INPUT REQUIREMENTS AND TECHNICAL KNOW-HOW: ISSUES IN AGRICULTURAL VALUE CHAIN IN NIGERIA
DOI:10.30825/5.EJPAU.170.2019.22.1

Musa Samuel Olayinka
Department of Economics, University of Lagos, Nigeria

ABSTRACT

Agricultural development faces serious challenges in Nigeria. Discovery of petroleum in commercial quantity in the early 1970s appears to have retarded output growth in the sector because there was a shift from agriculture to oil and gas. Therefore, the country has gone through quite a variety of ordeal in food production since the oil boom era. Government has formulated policies and programmes to address the performance of agriculture. It appears many of these efforts have failed resulting in large scale food imports and consequent adverse balance of payments. With the aim to devise a path to output growth, steps to attain value chain are examined in this paper having reviewed previous studies. Descriptive method is employed to achieve the study’s objectives. It is revealed, among others issues, that value chain is required in the agricultural sector. However, it necessitates transformation of farmers from peasantry to commercial farming which will require human capital development in agriculture. Some complementary factors like infrastructure and extension services are needed. Save farm land are to be guaranteed by the states and communities. It is suggested that government participation is needed significantly to attain value chain in agriculture in Nigeria because government appears to be the major resource owner since independence.

Key words: Agriculture, peasantry, structural transformation, mechanized farming, Extension services, Value chain.

INTRODUCTION

For countries in the early or medium stage of development, agriculture remains a critical sector to reckon with because of its crucial role in food security and poverty alleviation. The sector constitutes a significant portion of gross domestic product (GDP) and employment in most developing countries, and historically made up a large fraction of both in currently developed countries, Eberhardt and Vollrath [6]. Agriculture is complex and full of contradictions, while it constitutes small share of the global economy, it remains central to the lives of a great many people, Alston and Pardey [1]. In the Central European countries like Poland, Hungary and the Czech Republic, the sector traditionally plays an important role, Kocsis and Major [11]. In the advanced countries and emerging economies, agriculture played important role on the path to economic growth and development, Schultz [18].

Agricultural development in Nigeria has been taken seriously by the government and there have been various support schemes to increase the productivity and output of the sector. Some of these include loan schemes, extension services and subsidies. However, the issue of value chain in inputs supply and output growth appears to have been ignored. This may be a result of high proclivity to small-scale farming ubiquitous in most Sub-Saharan Africa. It may even be as a result of misplaced priority and lack of will-power often seemingly associated with policy makers in less developed countries. Therefore, value-chain phenomenon needs to be addressed because it can probably represent a catalyst to raise output growth in the agricultural sector.

In spite of the significant growth of other sectors, Nigeria is basically an agrarian society since political independence in 1960, Kwanashie, Garba & Ajilima [10]. Today agricultural production growth is low relative to population growth. Because there appears to be excess food demand over supply, Nigeria has practically remained a net importer of food for too long. Kwanashie et al., [10] states that in addition to the fact that Nigeria’s agricultural production is low, it does not provide adequate nutrient in terms of either calories or protein balance. However, a great number of authors have earmarked commercial agriculture as a critical factor to sustain Nigerian teaming population, Fashola, [8]; Anyanwu et al., [2]. They explain that large scale farming is required to avoid over-dependence on foreign imported goods and shields foreign exchange earnings of oil and gas sales from dissipation on food items like rice, poultry and fish. Therefore, value chain will diligently be an impetus to agricultural development and proffer solutions to the likely stagnancy in the sector if scrupulously explored.

Value chain includes all activities leading to creation of economic values starting from source of inputs, production, distribution, disposal of waste and recycling and also feedback from the consumers. In Nigeria, instruments of value chain in agriculture may consist of basic capital inputs like tractor and equipment; supply of save arable land, harvesting and creation of market. It also include disposal of agricultural waste which may be a source of inputs in poultry or animal husbandry. In addition, it consists of government guarantee outright purchase of left-over or excess supply of agricultural goods in order to keep price stable. Lastly, it includes different sources of financing agriculture.  

Nevertheless, it looks like issues in value chain have been inadequately addressed in the previous literature or in the history of addressing agricultural performance in Nigeria. The relevant questions to ask are: (1) what are the critical issues in the agricultural value chain that Nigeria needs to address to augment the sector’s output? (2) What appropriate policies are required to increase and sustain output growth in the sector? To address these questions, the paper adopts descriptive discussion of previous studies, this is followed by schematic illustration of possible solutions.

In view of the Nigerian high population growth rate and high rate of food imports, expectations are that optimal savoir-faire in agricultural value-chain in Nigeria might include increase human resource development, increase government funding and inclination towards mechanized system of farming.

