TREND, FORECAST AND SUPPLY RESPONSE OF CASSAVA PRODUCTION IN NIGERIA (1961 TO 2014)

ABSTRACT

Cassava is one of the most important staple foods in Nigeria, simulation of models that will increase the production of cassava is very necessary.  The study was conducted to estimate trend,  forecast  and  supply  response  of  cassava  production  in  Nigeria.  Secondary  data covering  the  period  of  1961  to  2014  were  used  for  the  study.  Secondary  data  used include  prices,  yield,  output  and  hectarage  of  Cassava.  Other  data  include  rainfall, number  of  rain  days,  date  of  onset  and  cessation  of  rain,  temperature  and  relative humidity.  The  data  was  obtained  from  Food  and  Agricultural  Organization  (F.A.O.), International Institutes of Tropical Agriculture (I.I.T.A.), Nigeria Bureau of Statistics (N.B.S.) and Nigeria Meteorological Agency. To achieve the aim of the study, four techniques were employed to analyse the data. The techniques were growth rate, grafted technique, partial adjustment hypothesis and adaptive expectation hypothesis. Simulations were also carried out to show the effect of some macro-level policy (pre-SAP, SAP, post-SAP and A.T.A. periods)  changes  on  cassava  production.  The  entire  periods  under  study  shows  an encouraging result on the hectarage, yield and output with growth rates of 4.1%, 0.1% and 4.2% respectively. The result of the study also revealed that polynomial spline models were adjudged to be the best forecasting model among other models like linear, semi-log and growth models. The study also forecast hectarage, yield and output of cassava from 2015 to 2035.  The  results  show  that  by  the  year  2035,  the  hectarage  to  be  cultivated  will  be 11,200,000 hectares, yield will be 98,000kg/ha and output will also be 11,000,000 tonnes. The result revealed that the mean of the partial adjustment coefficient of the farmers was 4.69E-07 while adaptive expectation coefficient was -0. 256186542 indicating that less error were committed in making hectarage decisions than in forming price expectation. The results of elasticity of supply were relatively inelastic both at the short run and long run. The short run and log run elasticities were -8.41E-15 and -2.74E-08 respectively for the partial adjustment hypothesis and -3.97E-02 for short run and 0.217803916 for long run under adaptive expectation hypothesis, this shows that farmers’ response to price have not been encouraging. The conclusion shows that there was an increase in the growth rate of cassava production in Nigeria from 1961 to 2014, the findings also shows that spline models were best fit in forecasting cassava production in Nigeria. Cassava farmers are less responsive to change in price and economic incentives. The recommendations, thus, there is the need to establish the short term and long term cassava needs base on present population rate of growth and employ the models estimated to establish hectarage, yield and output that will provide this need. The estimated elasticities of cassava supply are useful guide in studying the responsiveness of the farmers especially with regards to price and can be used in studies where such an estimate is required. Government should reintroduce minimum and maximum pricing policy with enough resources to guard it. Technology in farming has the tendency in increasing output; therefore, Government and private sector should train farmers on modern technology of farming.

CHAPTER ONE

1.0 INTRODUCTION

1.1 Background  Information

Many development oriented policies have been implemented in Nigeria, especially in the agricultural sector since independence. The Federal Government has made some institutional and policy reforms targeted at improving the socio-economic status of the farmers in Nigeria. These include Agricultural Credit Guarantee Scheme Fund (ACGSF), River Basin Development Authorities (RBDAs), Agricultural Development Programmes (ADP) and the Cassava Multiplication Programme (CMP) and the School to Land Programme, (Iyagba and Anyanwu, 2012). The Root and Tuber Expansion Programme (RTEP) is an offshoot of the CMP. Eke-okoro and Njoku, (2012), contended that RTEP is a farmer oriented programme whose beneficiaries are poor households and smallholder farmers but the overall objective of RTEP is to enhance national food self-sufficiency, improve rural households’ food security and income for poor farmers within the cassava producing States of Nigeria, (Iyagba and Anyanwu, 2012).

Cassava  is an  important source  of dietary  carbohydrate,  and  provides  food  for over 60 million in Nigeria,  (Abdulahi, 2003).  Cassava’s adaptability to relatively  marginal soils, erratic rainfall; its high productivity per unit of land and labour, the certainty of obtaining some yield even under the most adverse conditions and the possibility of maintaining continuity of supply throughout the year (Nweke, 1994), make this root crop a basic component of the farming system in many areas of Nigeria. Famine rarely occurs in areas where cassava is widely grown, since it provides a stable food base to the food production system (Iyagba and Anyanwu, 2012). Apart from its use as a staple food to human beings, other  uses  include  animal  feed  formulation,  agro-industrial  uses  (e.g.  starch,  ethanol, adhesive, fructose/glucose syrup), the peels in organo-mineral fertilizers formulation (Iyagba, 2010).

Nigeria was a major cassava producing country ranking fourth in the World after Brazil, Zaire and Indonesia in the 18th  Century and later part of the 19th  Century, Central Bank of Nigeria, (CBN, 2005). However, today, Nigeria is the largest producer of cassava in the World with an annual estimate of 54.8 million metric tons, 7.1 million hectares cultivated and yield of 77,203 kg/ha, (Food and Agricultural Organisation Statistical Database (FAOSTAT, 2015). The country has consistently been ranked as the world’s largest producer of cassava since 2005, (FAO, 2012).

