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role while the regional and state governments were left to take major initiatives.
Nwankwo (1986) attributed this development to the fact that Agriculture which include livestock, forestry, and Fishing is the sector from which the nation expects So much in terms of the provisions of employment Opportunities, self reliance in basic food production, Foreign exchange earnings and industrial raw materials There is belief that various administrations both military and civilian alike have not done enough to feed the people. Also the banking industry discriminated against the agricultural sector by denying them the needed funds to transform the sector.
Before the discovery of oil sector in 1956 in agriculture was the stay of the Nigerian economy, but now it is living in past glories. Both Ola Vincente (1981) and Asabia (1981) confirms this position that agriculture constituted a very important sector of Nigerian Economy and was the dominant sector before the oil boom of the 1970’s.
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The reason for the several in trend according to Nwankwo, agricultural sector is a major potentials which are not being fully exploited in the large and expanding domestic and foreign markets for agricultural products, abundance of land and human resources and availability of improved technology, suffers major constraints in the storage of qualified manager.
These are in key area of supply of physical infrastructure such as federal roads water shortage and marketing facilities, adequate agricultural credit and depilating land tenure system.
Despite the fact that before 1960‟s agriculture was the main traditional sector, able the produce domestic consumption and cash crop for exports. It was organized around small family holdings and crude implements like hoes, matches etc. To increase agricultural productivity, therefore both for domestic financially, the agricultural financing is inevitable to achieve self-sufficiency in agricultural production.
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Agriculture experts, however, believe that government and financial institutions efforts to save the agricultural sector may be better late than never. It has now dawned on government that the only way the economy can survive is to diversify it from one entirely dependent on crude oil to one with multiple streams of income from other sectors.
According to Okereke (1989) identified a number of problems impeding the sectors movement to desired prominence in the economy. These include low technological input, poor receptivity of new ideas by farmers still attached to the cutlass and hoe syndrome, red tapism in acquisition of credit land parcelization. Added to these, the vagaries of nature and the disastrous manifestation of drought, erosion, epidemics collapse of dams show the picture why Nigeria‟s agriculture remains in doldrums becomes clear.
These raise the need for an urgent appraisal of existing method of risk management in Nigeria agriculture. This is why the creation of Nigerian agriculture insurance scheme is a step in the night direction.
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Umuokoro (1987) in his analysis of risk and uncertainty in agriculture advocated for diversification, specialization, flexibility yield and proper polities etc. whereas, in agriculture risk can be insured and uncertainty can be insured because uncertainty are losses which may not occur.
The measure of diversification and its relative risk is why banks discriminate against agricultural sector in terms of credit. This can be attributed to the passant nature of agriculture in terms of credit. This can be attributed to the peasant nature of agriculture in Nigeria and the inability of various governments both past present to execute efficient agricultural policy and programmes.
Appraising the prospects of agriculture and agricultural related business, Ajakaiye (1986) contended that the agricultural sector of economy will turn out to be greatest that the beneficiary of the structural Adjustment Programme (SAP) the aspects concerning the devaluation of the naira and the disengagement of government from commodity price fixing.
According to him, the inability of the agricultural sector to complete favorably for finance has been the combined efforts the over-valuation
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of the naira and strangle-hold of the commodity boards and other agricultural and price fixing agents. The Structural Adjustment Programme (SAP) has restructured the macro and micro economics environment in the favour of agricultural production.
Although he did not aware of resultant increase in the price of farmers‟
foreign inputs, he says that this increase will be more than off-set, the increase in income as demonstrated by the vastly increased profitability of production of exports since inception of SAP.
Lap and Smith (1992) tasted this for United States and extended the study to United Kingdom (Smith and Lap 1993). The results obtained for us data were tentative. For example, no evidence was found to support or reject the hypothesis that variations in inflation affect relative price variability among agricultural commodities.
However, the results the hypothesis that the variability of relative price in agriculture is related to average rate of nominal price change among agricultural commodities.
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Zinnias (1997) studied the relationship between agricultural prices and the general price level in Greece. He used econometric methods for non-stationary variables preceded by co-integration and unit root tests.
Agricultural price deflator was regressed on GDP deflator and per capital of agricultural production. The results show that agricultural prices used in the short-run, while the adjustments speed to the long-run inflation neutrality is shown.
Furthermore, Loy and Weaver (1998) carried out a time series analysis of retail food price in Russian markets to determine the effects of anticipated and unanticipated inflation, as well as inflation, uncertainty on relative agricultural price volatility. The results indicate that distortions in relative‟s price were induced by the anticipated inflation or a measure of inflation uncertainty.
Jaramillo (1991) analyzed time series relationship between inflation and relative price variability, using V.S data. A significant positive association was obtained between inflation and relative price variability,
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allowing for an asymmetrical response of relative price to episodes of positive and negative inflation.
In spite of extensive studies done elsewhere on the relationship between inflation and price variability within the agricultural sector, adequate studies have not been done for Nigeria‟s inflationary process only a few studies analyzed the effects if inflation on the economy. Examples of such focused on the impact of inflation on the economy. Examples of such studies include C.B.N (1974) and Osakwe (1982). Both studies focused on the impact of inflation on output growth and macroeconomic variables that has continued of impact heavily, so much depends on type of exchange regime a country is pursing at a time. Nigeria has come a long way in evolving and enduring exchange rate management policy, and have no doubt made appreciable progress in this regard.
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CHAPTER THREE
RESEARCH METHODOLOGY