CHAPTER 1
INTRODUCTION
1.1 BACKGROUND
TO STUDY
1.2 STATEMENT
OF THE PROBLEM
1.3 SCOPE OF THE STUDY
1.4 OBJECTIVES
OF THE STUDY
1.5 SIGNIFICANCE
OF THE STUDY
1.6 RESEARCH QUESTION
1.7 RESEARCH HYPOTHESES
1.8
METHODOLOGY
OF THE STUDY
1.9
DATA SOURCE.
1.10 OUTLINE OF CHAPTERS
References
CHAPTER 2
2.0 LITERATURE
REVIEW
2.1
HISTORICAL BACKGROUND OF NIGERIAN AGRICULTURE
2.2 ECONOMICS OF COCOA
PRODUCTION IN NIGERIA.
2.3 THE ROLE OF AGRICULTURE (COCOA) IN THE
ECONOMIC DEVELOPMENT OF NIGERIA.
2.3.1
FOOD SUPPLY
2.3.2
EMPLOYMENT
2.3.3
COCOA AND EXPORT EARNINGS.
2.3.4 COCOA AND BALANCE OF PAYMENT
2.4
EFFORTS AT REVAMPING COCOA PRODUCTION IN NIGERIA.
2.4.1
NIGERIA AGRICULTURAL AND COOPERATIVE BANK (NACB)
2.4.2 AGRICULTURAL CREDIT
GUARANTEE SCHEME (ACGS)
2.4.3 COMMODITY BOARD
2.4.4 THE LAND USE DECREE
2.4.5 THE GREEN REVOLUTION
PROGRAMMES.
2.4.6 The
National Agricultural land Development Authority (NALDA)
2.4.7
RURAL BANKING SCHEME.
2.5
PROBLEMS OF COCOA PRODUCTION IN NIGERIA.
REFERENCES
CHAPTER 3
3.0
RESEARCH
METHODOLOGY
3.1 THEORETICAL
FRAMEWORK
3.2
MODEL SPECIFICATION
3.3
ESTIMATION OF THE MODEL
3.4
CRITERIA FOR DECISION MAKING
3.4.1
THE SIGN AND MAGNITUDE OF REGRESSION COEFFICIENTS
3.4.2 COEFFICIENT OF DETERMINATION (R2)
AND ADJUSTED (R2)
3.4.3 THE STUDENTS
3.4.4 THE F STATISTIC.
3.4.5 THE DURBIN – WATSON TEST
3.5 TYPE AND SOURCES OF DATA
REFERENCES:
CHAPTER FOUR
4.0
EMPIRICAL
ANALYSIS
4.1 Introduction
4.2 Presentation of Data
4.3 PRESENTATION OF RESULTS
4.4
ANALYSIS AND INTERPRETATION OF RESULTS
REFERNCES
CHAPTER 5
SUMMARY,
CONCLUSION AND RECCOMENDATIONS
5.1 SUMMARY
5.2 FINDINGS
5.3 RECOMMENDATIONS
5.3 CONCLUSION
5.3.1 LIMITATION
5.3.2 SUGGESTION FOR FURTHER
STUDIES
CHAPTER 1
INTRODUCTION
1.1 BACKGROUND
TO STUDY
Cocoa
is a bean that is in high demand all over the world especially by developed
countries. Cocoa has several uses and benefits to an economy. Africa is the largest producer of cocoa to
the international market, which are normally in Europe and America. Ivory
Coast, Ghana and Nigeria share the largest contribution to the world market and
with Ivory Coast by far the highest producer producing up to 39% of world
output (UNCTAD, 2004). While the contribution of Nigeria and Ghana is 19% and
6% respectively (UNCTAD, 2004). But our
focus is on Nigeria. World cocoa output
was estimated to have increased by 50%
in the early period of independence of the countries output (between 1958 and
1966) with practically the whole increase coming from West Africa (Ivory coast,
Ghana & Nigeria mainly). Explaining the basis of this increase, the FAO
(1966) had this to say.
The
remarkable upsurge in west African production -in which Nigeria participated
fully- can only be explained by the coming into bearing of your trees, an
increasing proportion of which were of Amazon and selected high yielding
Amelonado varieties, and the effects of spraying against diseases and pests.
Thus, research findings can be said to have made a
significant impact on the Nigerian cocoa industry. This view was given credence
and quantitative support by some empirical studies which found that cocoa
research in Nigeria has generated an internal rate of return as high as 42
percent (Abidogun, 1982). Against this background of impressive payoff to
investment in cocoa research, it may be pertinent to access the distributional
impact of benefit generated in the process. In particular, an export oriented
industry like the cocoa industry, the relative size of consumer surplus is of
interest to policy makers on account of its implication for research financing,
allocate efficiency and international equity.
