EFFECTS OF TRADE POLICY ON RICE IMPORTATION IN NIGERIA (1970-2020): A DISAGGREGATED APPROACH

Abstract

The study examined the effects of trade policy on rice importation in Nigeria (1970-2020). The short run and the long run estimates of the fitted model were examined with the use of Vector Error Correction Model. The empirical results showed all the variables failed stationarity test at level, but were stationary at first differencing. The order of integration was one (1) and the lag order is 1 based on the minimum value of SBIC. The coefficient of Error Correction term (ECT) in the short run showed a speed of adjustment of -1.02 which is relatively normal. The long run result showed that local rice production (t = -2.2876) and price of local rice (t = -3.7676) were statistically significant at 1% and had negative relationship with rice importation while exchange rate and inflation rate had positive relationship with rice importation. On the other hand, tariff on rice importation, per capita income and external reserves were found not to be statistically significant and so had little or no effects on rice importation in Nigeria. It is inferred from the research that rice importation is driven by factors beyond import tariff, the insignificance of the variable attest to this claim. As both local rice production and price significantly influence rice importation, it is evident from the study that increasing local rice production could pivot reduction of rice importation. Therefore, Nigeria government should enhance local production of rice which could be achieved by intensifying efforts in rice production technologies by putting in place credit, improved rice varieties and good agronomic practices.