ABSTRACT

The study examined the effect of macroeconomic variables on the performance of agricultural output in Nigeria. The work aims at investigating the effect of interest rate (INTR), inflation rate (INFR), exchange rate (EXRT), government agricultural expenditure (GAEX) and trade openness (TOPN) on agricultural output  (AGDP) in Nigeria from 1981 – 2020.  The data set used for the study consists of annual time series obtained from Central bank of Nigeria Statistical Bulletin, National Bureau of Statistic and World Bank Development Indicator covering the period of the study.  Autoregressive Distributed lag (ARDL) form of Ordinary Least Square method was used for purposes of estimation. The independent variables that include interest rate, inflation rate, exchange rate, government expenditure, trade openness and agricultural credit guarantee loan (the control variable) were regressed against the agricultural output (predictor variable). The result of the stationarity test showed that all the variables were stationary at levels. The co-integration test revealed an evidence of long-run relationship between the selected macroeconomic variables in the study. The findings showed strongly that the independent variables positively influenced the criterion variable and therefore the model was fit for estimation. The result further revealed significant relationship between agricultural output and some macroeconomic variables (interest rate, exchange rate, trade openness and agricultural credit guarantee loan) while inflation and government expenditure showed insignificant impact on the criterion variable of agricultural sector performance. Based on these findings, the study recommended that Central Bank of Nigeria (CBN) should make a single digit interest rate a policy for loans in the agricultural sector; government should take advantage of rising exchange rates in the country by encouraging export promotion strategies that will improve the sectors performance; government should improve the budget and the policy-making process that will enhance expenditure on the agricultural sector and also support farmers through the provision of inputs, subsidy and infrastructural development for increased agricultural production; government at all levels (Federal, State and Local governments) should prioritized agricultural spending which include investment in infrastructure, irrigation, research and development, modern machineries and equipment. This incentive, if adopted, will increase agricultural output and profitability, reduce food prices, and alleviate poverty; government should adopt measures and programmes that will ensure that its export products compete favourably with those of other countries, particularly producers of similar commodities globally.