IMPACT OF AGRICULTURAL OUTPUT ON NIGERIAN ECONOMY

Background of the study: One of the important objectives of macroeconomic policy in has been the rapid economic growth of an economy. Economic growth is defined as “the process whereby the real per capita income of a country over a long period of time.” Economic growth is measured by the increase in the amount of goods and services produced in a country. A growing economy produces more goods and services in each successive time period. Thus growth occurs when an economy’s productive capacity increases which in turn is used to produce more goods and services. In its wider aspect, economic growth implies raising the standard of living of the people and reducing Inequalities of income distribution. Economic growth is a desirable goal for a country. But there is no agreement over the annual growth rate which an economy should attain. (Jhingan, 2000).

Generally, economists believe in the possibility of continual growth .This belief is based on the presumption that innovations tend to increase productive technologies of both capital and labour over time. But there is every possibility that an economy may not grow despite technological innovations. Production might not increase further due to lack of demand which may retard the growth of the productive capacity of the economy. The economy may not grow further if there is no improvement in the quality of labour in keeping with the new technologies.

Economic growth is usually measured in terms of an increase in real gross national product (GNP) or gross domestic product (GDP) over time or by an increase in income per head over time. GDP measures increase in total output to a change in population. Thus, if total output rises higher as compared to population, then theirs an improvement in the average living standards. Growth is desirable because it enables the community to consume more private goods and services and the provision of a greater quantity of social goods and services such as health, education, etc. in this manner improving living standards. Government can also stimulate economic growth by increasing its current spending in the economy and through tax cuts (fiscal policy), and by increasing money supply and reducing interest rates (monetary policy).

Principally, there are three main determinants of economic growth, which are; the growth of its labour force, the growth of capital stock, and technical progress.

Nigeria used to be heavily dependent on the agricultural sector prior to the oil boom. In the early 1950’s up to the early 1970’s before the discovery of crude oil, agriculture was the mainstay of the economy, employing 70 per cent of the total population. Although subsistence farming was predominant, it was a major revenue earner for the country. In the early 1980’s, it became more apparent that the agricultural sector could no longer perform its traditional role of meeting domestic food requirement, raw materials for industry and started to decline  as a  major foreign exchange earner through exports  due to economic , social and political problems.