Determinants of Cash Crop Output Volatility in Nigeria

Sunday Brownson, Ini-mfon Vincent, Daniel Etim

Abstract


This study estimates the short run and long run cash crop output volatility equations in Nigeria. Time series data derived from FAO data base for Nigeria and publications of Central Bank of Nigeria (CBN) covering the period 1961 to 2010 were used in the study. Unit root tests conducted on the specified time series showed that all series were integrated of order one at 1% probability level. The GARCH (1, 1) model was used to generate the cash crop output volatility for Groundnut, Cotton seed, Cocoa Rubber and Palm oil. The short-run and long-run elasticities of cash crop output volatility with respect to the specify explanatory variables were determined using the techniques of co-integration and error correction model estimation based on Ordinary Least Squares. The empirical results revealed that the nominal inflation rate, nominal exchange rate, loan guaranteed by ACGSF to cash crop sector, harvested hectare of cash crop and import substitution policy era influenced output volatility of cotton, groundnut, cocoa, rubber and palm oil in both short and long run periods in Nigeria. The study advocated for appropriate short and long term policy packages that should focused on the moderation of the identified significant macroeconomic shifters of cash crop output volatility in the country. Also attention should be directed towards improving the quality of land allocated to cash crop sub sector. Furthermore, the long run agricultural policies embedded in the import substitution policy should be use as basis for regulating cash crop output volatility in Nigeria.


Full Text: PDF DOI: 10.5539/jas.v4n9p174

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Journal of Agricultural Science ISSN 1916-9752 (Print) ISSN 1916-9760 (Online)

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