CHAPTER TWO

2.0 LITERATURE REVIEW

2.1 Agricultural policies in Nigeria

Agriculture is a vital sector for Nigeria, contributing significantly to the economy, providing

employment, and ensuring food security. The sector has been subjected to various policies aimed

at enhancing productivity and export potential. Agricultural policy describes a set of laws

relating to domestic agriculture and imports of foreign agricultural products (Olayemi, 2012).

Governments usually implement agricultural policies with the goal of achieving a specific

outcome in the domestic agricultural product markets. Well-designed agricultural policies use

predetermined goals, objectives, and pathways set by an individual or government for the

purpose of achieving a specified outcome, for the benefit of the individual(s), society, and the

nation's economy at large (Akpan, 2013). The goals could include issues such as biosecurity,

food security, rural poverty reduction, or increasing economic value through cash crops or

improved food distribution or food processing (Ogunleye and Oladeji, 2020).

Agricultural policies take into consideration the primary (production), secondary (such as food

processing and distribution), and tertiary processes (such as consumption and supply in

agricultural products and supplies). Outcomes can involve, for example, a guaranteed supply

level, price stability, product quality, product selection, land use, or employment (Ajani, 2011).

Governments can use tools like rural development practices, agricultural extension, economic

protections, agricultural subsidies, or price controls to change the dynamics of agricultural

production or improve the consumer impacts of the production (Ojo, 2019).

2.1.1 Historical context of Agriculture in Nigeria

Agriculture has been a cornerstone of Nigeria’s economy since pre-colonial times. Historically,

the sector was characterized by subsistence farming with a focus on staple crops such as millet,

sorghum, yam, and cassava. The colonial era introduced cash crops like cocoa, palm oil, and

groundnuts, which significantly influenced Nigeria’s agricultural export patterns 9oni, 2006).

Post-independence, the Nigerian government adopted various strategies to bolster agricultural

development, focusing on increase productivity and diversifying the economy away from oil

dependency (Nwafor, 2010). This era saw the establishment of agricultural research institutes

and extension service aimed at improving farming techniques and crops varieties.

2.1.2 Evolution of Agricultural Policies

Early post-independence

Early agricultural policies in Nigeria were centered around increasing food production and self-

sufficiency. The Agricultural development projects (ADP) introduced in the 1970s aimed at

enhance productivity through improved technology and farming practices. These projects were

significant for their emphasis on modernizing agriculture and integrating farmers into the market

economy (Akinwumi, 1990).

2.1.3 Structural Adjustment Program (SAP) Era

In the 1980s, Nigeria implemented the Structural Adjustment Program (SAP) under the guidance

of International Monetary Fund (IMF) and World Bank. SAP policies included reducing

government subsidies, liberalizing trade, and promoting export-oriented agriculture (Nnadozie,

1998). While SAP aimed to improve efficiency and competitiveness, it led to a decline in
agricultural output due to reduced government support and increased costs for farmers (Akinlo,

1996).

2.1.4 The Return of Democracy and New Policy Frameworks

The return of democratic governance in 1999 brought renewed focus on agricultural

development. Policies such as National Economic Empowerment and Development Strategy

(NEEDS) emphasized agriculture as a critical sector for economy development and poverty

reduction (Nigeria vision 20:2020, 2009). The Agricultural Transformation Agenda (ATA)

introduced in 2011 aimed to enhanced productivity, improve value chains, and boost exports by

investing in infrastructure, technology, and, market access (Federal Ministry of Agriculture and

Rural Development, 2011).

2.2 Agricultural Policies and welfare of farmer

2.2.1 The Role of Agricultural Policies in welfare of smallholder farmer

Agriculture remains a crucial sector in many economies, particularly in developing countries.

The welfare of farmers is deeply intertwined with the effectiveness of agricultural policies. These

policies serve as a framework to guide the development, management, and sustainability of

agricultural activities, ultimately impacting the livelihoods of farmers. This write-up explores the

significance of agricultural policies in enhancing the welfare of farmers, with a focus on various

subtopics such as subsidies, credit facilities, market access, technological advancements, and

social security. (Jibowo, 2015).

