ABSTRACT

The objective of this study was to evaluate the effect of exchange rate policy on agricultural trade in Nigeria. Secondary data were used in this study and were analyzed using descriptive statistics and multiple regressions. Data were collected from 1970 — 2003. Total output of cocoa, world price of cocoa and average rainfall were significant determinants of cocoa export while world price of palm oil and average rainfall were significant determinants of oil palm export. World price of rice, time trend and local output 0f rice were significant determinants of rice imports within the period considered. Based on these findings, it has been seen that exchange rate has no effect on export and import of agricultural tradable crops but reviewed other variables in which export and import of agricultural tradable crops depends, and recommended that exchange rate policy should not be seen as a major determinant of international trade. Based on these findings, it is recommended that government support to domestic production of rice should be strengthened through the provision of credit and subsidies to rice farmers and processors and lifting of tariffs on processing machines and equipment. Furthermore, land use policy that will encourage the acquisition of large expanse of land by rice farmers, cocoa farmers and oil palm producers should be advocated, as this will promote domestic production of these crops. In the aspect of cash crops (cocoa and oil palm) government should encourage their large scale production through the provision of credit and subsidies to these farmers and processors and lifting of tariffs on chemicals, processing machines and equipment used for their production. The importance of technical-know-how is required for large scale production of these crops and should he encouraged by government policies as well.