IMPACT OF FOREIGN AGRICULTURAL AID ON CROP PRODUCTION OUTPUT IN NIGERIA

Abstract

The study analyzed the effect of Agricultural Aid on Crop output in Nigeria using time series data from 1991-2018. The level of stability of crop output, official development assistance to agriculture, loans from commercial banks, fertilizer consumption and climate change, Vector auto- regression analysis, Granger causality relationship and variance decomposition analysis were analyzed. Data generated were analyzed using a modified time series regression analysis and Augmented Dickey Fuller test. The unit root test revealed that there was unit root which means that at levels the variables were not stationary but stationary at the first difference. About 96.6% of the variation in crop output is explained by official development assistance, total domestic loans by commercial banks to agriculture, fertilizer consumption and carbon emission. The result reveals that official development assistance to Nigerian agriculture had a positive relationship with crop output, but there is an inverse relationship between total domestic commercial loans to agriculture and crop output. Granger causality test indicated a unidirectional causality between commercial loans and climate change and the result further indicated a bi-directional relationship between ODAA and CC (climate change) to crop output in the country. The variance decomposition analysis result in the long run suggest that innovation to crop output steadily reduces to 47%, while shock to agricultural ODA (24%), loans (2%), fertilizer consumption (14%), and climate change (13%) can cause fluctuation in crop output. This implies that agricultural ODA, fertilizer consumption and climate change are the major determinants of crop output in Nigeria. It was recommended that donor agencies should increase agricultural aid for agricultural production. Nigerian government should implement policies that ensure proper use of aid to agriculture.