Effect of Agricultural Outputs’ Pricing Incentives on Economic Growth in Nigeria: An ARDL approach

Abstract

The study examined the effect of agricultural productivity and its pricing on economic growth in Nigeria. The study is justified on the inadequacy of agricultural output pricing incentives for farmers and this makes their income more volatile and subjected them to abject poverty. Data were collected from Food and Agricultural Organisation (FAO) and the World Bank Development Indicators (WDI). Data on agricultural output price index was used to measure agricultural pricing incentives while the dependent variable economic growth was proxied by GDP per capita. Other explanatory variables are agricultural production, agricultural export, and inflation and population growth. The data collected were analysed using Autoregressive
distributive lag (ARDL) estimation technique. The findings indicate that agricultural output price and agricultural productivity do have a significant impact on economic growth. Agricultural exports show a marginally significant negative relationship with economic growth. Population has a significant positive relationship with economic growth while inflation does not show a significant impact on economic growth. The study recommended the need for government to adopt measures to manage a sizeable population, introduce output price incentive, specifically, price guarantee and direct government purchases of essential agricultural products, to cater for the frequent price fluctuations due to natural disasters and other risks including poor yield, consequentially providing stability in price for both producers and consumers.