Constraints to Increasing Agricultural Productivity in Nigeria: A Review

Poor Market Access and Marketing Efficiency
Investment in infrastructure, especially transportation and communication, has been found to
indirectly affect agricultural production and productivity (Antle 1983). Examples include
investments in roads, utilities, and communications. Public investments in these components
will increase agricultural productivity. Inputs will be cheaper at the farm gate because of
unhindered movement. Farmers will improve access to market opportunities. Proxies have
included paved road density (Craig et al. 1997), and contribution of national transportation and
communication to the GDP (Hu and Antle 1993).
Limited or poor-quality roads and rail transportation inhibit timely access to inputs, increase
costs of inputs, and decrease access to output markets. Thus, investment in infrastructure
contributes to agricultural productivity growth (Shane et al. 1998). However, data has limited
inclusion of this variable in African productivity studies.
The bulky nature of primary produce has discouraged production because rural farmers have
limited access to markets and good feeder roads. Economic reforms in Nigeria have led to
increased private-sector participation in the supply of most purchased inputs in Nigeria, but
most suppliers are based in urban areas. End users of inputs are in rural areas, which are
poorly linked to urban suppliers. Transaction costs of inputs increase delivery costs to rural
farmers. For example, the retail cost of fertilizer at the farm gate is about four to five times its
cost to the farmer in developed countries; this is a major disincentive. As noted earlier, some
elements of subsidies remain on fertilizer pricing in Nigeria. However, given the prevailing poor
marketing infrastructure and the attendant high transactions costs, the computations in
Appendix 2 raise doubts about the effectiveness of fertilizer subsidies in Nigeria in recent times.
Agricultural marketing efficiency in Nigeria is dismally low. First, transportation costs are high. In
addition, road conditions are poor, which limits access to purchased inputs, credit, and output
markets as well as reducing the transmission of key market signals. Increased access to output
markets would likely generate demand for conventional inputs. Tables 20 to 23 provide field
evidence in terms of specific marketing and infrastructural costs and constraints. High transport
costs are particularly evident as a key constraint in Tables 20 to 23, reflecting the poor state of
rural transport infrastructure in the study areas.
Table 19. Distribution of respondents by specific nature of agricultural marketing constraints, southwest
Nigeria
Nature of agricultural marketing constraints % responding *
Perishability of produce
Lack of/poor market access roads
Poor producer prices
Poorly developed village market
Lack of credit for agro-processing
High transport costs
100
50
83
58
58
67
Source: Phillip and Adetimirin 2001; * Multiple responses allowed.
Table 20. Components, values, and percentages of marketing costs, rice, Ogun state, 2007
Space rent
Labor
Cost item Iberekodo market Lafenwa market Kuto market
N/100 kg % of total N/100 kg % of total N/100 kg % of total
1,085.71
465.00
29.6
12.6
37
672.22
4,322.86
8.4
53.4
980.00
2,891.43
12.4
36.6