The Effects of Trade and Exchange Rate Policies on Agriculture in Nigeria

The past decade has been one of major turbulence in the global economy, including rapid inflation, oil price shocks, extraordinary rise and decline in food prices, and low real interest rates encouraging borrowers that had later proven unsustainable. The process of managing that turbulence, along with industry-oriented development strategies, has led many developing countries to grossly overvalue their exchange rates. The extent to which overvaluation discriminates against exports and agriculture in general and agricultural exports in particular had received increasing emphasis in recent years. Thus, the International Food Trade and Food Security Program at IFPRI has undertaken a series of country studies on the foreign trade and exchange rate regimes as they relate to the structure of incentives for agriculture in developing countries…This study was partially funded by the Ford Foundation’s office in Lagos, Nigeria, and by the International Development Research Centre of Canada. IFPRI is particularly grateful to these two organizations for their encouragement and support of this work on Sub-Saharan Africa.