LITERATURE REVIEW

Before discussing critical issues involved in attaining value chain in technical know-how and miscellaneous issues in agriculture in Nigeria, a brief review of previous studies and some theoretical facts are necessary. Agricultural production and distribution in Nigeria have been fundamentally carried out on a small scale level even before independence. However, the traditional self-subsistent farming is prevalent in Nigeria even in the 21st Century. Moreover, in the recent two decades, there have been scanty foreign commercial farmers existing in the country. Although, about 60% of the population is engaged in agriculture, NBS [15] yet the food import bill has risen over the years. Most farmers in the sector are illiterate, planting low yield crops. They have failed responses to government new programs and are often oblivion of important value chain potential contributions to agricultural productivity. These are also worsened by the fact that most farmers have no access to government credit schemes and when they do, many of them would divert such fund to unproductive purposes like marrying more wives and bearing more children. Taking a deep analysis of the classical economic ideology, and relating it with present day economic reality, more wives and children might be advantageous in the primitive period when large polygamous family was an asset and children, by tradition and culture, voluntarily worked for their parents. However, the late 20th century and obviously the 21st century global world implicitly alienate the primitive tradition of strict voluntary service to the course of extended family. This is because since the early 20th century, there has been a continuous increase in freedom from servitude and high self-esteem and these are independently pursued by every individual in all nations. This means that peasant farmers raising large number of wives and children might simply contribute immensely to rapid increase human number majority of whom might end-up in rural-urban migration imbroglio. Raising large family size has been the age-long private social life of most farmers in Nigeria. The worse is farmer’s high level of illiteracy hindering adherent to modern system of farming. Unfortunately for Nigerian peasant farmers, the world has adopted restructuring activities embedded in globalization that is gradually alienating peasantry. Loto [12] observed Wilkin [21] comments that “globalization exercise are somehow influenced by the liberalization of national economies, computer improvements, progress in transport and other infrastructures”. 

Some landmark issues raised concerning agricultural development in Nigeria are in Williams [20], Kwanashie et al., [10] and Eyo [7]. Williams [20], in a rather critical approach assesses the World Bank view of Nigeria agriculture. He observes that most World Bank’s suggestions to address poor performance of agriculture are either inadequate or do not target the real problem. Problems ranging from illiteracy to poor adaptation to modern farming methods, adverse balance of payments, debt burden and ineffectiveness of government agricultural programs are some key issues raised. He claimed these are often overlooked when the World Bank makes suggestions to less developed countries. In addition, the World Bank “promotes crops for which it has yield-enhancing technologies to sell even if they aren't the crops which consumers wish to buy or are more expensive to produce than alternatives”. The World Bank institutions also tend to attend to the needs of large-scale farmers for various forms of government assistance and projects staffed by international 'experts' operating on standardized lines alien to local farmers. The author concludes in a rather critique of World Bank that the institution determination is removal of constraints on food imports even if it’s to the detriment of Nigeria.

The Williams [20] observations point to the reason why most government assistance, in particular, those with World Bank undertone, are often unsuccessful in Nigeria. Good examples are the wheat planting and large scale irrigation projects which have failed several times in Nigeria. Concerning the wheat project, the truth is that wheat cannot thrive in a hot climate like Nigeria. Moreover, adverse balance of payments make imported large scale farming method, requiring large capital investment, unprofitable.

In Kwanashie et al., [10] testing for agricultural output responses to policy reveals that policy, particularly, liberalization policy increases commerce rather than production and efficiency. It does not necessarily solve output problem but farmers’ cropping behavior “which is a rational attempt, not to maximize profit, but to minimize the chance of poor harvest and hunger”. This strategy is adopted by farmers for survival and to avoid unreliable government and market forces. He suggests that constant review of policy engendered in real resource allocation and utilization might be better rather than financial reform which is the hub of liberalization policy. In the work of Eyo [7], it is stated that sustained growth in per capita agricultural output is possible through capital accumulation and technical progress. The issue of macroeconomic policy framework is also raised. Eyo’s empirical study concludes that macroeconomic policies that reduce inflation, introduce favorable exchange rates and increases foreign private investment in agriculture will complement government efforts and increase output growth in the sector.

Other observations made include Anyanwu et al., [2], Fashola [8]. They examine the structure and problems of agriculture in Nigeria which include the use of crude implement and poor irrigation system. They also highlight issue in land tenure system as one of the major hindrances to commercial agriculture. Fashola [8], Udemezue & Osegbue [19] specifically discuss the importance of agriculture to all other Nigeria’s major sectors like industry, service building and construction. Chambers [3] and McCalla [13] observe that increase dependence on unstable international commodity markets and export of primary products have had negative effects on agricultural output production and export in less developed countries.

