformed from their nominal value to real value and analyzed using descriptive statistics, unit root test, ordinary least square model, cochrane-orcutt, least absolute deviation estimators and simultaneous equation model. The study revealed that the prices of most of the major staple foods were at the peak value between 1991 and 1993 while their prices were at the lowest value between 1978 and 1983. The study observed that the price of cowpea is most volatile seconded by maize. The study further established that the prices of staple foods were interrelated. Also, it was showed that agricultural credit guarantee scheme funds (ACGSF), agricultural policies during structural adjustment period (SAP) and post-structural adjustment period (PSAP) were statistically significant while the agricultural input subsidy scheme was statistically insignificant. The study recommended painstaking formulation and implementation of agricultural policies and restructuring of agricultural of input scheme.
International Journal of Sustainable Agricultural Research , 2023
Increases in food prices in Nigeria have raised huge concerns on the impact welfare of poor households who have substantial share of their spending on food. This study investigated the welfare effects (including the direct and substitution effects) of food price changes on households in Nigeria. The study employed time series data on food prices from 1991-2013 and household survey data obtained from the National household Survey (wave 2). We group household consumption expenditure on different food and non-food commodities into nine (9) namely; fish, meat, pulses, fruit & vegetable, fat & oil, beverages, wheat, rice, corn, and others. Welfare effect was analyzed by compensating variation. The results showed that a safety net program would net to transfer an amount equivalent to 0.76%, 0.26% and 1.02% of the total national consumption to fully compensate the poorest quintile in rural, urban and at the national level respectively. And also, in the richest losers’ quintile about 1.29% of the aggregate national consumption will be required by a safety net program to fully compensate them overall. The study concluded that food price changes related significantly with welfare status of the respondents as tested by CV model. Welfare gain was enjoyed mostly by urban household whose mean compensated variation was as high as 18% compared with 14% for rural household.
Response of Nigeria’s Agricultural Sector to Selected Macroeconomics Policy Variables
Journal of Economics and Sustainable Development, 2015
This study analyzed the growth rate (output) of the agricultural sector in terms of the selected crops (cocoa and rubber) and the effect of macroeconomic variables on output of cocoa and rubber in Nigeria. The study covered the period between 1986 and 2010. Data were generated from secondary sources, including CBN, FAO and World Bank. Data were analysed through the use of descriptive statistics and the Ordinary Least Square regression analysis. The study shows that the production level of cocoa and rubber have been fluctuating over the period under review. Cocoa production rose to its peak between 1991 and 1995 with average output of 278.4 tones and fell to 189.3 tonnes between 2001 and 2005. Rubber production consistently increased throughout the period under review. Its average output in 1986-1990 was 172 tones, this rose to its peak of average output of 294.68 between 2006 and 2010. From the regression result, Output price affected the production output of Cocoa at the 0.05 level, while for Rubber production, capital and recurrent expenditures on agriculture are the main determining factors on output. While the capital expenditure is significant at the 10% level the recurrent expenditure on agriculture is significant at the 5% level. Based on the findings it is recommended that government percentage share of expenditure on agriculture should be increased and sector-specific and there should be incentive geared towards encouraging increased participation of the organized private sector in commercial agriculture. This will guarantee continual flow of investment resources, technologies and entrepreneurial skills in agriculture.
OIL PRICE SHOCKS, AGRICULTURE AND HOUSEHOLD WELFARE IN NIGERIA: RESULTS FROM AN ECONOMY-WIDE MODEL
Following the recent plunge in the price of crude oil in the international market and its attendant implications on oil-exporting countries, this paper simulated the impact of a 50 per cent decline in world oil price on agriculture and household welfare in Nigeria using a computable general equilibrium (CGE) model and data from a social accounting matrix (SAM) for Nigeria. Results show that gross domestic output and supply of composites in the agriculture sectors increased substantially thus causing prices in agriculture to decline. Accordingly, agricultural imports fell substantially while there was a dramatic rise in the sector's exports. Furthermore, the shock reduced incomes/expenditure in all household groups except urban north households that recorded an increase, with rural north households being the most negatively affected. The paper therefore surmises that while high oil prices may lead to increased revenue for government in Nigeria, lower oil prices may not necessarily lead to output losses but could actually boost output from other sectors and lead to diversification of the export base, even though the rate of accretion of foreign exchange earnings may be low in the near term. Additionally, targeted interventions would prove more effective in mitigating the negative impact of oil price shocks on households than general palliative measures, as some household groups and segments of the population are affected more than others. In particular, rural north households need the most attention based on the results of this study.