Long Run Co Integration Modeling for Rainfall, Yield and Prices of Cereals and Legume in Nigeria

This study established a long run relationship in rainfall, yield and prices of soya bean, rice and maize for (1975-2009) period in Nigeria. Annual secondary time series data on selected parameters were collected in thirty six states including Abuja in six agro ecological zones and analysed. The result revealed that mean yield of soya bean, rice and maize in Nigeria were 0.52 mt/ha, 1.76 mt/ha, 1.38 mt/ha respectively. The average price of soya bean, rice and maize were N80, 316.38, N95, 044.85 and N85, 140.00 per ton respectively. Average rainfall figure was 1953.51mm/annum with the range of 594 to 4,046. The Augmented Dickey Fuller (ADF) test of stationarity revealed that rainfall; yield and prices of soya bean, rice and maize were non stationary at level but stationary on first differencing. The Johansen Co integration analyses revealed a long run equilibrium relationship among rainfall, yield and prices of soya bean, rice and maize. Further analysis using Vector Error Correction Model (VECM) on these variables showed that soya bean price had a negative influence (-0.11) on soya bean yield, variation in rice prices had no significant causal influence on rice yield. Contrarily maize price variation had significant positive influence on maize yield (0.08) though with low magnitude. Regarding rainfall generally, the study showed that rainfall had a significant negative influence (-0.44,-1.01,-0.21) on yield of soya bean, rice and maize respectively. Short run analysis of Granger causality test showed no causal influence in the short run for all the variables. Also the result of impulse response showed that shocks to any of the variables had a persistent effect on the others for more than ten years. Based on the findings of this study, it is recommended that Co integration model should be adapted in using time series data to achieve more effective and efficient result in prediction and policy evaluation in long run situations. Above all, sustainable productivity, increased growth and economic development can be achieved if marketing can be more efficiently organized for more attractive producer prices for increased production of soya bean and cereals annually.