These critical reviews give long time information about the usual problems and challenges in agricultural development in Nigeria. However, there are quite a new wave of adversaries detrimental to the accomplishment of value chain. These are listed below:

• Dearth in schools of agriculture.
• Poor human resource development preventing technological transfer.
• Lack of integration between agriculture and processing firms.
• It appears over 90% of farmers are stark illiterate thereby preventing adaptation to modern farm techniques.  
• Ineffective land laws.
• Increase in communal clashes between herdsmen and farmers seems to be a symptom of population explosion.
• Mass immigration of extreme poor people from neighboring countries, especially, those from arid land of Niger, Chad, Mali, Northern Cameroon, Northern Togo and Northern Benin. Nigeria has been the main destination of migrants probably as a result of the porosity of border land. This further put pressure on the population and shrinking arable land.
• The continuous shrinkage of Lake Chad worsened by increase irrigated farm land which is unable to sustain high number of farmers pushes less opportune people southward to countries especially Nigeria. 

With the existence of these new set of problems, it might be difficult to achieve a successful value chain in agricultural input in Nigeria. In other words, with quite a good number of problems and challenges in agriculture, Nigeria aspiration to become self-sufficient in food production becomes a phantasm. However, Nigeria can deliver herself from the seemingly chasm of low food production. Value chain in input might be a way out, though yet to be discussed conscientiously in the literature. It might be a critical factor that can provide the much desired solution to the agricultural sector output in Nigeria.

THEORETICAL REVIEW

The issues concerning value chain in agriculture require structural transformation, technological and economic change. The classical economic theories of growth discuss how agriculture can explicitly or implicitly enhance economic growth and development. This is postulated in Sir Author Lewis surplus labour and Rostow’s stages of development theories. It was also discussed in John Mellor’s accelerated growth in agricultural production and the inter-sectoral transfer of resources. In summary, some major theoretical literature in agriculture include resource exploitation theory, the conservation, the location, the diffusion, and the high-pay-off input models. Of all these, the conservation theory and the high-pay-off input models appear to be more relevant to agriculture value chain. “The conservation model emphasizes the evolution of a sequence of increasingly complex land and labour-intensive cropping system, the production and use of organic manures and labour-intensive capital formation in the form of physical facilities to more effectively use land and water resources” Udemezue & Osegbue, [19]. The model is related with English agricultural revolution and the notions of soil exhaustion suggested by the early German chemists and soil scientists, Ruttan, [17].

The basic tenets of high-pay-off input model is the ability to annex current agricultural resources which is assumed to come from outside the agricultural sector itself. It is postulated that factors to lead to agricultural development should be exogenous, to be accompanied by education and technology which peasants can use and must be affordable. Peasants, in traditional agricultural systems are viewed as rational, efficient resource allocators. They remained poor because in most poor countries, there are only limited technical and economic opportunities to which they could respond, Udemezue and Osegbue, [19].

Ruttan [17] classified the new high pay-off inputs into three categories which include the capacity of public and private sector research institutions to produce new technical knowledge. Secondly, the capacity of the industrial sector to develop, produce and market new technical inputs and  thirdly, the capacity of farmers to acquire new knowledge and use new inputs effectively. These show that in a country of large self-subsistent farmers, the use of modern agricultural tools and techniques are necessary to transform the society. These must be predicated on increase human resource development and enlightenment concerning appropriate improved inputs such as seeds or cropping, insecticides or pesticides. On the supply-side, analyzing human resource development on the agricultural path entails basic schools of agriculture, regular training, extension services, creation of agricultural-base laboratories and manufacturing of chemicals. On the demand-side, transportation and provision of market or guarantee of stable prices are essential elements prerequisite to achieve value chain. Value chain is a global world phenomenon involving production processes that incorporate miscellaneous inputs which no single nation can supply. As an aid, a driving force is postulated by the endogenous growth theory of neo-classical economists suggesting increase in educational training, skills, communication, and software development. Therefore, agricultural development would become a lot easier if the postulations made in the theoretical review are practiced.

METHODOLOGY

This study employs table and graphs to illustrate agricultural linkages with macroeconomic variables in Nigeria. The method also includes the use of a simple schematic approach to depict a typical process of transforming value chain potentials into economic growth.

