The Impact of Agricultural Trade Liberalization on National Food Security in Nigeria, 1970-2000

Abstract

This study attempts to examine the impact of a trade decontrol policy on food output within the Nigerian macroeconomic context. In other words, the study relates trade liberalization to the national food security situation between 1970 and 2000, by employing descriptive statistics and error correction model (ECM) as the research methodologies.

Regional and multilateral trade agreements seem to reduce barriers to the flow of commodities across borders, thus fostering a more efficient allocation of scarce resources as well as raising gross output with positive implications for food security at various levels. Though the trend analyses revealed considerable fluctuations, there existed greater improvements during the trade decontrol era than during the period of trade restriction. The production statistics for both agricultural exports and food showed substantial diversity of performance. Deregulation of the exchange rate and abolition of commodity boards were partly responsible for the significantly positive changes in the cash crop market and enhanced farmers' earnings during the trade decontrol era.

One positive development during the trade liberalization era is the emerging trend as well as remarkable improvement in the production of agricultural tradables (cocoa, cotton, groundnut, palm kernel, palm oil and rubber), although this was at the expense of the food crop sub sector.

Consumer Price Indices recorded high and increasing values during liberalization as compared to before deregulation. That is, the price situation of foods items was particularly more favourable before deregulation than thereafter. By implication, the purchasing power of most Nigerians, especially wage earners, declined, thereby making them to be less food secured.

More specifically, beans appeared to be the most expensive of all the selected food items. The price of beans more than doubled that of guinea corn, maize and millet during the liberalization period under study. This made Nigerians more dependent on less nutritious but cheaper food items, such as cassava meals.

The EPC analysis showed that food crops enjoyed adequate level of protection even during liberalization. The protection accorded to agriculture during liberalization resulted in a movement of resources to agriculture in general and non-food crops in particular.

Since input subsidy and tariffs are crucial ingredients in the computation of EPCs which recorded some differences between the regulated and liberalized periods, Nigerians were less food secured during the liberalization era. The reason adduced for this is that supportive policies and programmes were not put in place to curtail the rising food prices and generally high inflation rate during the period. In view of this, desirable and workable policies are therefore required to reform as well as improve the efficiency of market process, in order to moderate marketing costs and eliminate undue mark ups.