Russian Journal of Agricultural and Socio-Economic Sciences, 2012, №6 (6) Июнь

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ooff AAggrriiccuullttuurraall aanndd SSoocciioo--EEccoonnoom
miicc

SScciieenncceess

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СОДЕРЖАНИЕ
CONTENT 
 
 
 
Российский журнал

сельскохозяйственных и социальноэкономических наук 

Russian Journal 
of Agricultural and Socio-Economic 
Sciences 
 
выпуск 
6(6) 
issue 
июнь 2012
June 
 
 
 

М
М.. М
Мккппааддоо 
Global financial crisis and agrarian households’ 
income, remittance and prices in rural Nigeria 
amid policy responses

3 
M
M.. M
Mkkppaaddoo 
Global financial crisis and agrarian households’ 
income, remittance and prices in rural Nigeria 
amid policy responses 

АА..М
М.. ВВааккииллии 
Technical efficiency of sorghum production in 
hong local government area of aDamawa state, 
Nigeria

10 
AA..M
M.. W
Waakkiillii 
Technical efficiency of sorghum production in 
hong local government area of aDamawa state, 
Nigeria 

АА..СС.. М
Мееддооллааззоовв 
Приоритеты социально-экономического 
развития сельских муниципальных 
образований Орловской области

16 
AA.. M
Meeddoollaazzoovv 
Priorities of socio-economic development 
of rural municipalities of Orel region, 
Russia 

ЛЛ..ИИ.. ККооввааллёёвв,, ИИ..ЛЛ.. ККооввааллёёвв 
Прогнозирование и минимизация трудовых 
затрат на технический сервис машин и 
оборудования в животноводстве

23 
LL.. KKoovvaalleevv,, II.. KKoovvaalleevv 
Prediction and minimization of labor costs 
for technical services of machinery and 
equipment in livestock 

КК..АА.. ЛЛеещщууккоовв,, Ю
Ю..Ю
Ю.. ККрраассююкк 
Оценка биологической безопасности молока 
по биоэнергетическому статусу коров

29 
KK.. LLeesshhuukkoovv,, YY.. KKrraassyyuukk 
Evaluation of biological safety of milk 
on bioenergetic status of cows 
 

M. MKPADO, Federal University Oye-Ekiti 

3 
 

GLOBAL FINANCIAL CRISIS AND AGRARIAN HOUSEHOLDS’ INCOME, 
REMITTANCE AND PRICES IN RURAL NIGERIA AMID POLICY RESPONSES 
 
Mmaduabuchukwu Mkpado, Researcher 
 
Federal University Oye-Ekiti, Ekiti State, Nigeria 
Phone: +2 (348) 035813278 
E-mail: manotejah341@yahoo.com  
 
Received May 29, 2012 
 

ABSTRACT 

The recent global financial crisis affected almost all aspect of human life. This paper explored effects 
of the global financial crisis on farmers’ income, remittance and prices of food staples and highlighted 
certain government policy responses. The study was conducted in Nigeria. Secondary data were used. 
Data were analyzed using descriptive statistics, equivalent variation and Shannon index analysis. Results showed the global financial crisis affected the agrarian households/sector in Nigeria. The increase in prices meant more nominal income to farmers but grossly reduced their welfare due to decrease in real income as result of high inflation trend.  Recommendations include that government 
should continue to sustain agrarian programs aimed at helping poor farmers to increase their capacity in production to meet the growing demand and changes. 
 
KEY WORDS 

Agrarian Households; Financial Crisis; Income; Remittance; Prices; Responses; rural Nigeria. 

The author is grateful to Poverty and Economic Research Network (PEP) Canada for 
sponsoring a research that provided data for development of the paper. The views expressed in 
the paper is that of the author and not his associated insinuations. 
 
The world is fast consolidating on its new 
name ‘global village’. The experiences caused by 
the current global financial crisis illustrated this 
fact beyond doubt. This current global financial 
crisis, which was triggered by the credit crunch 
within the United States (US) sub-prime mortgage market, has continued to spread and its effects deepen in several countries. The economic 
downturn in developed countries may thus, have 
significant impact on devel-oping countries 
through trade, net foreign direct investment (FDI) 
inflow and remittances as well as financial contagion and spillovers for stock can affect the volume of investable income in developing countries. Countries around the world have approached this whirlwind pragmatically, prompting emergency funding support for relevant sectors, thereby mitigating the impact of the crisis on 
economies as well as avoiding the entire collapse 
of the international financial system. In spite of 
such support, some countries have been officially 
declared as in recession, owing to a monumental 