Table 1. Sectoral Output Contribution to GDP, Five Year Average [%] Change

Year	Agriculture	Industry	Services	Wholesale & Retail	Building & Construction
1981–1985	15.50	5.40	5.90	10.36	-9.37
1986–1990	26.46	24.53	13.93	33.24	24.23
1991–1995	50.72	43.85	33.38	51.51	26.16
1996–2000	14.29	21.97	27.15	14.28	17.55
2001–2005	36.45	20.49	27.44	29.65	27.93
2006–2010	16.76	20.72	21.66	20.65	30.61
2011–2015	8.54	5.73	14.90	14.93	17.29
2016	9.61	-4.65	8.90	14.68	3.87
2017	11.29	42.81	5.00	4.34	18.72
2018	2.88	3.70	2.29	5.14	6.97
Source: CBN Statistical Bulletin, 2018

In table 1, the study presents multi-sectoral percentage contribution to GDP from 1981–2018. Growth pattern in each sector is ambiguous. For instance, it is noticeable that five year average percentage change in agriculture varies but mainly in double digits from 1981 to 2010. Nevertheless, in spite of government policies to address the sector, changes remain averagely single digit since 2011 with slight improvement in 2017. Agriculture is expected to provide food supply to services and raw materials to industry. The inadequate output of the sector induces large amount of food import. Since year 2011 most sectors average annual change has been much lower than the previous years between 1981 and 2010. The reason for this may be failure in macroeconomic framework reflecting poor policy design lackluster commitment to policy implementation. The Nigerian real sector appears to have virtually increasingly and significantly performed sub-optimally in the past ten years. This continues in the atmosphere of relatively rapid population increase and infrastructural deficiency. It is often thought that agricultural development might be a quick channel to step-up the growth of the economy.

Table 2. Sectoral Output Growth Rate of GDP at 2010 Constant Basic Prices [%]

	2002	2003	2004	2005	2006	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017
Agriculture	4.22	6.64	6.50	7.06	7.4	7.1	6.3	5.9	5.7	6.1	6.7	2.9	4.3	3.7	4.1	3.45
Crop Production	4.15	7.00	6.50	7.13	7.50	7.30	6.20	5.80	5.70	5.61	6.00	2.5	4.1	3.5	4.3	3.64
Livestock	4.8	4.19	6.5	6.76	6.9	6.9	6.9	6.5	6.5	6.4	6.5	6.0	5.4	6.0	2.9	1.16
Forestry	0.07	1.5	6.5	5.92	6.0	6.1	6.1	5.9	5.9	5.8	5.3	5.6	4.6	3.7	2.6	3.31
Fishing	6.3	4.06	6.5	6.02	6.6	6.6	6.6	6.2	6.0	6.1	6.9	9.0	6.7	5.9	-0.7	1.34
Industry	-3.8	21.26	4.15	4.15	-2.5	-2.2	-3.4	2.0	5.3	3.8	1.2	-0.1	6	-3.4	-9.0	2.14
Building & Construction	4.34	8.75	10.00	10.00	13.0	13.0	13.1	12.0	12.2	11.6	9.4	14.2	13.0	4.4	-6.0	1.0
Whole sale & Retail Trade	6.48	5.76	9.70	9.7	15.3	15.2	14.0	11.5	11.2	9.3	2.2	6.6	5.9	5.1	-0.2	-1.05
Services	22.5	0.41	8.83	8.83	9.2	9.9	10.4	10.8	11.9	8.5	5.0	9.4	7.1	4.5	-1.2	-0.67
Source: CBN Annual Report, 2017

Apart from change in output contribution to GDP, another way to examine sectoral performance is by estimating sectoral growth rate of output using a particular base year. Table 2 shows the sectoral growth rate of GDP. While Agricultural growth rate of GDP increases from 4.22% in 2002 to 7.06% in 2005, there has been a decrease from 7.40% in 2006 to 5.7% in 2010. The sector recorded the lowest growth rate of 2.9% in 2013 and 3.45% in 2017 which further explains the poor performance of the sector in the past 10 years despite government increase expenditure. Relative to the previous period, crop production, which has been a major contribution to the sector’s growth rate of GDP, appears to have performed poorly, accounting for average 3.69% from 2013 to 2017. Industrial growth rate perform poorer with negative growth rate of -0.1%, -3.4% and -9.0% in 2013, 2015, and 2016 respectively. Services sector appears to grow in double digits till 2010, but recorded abysmal performance since 2014. Much of the services sector activities in Nigeria take place in the informal sector and this are not recognized in the country’s system of national accounting (SNA). In addition in most cases the activities neither serve agriculture nor industry. Overall, in year 2016 and 2017, there has been falling rate of growth of the multisector practically diminishes overall growth of the economy.

