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Journal of Economics and Sustainable Development www.iiste.org

ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online)
Vol.4, No.16, 2013

Challenges and Prospects of Agriculture in Nigeria: The Way

Forward
Oni Timothy Olukunle*
Nigerian Institute of Social and Economic Research(NISER), P.M.B.5, U.I. Post Office
Ojoo, Oyo Road, Ibadan, Oyo State, Nigeria.
* E-mail of the corresponding author: [email protected]
Abstract
Over the past three decades, Nigerian government had initiated a plethora of policies and programmes which
were aimed at restoring agricultural sector to its pride of place in the economy. However various efforts at
promoting investment and export diversification in the agricultural sector have not yielded appreciable dividend.
Enormous investment and export diversification potentials for generating higher growth in the economy have
remained unlocked and unexploited in the agriculture due to a host of constraining factors that must be removed.
Therefore, the paper identified the constraints and proffered policy prescriptions to be implemented to remove
them so as to fast track the attainment of poverty reduction and rapid economic development in the country. The
identified constraints included marketing problem, infrastructure inadequacies, and unstable input and output
prices. Policy actions for removing the constraints must include improvement in downstream commodity
activities, environmental management, increased funding and efficiency in agricultural spending. Government
must invest heavily in rural infrastructure and such investment must ensure development of infrastructure in the
rural area.
Keywords: constraints, prospects, agriculture, development, investment.

1. Introduction
Agricultural development is considered to hold the key to economic development for most Sub-Saharan
countries including Nigeria. In Nigeria, there are several sectors that contribute to the total output of the
economy. In practice, these are grouped into four major sectors, namely agricultural, manufacturing,
oil/petroleum, and services. The agricultural sector is further disaggregated into crop production, livestock,
forestry and fishing. Table 1.1 indicates five-year average contribution of each sector to GDP over the period
1981-2011. From the historical record, agriculture remained the highest contributor to the GDP with an average
of 40.1 percent over the entire period. Agricultural sector was followed closely by the services sector with a
combined contribution of 38.1per cent, out of which the private services sub-sector accounted for about 29.0
percent. The petroleum sector was in the third position with an average contribution of 14.2per cent, in spite of
its being the largest source of public revenue and foreign exchange earnings for the country. This suggests the
relatively low linkage of the petroleum sector with other sectors of the economy. The foregoing indicates that in
Nigeria, agriculture is pivotal to economic development and more of the efforts to revive the economy, and
reduce significantly the level of poverty, should be devoted to revamping meaningfully the agricultural sector.
In the past, agricultural activities and foreign trade have driven growth performance of the economy. During the
pre-independence era, the Nigerian government was able to execute investment projects through earnings from
agricultural product exports. In the 1940s and 1950s, Nigeria’s agricultural export commodities contributed over
75per cent of the total annual merchandise exports (Ekpo and Egwaikhide 1994; Oyejide 1998; Okoruwa et al
2003). During this period, agricultural products dominated Nigeria’s non-oil export trade accounting for nearly
70 percent of the value of non-oil exports. Agricultural export commodities such as cocoa, rubber, cotton, palm
oil, palm kernel, groundnut and coffee played a prominent role in economic development by providing the
needed foreign exchange for capital development projects. Thus, the agricultural export commodities, constituted
the main export trade basket of the colonial period.
Nevertheless, introduction of petroleum into the nation’s export trade had changed the composition and structure
of the export trade. The oil sector, which initially contributed modestly to the economy in the 1960s, became
more important in the 1970s and it is now overwhelmingly important to the point of the economy becoming
over-dependent on it, providing about 95 per cent of foreign exchange earnings, as well as 65per cent of
budgetary revenues (CBN 2010). Governments have, over the decades, initiated numerous policies and programs
aimed at restoring the agricultural sector to its pride of place in the economy. Various efforts at promoting
investment and export diversification in agricultural sector have not yielded appreciable dividend. The relative
share of the agricultural sector in foreign exchange earnings had declined from an average of about 11per cent in
the 1970-75 sub-period to average of about 2per cent in the 1991-95 sub-period (CBN 2003). The efforts to
reverse the trend seem to be yielding very limited results, as oil continues to dominate the country’s exports
while agricultural exports share of Nigeria’s total exports remained under 5 percent for most years since the
introduction of Structural Adjustment Programme (Oni 2007).

