Macroeconomics determinant of agricultural productivity in Nigeria: Evidence from crop production

Abstract

This study examined the effect of macroeconomic variables on agricultural productivity, evidence from crop production between 1990 to 2021. The variables include interest rate (INT), exchange rate (EXR), inflation rate (INF), government expenditure on agriculture (GXP), gross capital formation (GCF), and household expenditure (HCX). The variables were verified for unit root. Hence, the various order of integration 1(0) and 1(1) paved the way for the adoption of ARDL. The ARDL co-integration test revealed the existence of a long-run relationship between the variables. The regression result showed that the coefficient of INT,
GXP, and GCF are positive and statistically not significant. Suggesting that a 1% rise in these coefficients will result in a 0.02%, 0.02%, and 1.6% respectively increase in crop production. More so, the coefficient of EXR and HCX was found to have positive and statistically significant effects on crop production for the period under review. However, the coefficient of INF was found to exert a negative effect on crop production. This suggests that a 1% rise in INF will result in a (0.08) decrease in crop production. The study concluded that crop production is influenced by the macroeconomic variables. Based on this, the study recommended that the
federal government, through the monetary authority, develop a system that would ensure that farmers would receive an interest rate in the single digits. Additionally, the government should give adequate attention to agriculture and should make sure that its financial allotment for agriculture is properly executed and that the funds are used efficiently in order to boost agricultural output.