2.3 Key Policies Impacting Smallholder Farmer Welfare

Farmer welfare is a critical aspect of any economy, especially in agrarian countries like India.

Various government policies and schemes directly impact the livelihood, income, and overall

well-being of farmers. Here’s a list of key policies impacting farmer welfare:

Income Support and Financial Assistance Policies

 PM-Kisan Samman Nidhi Yojana (PM-KISAN): #60,000 annual income support to small

and marginal farmers.

 Interest Subvention Scheme: Subsidized loans for short-term credit needs at lower

interest rates (4-7% per annum).

 Kisan Credit Card (KCC): Easy access to loans for crop production, equipment purchase,

and other farming needs.

Crop Insurance and Risk Management

 Pradhan Mantri Fasal Bima Yojana (PMFBY): Crop insurance scheme to protect farmers

from losses due to natural calamities and market price fluctuations.

 Weather-Based Crop Insurance Scheme (WBCIS): Compensation for weather-related

crop damage.

Price Support and Market Reforms

 Minimum Support Price (MSP): Government-fixed price for key crops to ensure farmers

get a fair price.

  e-NAM (National Agriculture Market): Online platform to enable farmers to sell their

produce directly to buyers across India.

 Agricultural Produce Market Committee (APMC) Reforms: Encourages direct selling to

consumers without middlemen.

Subsidies and Input Support

 Fertilizer Subsidy: Direct subsidy to manufacturers, making fertilizers affordable.

 Seed Subsidy Programs: Certified seeds at subsidized rates.

 Electricity Subsidy for Irrigation: Reduced electricity rates for agricultural use.

Irrigation and Infrastructure Development

 Pradhan Mantri Krishi Sinchayee Yojana (PMKSY): Focus on expanding irrigation

coverage and improving water use efficiency.

 Rural Infrastructure Development Fund (RIDF): Funding for rural infrastructure like

irrigation, storage, and rural roads.

Sustainable Agriculture and Climate Resilience

 Paramparagat Krishi Vikas Yojana (PKVY): Promotion of organic farming.

 Soil Health Card Scheme: Regular testing and recommendations to improve soil fertility.

 National Adaptation Fund for Climate Change (NAFCC): Support for climate-resilient

agricultural practices.

Livelihood and Skill Development

  National Rural Livelihood Mission (NRLM): Formation of Self-Help Groups (SHGs) for

women farmers.

 Agriculture Skill Development Scheme: Training programs for rural youth in farm-based

activities.

Digital and Technology Adoption

 Digital Agriculture Mission (2021-2025): Use of AI, drones, and IoT in farming

practices.

 Kisan Call Centers (KCC): Toll-free helpline for farmers to get information on

agriculture practices.

2.4 Importance of Agricultural Policies on welfare of smallholder farmer

Agricultural policies are essential for creating a conducive environment for farmers to thrive.

They provide strategic direction on issues such as pricing, input supply, land management, and

infrastructure development. Effective agricultural policies not only improve productivity but also

ensure income stability and social security for farmers.

2.4.1 Subsidies and Financial Support

Subsidies play a pivotal role in reducing production costs for farmers. Governments often

provide subsidies on fertilizers, seeds, and irrigation equipment to make these inputs more

affordable. Additionally, direct cash transfers and minimum support prices (MSP) help farmers

maintain a steady income, especially during times of market volatility.

2.4.2 Credit Facilities and Loans

Access to credit is a critical factor in enhancing the welfare of farmers. Agricultural policies that

promote low-interest loans and microfinance initiatives empower farmers to invest in quality

inputs, modern machinery, and storage facilities. Credit facilities also enable farmers to adopt

better farming practices, which can lead to higher yields and profitability.

2.4.3 Market Access and Price Stabilization

Agricultural policies that improve market access significantly impact farmers' welfare. Policies

promoting the development of rural markets, cooperatives, and contract farming arrangements

help farmers sell their produce at fair prices. Price stabilization mechanisms, such as MSP, buffer

stocks, and export-import regulations, protect farmers from market fluctuations.