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ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online)
Vol.4, No.16, 2013

In spite of enormous efforts by the government to reposition agriculture to its prime of place of providing food
for the human consumption and raw materials for industrial needs, as well as generating foreign exchange
earnings, and employment for the population, the rate of capacity utilization by agro-allied industry in the
country has been declining partly because of irregular and inadequate supply of raw materials. Linkage of
agricultural sector to the industry has been very weak. It is imperative for the country to maintain equilibrium
between raw materials requirements of industries, human consumption needs and capacity of agriculture to
supply the raw materials. The National Economic Empowerment and Development Strategy (NEEDS) had
emphasized the need for the country to reduce over-dependence on export of petroleum product for its foreign
exchange earnings. The emphasis was due to the fact that petroleum is a non-renewable product. In order to
broaden the sources of foreign exchange earnings it is necessary to diversify away from petroleum products into
non-oil products such as agricultural export products
From the perspective of sustainable agricultural growth and development in Nigeria, one of the fundamental
constraints is the peasant nature of the production system, with its low productivity, poor response to technology
adoption strategies and poor returns on investment. It is recognized that agricultural commercialization and
investment are the key strategies for promoting accelerated modernization, sustainable growth and development
and, hence, poverty reduction in the sector. However, to attract investment into agriculture, it is imperative that
those constraints inhibiting the performance of the sector are first identified with a view to unlocking them and
creating a conducive investment climate in the sector. The development challenges of Nigeria’s agriculture are,
therefore, those of properly identifying and classifying the growth and development constraints of the sector,
unlocking them and then evolving appropriate strategies for promoting accelerated commercialization and
investment in the sector such that, in the final analysis, agriculture will become one of the most important growth
points in the economy.
Generally, agricultural products have been recognized to have domestic food and industrial value and great
export potential because they can provide food for the entire population and income to farmers as well as many
economic agents involved in marketing of agricultural products. They serve as major source of raw materials for
industry as well as major source of non-oil foreign exchange earning for the nation. Significant growth potentials
in agricultural products can be exploited. The potentials include generating growth in export earnings through
increased cultivation of crops, generating increased income for labour and entrepreneur who are engaged in
small scale industries as well as large scale agro-based industries that make use of agricultural products as raw
materials. In addition, the manufacture of food items like vegetable oil and fats, majority of which are currently
imported can be obtained from industrial processing of agricultural commodities. Opportunities also exist to
substitute traditional grains with cassava in ago-industry instead of wheat. In view of the investment and export
diversification potential of agricultural commodities that has not been fully exploited, some questions may be
asked. What are the constraints to agricultural development in Nigeria? What policy strategies should be
implemented to improve performance of agriculture? Thus this paper assesses the challenges and potentials of
agriculture in Nigeria with a view to provide policy recommendations to accelerate performance of agriculture.
The remaining section of the paper is structured as follows. Section two presents the Methodology used. Section
three discusses the challenges inhibiting agricultural performance in Nigeria. The potentials of agriculture that
should attract private investment are presented in section four while the paper is rounded off in section five with
policy implications and suggested strategies for achieving the development goals of the agricultural sector of the
economy.

2. Methodology
The paper was culled from unpublished doctoral degree research work by the author. Data were obtained mainly
from secondary sources. These included publications of the Central Bank of Nigeria such as various issues of
Statistical Bulletin, and Annual Reports and Statement of Accounts. Publication of National Bureau of Statistics
such as Annual Abstracts of Statistics also provided useful data. The types of secondary data collected included
average prices of major farm inputs such as hoe, sprayer, tractor services, fuel, fertilizer, agrochemicals, imports
of agrochemicals, and average capacity utilization rates in agro-industry in Nigeria. The data were analyzed
using descriptive statistics such as averages and growth rates. The analyzed date were presented in tables for
ease of understanding.

3. Development Challenges in Nigerian Agriculture

Identification of the development constraints in the agricultural sector is a necessary step to unlock the factors
inhibiting performance of the sector toward designing policy strategies that would create conducive climate for
promoting accelerated commercialization and growth of the sector. In this connection, the following factors are
very important.

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ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online)
Vol.4, No.16, 2013

