Impact Of Government Agricultural Policies On Agricultural Output In Nigeria

Abstract

Agriculture plays a pivotal role in the economic development of Nigeria, yet challenges persist in optimizing its output. This study investigates the relationship between government agricultural policies and agricultural output, aiming to provide insights for effective policy formulation. The study focuses on variables including the Agricultural Credit Guarantee Scheme Fund (ACGSF), agricultural lending, government agricultural expenditure, and interest rates. Drawing from New Institutional Economics (NIE) theory, the study employs the Autoregressive Distributed Lag (ARDL) approach to analyse data spanning from 1980 to 2021.The study's results unveil significant findings regarding the impacts of the examined variables on agricultural output. The ACGSF, agricultural lending, and government agricultural expenditure exhibit positive and statistically significant effects on both short- and long-term agricultural output. However, the interest rate displays a negative impact. The presence of an Error Correction Mechanism (ECM) indicates a swift adjustment process towards long-term equilibrium, highlighting the sector's adaptability to deviations from equilibrium. These findings underscore the pivotal role of government policies in shaping agricultural performance. As a result, policy recommendations are proposed: augmenting budgetary allocations to agriculture, tailoring lending policies to favour the sector, reinforcing credit guarantee schemes, and ensuring favourable interest rates. This study contributes to the understanding of how policy measures can foster agricultural growth, ultimately advancing Nigeria's socio-economic development.