Constraints to Increasing Agricultural Productivity in Nigeria: A Review

consumption, ranging from simple boiled roots to fermented products and beverages. Most of
the products are consumed domestically within the countries in which they are produced.
However, there is a small but growing export trade in dried cassava chips and other industrial
products.
Agricultural policies and programs affect the commodity system at different stages and in
different ways. Each stage has its unique constraints. However, there are generic constraints
that affect the system as a whole. The system contributes significantly to employment creation
and income generation. It has an impact on the environment and its development will be
affected by infrastructure constraints, especially the state of the rural road network.
Sectorwide Constraints
Most of the following constraints affect virtually every commodity in the sector, although to
varying degrees. Commodity and regional distinctions will be highlighted to the extent that
evidence allows.
Poor Agricultural Pricing Policies
The history of agricultural prices (inputs and outputs) is expected to affect agricultural
technology adoption (Fulginiti and Perrin 1993; Hu and Antle 1993). Tax or subsidy policies or
both affect agricultural prices (Fulginiti and Perrin 1993; Hu and Antle 1993). Exchange rate
depreciation, a proxy for policy reform (Frisvold and Ingram 1995), affects input and output
prices and domestic supply response of farmers.
Fertilizer use is promoted primarily by the fertilizer subsidy policy in Nigeria. The main challenge
in this regard is that the fertilizer subsidy has not been pro-poor, nor has it increased market
participation of the rural poor (World Development Report 2008). Issues to keep in mind when
formulating input subsidy policy include access, which is aimed at improved volume, varieties,
and quality of agricultural inputs. Also important is affordability; agricultural inputs must be
priced within reach of rural farmers.
In spite of economic reforms in Nigeria, fertilizer subsidies have remained. There is renewed
interest in discussing input subsidies, at least as a means to reduce attendant effects of market
failures. Input subsidies were widely practiced from the 1960s through the 1980s. The costs of
subsidies became high and unsustainable. Between 1978 and 1982, the cost of subsidizing
fertilizers as a percentage of the total costs of subsidizing all eligible inputs and services (bush
clearing, agricultural machinery and tractor hire services, equipment sale, pesticides, and
seeds) in Nigeria varied from 62 to 77 percent (Olufokunbi and Titilola 1993).
Viewed in another related dimension, the share of fertilizer in the agricultural sector budget
between 1981 and 1987 varied from 14 percent in 1983 to 71 percent in 1987. The
unprecedented jump in the fertilizer percentage share in 1987 may have been due to the naira
devaluation as part of the SAP, which began in 1986. This jump may have directly related to the
fact that most of the domestic fertilizer demand is met by importation.
Nagy and Edun (2002) provide the following descriptions of the fertilizer-pricing scenario during
the 1997–2002 period. FGN discontinued the fertilizer subsidy and distribution programs in
1997 and adopted a complete privatization/liberalization of the fertilizer sector. Subsidies were
abolished and the import tariff reduced from 10 percent to 5 percent. However, this policy was
21