3.1 Marketing Problem

Marketing involves getting the agricultural products from the farmers to the consumers. It helps to enlarge
production by stimulating consumption, expanding the agro-industry and facilitating industrial growth. For the
marketing to play an essential role in increasing agricultural production, the following five basic elements are
necessary.
1 Transportation for moving the products from where they are produced to where they are consumed. An
efficient network of road is imperative. The majority of Nigerian rural roads are in very deplorable conditions.
2 Safe and efficient storage system to ensure continuous supply of agricultural commodities in the market.
This is very inadequate and ineffective.
3 Financing for the marketing to ensure prompt payment to the farmers as they deliver goods for sale.
4 Processing system that stimulates production by furnishing a continuous outlet for the farmers to produce
over a long period of time.
5 The marketing system also requires a functioning and dynamic information system in which both the buyers
and sellers are linked together.
Regrettably, the state of development of market information in the country is still primitive. Improved storage
techniques that have been developed by relevant research institute have remained unadopted and sometimes
unknown to farmers. Heavy post harvest losses occur due to inadequate storage facilities, especially in tines of
bumper harvests.
3.2 Storage and Processing
The lack of adequate storage and processing facilities accounts for divergence between national food security
and household food security. Even if the total production of food seems adequate at the aggregate level, it will
not lead to significant improvement in food security unless the food is available for consumption at the right time
and in the right form. Whereas food must be consumed on a daily basis, production has a different specific time
profile. Storage and processing are critical in ensuring that the commodities produced at a particular period are
available for consumption whenever and wherever they are required. A significant quantity of products harvested
in Nigeria perishes due to lack of storage and processing facilities. Simple, efficient, and cost effective
technologies for perishables, such as roots, tubers, fruits and vegetables, are not as highly developed in the
country compared to the storage technologies for cereal grains and legumes. Consequently, post-harvest food
storage losses are very high, approximately 40 per cent for perishables, compared to cereal grains and pulses at
about 15 percent. Traditional storage facilities have certain deficiencies, including a low elevated base giving
easy access to rodents, wooden floors that termites could attack, weak supporting structures that are not
moisture-proof, and inadequate loading and unloading facilities. Across geo-ecological zones, most farmers store
only a portion of their crops for consumption. They sell part of their crop early to get cash to pay for their
immediate financial obligations, including, in some instances, repaying the production loan to the middlemen.
3.3 Infrastructural Inadequacies
Infrastructure in this instance is construed to include physical infrastructure, such as roads and railway system,
educational and health facilities, social services such as potable water and electricity and communication system.
Agricultural performance in Nigeria is greatly impaired by the low level of development of infrastructure. In the
rural areas where majority of the smallholders operate, inadequate infrastructure constitutes a major constraint to
agricultural investment, production and trade. In many parts of the country physical and marketing infrastructure
is poorly developed, storage facilities are rudimentary and access to information and markets is highly restricted.
The situation represents the urban bias in the pattern of development in the country. Infrastructure inadequacy is
mirrored by restricted access to the markets, which limit the availability of agricultural products in many areas,
and reduces farmers’ income. The Infrastructure constraint has persisted due to government neglect, poor
governance, poor political leadership, poor maintenance culture and poor funding. In terms of road facilities, the
efforts of the Agricultural Development Programmes, the Directorate of Foods, Roads and Rural Infrastructure,
the National Agricultural Land Development Authority and the Petroleum Trust Fund have not been sustained to
ensure good road networks in the rural areas where the bulk of agricultural activities take place. In addition, the
railway system that is expected to provide relief has been comatose for years thereby restricting the movement of
agricultural inputs and outputs to the road transport system. The constructed roads do not often last for more than
three to five years before they start to crumble due partly to poor maintenance culture. As regards educational
and health facilities, these are largely urban-biased. Supply of potable water has not been adequate for a majority
of rural dwellers. Electricity supply is often epileptic and communication system is still poor. Although recent
expansion of the Global System of Mobile Communication (GSM) infrastructure and Internet services has
improved the communication situation somewhat, the services are urban-biased and too expensive for the
average people.
3.4 Unstable Input and Output Prices
Generally, a major problem inhibiting investment in agriculture is the escalating cost of major farm inputs as

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ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online)
Vol.4, No.16, 2013