Fig. 1. Nigeria's Trade in Food (as % of total merchandize trade) & Demographical Structure Source: World Bank World Development Indicator, 2017

Figure 1 illustrates trade (in food) and demographical structure of Nigeria. Food export and import are expressed as percentage of merchandise trade. The figure shows that percentage of rural population, relative to population total, decreases gradually from 1981 to 2017. While annual population growth rate is relatively high and steady at 2.68%, arable land per head falls below 1.0%. Statistical facts from the World Development Indicators reveals in Nigeria, there has been a gradual decline in arable land per capita since 1996 probably as a result of growing population and the need to provide housing and infrastructural facilities to maintain the population. Food exports also decreases sharply from 1991–2007 but slightly and unsteadily rises from 2008 till 2017. On the other hand, food import is, by far, higher than export. It falls from 22% in 1983 to 15% (of the total merchandize import) in 1991. From then, it begins to rise gradually and riches the pick of about 28.0% in 1999. The highest pick recorded was in year 2011 at 31.1%. This trend depicts the food-shortage effect of massive rural-urban migration and gradual decrease in arable land per capita. The phenomenon of rural-urban migration became significant during the oil-boom era of the early 1970s which precipitates rapid urbanization and increase in urban income which further propels the rapid urbanization. According to Mordi et al., [14] oil-boom also results into Dutch disease and city congestion and consequence incessant unemployment that persists till the present day.

Fig. 2. Agricultural Output in Selected Countries Source: Illustration is based on data obtained from UNCTAD, 2016

In figure 2, China appears to live up to expectation in food security. Agricultural output value is in hundreds of millions of dollars. This is followed by India whose population is about 85% of the Chinese. Nigeria follows in the trend and lastly Kenya. We can conclude that China, with highly mechanized and innovative systems of agriculture, thrives much more than India and Nigeria. Based on data from the United Nations Conference on Trade and Development (UNCTAD) Agriculture, hunting, fishing and forestry in China is indeed more vibrant than other selected countries. Nigeria and other developing countries may adopt the Chinese example of value chain to achieve massive food production via infrastructures to farm settlements; provision of healthy seeds and creation of market to dispose farm produce profitably.

Fig. 3. Agricultural Value Chain in Nigeria: A Schematic Approach Source: Author's Effort

Figure 3 illustrates a simple scheme value chain process explaining how a self-subsistent farmer can be transformed from peasantry (on top of the table) to a typical high productive commercial farmer, able to contribute to economic growth (at the bottom of the scheme). The process entails education, training, extension services, government support and private sector participation. Some complementary factors comprise infrastructures, machinery, appropriate seedlings and availability of land as well as subsidized farm inputs like pesticide and fertilizer. These should be buttressed by strategies to achieve desirable outcomes like government fiscal policy actions and supply side policy which are much better than monetization of support values. On the demand side, market availability and viability is essential to clear farm produce. Creation of cottage industries for output processing exports are essential in farm settlements. For instance in Nigeria, as part of the efforts to keep price stable, the “Ronald Reagan” policy of outright purchase of excess farm produce may be adopted. This is because a stable price prevents disequilibrium production in the next period.  

AGRICULTURAL DEVELOPMENT IN NIGERIA, SOME STYLIZED FACTS

Some of the lingering problems in agriculture in Nigeria have been highlighted in the previous sections, these include farmers’ disposition to peasantry rather than mechanized farming; illiteracy, poor cropping, poor seedlings, low yield, insufficient funding and unavailability of coordinated extension services, Kawnashie, et al., [10]; Anyanwu [2]; Fashola [8]. Others include poor implementation of government programmes and importation of cheap agricultural products.

From the scholarly point of view, the foundation of Nigerian agriculture had been laid in peasantry during the colonial era. Under colonialism peasantry was incorporated into the economy of the third world countries and into a hierarchical system of administration which extended down to the rural areas, Forrest, [5]. The incorporation restructured economic relations because both external and internal markets expanded. For instance, in the early 1960s, Nigeria thrived on agriculture, constituting over 80% of federal government revenue and 75% of GDP. The economic dynamics of the sector was large. Improved transport and communications, labour migration and employment as well as the growth of towns and mining industries increased the spread of commodity production, Forrest [9]; Nnanna, Alade & Odoko [16]; Mordi, Englama & Adebusyi [14].

The important note on agricultural development in Nigeria is that over the years, government has tended towards establishing programmes and institutions which have performed sub-optimally. However, based on the Nigerian experience, programmes and institutions do not really run agriculture but learning by doing; research and development. Others include adaptation to new techniques, national orientation and the will-power. This paper would not necessarily dwell on highlighting past programmes but to discuss, in view of the challenges identified by previous authors, alternative solutions available relative to factor endowments. With respect to this, a brief descriptive analysis of structure and trend in agriculture are discussed below.

