TABLE
OF CONTENTS
Dedication
————————————————————————– i
Acknowledgement
—————————————————————– ii
Table of
contents——————————————————————- iii
List of
tables———————————————————————— v
Abstract—————————————————————————–
vi
CHAPTER ONE: INTRODUCTION
1.1Background
Information————————————————– —- 1
1.2 Problem
Statement————————————————————- 4
1.3 Objective of the
Study——————————————————— 5
1.4 Research
Hypotheses———————————————————- 6
1.5
Justification—————————————————————- —- 6
CHAPTER TWO: LITERATURE REVIEW
2.1 Fertilizer
Procurement, Distribution and Subsidy——————— —- 7
2.2 Constraints to
Fertilizer Supply and Use——————————- —- 11
2.3 Policy
Performance Criteria——————————————— —- 13
2.4 Environmental
Issues on the Use of Fertilizer————————- —- 14
2.5 Economic
Regulation—————————————————– —- 16
2.6 Economic
Deregulation————————————————– —- 16
2.7 Theoretical
Framework————————————————— —- 17
2.8 Analytical
Framework—————————————————- —- 20
2.9 Time Series
Features of the Variables———————————- —- 23
2.10 Relationship
between the explanatory and explained variables—23
2.11 Residual test
for Cointegration—————————————– —- 24
2.12 The Error
Correction Model——————————————– —- 24
CHAPTER THREE: METHODOLOGY
3.1 Study
Area—————————————————————– —- 25
3.2 Period of
Study—————————————————————– 26
3.3 Data
Collection———————————————————— —- 26
3.4 Data
Analysis————————————————————– —- 27
3.5 Model
Specification—————————————————— —- 27
CHAPTER FOUR: RESULT
AND DISCUSSION
4.1 Distribution of
fertilizer between 1986 -1996 and 1997-2006———– 30
4.2 Usage-rate of
Fertilizer between ‘86/’96 and ‘97/’06——————— 33
4.3 Yield of selected
Fertilizer Dependent Crops for the two periods ——- 36
4.4 Determinants of
Time Series Properties————————————- 37
CHAPTER FIVE:
SUMMARY, RECOMMENDATION AND CONCLUSION
5.1
Summary———————————————————————— 44
5.2
Recommendation————————————————————– 44
5.3 Conclusion
——————————————————————— 45
References———————————————————————
—- 46
LIST OF TABLES
Table 1: Total
Fertilizer Production, Importation, Exports and Use in
Nigeria——————————————————————— 10
Table 2: Nigeria
Fertilizer Use, Procurement, Subsidy, Price and Tariffs 11
Table 3: Distribution of Fertilizer between 1986/1996
and 1997/2006—– 30
Table 4: Price of
Fertilizer between 1986/1996 and 1997/2006————– 31
Table 5: Subsidy Cost
of Fertilizer between 1986/2006 and 1997/2006- 32
Table 5.1: Nigerian
National and Agric Budgets &
Fertilizer Subsidy Costs——————————– 33
Table 6: Fertilizer
Usage-rate for the periods———————————– 34
Table 7: Yield of
Maize, Millet, Rice and Sorghum for the two Eras——— 36
Table 8: ADF Root
values at Order (1)—————————————— 37
Table 9: Augmented
Engel-Granger Test for Co-integration at Order 1(0)38
Table 10: Maize
yields Response to price and other factors of Fertilizer 39
Table 11: Rice yield
response to price and other factors of Fertilizer -40
Table 12: Millet
yield response to price and other factors of Fertilizer -41
Table 13: Sorghum
yield response to price and other factors of Fertilizer-42
ABSTRACT
This study examined
the impact of fertilizer policy on crop production. The various trends in fertilizer policy
reform were explored. Specifically, the
fertilizer policy was studied under two policy regimes: the pre-liberalization
and the liberalization periods. The
first period is between 1986 and 1996, which otherwise constituted the
pre-liberalization era while the years between 1997 and 2006 make up the second
period, otherwise called the liberalization era. Secondary data on the distribution of
fertilizer, usage-rate, fertilizer cost, yield of selected cereals, as well as
the time series features of the variables, test for cointegration and the error
correction mechanism were used in this research. The descriptive analysis, students’ t-test
and the regression model were used to analyze the data. It was discovered that there was an increase
in the distribution of fertilizer in the second period. There was also an increase in the yield of
the selected cereals. Among the selected
crops, rice had the highest yield in the first era. The quantity of fertilizer distributed, the
usage-rate of fertilizer, the price and the policy periods of the variables
were found to have significant effect on agricultural production. The quantity of fertilizer distributed and
the price of fertilizer were found to have positive effect on agricultural
production. In order to increase
agricultural production in Nigeria through an effective fertilizer policy: the
distribution of fertilizer to farmers has to be timely. Farmers should be educated on the dangers of
excessive use of fertilizer in order to prevent environmental pollution. Complementary use of inorganic and organic
fertilizer should be encouraged so as to ensure eco-balance and food security.
