IMPACT OF ECONOMIC RECESSION ON HOUSEHOLDS INVOLVEMENT IN AGRICULTURAL PRODUCTION IN ABEOKUTA OGUN STATE

CHAPTER ONE

                                     INTRODUCTION

1.1      Background to the Study

No doubt, Nigeria is richly blessed with huge physical, human and natural resource endowments yet the majority of its population live below both the absolute and relative poverty lines. The national survey conducted between 2003 and 2004 shows that slightly above half of the population (51.6 percent) live below US$1 dollar per day and the relative national poverty incidence was found to be 54.4 percent (National Bureau of Statistics (NBS, 2012). However, the most current Human Development Report by the United Nations Development Programme (UNDP, 2009) shows that about 64.4 and 83.7 percent of the population lives below $1.25 and $2 a day, respectively. This poverty situation is worse in the rural areas where over 70 percent of the people reside and earn their living through agriculture than in the urban areas. More than 86.5 percent of the rural population is engaged in agriculture (NBS, 2012). This systematically makes agriculture a key sector that is capable of affecting the lives of majority of Nigerians economically. Therefore, the persistence of hunger and poverty in Nigeria must be, to a large extent, the failure of the agricultural sector to fully impact positively on the people.

        Agriculture plays a cardinal role in Nigeria’s economy contributing the greatest share to the nation’s gross domestic production (GDP). For instance, 2008 agriculture’s contribution to total real GDP was 42.07 percent with crop, livestock, forestry and fishery accounting for 37.52, 2.65, 1.37 and 0.53 percent, respectively (NBS, 2007; Central Bank of Nigeria (CBN), 2008). This is to say that the crop sub-sector contributed 89.2 percent of agriculture GDP. Furthermore, agriculture generates employment for over 70 percent of the total labour force, accounts for about 60 percent of the non-oil exports and, perhaps most important, provides over 80 percent of the food needs of the country (Adegboye, 2004; Onwuemenyi, 2008; CBN, 2008). Despite these indicators, Nigeria’s agricultural performance in recent times remains inadequate and indeed far less than its potentials. Food demand exceeds the supply thus leading to large importations of food, which further erodes the economies foreign exchange. The growing food import over the years gave rise to escalating foreign exchange expenditures, which could have been invested in other areas of the economy. The food import bill for Nigeria rose from N3.474 billion in 1990 to N 654 billion in 2007 where as it could only boast of agricultural export worth of N73.3 million (CBN, 2007); and this trend has not yet changed. At the heart of this inadequacy of the sector lies the foremost problem of low productivity, as will be clarified later in this introduction. Low productivity in the country over the last three years has been as a result of the economic recession in the country.

        In some countries especially in Abeokuta, Ogun State, Nigeria, economic recession has been part of their experience and challenges which has affected most households in the state in various areas as well as production of food. Generally, a country experiencing recession is said to be experiencing a decline in economic activities which might affect citizens negatively due to slowdown in the economy. Economy recession is known to last for months. It includes drop in the following economic indicators: Real GDP, income, Employment, manufacturing and sales. When there is an economic recession, food production in the country changes in so many ways which might be a disadvantage or an advantage. The production of food can be seen in so many ways including farming and the processing of raw materials into consumable goods. Production process and cost changes as the economy changes and during economic recession where there is unemployment, increased cost in goods and services, low income which is not always enough for human expenditure, many citizens who cannot afford the purchase of food (Due to increment in the price), venture in food production (farming etc.) in order to fit and survive during the period of the economic recession. It is on the note of this that this study seeks to examine the impact of economic recession on households’ involvement in agricultural production in Abeokuta Ogun State, Nigeria.

1.2      Statement of the Problem

Agriculture has been regarded as the mainstay of the Nigerian economy especially in the 1970’s. Agricultural sector is a sector with a potential for earning foreign exchange. This is a sector that Nigeria could boast of having a comparative advantage. Agricultural sector is very important in the third world countries, especially Nigeria. It provides food supply, employment and export earnings for the economy. It is believed that the agricultural sector is critical for both overall economic growth and the reduction of poverty. Nigeria is blessed with immense land resources that are still largely underutilized with liberal regulations in relation to foreign trade and the adoption of a structural programme that focused on the competitiveness of the sector. Agricultural sector stands a good chance in the international market to be competitive if the economy of the country is smooth.

What is the position of the Agricultural sector in this global economic meltdown? In any economy, some sectors can integrate faster than the orders; some economies have comparative advantages in some sectors as compared to other economies. In Nigeria for example, agricultural sector is assumed to have comparative advantage in the international trade provided the economy is smooth and running unlike the economic downturn facing Nigeria and which is directly or indirectly affecting the agricultural sector due to the inability of some households to afford basic farm implements for farming and thereby raising their standard of living. It is on this basis that the study examines the impact of economic recession on households’ involvement in agricultural production in Abeokuta Ogun State, Nigeria.

 

 

1.3   Research Objectives

The study has both general objective and specific objectives. The general objective or main objective of this study is to examine the impact of economic recession on households’ involvement in agricultural production in Abeokuta Ogun State, Nigeria. The specific objectives are:

i)             To identify the relationship between economic recession and agriculture sector in Nigeria

ii)           To study how economic recession can be averted in Nigeria through agriculture 

iii)         To understand the prevalence of economic recession in Nigeria

iv)         To investigate the causes of economic recession in Nigeria

1.4   Research Questions

The following are some of the questions which this study intends to answer:

i)             What is the relationship between economic recession and agriculture sector in Nigeria?

ii)           What are the ways in which economic recession can be averted in Nigeria through agriculture?

iii)         What is the prevalence of economic recession in Nigeria?

iv)         What are the causes of economic recession in Nigeria?

Hypothesis of the Study

Ho: There is no significant relationship between Economic Recession and House involvement in Agricultural activities in Nigeria.

Hi: There is a significant relationship between Economic Recession and House involvement in Agricultural activities in Nigeria.

 

1.5   Significance of the Study      

This study sought to investigate the impact of economic recession on households’ involvement in agricultural production in Abeokuta Ogun State, Nigeria. It will show the reason why there is economic recession in the country and give insight on how economic recession directly affects economic growth and proffers a lasting solution to the Nigerian government. The study will help farmers, entrepreneurs, government, unemployed and underemployed individuals in the country to understand the risks that economic recession posses. This study will also contribute to academic literature by bringing about the relationship between agriculture and economic recession in the country. This study can also serve as a foundation for further research to be conducted in Nigeria.

1.6   Scope of the Study

This study sought to investigate the impact of economic recession on households’ involvement in agricultural production in Abeokuta Ogun State, Nigeria. Therefore, the study will be carried out among subsistence farmers in Abeokuta and its environs. The variables of interest shall be: economic ‘recession’ and ‘agriculture’. While agriculture in the country is dependent variable, economic recession is the independent variable.

1.7   Limitations of the Study

        This study entailed investigation into a variety of issues to be able to achieve a comprehensive study of the problems; a lot of constraint were encountered in form of data collection, lack of adequate information from the respondents. The main limitation of this survey was the difficulty in getting accurate information from the subsistence farmers in the city.

1.8   Definition of Terms

The following terms were used in the course of this study:

Agriculture: it is concerned with the cultivating of land and rearing of animal for man’s use

Economic Recession: Is a period of general economic decline and is typically accompanied by a drop in the stock market, an increase in unemployment, and a decline in the housing market.

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