ABSTRACT

The study was designed to examine the impact of agricultural policies on cocoa export in Nigeria from 1970 to 2007. Agricultural policies, policy regimes and relevant policy variables were analysed; the trend and growth rates of cocoa export quantity in the two policy regimes (Premarket liberalization (1970 — 1985) and Market liberalization (1986 — 2007) were also analysed; the effect of Liberalization on cocoa export in Nigeria were determined and cocoa export supply function was estimated with a view to assessing the impact of the policies identified on cocoa export supply and analysis of their elasticities. Variables employed included cocoa export quantity (in period t and in previous period), domestic utilization, total output of cocoa, relative price, real exchange rate, trend variable to capture technological change, world income (proxied by the GDP of Netherland as the highest importer of Nigeria's cocoa); dummy variables were introduced to control the effects of different government policy programmes like Operation Feed the Nation, Green Revolution, Structural Adjustment Policies, and Post Structural Adjustment Policies. The secondary data collected were analyzed using such statistical and econometric tools like, averages, t-test statistic, multiple regression analysis by the ordinary least squares as well as Chow's test. The result showed that on the average, the quantity of cocoa exported was positive in both Pre-Liberalization (1970-1985) (149539. 69tons) and Liberalization (1986-2007) (180817.8ltons) periods. Significant difference (2.14 at 5%) was found between the average cocoa export quantities in both periods suggesting that cocoa export quantity was on the average significantly lower in Pre-Liberalization period than in Liberalization period. The average growth rate was also positive in both Pre-Liberalization (0.7%) and Liberalization (9.8%) periods, suggesting that on the average cocoa export quantity increased within both periods. No significant difference was found between the average growth rates of cocoa export quantity in both periods, suggesting that growth rate in both periods could have been the same. The Chow's test analysis showed a significant difference in cocoa export supply between the two policy regimes. It showed that Market Liberalization period have superior cocoa export supply relative to Pre-Liberalization period. The result on the impact of the policies on cocoa export supply showed that Cocoa output (0.734 at 1%), Real exchange rate (0.639 at 5%), Relative price (0.511 at 10%), Green Revolution (0.262 at 5%), Structural Adjustment Policies (0.166 at 5%) and Post Structural adjustment Policies had positive significant effects on cocoa export supply. Likewise the elasticity of response shows that cocoa export was inelastic with respect to Cocoa Output (0.43), Real Exchange Rate (0.34), Relative Price (0.20), Green Revolution (0.31), Structural Adjustment Policies (0.40), and Post Structural Adjustment Policies (0.24). The elasticity of response of export supply of cocoa was highest for Cocoa Output and lowest for Relative Price. Cocoa export was therefore more responsive to Cocoa Output followed by Structural Adjustment Policies than Relative Price and Green Revolution. It was recommended that Government should revisit those policy instruments and measures that were in place during Green Revolution and Structural Adjustment Programmes that improved cocoa export. Such as provision of incentives in the form of liberal resources allocation to agriculture, particularly irrigation facilities, agrochemicals, equipments, improved seeds, infrastructural facilities, etc., which probably encouraged the production and export of cocoa in Green Revolution era. The export promotion incentives provided in the SAP and PSAP periods probably encouraged cocoa production and export in the periods.