reflected by data in Table 3.4.1. Average prices of major farm inputs such as hoe, matchet, sprayer, tractor, and
agrochemicals have been rising over the years. The rising prices of inputs are the results of instability in the
factor markets arising from instability in macroeconomic policy actions leading to inflationary pressures, high
interest rates, and volatile exchange rate. Invariably, the deficiency in macroeconomic policy environment
constituted a major constraint to the growth of investment in production of agricultural products. This has a
tendency to cause high factor cost to the farmers cultivating agricultural crops. Moreover, the rising prices of
fuel have led to rising cost of transportation of farm inputs thus aggravating the rising cost of production. The
rising costs of farm inputs combined with dearth of investible funds pose a serious constraint to investment in
agriculture. This could lead to reduction in production and domestic supplies of agricultural products. The high
interest charges on loans for agricultural production have resulted in escalation of production costs. Most of
agrochemicals are imported as reflected by Table 3.4.2. The situation not only made procurement difficult but
again resulted in cost escalation arising from the depreciated naira exchange rate. The prices of many
commodities also increased although due to wide fluctuations it has not resulted in persistent rise in profitability
of farm enterprises. The cassava experience provides an illustration of the possible effect of price fluctuations on
output of commodities. When the Presidential initiatives commenced in 2002, farmers were encouraged to
expand the production of cassava. Initially, the farmers received remunerative prices. As further campaigns
continued and support for the production of the commodity increased, output was further increased. However,
today there seems to be a glut in the cassava market due to marketing bottlenecks. Prices are now falling and
farmers are likely to reduce the area under cassava production. Urban consumers will support falling prices of
food staples, but net producers are unlikely to derive adequate income to guarantee profitability of production of
the commodities.
3.5 Agricultural Labour
Availability of labour affects the use of farmland in the traditional farming system. Since agriculture in Nigeria
is virtually unmechanised, human labour becomes vital in all production systems, accounting for about 90 per
cent of all farm operations. Under semi-mechanized systems, including animal traction use, human labour use is
as high as 70 per cent of all operations (NISER, 2001). Although farming is largely labour-intensive, farmers,
generally often experience seasonal labour shortages. The supply of labour is affected by unending migration of
able-bodied youths from the rural to urban areas creating labour shortages especially at peak periods when
labour is required for land preparation, weeding and harvesting. Hired labour shortages have driven up the cost
of labour making such labour unprofitable to the average smallholder. Exacerbating the migration problem has
been the poor agricultural productivity of smallholder farmers and the perception among young adults in farm
families that the farm cannot support them and their livelihood (Chemonics, 2003).
3.6 Technical Constraint
Technical constraint in Nigeria affects both the upstream and the down stream segments of agriculture. The
constraint manifests in poor technology, poor quality of raw materials and inadequate supply of modern inputs.
The main causes of the constraint include low support from government, poor government policy, poverty, low
level of awareness, lack of adequate research and increases in the prices of inputs. Poor government support and
poor government policy prevent the emergence of innovations from research institutes, thereby curtailing the
level of available technically feasible and efficient agricultural practices. Even when they are available, there
seem to be communication gaps between farmers (end-users of research efforts) and the researchers. The
existence of unified agricultural extension system notwithstanding, there is still poor coordination between
researchers, extension agents and farmers. This situation is worsened by the low extension-farmer ratio, which
hovers around 1 to 1000. The poverty incidence among farmers, which is the highest in the economy, also
contributes to the persistence of technical constraint in Nigeria. Thus, farmers are unable to take up new
innovations aimed at boosting their productivity and, by extension, their output. The low level of productivity
translates to a vicious cycle of poverty, thereby leading to low level of production. The technical constraint is
further sustained by high input prices, which is a consequence of inflation in the economy as well as the
dependence of the agricultural economy on foreign inputs.
3.7 Inadequacies in Past Policies and Programmes
Earlier attempts at improving agricultural production in Nigeria such as the operation feed the nation, the green
revolution programme and other laudable interventions in the agricultural sector emphasized increased
production without commensurate efforts at post harvest management and industrial utilization. Most of them
handled the various aspects of the post harvest system such as processing, packaging, marketing, storage,
distribution and transportation in isolation from one another. There was no effort to make the system
comprehensive and holistic in its management. Also, industrial utilization of agricultural commodities is
constrained by inadequate linkage of agriculture to industrial sector. Each programme followed haphazard
implementation that creates more problems without achieving anticipated goals. Although, most of the
programmes yielded seasonal increases in agricultural output, inefficient and ineffective post-harvest

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ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online)
Vol.4, No.16, 2013

management and generally low level of industrial utilizations have always resulted in substantial agricultural
wastages, food losses, reduction in available food, restriction in its spread over the year, and also reduction in
employment and rural income.
The difficulty confronting the local industrial utilization of agricultural commodities is how to initiate and
sustain the momentum for diversification of raw agricultural commodities into agro-industry for transformation
into high value added products in order to realize and optimize high growth potential that undoubtedly exists in
agricultural commodities. This remained worrisome by the dilapidating state of rural infrastructures that
hampered effective linkage of agriculture to the industry. This undoubtedly makes investment unattractive to the
private sector and thus limiting agricultural development in the country. Excessive dependence on a narrow
range of products as sources of income and foreign exchange earnings bring about a number of unfavourable
consequences on the economy. Firstly, it exposes farmers unduly to the vagaries of climate, pests and diseases
and to price fluctuations. Secondly it leads to fluctuations in farm income and government revenue. Thirdly, it
contributes to environmental degradation. Fourthly, it may result in failure to take advantage of
complementarities (e.g. between livestock and crops) and has negative effects on diet, food security and welfare
of Nigerians. In addition, an adverse international term of trade facing the primary agricultural commodity
sector is a further constraint to growth of the sector. There is a clear need to diversify production and export
base, both horizontally and vertically, from low value added to high value added products.
High growth potentials and opportunities available in diversifying agricultural commodities to agro-industry for
generation of high value added products had been limited and thus underexploited in Nigeria due to irregular
supply of raw materials from the agricultural sector to the agro-industrial firms. Available evidence depicts that
there had been poor linkage of agricultural sector to the industrial sector. This had aggravated the low domestic
utilization of agricultural commodities by the agro-allied firms, which is being reflected by a general decline in
the average capacity utilization rates by the firms. For instance, average capacity utilization rates had declined
from 54.3per cent in 1980 to 19.0 percent in 2005 in cocoa confectionary industry. In the vegetable and grain
milling industry, average capacity utilization rate had declined from 84.5per cent in 1980 to 45.8per cent in
2003(Table 3.7). Thereafter, it rose to 90per cent in 2005 and declined again to 76.97per cent in 2010. The
general decline in average capacity utilization rates in the agro-industry could partially be attributed to
inadequate and irregular supply of raw materials and a combination of other factors like aging plants, deficient
equipments and poor performance of utilities (Oni, 2005). The inadequacy and irregularity of supply of raw
materials to agro-industry can be more formidable because majority of the domestic supply of the commodities
are being exported from Nigeria to foreign trading partners in their raw forms.