decline in their wealth, manifesting itself in falling productive capacity, growth, employment and 
welfare (Olu Ajakaiye and ’Tayo Fakiyesi, 
2009). Evidences are required to illustrate the 
magnitude of the transmission of the crisis to less 
developed countries. A number of studies such as 
those by Olu Ajakaiye and ’Tayo Fakiyesi, 
(2009) and Dirk Willem te Velde (2008) have 
examined the transmission at macro level. But 
what is happening at micro or household level? 
Which transmission channel has direct effect on 
agrarian households? 
Each of the channels of transmission such as 
remittance, migration and so on  needs to be monitored, as changes in these economic variables 
can have direct consequences for growth and development. Depending on policy responses, 
countries can mitigate the effects on downstream 
sectors. The impact on developing countries will 
vary due to their different circumstances and capacities. The actual effects in developing countries will depend on the responses in developed 
countries to the financial crisis and the slowdown; the economic characteristics and policy 
responses, in developing countries. Research is 
needed to examine the effects in many countries 
across sectors, firms and household.  
The broad objective of the study was to examine effects of the global financial crisis on in

Russian Journal of Agricultural and Socio-Economic Sciences, No. 6 (6) / 2012 

4 
 

come and remittance of farmers as well as prices 
of few major food staples and highlight certain 
policy responses aimed at helping the agrarian 
household to stomach the crisis in Nigeria. Specifically, the study aimed at describing (i) sources 
of income to agrarian households, (ii) emerging 
trend on remittance, (iii) the crisis effects on food 
staple prices and human welfare; and (iv) examine government responses towards helping the 
populace including farmers to cope with the crisis. 
The recent financial crisis affects developing 
countries in many ways. With respect to agricultural sector, financial contagion and spillovers for 
stock can affect the volume of fund available 
through micro credit to farmers. The impact of 
the crisis on the Nigerian economy has different 
ramifications for the capital market, the banking 
sector, foreign exchange and the balance of payments, as well as the real sector. Market capitalisation fell by 45.8% in 2008, a sharp reversal of 
growth from 2007, when the market grew by 
74.7% (Okereke-Onyiuke, 2009). The crude oil 
price (Bonny Light) declined precipitously from 
US$147 per barrel in July 2008 to $47 per barrel 
in January 2009, prompting the government to 
seek other sources of financing for the 2009 fiscal year, as it cannot rely on earnings from crude 
oil exports. Eventually, there may be a huge 
budget cut at all tiers of government and social 
spending, such as on agriculture, education, 
health and other basics such that the level of 
achievement of the millennium developments 
goals (MDGs), will be deeply affected. The Nigerian currency, the naira, has also depreciated 
against the US dollar, and this has implications 
for foreign reserves, which dropped from $67 
billion in June 2008 to $53 in December 2008. 
All of these have implications for the livelihood 
of the populace in agricultural sector. 
The economic downturn in developed countries may also have significant impact on devel¬oping countries through trade, net FDI inflows and remittances. The developed countries 
are markets for a number of agricultural outputs 
from Africa. Changes in trade and associated 
prices could affect agriculture. The volume of 
Remittances from developed to developing countries declined as probably lower volumes of remittances per migrant may exist. Trend of migration could be affected. Many firms in developing 
countries which major source of income and nature of business depended on developed countries 
may down size by reducing work force or wages 
which will affect migration trends and reduce 

remittance. There will be fewer economic migrants coming to developed countries when they 
are in a recession. 
Possible policy responses can include a better understanding of what can provide financial 
stability, how cross-border cooperation can help 
to provide the public good of international financial rules and systems, and what the most appropriate rules are with respect to development; an 
understanding of whether and how developing 
countries can minimise financial contagion. It 
may involve developing countries to manage the 
implications of the current economic slowdown 
by increasing expenditure to improve human welfare. Countries should maximize room to use fiscal and monetary policies. It requires developing 
countries to understand the social outcomes and 
provide appropriate social protection schemes. 
There may be limits to financial solutions as the 
problems appear to lie in the real economy, but 
develop-ment finance institutions may be able to 
take some risks and support investment flows to 
developing countries, counteracting reductions in 
other financial flows. Above all the current macro economic and social challenges posed by the 
global financial crisis require a much bet-ter understanding of appropriate policy responses (Dirk 
Willem te Velde, 2008). 
 