CHAPTER
ONE
INTRODUCTION
BACKGROUND
OF THE STUDY
Fertilizer is one of
the major farm inputs for achieving the green revolution objective in the
world. According to Dada (2006), during the Africa Fertilizer Summit, it is
generally believed that not less than 50% of incremental crop output in the
past five decades is attributable to fertilizer use.
Owing to fertilizer
use, along with other inputs such as seeds and agro chemicals, many countries
of the world with high population densities have been able to achieve,
relatively, food self-sufficiency in the past decades (World Bank, 2004).
Unfortunately, the
benefits of green revolution did not accrue significantly to sub-Saharan Africa
to any perceptible extent due, among other reasons, to inadequate use of
fertilizer (FGN, 2005).
The Food and Agriculture
Organization (FAO) estimates of fertilizer need in Africa concomitant to yield
and area expansions for meeting the Millennium Development Goals (MDGs) amount
to an increase in total nutrients of 47% or 26% average annual growth rate (UN,
2000).
This is why members
of New Partnership for African Development (NEPAD) of the African Union (AU)
had formulated the Comprehensive Africa Agriculture Development Plan (CAADP)
predicated on increased and efficient use of fertilizer. The components of
CAADP are consistent with the global objectives set in the MDGs as well as the
national objectives of Nigeria contained in the National Economic Empowerment
and Development Strategy (NEEDS) document (NEEDS, 2004). The critical aspect of
the MDGs in relation to the fertilizer sector is the goal to reduce poverty by
half by 2015, taking cognizance of the role of agriculture in the economy
wherein about 70% of the people are employed or engaged (Dada, 2006).
The role of fertilizer is well
established all over the world; crop output of countries correlate strongly and
positively with fertilizer consumption: World average = 91kg/ha; North America
= 93kg/ha; Western Europe = 186kg/ha; South Asia = 96kg/ha; East Asia =
201kg/ha; All Asia = 141kg/ha; Africa = 19kg/ha; Nigeria = 8kg/ha (IFDC, 2003;
Idachaba, 2006). But the FAO recommended 200kg/ha; therefore, the need for
Nigeria to redouble fertilizer use, improve agricultural production and
productivity and raise rural income in the face of a rapidly growing population
and worsening poverty incidence has become obvious (Idachaba, 2006).
Okolo (2004) described the
fertilizer supply in Nigeria as still inadequate. This accounts to some extent
for its low usage. One major impetus to fertilizer usage is an improvement of
the fertilizer market. Olomola (2005) stated that there is need to improve the
agribusiness market structure and performance.
Since the establishment of a
ministry for agriculture at the Federal level in 1967 followed by the creation
of the first professional department (Federal Department of Agriculture (FDA),
in the ministry in 1970, the promotion of fertilizer and other green revolution
technologies has become a deliberate government policy (Bello, 2006). The
institutional policy on fertilizer involved the subsequent establishment of the
erstwhile Fertilizer Procurement and Distribution Division (FPDD), which was
established in the FDA in an effort to co-ordinate the activities of the states
in the importation of fertilizer (Dada, 2006).