4.0 Prospects of Attracting Investments

Investors are always willing to put their money in attractive enterprises. In Nigeria, the new policy on agriculture
has indeed identified seven areas of investment. These are agricultural production (crops, livestock, fisheries, and
agroforestry), provision of enterprise specific infrastructure, agricultural produce storage, processing and
marketing, agricultural input supply and distribution, support for agricultural research, provision of agricultural
implements hiring service and collaboration with state and local government as well as farmers in
implementation of the research-extension-farmer-input/marketing-linkage system (REFILS) in the states.
Manyong et al 2003 also identified thirteen investment options including input production and supply
enterprises, staple food crops production enterprise, industrial crops production enterprises, livestock production
enterprises, fisheries, forestry, commodity processing and storage enterprises. Others are agricultural commodity
marketing, agro-industry/manufacturing, agricultural commodity export and agricultural support services.
Perceptions of different stakeholders revealed that foreign investors would be attracted to activities/enterprises
that are capital intensive and that add value to primary products (Manyong et al 2003). In this connection,
downstream activities are relatively more attractive to foreign investors. On the other hand, primary upstream
enterprises and agro-services are relatively more attractive to local investors. *Across the six geopolitical zones
in the country and enterprises, three main reasons stand out for the attractiveness of the enterprises to foreign
investors. These are high level of demand, availability of raw materials/inputs and high rate of returns. All of
these indicate economic viability of the different enterprises. There are, however, specific reasons for the
attractiveness of the enterprises across the zones. For instance, lack of competing local investors is identified in
the northeast as one of the reasons for the attractiveness of commodity processing to foreign investors. Similarly,
poor infrastructure and high perishability of agricultural commodities are considered to be incentives for foreign
investment in agricultural commodity storage. The three main incentives for domestic investment are high
demand, high rate of return and availability of raw materials. However, huge capital requirement is a
disincentive for domestic investors’ involvement in input production/supply enterprises and agricultural
commodity processing enterprises. Similarly, land fragmentation is a major disincentive for domestic investors’
participation in forestry enterprises in both the southeast and the south south.

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ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online)
Vol.4, No.16, 2013