2.4.4 Technological Advancements and Extension Services

Investment in agricultural research and technology is crucial for the long-term welfare of

farmers. Policies that facilitate the adoption of modern farming techniques, climate-resilient

crops, and precision farming technologies enhance productivity. Extension services play a vital

role in disseminating knowledge and training farmers on best practices.

2.4.5 Social Security and Insurance Schemes

Social security measures, including crop insurance, health insurance, and pension schemes,

provide a safety net for farmers. These policies safeguard farmers against unforeseen risks such

as crop failure, natural disasters, and health emergencies, ensuring their overall well-being.

2.5 Impact of Agriculture Policies on Smallholder Farmer Welfare.

2.5.1 Success and Achievements

Nigeria has made notable progress in certain areas of agricultural exports due to policy

interventions. For instance, the country has experienced growth in the export of products such as

sesame seeds, cocoa, and cashew nuts. The introduction of modern farming techniques and

improved varieties has contributed to increase production and export volumes (Agbonlahor,

2019)

2.6 Challenges in Implementing Agricultural Policies

Despite the numerous benefits, implementing agricultural policies effectively poses several

challenges. These include inadequate infrastructure, bureaucratic delays, corruption, and lack of

awareness among farmers. Addressing these challenges requires a multi-stakeholder approach

involving government agencies, non-governmental organizations, and farmer associations.

Agricultural policies play a fundamental role in enhancing the welfare of farmers by providing

financial support, improving market access, promoting technological advancements, and offering

social security. However, the success of these policies depends on their effective implementation,

transparency, and inclusivity. Governments must continuously evaluate and adapt these policies

to address emerging challenges and ensure the sustainable development of the agricultural sector.

Despite this success, several challenges persist. Issue such as inadequate infrastructure, poor

storage facilities, and limited access to finance continue to hamper the sector. Additionally,

policy inconsistencies and implementation challenges have affected the effectiveness of

agricultural policy (Eze, 2020).

[Link] Inadequate Infrastructure

Inadequate infrastructure, including poor road networks and inadequate storage facilities, has

been a significant barrier to agricultural export growth. These infrastructural deficits lead to high
transportation costs and post-harvest losses, affecting the competitiveness of Nigerian

agricultural products (Akinbode, 2018).

[Link] Policy inconsistencies

Frequent changes in policy and regulatory framework create uncertainty fir investors and

exporters. The lack of continuity and coherence in policy implementation often undermine log-

term planning and investment in agricultural sector (Afolabi, 2017).

[Link] Access to Finance

Access to finance remains a critical issue for smallholder famers and agro-enterprise. Despite

various government initiative, man farmers struggle with inadequate credit facilities, which

limits their ability to invest in modern technology and expand production (okuneye, 2016).

2.7 Future Directions and Recommendations

2.7.6 Enhancing Policy Coherence and Implementation

To improve agricultural export performance, there is a need for greater policy coherence and

effective implementation. This includes aligning policies across different level of government

and ensuring consistent support for farmers and exporters (Oluwatayo, 2021).

2.7.2 Investing in Infrastructure

Investing in infrastructure is crucial for reducing cost of agricultural production and improving

export competitiveness. Developing better transportation network, storage facilities, and

processing plant will help reduce post-harvest losses and enhance the quality of exportable

product (obi, 2019)

2.7.3 Strengthening Financial Support Systems

Improving access to finance for smallholder farmers and agro-enterprises is essential for

boosting productivity and export capacity. Expanding credit facilities, providing subsidies and

supporting agricultural insurance schemes can help mitigate financial risks and encourage

investing in agriculture (Ezekiel, 2020).

2.7.4 Promoting Research and Development

Investing in agricultural research and development (RandD) is critical for improving crop

varieties, pest management, and farming techniques. Enhanced (RandD) efforts can lead to better

yield, reduced production costs, and increased competitiveness in international markets (Dike,

2021).

2.7.5 Expanding Market Access

To boost export, Nigeria needs to focus on expanding market access for it agricultural product,

this includes engaging in trade negotiations, improving quality standards, and exploring new

export markets. Additionally, establishing trade agreement and participating in international trade

forum can help enhance Nigeria’s presence in global markets (Oyekale, 2022).