For many years, the
FPDD served as the central agency for fertilizer importation and its delivery
to designated points in the country till the liberalization of the sub-sector
began in 1995 following which the division was re-designated as Federal
Fertilizer Department in 2001. During this period (1976-1995), the main statute
in force was the National Fertilizer Board Act of 1977 which provided for the
establishment of “a body corporate to be charged with the responsibility for
purchasing and distributing fertilizer to state government at such subsidized
prices as may be determined by the Federal Government” (FFD, 2006b).
Generally “Fertilizer” means any
substance containing one or more recognized plant nutrient(s) that is used for
its plant nutrient content and is designed for use or claimed to have value in
promoting plant growth (FFD, 2006a)
Specifically,
“mineral fertilizer” means fertilizer produced by mineral processes or mined
and derived from an organic substance or synthetic organic substance; while
“organic fertilizer” means fertilizer derived from non-synthetic organic
material, including sewage sludge, animal manures and plant residues produced
through the process of drying, cooking, composting, chopping, grinding, fermenting
or other methods and makes a declaration of nutrient value on the label (FFD,
2006a).
Cereals are those members of the
grass family, Poeceace grown for their characteristic fruit, the caryopsis,
which have been the most important sources of world’s food for the last 10,000
years ( Onwueme and Sinha, 1991). Wheat and barley are the oldest cultivated
cereals. Their cultivation started in the fertile crescent of Mesopotamia some
10,000 years ago, this region now include parts of Turkey, Syria, Irag and Iran
( Onwueme and Sinha, 1991).
The major cereal crops in Nigeria
are rice, maize, sorghum, millet, wheat, pearl, sugar cane and fonio millet
with rice ranking as the sixth major crop in terms of the land area while
sorghum account for 50% of the total cereal production and occupies about 45%
of the total land area devoted to cereal production in Nigeria ( NEARLS, 1996
).
The role of cereals to modern
society is related to its importance as food crop throughout the world. In most
parts of Asia and Africa, cereals products comprises 80% or more of the average
diet, in the United State, between 20-25% ( Onwueme and Sinha, 1991). Cereals
are the major dietary energy suppliers and provide significant amount of
protein, minerals (potassium and calcium) and vitamins ( vitamin A and C) (
Idem and Showemimo, 2004). Cereals are consumed in a variety of forms,
including pastes, noodles, cakes, breads, drinks etc. depending on the ethnic
or religious affiliation. The bran, husk, plant parts and other residues( after
processing) are useful as animal feeds and in the culture of micro-organism.
Wax syrup and gum are extracted from cereals for industrial purposes ( Ismaila,
Gana, Tswanya and Dogara, 2010).
Agriculture is the
economic heart of most countries and most likely source of significant economic
growth (DFID, 2003). It has been observed as the major and certain path to economic
growth and sustainability. In spite of the dominant role of the petroleum
sector as the major foreign exchange earner in Nigeria, agriculture remains the
mainstay of the economy (NEEDS, 2004). Apart from contributing the largest
share of gross domestic product (GDP), it is the largest non-oil export earner,
the largest employer of labour and a key contributor to wealth and poverty
alleviation, as a large percentage of the population derive their income from
agriculture and related activities (Ayinde, Adewumi and Omotosho, 2009).
Moreover, in order to increase
productivity, Nigeria’s agriculture needs to embrace science-based technology
and the use of fertilizer, improved seed and crop protection products. Since
land expansion is limited, without science based agricultural inputs,
agricultural production will decline and fall (Ayinde et al, 2009). Despite the
laudable efforts of the nation to improve crop production, Nigeria’s
agricultural sector is still characterized by low yields attributable to the
use of crude implements, a low level of input and limited area under
cultivation among others.
Hence, Nigeria has to
adopt policies that will encourage an agricultural sector that has a high
investment rate. A key element of this strategy is an efficient and well
functioning policy on agricultural inputs market, making use of the following
complements, among which are: Fertilizer, improved seed variety and crop
protection product. Thompson, Vander-Meer, Alex and Kane (2004) saw the need to
invest in policy and regulatory reforms in the fertilizer sector as well as
establishment of government and regulatory capacity.