4.1 Crop Production

It is pertinent to note that the massive importation of particularly rice and the seasonal scarcity of maize sorghum
and millet are indications that the production of cereals is inadequate. It has also become necessary to increase
the production of other crops as underscored by the presidential initiatives on the production and export of
cassava, vegetable oil, tree crops and cotton. Crop production still provides ample opportunities for private
sector initiatives.
4.2 Livestock Production
Private sector initiatives in poultry production and the breeding and rearing of small and large ruminants are
common although most establishments may be described as small-scale farms. Poultry production can easily be
described as the leading private sector driven agricultural enterprise. The enterprises were sustained on cheap
poultry feed predicated on cheap maize imports from the United States of America. The ban imposed on the
importation of maize in the 1980's and the attendant escalation of feed prices dealt death blows to most
"backyard" poultry enterprises. At a point, only those producers who formulated their own feed were able to stay
in business. Poultry production has since revived but the demand for poultry products has remained far above
supply necessitating the importation of frozen chicken and beef. The current ban imposed on the importation of
frozen chicken and beef should therefore, create even greater investment opportunities for the private sector in
the poultry industry. The poultry industry nevertheless depends almost entirely on the importation of exotic
breeds of parent stock of birds - a situation that can hardly be sustained by the farmers and by the economy. The
need for the private sector to support research to develop truly Nigerian breeds that are comparable in attributes
to the foreign imported stock creates important opportunity to invest. Another aspect of the livestock industry
that appears to have been ignored is dairy production. It is evident that herdsmen for lack of market pour large
quantities of milk away each day. Yet, the market for dairy products appears vast in Nigeria. Milk collection and
processing is thus an area yearning for private sector attention. The establishment of feedlots especially close to
the major urban centers where incomes have risen and the demand for high quality beef should provide
opportunities for viable private sector initiatives.
4.3 Fish Production:
The demand for fish far outstrips the supply and thus fish is relatively scarce and expensive. Investment in
culture and capture fisheries by the organized private sector is the only hope for rapid expansion of fish
production to meet increasing demand. The need for private sector participation becomes quite pressing in view
of the fact that culture and capture fisheries are both capital intensive. Identified investment opportunities for the
private sector include the following:
• Large-scale aquaculture and industrial fisheries development, including the acquisition of industrial
fishing trawlers;
• Development of fishing infrastructure such as fish hatcheries, construction of fishing terminals and fish
landing jetties in major fishing settlements;
• Local production of fishing inputs such as nets, fishing crafts, boats, hooks and lines, floats and sinkers;
• Fishing processing, marketing and distribution facilities;
• Development of fish feed mills.
4.4 Input Supply
The production, distribution and supply of agricultural inputs provide opportunities for viable private sector
initiatives. Opportunities are increasing for agro-industries that service and sustain farm operations through the
production, distribution and supply of various categories of production inputs such as:
• Fertilizers and other agro-chemicals (pesticides, insecticides, herbicides, and fungicides). About 95per
cent of the agrochemicals used in Nigeria is imported since the withdrawal of multi-national
companies from Nigeria during the Abacha regime (Nwosu, 2004). The demand for agrochemicals is
rising and provides viable opportunities for the local manufacture of agro-chemicals.
• Improved seeds and seedlings: The time is ripe for the emergence of seed companies to provide
improved seeds for the emerging large-scale, commercial growers. The market for improved seeds has
remained largely untapped.
• Day old chicks: The demand for day-old-chicks has remained largely unsatisfied especially in the
eastern parts of the country. Poultry farmers in the East go as far as Lagos and Ibadan to procure day-
old-chicks.
• Fish fingerlings Seedlings : oil palm, cocoa, horticultural crops.
4.5 Production of Farm Machinery and Equipment
A vast proportion of the agricultural machinery used in Nigeria is still imported. According to Nwosu (2004),
there are only two tractor-assembly plants in Nigeria - Steyer in Bauchi and Fiat in Kano. The two companies
have a combined annual output of less than 2000 tractors. There are nevertheless, some private establishments,
which fabricate some agricultural equipment. A major problem faced by such establishments is inadequate

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ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online)
Vol.4, No.16, 2013

funding. Private sector investment in the development and commercialization of appropriate agricultural
machinery and equipment for processing and storage and other farm operations is desired. In this connection, the
private sector should also invest in the commercialization of prototypes of improved mechanical and other
technologies developed in various research institutes, which are wasting away on the shelves of researchers. The
pioneering role of Holt Engineering in the manufacture and distribution of farm tools such as disc harrows,
riggers and plows is acknowledged. The production and marketing of farm machinery, tools and equipment is
capital intensive and provides gainful opportunities for private sector initiatives.
4.6 Processing of Farm Produce for Domestic and Export Markets
Processing facilities are inadequate for the export commodities such as cocoa, rubber, palm kernels, cotton,
groundnuts, tobacco and timber. There is also very few processing facilities for the highly perishable fruits and
vegetables. The Chi Group in Lagos, which manufactures fruit juices, seems to have successfully integrated own
farming, and contract out-grower system with processing. The subsisting ban on the importation of fruit juices
should enhance the investment opportunities for the private sector. Besides, there is a large and increasing
demand for processed farm products in the Nigerian market and the ECOWAS sub-region. There is also a
growing market abroad for various types of Nigerian foods patronized by the large number of Nigerians living in
Europe and the USA, by other West Africans and even by African Americans. Food processing, marketing and
trade provide opportunities that should be exploited by the private sector. The possibilities provided by the
African Growth and Opportunity Act (AGOA) of the United States of America should be explored. The Act
eliminates for Nigeria and other African countries existing quotas under the Uruguay Round Agreement in many
commodities, especially agricultural products from Sub-Saharan Africa. Also, the generalized system of
preference (GSP), which confers lesser tariff on a large number of products entering the U.S. market, will be
enforced for Africa up till the year 2008. There is nevertheless, the need to educate Nigerian entrepreneurs on the
conditionalities of AGOA, to enable them take advantage of the high export prospects offered by products such
as ginger, gun arabic, sesame, cashew, leather and skins, cocoa, rubber, African honey, flowers, spices and
vegetables. The export trade in these commodities again, provides opportunities for private sector initiatives.