Fig. 4. Trend in Agricultural Output in Nigeria Source: CBN Statistical Bulletin, 2017

Trend in agricultural output in Nigeria is shown in figure 4. Although, agricultural output increases gradually from 1981 to 2017, however, the percentage change in the sector shows gradual downward movement from 2002 to 2017. The seemingly decrease rate may be attributed to high population growth rate with less attention devoted to human capital development particular to raise skillful farmers with capacity to adopt modern farming method. The National Bureau of Statistics (NBS) stated an average annual population growth rate of 2.68% per annum has been recorded in Nigeria since 1980. This, with increase peasant farming, appears to have overwhelmed production and output. If food production fails to counterpoise population growth, then the government would have no other option than food importation. This would consequently impose more pressure on foreign exchange rate and also reducing security and self-reliance and as depicted in figure 1, food import (as percentage of merchandize import), has always been higher than food export and it reaches its pick in year 2011 constituting over 30% of merchandize import.

Table 3. Activity Sectors Composition of GDP (% of Total) 1981–2017

Year	Total (GDP), (N'Billion)	Agriculture	Industry	Building & Construction	Wholesale & Retail Trade	Services	Manufacturing	Total
1981–1986	244.4	36.8	28.5	1.9	14.6	13.2	5.0	100.0
1987–1993	309.1	39.6	26.8	1.4	14.2	11.9	6.2	100.0
1994–1998	366.3	40.9	27.0	1.3	13.6	13.3	3.9	100.0
1999–2007	500.4	41.9	24.5	1.5	13.6	14.8	3.7	100.0
2008–2017	820.2	40.3	13.8	2.2	20.5	19.2	4.0	100.0
Source: National Bureau of Statistics (NBS) 2013 & Central Bank of Nigeria (CBN) 2017

Table 3 shows the active sector composition of GDP in Nigeria. The GDP has increased from N244.4 billion naira in between 1981 and 1986 to N820.2 billion in 2008–2017. Agricultural contribution to the GDP from 1981 to year 2017 has been larger than each of the remaining sector. The share of GDP increases from 36.8% between 1981 and 1986 to 41.9% in 1999–2007. The share slightly falls to 40.0% between 2008 and 2017. Although, as part of the efforts to diversify the Nigerian economy, much emphasis has been laid on industry but there is yet to be a significant comparable improvement. The table reveals that industrial sector seems to have lagged behind in the complementary role to agricultural sector. Manufacturing sector continues to grow at very low single digit rate of 4.6% which is detrimental to the entire sectors. Manufacturing activities should serve as a catalyst to the multi-sector. In turn, all other sectors like agriculture and services should serve the manufacturing in terms of food supply, raw materials and essential services. This means that the sub-optimal performances of agricultural growth stimuli like industry, manufacturing, and services, have adversely affected agriculture itself. In this regard, an effective value chain should include development of, not only agriculture, but also other complementary sectors. 

Fig. 5. Change in Agriculture and Crude Petroleum Output in Nigeria Source: CBN Statistical Bulletin, 2017

In figure 5, agriculture and crude petroleum output are depicted in a bar chat. The volatile changes in crude petroleum and natural gas sector is noticeable. The rate of changes in agriculture is less volatile but lower than crude petroleum sector. With respect to the occasional negative changes in crude petroleum, if Nigeria relies heavily on the sector, the economy would be adversely affected when petroleum prices fall in the international market. From the table, it is noted that in the early 1980s, a fall in the petroleum sector activities also coincided with sluggish growth in agriculture. Following the Structural Adjustment Programme (SAP) in 1986, there appears increase multi-sectoral growth rise which also include petroleum and agriculture. However, agriculture has been shown a retarded growth since year 2010. Therefore, these and for other reasons call for adoption of modern aid to agricultural development which includes value chain.

FURTHER POLICY OPTIONS TO ENHANCE VALUE CHAIN
IN NIGERIAN AGRICULTURAL DEVELOPMENT

To incorporate value chain in agriculture means that Nigeria intends to become a world-class food producer. With due acknowledgement of problems identified by previous authors and in this article, the starting point is to resolve the present day new wave of challenges faced by existing and prospective farmers. Besides, a technological or commercial driven value chain involves all activities leading to efficient input supply and adequate output. It also includes sizeable market. Essentially, both domestic and international markets are required to dispose output at profitable value. There should be convenient input channels involving easy access to loan, and subsidized chemicals and equipment. Subsidy should be withheld when produce is subject to waste. Another complementary factor may be in form of provision of infrastructure to prevent massive rural-urban migration. In a nutshell, the policy options that might serve as foundation to attain a feasible value chain for successful outcomes are highlighted below.        

