Impact of Fertilizer Policy on Crop Production in Nigeria

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 preliberalization 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 toensure eco-balance and food security.

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

vi

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