Cash crops financing, agricultural performance and sustainability: evidence from Nigeria
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Abstract
Description
Purpose
One of the challenging factors in achieving sustainable growth is the inability of the Nigerian
government to diversify the country's revenue base. This study aims to investigate the
relationship between cash crop financing and agricultural performance in Nigeria.
Design/methodology
Four crops were considered, namely, cotton, cocoa, groundnut and palm oil. The impact of cash
crop finance shock on agricultural performance was investigated using the vector error correction
model (VECM), while the long-run relationship was examined through the identification of longrun
restrictions on the VECM.
Findings
The variance decomposition showed that financing shock is more sensitive to cause variation in
aggregate employment than aggregate agricultural output in palm oil, while for cocoa, cotton and
groundnut showed otherwise. The long-run structural equations exert a positive relationship
between cash crop financing and agricultural performance, except for oil palm and cocoa
financing that has a negative connection with agrarian employment.
Research limitations/implications
The study is limited to the unavailability of data for agriculture sector capital utilisation, which
was not used.
Practical implications
These results show that long-run benefit can be maximised by appropriate funding in cotton and
groundnut production to promote sustainable growth.
Originality/value
The study examines the impact of cash crop financing on agricultural performance with the aim
to promote sustainable growth in Nigeria using identified VECM.
Keywords
HB Economic Theory, S Agriculture (General)