Nigeria is an important player in the cocoa
sector and as such, the Nigeria output has effects on the international
aggregate output and price level. Cocoa
production in Nigeria is done in the South West of the country especially in
Ondo state and some are seen in the South -South zone especially in Akwa-Ibom
state.
In the early part before and after the
independence in Nigeria, Nigeria was solely dependent on agricultural output
such as cocoa as means of foreign exchange and income for the government and
citizenry. The bulk of the country was
run with revenues got from agricultural produce. The Southwestern part of the
country was reliant on the production and sales of Cocoa. So also were the
Northern part of the country that gets its output from monkey nut (also know as
groundnut). The southern parts were not
left out because they had vast amount of land at the time providing them with
palm kernel. Though, this region also
had additional income from coal from Enugu. But deductively, it has been shown
that the South West which founded were only cocoa was richer that the Eastern
part that had both palm kernel and coal.
This is an indication of the commercial viability and economic
importance of cocoa in the community of other cash crop. It is widely acknowledged that Nigeria has a
wide range of natural resources which agriculture can be said to be
included. This enormous base (e.g.
cocoa) if well managed, could be a support to the manufacturing sector (industrialization)
by providing supplies of raw material for the raw material needs of the
industrial sector as well as providing gainful employment for the teeming
population. One of the major development expectations of the cocoa industry in
Nigeria is the supply of raw materials for the emerging agro-industrial
processing and manufacturing sector.
This expectation, which is in consonance with economic theory, which
assumes that with the growth in the industrial sector, the excess labour, would
be absorbed in to the modern sector.
This relationship would eventually lay the foundation for an accelerated
economic growth. The expansion of cocoa
production is expected to eliminate possible trade distributions arising from
externally dependent economy by ensuring availability of raw material for
industries. This process could lead to
an expansion in the country’s industrial activities with a multiplier effect in
employment opportunities for all the stakeholders in the economy such as the
farm workers, factory processors, and product distributors among others.
Using a basket of four agricultural
commodities: - cash crops (Cocoa, Coffee, Rubber, Groundnut oil). An analysis
shows that as at the period of 1980’s cocoa production in Nigeria was at its
peak. Over time, the output has fallen by over 50% from 1980 to 2002, while
these have a been a steady but contributes rise in the product output the cost
per tonnes of cocoa in amongst the highest, so there is a prospect for an
increase in the total Gross Domestic Product (GDP) of there is an increase in
the output per tonnes.
In Nigeria, cocoa is a very important part
of the cash crop family in the agricultural sector. So, the downturn trend of
the aggregate agricultural output is as a result of downward movement in the whole
composing variables in the sector. And
of course, the composing variable includes all other agricultural products
contributing to aggregate agricultural output.
The resultant output is a result of the declining level/pace of growth
in the composing output. Countries that
have a higher or increasing rate of growth in each composing products tends to
have an overall increase in the aggregate agricultural output.
Countries like Cote d’ivoire and Ghana have
their aggregate agricultural output on the increase solely or primarily because
they have a growing and versatile cocoa sub sector which is probably one of the
largest in the international commodity market.
As it is commonly said, Agriculture in the mainstay of a traditional
society, in a country like Cote d’ivoire, it is right to further say that cocoa
in their mainstay in their economy because cocoa contributes the bulk of the
agricultural sector.
The importance inherent in cocoa in any
economy is rather vast because it serves as food and raw material (beverages,
butter) in local use, and export. Cocoa
production can be the main source of a country’s foreign exchange earnings as
well as a significant part of the GDP. At
least post independent (1960- early 1970s) Nigeria belonged to this category/cadre. At the said time, cocoa was sufficient to
produce a bulk of the national need of foreign exchange while other
agricultural produce complemented the efforts therein.
The decline in cocoa was also reflected in
the other crops. In the past, crop production
has been classified basically into two broad categories of food and cash
crop. This classification recognizes the
use of output for domestic consumption and for export. The evaluation of the performance of the
agricultural sector in industrial crop production is given in three places
1970-1985 which is regarded as the pre Structural Adjustment Programme (SAP)
era, 1986 – 1993 SAP era and 1994-2001 post SAP or era of deregulation.
1.2 STATEMENT OF THE PROBLEM
Overtime, there has been dwindling
level of output in the agricultural sector in general and the cocoa sub sector
specifically. As we know, at a point in the Nigeria economic history,
agricultural production has a major priority of the Nigerian state. But as time went by, there has been a gradual
and small fall in the output overtime.
Factually speaking, Nigeria produces a little more than half of what she
used to produce in the 1970s (CBN, 2004).