5.0 The Way Forward

• Government should invest heavily in rural infrastructure development that will promote private investment
in all areas of agriculture and facilitate linkage of agriculture to industry. The rural electrification
programme should be intensified to cover all rural villages in the country.
• Improvement in downstream Agricultural Commodity Activities: Primary activities encompassing crop
planting and harvesting constitute upstream agricultural commodity activities from which primary
commodities emerge. Following these are some essential secondary or post-harvest activities that constitute
downstream activities. These secondary activities are important in adding value to the primary product,
improving its quality and rendering it less perishable. In general, downstream commodity activities improve
the market opportunities for agricultural products and promote their commercialization, enhancing not only
its competitiveness but also the rate of return on their investment. Key downstream commodity activities
include: storage, processing into intermediate or final (finished) products, and marketing and distribution
through domestic and export trade. Key intermediate supporting services for these downstream activities
include adequate infrastructure (physical, economic, and social), efficient financial institutions, adequate
human capital, relevant local organizations (such as community-based organizations, farmer organizations,
etc.), transport services and commodity grading and quality control services.
• Improve agricultural production, processing and trade through increased access to resources such as land,
technology (improved inputs) credit, training. Adoption of modern farming and husbandry practices such as
planting of improved seeds and seedlings, application of agricultural chemicals for pest and disease control
and tractors to reduce drudgery and enhance yields should be facilitated by assisting the farmers in sourcing
improved technologies. Small-scale irrigation in all agro-ecological zones of the country should be
promoted and strengthened.
• Government should sustain its drive to achieve a stable macroeconomic environment, which manifests
largely in price stability. On the social front, government should ensure security of life and property to
attract domestic and foreign investment to the sector.
• Increased support for Agricultural Research and Extension: There is the need to strengthen agricultural
research activities through increased and stable funding, proper coordination, strengthening of linkages
among research centres as well as adequate training of research and technical staff in specialized skills.
Research systems must identify new mechanisms to find out why farmers do what they do, their research
needs and priorities.
• Employment and income generation should be enhanced through promotion of diversification of rural
economy. Government should support capacity building among small-scale farmers and facilitate linkages

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Journal of Economics and Sustainable Development www.iiste.org
ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online)
Vol.4, No.16, 2013

with large processors and manufacturers using agricultural commodities so as to develop long-term
contractual arrangements among them. Also government should promote value-added agriculture to provide
stimulus for wealth creation and employment creation.
• Increased funding of the agricultural sector so as to improve efficiency of institutional agencies for
agricultural development. The functions of the agencies should be streamlined to ensure adequate funding
for their core functions.
• Environmental Management: Increased investment in the agricultural sector and the resulting
commercialization of products will most likely pose increased threat to environmental damage either
through land degradation, pollution of the ecosystem by the effluent of processed agricultural commodities
or the exhaustion of agricultural resources. Sustaining the agriculture environment will require adopting the
following strategies: promotion of proper cultural practices associated with various commodities
recommended by developers of improved technology packages. Adoption of post-harvest processing
technologies that minimize waste and control pollution of the environment. Use of crop and livestock mix
enterprises that prevent and minimize soil degradation.
In conclusion, the potentials for domestic and foreign investment in different agricultural enterprises in the
different zones of Nigeria are high, in view of the large population size of the country, the availability of
abundant resources and raw materials and the opportunity to earn good returns from investment. Efforts put into
ensuring effective implementation of the above recommendations will constitute quick wins in stimulating the
flow of investment into the agricultural sector. This will pave way for diversification of revenue sources,
increased income, employment generation and poverty reduction in the country.

References
Akande, S.O (2006), "Food Policy in Nigeria", Analytical Chronicle, New World Press.
CBN (2003), "Contemporary Economic Policy Issues in Nigeria", Central Bank of Nigeria, Abuja, Nigeria
CBN (2011), "Statistical Bulletin", Volume 22, Central Bank of Nigeria, Abuja, Nigeria.
Chemonics International (2003), "Nigeria Food Security Assessment", Final Report USAID, Nigeria.
Ekpo, A and Egwaikhide,F (1994), "Exports and Economic growth in Nigeria: A Reconsideration of the
Evidence", Journal of Economic Management 1(1) December.
Manyong V.M.et al (2003), "Agriculture in Nigeria: Identifying Opportunities for Increased Commercialization
and Investment", USAID.
NBS(2011), "Annual Abstract of Statistics", National Bureau of Statistics, Federal Republic of Nigeria, Abuja,
Nigeria.
NISER, (2001), "NISER Annual Survey of Crop Production Conditions in Nigeria", A Publication of NISER
Annual Monitoring Research Project.
Nwosu, A.C. (2004), Private Sector Initiatives in Agricultural Development in Nigeria in Nnanna et al eds:
Enhancing Private Sector-Led Growth in Nigeria. Proceedings of the 13th Annual Conference of the Regional
Research Units. Central Bank of Nigeria, Abuja, Nigeria.
Okoruwa, V.O. et al (2003), "Determinants of traditional agricultural exports in Nigeria: an application of
cointegration and error correction model", Quarterly Journal of International Agriculture, Vol. 43, No. 4
Olomola, A.S. (1998), "Structural Adjustment and Public Expenditure on Agriculture in Nigeria eds Tshikala T.
in Structural Adjustment and Agriculture in West Africa", Codestria, Senegal.
Olomola, A.S (2007), "Food Security Under the 7-Point Agenda of President Yar’ Adua Strategies and
Challenges" Nigerian Institute of Social and Economic Research, Ibadan, Nigeria.
Oni, T.O. (2005), "The Potentials of and Constraints to Diversification of Cocoa to Agro-Industry in Nigeria",
Bowen Journal of Agriculture Volume 2, No 2.Bowen University, Osun State, Nigeria.
Oni, T. O. (2007): Supply Response of Traditional and Non-Traditional Agricultural Export Commodities
to Macroeconomic Policies in Nigeria. Unpublished Ph. D Thesis, Department of Agricultural Economics,
University of Ibadan, Nigeria.
Osuntogun et al (1997), "Potentials for Diversifying Nigeria’s Non-Oil Exports to Non-Traditional Markets",
AERC Research Paper 68, African Economic Research Consortium, Nairobi.
Oyejide T.A. (1998), "Trade Policy and regional integration in the development context. Emerging patterns,
issues and lesson for sub-Saharan Africa" , Journal of Economics 7 supplement 9, June, 1998.