Presidential Initiative on Cassava launched in 2003 brought cassava and its potentials to the national  limelight.  The  Initiative  has  a  goal  of  promoting  cassava  as  a  viable  foreign exchange earner for Nigeria, and also development of the cassava production system in order to sustain the national demand. Another recent government action on cassava production was the  federal  government  Agricultural  Transformation  Agenda  (ATA).  The  transformation focuses on cassava value chain with the production of High Quality of Cassava Flour (HQCF) and making it mandatory for the replacement of up to 10% wheat flour in bread with cassava, (Asanke-pok, 2013). As part of its effort in developing a vibrant cassava market locally and internationally, government designed cassava master plan in 2005 thereby encouraging large production cassava in the country.

1.2 Statement of the research problem

Cassava production and processing has been on the increase and Nigeria is the largest cassava producing country in the world with estimated annual production of 54.8 million tonnes, (FAOSTAT, 2015), there was still a large gap to be filled in meeting the food and raw  materials  needs  of the  country  in  terms  of products  and by  products.  In  addition, according to Akinpelu, ( 2011) and International Institutes for Tropical Agricultue, ( 2007), over 90 percent of the country’s cassava is consumed locally as food, and very little is left for industrial processing and less than 1% of cassava in Nigeria is processed for industrial purposes.

Producers’   decision   behavior could be approximated by the amount of effort they are willing to put into the production process, the size of the area worked could be proxy for their expected output rather than the actual harvest in defining  a response to economic  incentives. The starting point in the modeling is the selection of either the amount of production or the size of the cultivated area as the dependent variable. To measure the responsiveness exactly would  require  highly  detailed  disaggregated  cost  data  that  typically  unavailable.  To circumvent the data problem, it requires the simulation of the model which involves a very long process and fully specified formulation.

In  order  have  accurate  prediction  about  the  estimation  of  the  future  production  of cassava, the data must linearly relate to the series over the entire period, unfortunately, time series might not be linearly related to the series over the entire sample period, as the model tends to suggest. The models have to be improved upon by dividing the data into different  segments  and  applying  different  functional  forms  as  suggested  by  the  data rather than forcing the data to accept a particular form. The whole process is very tedious that requires careful and systematic approach otherwise wrong prediction might results.

The Nerlovian approach used Ordinary Least Square (OLS) to estimate the specification of the supply response of cassava farmers. This means that the estimates of agricultural supply  response  are  based  on  the  assumption  that  the  underlying  data  process  is stationary. Agricultural time series tend to be non-stationary, that is, their two moments, means  and  variance  are  not  constant.  Using  OLS  with  non-stationary  variables  may result  in  spurious  regression.  To  ensure  stationary  variables,  the  equation  has  to  be reformulated in terms of difference, but this losses important information conveyed by the levels, such as information on long run elasticities.

However,  to  be  able  to  simulate  models  that  will  provide  solutions  to  the  identified problems, certain pertinent questions needed to be asked. Such questions include:

i. what has been the trends of cassava hectarage, yield and output in Nigeria from 1961 to 2014 ?

ii  how  will  grafted  response  models  estimate  cassava  hectarage,  yield  and  output  in

Nigeria from 1961 to 2014 ?

iii, what will be the future of cassava hectarage, yield and output in Nigeria from 2015 to 2035?

iv. How do farmers form expectation about future prospects in price changes and adjust production to policy changes that affect cassava production using Nerlove model, and what is the magnitude of expectation and adjustment?

v.  What  will  be  the  future  of  cassava  supply  in  Nigeria  using  estimated  adaptive expectation and partial adjustment models?

vi. What has been the short run and long run price elasticity of cassava from 1961 to

2014?

1.3 Aim and objectives

The aim of the study was to analyse the trend, forecast and supply response of cassava production in Nigeria from 1961 to 2014).

The specific objectives of the study were to:

i.   examine the trend of cassava hectarage, yield and output from 1961 to 2014,

ii. estimate models through grafted response for cassava hectarage, yield and output from 1961 to 2014,

iii. forecast cassava hectarage, yield and output from 2015 to 2035,

iv estimate  Nerlovian  adaptive  expectation  and partial  adjustment  models  for cassava supply in Nigeria incorporating additional weather variables,

v forecast cassava supply from 2015 to 2064 using estimated adaptive expectation and partial adjustment models and

vi estimate short run and long run elasticities of supply for cassava in Nigeria from 1961 to 2014.

1.4 Hypotheses

The following hypotheses were tested:

1.  HO:  Adaptive  expectation  and  partial  adjustment  coefficients  of  cassava  supply response in Nigeria do not vary from year to year but remain the same through the entire series.

2.  HO: Short-run and long run elasticities of cassava supply response in Nigeria do not vary from year to year but remain the same through the entire series.

1.5 Justification  of the Study

Cassava’s adaptability to relatively marginal soils, erratic rainfall; its high productivity per unit of land and labour, the certainty of obtaining some yield even under the most adverse conditions, need greater attention that have not been given in the past. As such, the need arises  for  models  that  predict  and  forecast  future  production  of  adequate  quantity  of cassava for Nigeria’s teeming population which can also provide policy direction to both government and private sector.

In  this  study,  an  attempt  was  made  to  contribute  to  general  knowledge  of  supply responsiveness in agricultural production in Nigeria and Cassava production in particular, thereby    providing    basis    for    concerted    government    action    towards    effective commercialization  of  Cassava  production  in  the  country.  The  study  would  provide models for predicting and forecasting the volume of output and other variables with a view to making them available to policy makers. The study will also provide analytical framework for the study of farmers’ behaviour and expectation formation in relation to Cassava  supply  in  Nigeria  and  provide  basis  for  further  econometric  research  into Cassava production.

The gap in knowledge filled by this research is the introduction of four joint points in forecasting hectarage, yield and output of cassava in Nigeria, which is different from the universal three joint points and the modification of Nerlove model to capture the effects of temperature on the supply of cassava in Nigeria.

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