Production of cocoa though can be increased but some factors will
militate against attaining it most especially because productivity is not too
great in the sector. Also several
factors overtime have led to the decline in productivity starting from
over-regulation of the sector, international market price, marketing boards,
illiteracy, etc. Data available from
both the statistical bulletin and FOS publications has shown a large decline
over time. At different times, there
have been growth and other times, some slumps in the overall output. The problem this project is set to address
the cases of decline in the cocoa production overtime.
1.3 SCOPE
OF THE STUDY
The scope to the study is
to cover relevant areas as regards the contribution of cocoa to overall
improvement in a country’s economic status.
The study basically would highlight the challenges inherent in the cocoa
production which is a very valuable part of the output of agriculture
production from1970 to 2004. A further
study would be done on the contribution of cocoa into the gross domestic
product (GDP) of the country. A critical
and analytical study would be done to comprehend happening before, during and
after SAP. The overall impact to the
contribution of cocoa to the non oil export would be analysed in the study.
Available data from 1970 to 2002 would be used to cover the data. In closing, some very relevant areas would be
examined with a view to addressing some lingering issues and also for the
purpose of contributing to knowledge.
1.4 OBJECTIVES
OF THE STUDY
The objective of
the study is the basis for the research work.
It is the crux of the work.
1. To know the
amount that the Nigeria has got from cocoa in terms of international market
value over time.
2. To make
comparative analysis of the cocoa output in the pre SAP, during SAP, and post
SAP period.
3. To make
recommendations necessary in moving the Nigeria cocoa production to her desired
output.
Further objectives of the study on the determinants of cocoa
production are given. The reasons or factors for whatever decline or boom experienced
can then be expatiated as relevant to the respective years. Then, a further analysis will show the
solution to the problems which leads to the output decline or stagnation in the
agricultural sector especially cocoa.
1.5 SIGNIFICANCE
OF THE STUDY
The study would identify the problems/challenges over time and also
proffering solutions that would return to the nation but to its glory days
which would be impactful on the GDP per capita as well as reduction in
unemployment became may people would be employed in the sector as well as other
sector has the Agricultural sector plays a supportive role for the other
sectors that use Agricultural output especially cocoa for their input. . The
project goes further to show that level of output of the cocoa production has
been declining and recommendations are made forthwith. The knowledge of this is relevant so that
Nigeria would return back to its leading role which has been taken over by
Ivory Coast.
1.6 RESEARCH QUESTION
The study seeks
to answer several questions which have to do with the determinant of the
production of cocoa.
1. How has been the trend of cocoa output
over time?
2. What are the determinants of cocoa
production?
3. Can the present trend be reversed?
1.7 RESEARCH HYPOTHESES
The study is to prove the following
null hypothesis and whatever decision made would made on the basis of the given
hypothesis.
H0. There is no statistical significant
relationship between the value of cocoa and government expenditure on cocoa at
a lagged year as a percentage of total capital expenditure in Nigeria.
H0. There is no statistical significant
relationship between the value of cocoa and infrastructural development at a
lagged time.
H0. There is no statistical significant
relationship between the value of cocoa and the international price.
H0. There is no statistical significant relationship between cocoa
and rainfall in cubic millimeters at a lagged time.
1.11 METHODOLOGY OF THE STUDY
The
methodology of the study has to do with the formulation of a typical linear
production function. The available data would be regressed using ordinary least
square (OLS) method of estimation. However, if the estimated result shows the
presence of autocorrelation because the DW-statistic was less than 2, then, the
Cochrane-Orcutt would be used at different reiteration. Though, more often than
not, the OLS is the best linear unbiased estimates (BLUE). Furthermore, trend
analysis would be used to analyse the growth and decline of value of output.
1.12 DATA SOURCE.
The data
obtained are wholly secondary in nature and were gotten from the CBN
statistical bulletin (2004). In some regards some data were derived from data
provided by the statistical bulletin. An example is the value of output: which
is derived by output as provided by CBN and the prices as provided by
International Cocoa Organisation (ICCO). To this extent, the validity of our
findings is dependent mainly on the accuracy of these data and on how real our
various theoretical assumptions are.
1.13
OUTLINE OF
CHAPTERS
This research
work is carried out to analyze the production of cocoa with the relation on the
output. To do this, our paper shall be divided into five chapters / parts.
Chapter one shall entail the introduction / background to the
study. Under the introduction, we shall have; background to the study,
statement of the problem, objectives of the study, hypothesis to the study,
justification of the study, scope of the study, limitations and structure of
the study.
Chapter two shall feature the literature review. This should
show or lead us to the “why” of the study.
Chapter three shall talk about the theoretical framework or
methodology. This part should lead us to the “how” of the study.
Chapter four shall feature the empirical analysis. Here, we
shall have data presentation and trend analysis, statistical analysis and
presentation of results and interpretation or discussion of results.
Lastly, chapter five shall show the summary, recommendations
and conclusion of the study.
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