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Impact Of Market-Determined Exchange Rates On Rice Production And Import In Nigeria

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  • Ammani, Aliyu Aishat

Abstract

Rice is an economically important food security crop, cultivated in almost all of Nigeria’s 36 States. Nigeria spends more than 356 billion naira (2.24 billion US dollars) annually on rice import. This paper set out to analyze the trend in rice production, productivity, import, value of import and consumption that follows the adoption of the Structural Adjustment Programme (SAP) in Nigeria, with emphasis on the effects of exchange rate (ER) deregulation on domestic rice production and rice imports over the period 1986-2010. Relevant time series data were collected and used. A semi-log growth rate model and 2simple linear regression models were developed and estimated. Highlights of the findings include (i) accelerated rate of growth in rice production (Instantaneous Growth Rate (IGR) 2.2%; Cumulative Growth Rate (CGR) 2.2%); rice hectarage (IGR 3.7%; CGR 3.8%); rice importation (IGR 8.5%; CGR8.9%); expenditure on rice importation (IGR 10.6%; CGR 11.2%) and rice consumption (IGR 3.4%; CGR 3.5%) alongside a significant deceleration in rice yield (IGR -1.4%; CGR -201.4%) (ii) The observed significant increase in domestic rice production cannot be confidently attributed to ER deregulation alone because it does not lead to a decrease in rice importation into Nigeria. (iii) The significant increase in domestic rice importation as observed contradicts a priori expectation that ER deregulation will lead to significant decrease in rice importation. The study concluded that free market approach alone cannot stimulate local agricultural production in countries where farmers producing under low-technology-agriculture are put in direct competition with farmers from advanced-technology-agriculture; hence governments need to restrict importation to protect local producers

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Bibliographic Info

Article provided by Niğde University, Faculty of Economics and Administrative Sciences in its journal International Journal of Food and Agricultural Economics (IJFAEC).

Volume (Year): 1 (2)
Issue (Month): ()
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Handle: RePEc:ags:ijfaec:160097

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Keywords: Nigeria; SAP; exchange rate; rice; production; productivity; imports; consumption; Agricultural and Food Policy; Agricultural Finance; Financial Economics; International Relations/Trade;

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  1. Alesina, Alberto & Rodrik, Dani, 1994. "Distributive Politics and Economic Growth," The Quarterly Journal of Economics, MIT Press, vol. 109(2), pages 465-90, May.
  2. WenShwo Fang & YiHao Lai & Stephen M. Miller, 2005. "Export Promotion through Exchange Rate Policy: Exchange Rate Depreciation or Stabilization?," Working papers 2005-07, University of Connecticut, Department of Economics.
  3. Besley, Timothy & Coate, Stephen, 1998. "Sources of Inefficiency in a Representative Democracy: A Dynamic Analysis," American Economic Review, American Economic Association, vol. 88(1), pages 139-56, March.
  4. Mohsen Bahmani-Oskooee & Orhan Kara, 2003. "Relative Responsiveness of Trade Flows to a Change in Prices and Exchange Rate," International Review of Applied Economics, Taylor & Francis Journals, vol. 17(3), pages 293-308.
  5. North, Douglass C. & Weingast, Barry R., 1989. "Constitutions and Commitment: The Evolution of Institutions Governing Public Choice in Seventeenth-Century England," The Journal of Economic History, Cambridge University Press, vol. 49(04), pages 803-832, December.
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