Demand for fertilizer in Nigeria: An application of cointegration and error correction modeling

Abstract

Input-output price ratio is an important factor in the use of purchased farm inputs. Sufficient empirical evidence is needed to guide rational and accurate prediction of fertilizer demand in a predominantly peasant, external input-driven agro-ecosystem. This study employed time series data for the years 1970 to 2005 to estimate relative price elasticities of fertilizer demand in Nigeria using price ratios of fertilizer to cassava. The autoregressive distributed lag error correction model (ARDL-ECM) produced a plausible estimate of short-run and long-run price elasticities of fertilizer demand with respect to the relative price ratio. The ECM coefficient showed a slow adjustment of fertilizer use to the error correction term, indicating that fertilizer use responds slowly to shifts and shocks in the determining variables. This implies that inspite of the inherent difficulties associated with using fertilizers in Nigeria, the farmers still recognize its relevance in crop production as well as the attendant economic benefits. Another plausible finding of the study was the positive correlation between fertilizer use and irrigation. Following these outcomes, it was advocated, in the main, that farmers should be well informed on market opportunities with consideration given to input and output prices. The onus lies in establishing a workable market information system that would provide timely information with respect to spatial and temporal price variations in both input and output markets. In this same vein, emphasis was laid on developing irrigation infrastructure as a major policy thrust for fostering fertilizer use across the country

Spatial integration of rice markets: The case of Kwara and Niger States, Nigeria.

“…The implication of this process is to avoid the consequences of regressing non-stationary time series with the antecedent problems of spurious results due to inflation and seasonality. This finding concur with earlier findings and conclusion by that food commodity price series are mostly stationary of order one, (Okoroafor et al, 2010 andMafimisebi, 2008). …”

Analysis of rural and urban rice markets integration in Niger State, Nigeria: error correction model approach

“…This finding concur with earlier findings and conclusion that food commodity price series are mostly stationary of order one i.e. 1(1) (Agunbiade, 2013 andOkoroafor et al, 2010). Table 2 shows the result of the pairwise cointegration test between the sampled markets in Niger State.…”

“…This kind of modeling of spatial market integration has been criticized for masking other. Some other past research work on market integration on various combinations of foodstuffs markets are Akwasi et al, (2011); Amikuzuno (2010); Mohammad and Verbeke, (2010); Okoroafor et al, (2010); Rahji and Adewunmi (2008); Daan, (2008); Mafimisebi, 2008;Tahir and Javed, 2007;Aminu (2006);Huang and Rozelle, (2006); Moser et al, (2005); Akande and Ak-pokodje (2003); and Takamatsu (2002). These studies suggest that the major sources of poor integration and inefficiency include poor price information transmission channel, too many intermediaries and the high cost of transportation, as well as the sources and validity of price data.…”

“…Therefore, the null hypothesis of unit root was accepted at levels but rejected at first difference for all the price series both at 1% and 5% levels of significance. The reason for this process according to Okoroafor et al (2010), is to avoid the consequences of regressing non-stationary time series with the attendant problem of spurious results due to inflation and seasonality. This finding concur with earlier findings and conclusion that food commodity price series are mostly stationary of order one i.e.…”

A historical review of fertilizer policies in Nigeria

“…Fertilizer consumption in Nigeria fluctuated substantially from 1969 to 2018. Theoretically, in a functioning market system, the demand for fertilizer is driven by the demand for the crops farmers produce (Okoroafor, 2010). Unfortunately, because of market distortions, supply-chain problems, lack of access to credit (IFDC & AFAP, 2018), and poor infrastructure, among other constraints, fertilizer consumption and demand in Africa is not guided by market signals (Okoroafor, 2010).…”