First and foremost, the various tiers of government should earmark permanent land for farming. With respect to this, re-addressing the Land Used Act of 1979 would arrest increasing misuse of land in Nigeria. There should be limitation to the hectares of land that can be used for private purposes. Land should be exclusively reserved for farming and public purposes and adequate reward given to private individuals who release land for agriculture. In this regard there ought to be public-private sector cooperation for efficient use of land.

Secondly, some regions in Nigeria today are crisis battered or inclined. Without a peaceful co-existence of the people, there would be no significant progress made in agricultural development. For instance, the Fulani-herdsmen communal fight with farmers and Boko-haram sect seem to have resulted into shrinking farming activities in the Northern region with unemployment upswing. Prices of food items are also rising leading to rise in inflation rate. Security of life and property is therefore paramount in the value chain. Farmers deserve crises-free farm communities for animal husbandry and to grow crops and raise their families.

In addition to security, population control policy can also help. The issue of high population growth rate is becoming a menace in Nigeria. As population increases at a rate faster than productivity rate in agriculture, more land will be needed to grow food to feed the increasing number of people, whereas productivity enhancement increases agricultural output without unnecessarily extending farmland. Land is in fixed quantity though its productivity can be improved. However, productivity improvement does not come in a hurry, it requires long term investment in human capital development. For Nigeria, a major key way to achieve speedy human capital development involves increase government budget allocation to education. In addition, functional population policy must be established. Government should start a population control policy that emphasizes a maximum number of children per family or per couple.

For optimal commercial farming, still, education of farmers and agricultural professionalism are key ingredients. That is human resource development can enhance value addition in the value chain. Key input elements in this regard encompass institution of higher learning, specialized agricultural training institute and extension services. When these are in existence, then complementarities to the scheme follow. These include: provision of infrastructures, cottage industries to process output, medium term loans to purchase or rent equipment, and subsidized chemical inputs like fertilizer and pesticides. Although, creation of market for farm produce in domestic economy is very important, but some farm produce can be processed into tradable goods for exports. This can indeed generate foreign exchange.

Finally, no nation can be successful in commercial agriculture without minimum food processing industries as essential utilities. Although Nigeria does not have the adequate foreign exchange to import all her agricultural input needs, but she can establish foundries (not necessarily giant steel industries) to supplement the sophisticated imported steel products. It is believed that if the will-power, as India and China, is imitated, Nigerians would probably replicate production of some of the heavy farm automobiles and other industrial machines, although these in turn are enhance-able via availability of affordable energy and infrastructures.

SUMMARY AND CONCLUSION

This study has discussed critical issues in agricultural value chain in Nigeria. The country has gone through quite a variety of ordeal in food production since the oil boom era of the 1970s when production shifted away from agriculture to oil and gas thereby making Nigeria to be oil dependent. Population has also increased at a high rate, inducing taking over of more land area. The continuous importation of food items to feed the increase population has obviously put pressure on foreign exchange, increase debt burden and reducing Nigeria’s credibility at the international market. No nation can survive for long by ceaselessly incurring huge debt year-on-year. As part of multi-sectoral development and diversification effort, Nigeria must adopt value chain in agricultural inputs for self-reliance and to raise productivity and growth. 

For the Nigerian economy, government role in the value chain is very essential because government is the major driver of the economy. It can catalyze the country to the desired outcomes through its fiscal and monetary policy actions. Therefore, increasing government expenditure on agricultural programmes such as extension services and subsidies are key ingredients in the value chain. Monetary policy action such as concessionary interest rate for farmers and also supply-side policy like strict implementation of the Land Use Act are critical added advantages.

