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Food Price Inflation and Agricultural Sector Performance in Nigeria
Subject area: Arts, Social Sciences and Humanities · Area of research: Development Economics
Abstract
Food price inflation is a very important macroeconomic variable because everyone in the economy is affected by the experience of a shock. Of particular importance therefore is the effect of food price inflation on the Nigerian agricultural sector. The study hinges on the endogenous growth theory, which emphasizes the need for an economy to grow from within. Data was sourced from Ha, et al. (2021) and World Development Indicators (2025). This study ascertained the nature and strength of the link between food price inflation and the Nigerian agricultural sector output and exports. Correlation analysis and the autoregressive distributed lag were used to analyze time series data from 1981 to 2025. The study found that food price inflation adversely affected agricultural output while credit to the private sector during the preceding year spurred agricultural output in the current year. However, the study also found that credit to the private sector was too low to sustain increased agricultural output in the long run. Also, current-year capital was found to be key to agricultural exports both in the short run and long run. So, the study concluded that financial credit to farmers spurs agricultural exports. Therefore, the study recommends that agricultural marketing boards be reintroduced to suppress the rising cost of agricultural produce and that the government should subsidize the cost of transportation of agricultural produce to the market. In addition, monetary policies should be directed at making more credits available to farmers and mechanized farming should be encouraged by the Nigerian government. This study contributes to the literature by revealing the negative effect of food price inflation on output and the need for an increase in the financial support of the Nigerian government for agriculture.
Keywords
Autoregressive distributed lag, Agricultural exports, Financial Credit, Food price inflation, Nigerian agricultural sector
References
[1] Arikpo, et al (2024). High rate of inflation and adult workers' productivity in the Southern Senatorial District of Cross River State, Nigeria. ResearchGate
[2] Bello, U.A. & Sanusi, A.R. (2023). Food Price Inflation Adjustments in Nigeria: Evidence from Threshold Cointegration. CBN Journal of Applied Statistics, 14(1), 121-156. CBN Journal of Applied Statistics
[3] El-Rasheed, S., Abdullahi, B.M. & Mustapha, A. (2023). Inflation Dynamics and Food Prices in Nigeria. Gusau International Journal of Management and Social Sciences, 6(3). Gusau International Journal of Management and Social Sciences
[4] Farahani, M.H. (2021). The Effect of Inflation Threshold on Financial Development and Economic Growth: A Case Study of D-8 Countries. Iranian Economic Review, 25(3), 465-475. Crossref
[5] Femi, J.O & Emmanuel, O.I (2015). Inflation and Economic Growth in Nigeria. Journal of Economics and International Business Management 3(1), 20-30.
[6] Ha. J., M. A. Kose, and F. Ohnsorge. 2021. One-Stop Source: A Global Database of Inflation. Policy Research Working Paper 9737, World Bank, Washington DC. World Bank
[7] Hazell, J., Herreno, J., Nakamura, E. & Steinsson, J. (2022). The slope of the Phillips Curve: evidence from the United States. Quarterly Journal of Economics, 137(3), 1299-1344.
[8] Kohlscheen, E. (2022). Understanding the food component of inflation. BIS Working Paper No. 1056. Available at Bank for International Settlements
[9] Liyanage, R.D. (2021). Impact of Inflation on Labour Productivity in Sri Lanka. International Journal of Economic Behaviour and Organisation, 9(3), 57-70.
[10] Oladosu, A. (2024). Food prices and Economic Growth in Nigeria: A Quantitative Analysis. Available at ResearchGate
[11] Supriya, G. (2016). The Structural Theory of Inflation - Explained! Available at: Your Article Library
[12] World Bank (2025). World Development Indicators. Washington DC. World Bank
How to cite this paper
@article{1723176,
author = {Olayide Olayinka Olaoye},
title = {Food Price Inflation and Agricultural Sector Performance in Nigeria},
journal = {Iconic Research And Engineering Journals},
year = {2026},
volume = {10},
number = {3},
pages = {2265-2277},
issn = {2456-8880},
url = {https://www.irejournals.com/formatedpaper/1723176.pdf},
abstract = {Food price inflation is a very important macroeconomic variable because everyone in the economy is affected by the experience of a shock. Of particular importance therefore is the effect of food price inflation on the Nigerian agricultural sector. The study hinges on the endogenous growth theory, which emphasizes the need for an economy to grow from within. Data was sourced from Ha, et al. (2021) and World Development Indicators (2025). This study ascertained the nature and strength of the link between food price inflation and the Nigerian agricultural sector output and exports. Correlation analysis and the autoregressive distributed lag were used to analyze time series data from 1981 to 2025. The study found that food price inflation adversely affected agricultural output while credit to the private sector during the preceding year spurred agricultural output in the current year. However, the study also found that credit to the private sector was too low to sustain increased agricultural output in the long run. Also, current-year capital was found to be key to agricultural exports both in the short run and long run. So, the study concluded that financial credit to farmers spurs agricultural exports. Therefore, the study recommends that agricultural marketing boards be reintroduced to suppress the rising cost of agricultural produce and that the government should subsidize the cost of transportation of agricultural produce to the market. In addition, monetary policies should be directed at making more credits available to farmers and mechanized farming should be encouraged by the Nigerian government. This study contributes to the literature by revealing the negative effect of food price inflation on output and the need for an increase in the financial support of the Nigerian government for agriculture.},
keywords = {Autoregressive distributed lag, Agricultural exports, Financial Credit, Food price inflation, Nigerian agricultural sector},
month = {September},
}