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Journal of Economics and Sustainable Development www.iiste.org
ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online)
Vol.4, No.16, 2013

Table1.1: Five-Year Average Sectoral Contribution to GDP (%).

Year Agriculture Manufacturing Oil Services Total
(%)
Private Government Total
1981-85 37.2 9.2 14.9 27.2 11.5 38.7 100

1986-90 41.0 8.3 13.3 29.7 7.8 37.5 100

1991-95 38.3 7.5 13.3 31.3 9.6 40.9 100
1996-2000 40.0 6.3 11.9 32.0 9.8 41.8 100
2001-2005 42.4 8.1 13.5 24.1 11.9 36.0 100
2006-2011 41.7 6.2 18.2 29.6 4.3 33.9 100
Average 40.1 7.6 14.2 29.0 9.2 38.1 100
Source: Underlying data obtained from the Central Bank of Nigeria, Abuja, Various issues.
Table 3.4.1: Average prices of Major Farm Inputs in Nigeria.
Type of Input 1980 1985 1990 1995 1999 2007 2011
Hoe(N/Unit) 2 20 105 200 Na 400
Matchet(N/Unit 5 8 35 150 250 500
Sprayer(N/Unit 75 150 850 2200 4500 Na 7000
Tractor Hire(N/ha) 25 55 250 850 2000 Na 3000
Fuel (N/Litre) 0.20 0.44 7.39 17.80 Na 97.00
Fertilizer(N/25kg 2 15 50 500 1250 Na 5,000
Agrochem(N/litre) - 65 280 850 1500 2026 2500
Source: National Bureau of Statistics, Annual Abstract of Statistics, 2011, Federal Republic of Nigeria.
Table3.4.2: Growth Rates of Agrochemical Imports in Nigeria, 1970-2005.
Variables 1970-75 1976-80 1981-85 1986-90 1991-95 1996- 2001-
2000 2005
Insecticide imports
Average 460.43 20721.96 20127.44 4146.3 3742 Na Na
quantity(‘000Kg)
Growth Rate (%) 1050.82 22.26 -34.38 -16.08 -9.75 Na Na
Fungicide imports
Average 201.97 1001.85 879.64 4024.89 972.39 Na Na
quantity(‘000Kg)
Growth Rate (%) 217.04 1.24 694.87 393.21 -75.84 Na Na
Source: Oni, T. O. (2007): Supply Response of Traditional and Non-Traditional Agricultural Export
Commodities to Macroeconomic Policies in Nigeria. Unpublished Ph. D Thesis, Department of
Agricultural Economics, University of Ibadan, Nigeria.
Table3.7: Nigeria’s Average Capacity Utilization Rates in Agro-Industry (%).
Item 1975 1980 1985 1990 1995 2003 2005 2010
Sugar and Cocoa - 54.3 31.6 42.6 18.3 33.1 19.0 71.25
Confectionery
Vegetable and - 84.5 51.2 25.0 40.4 45.8 90.0 76.97
Grain Mill
Bakery 66.4 74.4 42.7 42.3 19.1 43.0 65.0 53.75
Soft Drinks - 72.5 27.7 47.0 41.5 46.5 48.0 57.40
Textiles 79.7 84.4 44.6 52.2 44.3 34.6 48.0 38.20
Source: Underlying Data Obtained from Central Bank of Nigeria Statistical Bulletin, 2011.

45
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