Appendix

Sectoral Contribution to GDP Annual Percentage Change

Year	Agriculture	Industry	Services	Wholesale & Retail	Building & Construction
1981	17.05	40.00	64.24	12.49	11.04
1982	20.13	38.21	73.93	12.80	9.90
1983	23.80	39.12	75.03	16.07	8.98
1984	30.37	37.02	78.78	16.63	7.59
1985	34.24	51.14	83.03	17.77	6.10
1986	35.70	51.08	89.65	18.36	7.64
1987	50.29	65.50	96.33	28.66	8.66
1988	73.76	86.08	110.53	40.14	9.82
1989	88.26	122.73	130.25	62.61	15.34
1990	106.63	147.96	158.44	69.33	17.32
1991	123.24	187.38	185.08	80.84	19.51
1992	184.12	303.28	277.58	120.51	24.32
1993	295.32	365.92	370.82	195.09	31.92
1994	445.27	487.57	482.47	306.41	41.10
1995	790.14	862.24	658.08	529.87	54.87
1996	1,070.51	1,153.53	800.53	690.70	63.86
1997	1,211.46	1,171.35	895.13	758.97	74.74
1998	1,341.04	1,053.41	1,235.68	859.83	99.03
1999	1,426.97	1,314.29	1,517.03	939.50	109.57
2000	1,508.41	2,100.51	2,146.36	1,020.39	121.82
2001	2,015.42	1,964.89	2,748.38	1,243.26	162.18
2002	4,251.52	2,178.51	3,216.98	1,494.24	191.01
2003	4,585.93	2,902.81	3,794.50	1,783.85	234.47
2004	4,935.26	3,992.28	5,210.37	2,871.53	311.85
2005	6,032.33	5,080.16	7,128.69	3,614.03	414.76
2006	7,513.30	6,157.84	9,135.84	5,303.85	551.63
2007	8,551.98	6,800.15	11,019.64	5,889.95	733.67
2008	10,100.33	8,072.50	13,232.56	6,776.71	975.78
2009	11,625.44	7,513.88	15,951.36	7,897.09	1,297.79
2010	13,048.89	12,033.20	18,966.55	8,992.65	1,570.97
2011	14,037.83	15,626.42	21,085.01	10,325.57	1,905.57
2012	15,816.00	16,975.34	24,890.35	11,843.53	2,188.72
2013	16,816.55	17,614.29	29,282.60	13,702.84	2,676.28
2014	18,018.61	18,402.19	33,729.86	15,704.13	3,188.82
2015	19,636.97	15,073.78	37,933.06	18,028.90	3,472.26
2016	21,523.51	14,372.78	41,310.78	20,675.86	3,606.56
2017	23,952.55	20,526.46	43,377.12	21,573.73	4,281.78
2018	24,643.34	21,285.23	44,369.78	22,683.28	4,580.11
Source: CBN Statistical Buletin, 2018

Nigeria's Trade in Food (as % of Total Merchandize Trade) & Demographical Structure

Year	Food Export	Food Import	Annual Population Growth Rate	Rural Population as Percentage of Total Population	Arable Land Per Capita
1981	2.180091	15.54433	2.719177	77.329	0.217432
1982	2.553579	17.85447	2.607000	76.611	0.224264
1983	3.773635	21.55488	2.539855	75.878	0.219555
1984	2.733751	21.28781	2.533692	75.128	0.256802
1985	2.178108	17.95692	2.567012	74.365	0.274131
1986	5.116929	15.76964	2.607462	73.586	0.323509
1987	3.137823	10.85984	2.629913	72.791	0.315361
1988	2.168107	10.85788	2.635056	71.981	0.309694
1989	4.216629	9.544569	2.616184	71.158	0.301439
1990	3.937322	7.948885	2.582376	70.32	0.294654
1991	1.460457	6.363358	2.548466	69.824	0.305856
1992	1.644789	11.64479	2.523839	69.323	0.299227
1993	1.577900	14.08066	2.505938	68.818	0.291822
1994	1.288899	15.03457	2.497035	68.309	0.293136
1995	1.446789	16.73589	2.495003	67.795	0.303436
1996	1.652211	17.50753	2.49554	67.275	0.297757
1997	0.152212	18.38662	2.496716	66.753	0.291292
1998	0.415106	19.5971	2.500294	66.227	0.290945
1999	0.302261	27.02139	2.506007	65.696	0.29209
2000	0.138493	19.91686	2.513898	65.16	0.284838
2001	0.015658	21.70384	2.521883	64.331	0.261874
2002	0.638004	19.57582	2.531932	63.492	0.263064
2003	0.023577	15.49598	2.547768	62.644	0.263989
2004	0.047654	16.74469	2.570243	61.788	0.251729
2005	0.063499	17.06457	2.596229	60.926	0.257859
2006	0.055381	17.95464	2.620386	60.057	0.256772
2007	1.623111	20.05793	2.640346	59.181	0.25144
2008	1.288099	9.776942	2.657618	58.298	0.238228
2009	4.533845	11.82765	2.671499	57.412	0.206176
2010	3.339066	10.24825	2.681133	56.52	0.206994
2011	1.795875	30.56138	2.689512	55.638	0.207607
2012	5.338676	22.70964	2.692684	54.766	0.208036
2013	5.051333	17.82881	2.683651	53.906	0.19674
2014	1.872455	17.02717	2.660487	53.058	0.18856
2015	1.755275	16.64157	2.628044	52.224	0.18164
2016	3.238626	17.84457	2.782651	51.452	0.17656
2017	5.121434	18.93567	2.750188	50.964	0.17276
Source: World Bank World Development Indicator, 2017

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Received: 17.01.2019
Reviewed: 7.03.2019
Accepted: 28.03.2019

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Musa Samuel Olayinka
Department of Economics, University of Lagos, Nigeria

email: olayinksam@yahoo.com

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