METHOD AND MATERIALS 
 
Study area: Nigerian Economy, Agriculture and Rural Sector. Nigeria lies on the coast 
of West Africa and occupies a land area of 
924,000 km2. According to the provisional results 
of the 2006 census, it has a population of 140 million (NPC 2007), making it one of the largest and 
politically a very important nation in Africa. The 
country has a decentralized federal system of government comprising a federal capital territory 
(FCT), 36 states and 774 LGAs. All three tiers of 
government- federal, state and LGA- are democratically elected. The federal capital is Abuja. 
Nigeria is divided into six ecological zones, ranging from the semi-arid north-west to the savannah 
of the centre and south-west, and the high rainfall/rainforest areas of the south-south and southeast regions. The dominant ethnic groups are the 
Hausa/Fulani in the north, the Yoruba in the west 
and the Igbos in the east. 
 Given that agriculture is a major source of 
Nigeria’s economic growth, accounting for about 
45 per cent of the increase in GDP during the period 1990-2005, the country is classified as agriculture based by the World Bank (World Bank, 

M. MKPADO, Federal University Oye-Ekiti 

5 
 

2008). Seventy-eight per cent of Nigeria’s poor – 
those living below the poverty line on less than a 
dollar a day – live in rural areas and derive their 
livelihoods primarily from agriculture and rural 
development. However, since 1973, the economy 
has become highly dependent on the oil sector, in 
which Nigeria is the twelfth largest world producer. By 2006, depending on international oil prices, 
oil and gas accounted for 70 to 80 per cent of government revenue, over 90 per cent of export earnings and 25 per cent of GDP. The non-oil sector – 
particularly communications, construction, manufacturing and services – is becoming increasingly 
significant, currently accounting for a further 42 
per cent of GDP and growing by nearly ten per 
cent each year. GDP increased fivefold from 
US$28 billion in 1990 to an estimated US$140 
billion in 2007 and is expected to continue to grow 
at a rate of five to seven per cent per year, yielding 
current account surpluses of ten per cent of GDP. 
GDP per capita at purchasing power parity was 
calculated at about US$1,000 at the end of 2003 
and is estimated to have risen to US$1,256 in 2007 
(CBN, 2008). 
However, higher revenues from oil and gas 
have not led to a reduction in poverty. The Government is committed to a liberal economy, with a 
market-determined exchange rate, fiscal prudence, 
decentralization, privatization and progressive 
reform of the financial sector. Inflation is on a 
downward trend and was estimated at 7.2 per cent 
at the end of 2007. The Government received debt 
relief in 2005/2006 and by May 2007 had paid off 
its accumulated debt in full. Agriculture contributes to development in several ways. For instance, as an economic activity, agriculture is a 
source of growth for the national economy, a provider of investment opportunities for the private 
sector and a prime driver of agriculture-related 
activities and industries and the rural non-farm 
economy. Agricultural production is important for 
food security because it is a source of income for 
most of the rural poor. Between 1990  and 2005, 
agricultural value added rose by an average of four 
per cent each year; for the period from 2003 to 
2005, agriculture value added (AVA) represents 
US $16.46 billion and accounts for 22.1 per cent 
of GDP. Agriculture is the source of livelihood for 
the majority of rural people, providing jobs for 
smallholders and landless laborers and a foundation for viable rural communities (WDR 2008; 
IFAD, 2009). 

Sources of data and data collection. 
Sources of data were data base of Community 
Based Monitoring System (CBMS) Nigeria, library materials from University of Nigeria Nsukka 
(UNN) and Enugu State Agricultural Development Project as well as National Breau of Statistics and Central Bank of Nigeria. The CBMS data 
base which house variables of about 5,000 rural 
households of Edem Nsukka,  Enugu State, Nigeria; provided important variables on agrarian 
households.  Only households whose crops income was at least five thousand naira were judged 
by the author as deriving their income from agrarian practices and hence were used for the study. 
Data analysis. Descriptive statistics were 
used in achieving all the objectives except objective (iv) which was achieved with equivalent variation (EV); while the second part of objective (i) 
was achieved using Shannon index. The equivalent variation (EV)/compensatory variation (CV) 
are also used to measure social welfare, by comparing the utility of households at price and income in a reference situation to the utility in the 
new situation. In this study we use equivalent variation (EV) defined as: 
 

0
1

1

1
2

0
2
1
1

0
1
YM
YM
P
P
P
P
EV

y
y
−
=

−

             
(1) 

Where: 
0
1P = price of good 1 (beans) at base year (before 

the crisis); 
1
1P = price of good 1 at year 1 (after the 

crisis); 
0
2P = price of good 2 (maize) at base year 

(before the crisis); 
1
2P = price of good 2 at year 1 

(after the crisis); 
0
YM = household income at base 
year (before the crisis) = N 283999.10 tines 2; 

1
YM = household income at year 1 (after the crisis) = N 159734.00 tines 2; y= percentage increase 
in price by the crisis (an average price increase of 
78% was deduced); If: EV>0 = increase in household welfare; while EV<0 = decrease in household welfare. 
The Shannon index used to examine variations in the sources of income before and after the 
crisis. Shannon index measures overall diversity of 
income from a set of income sources. It is presented as: 

 

(
) (
)
∑
=
=

S

i
share
income
share
income
index
incme
Shannon

1
(
ln
.
         
(2) 

Russian Journal of Agricultural and Socio-Economic Sciences, No. 6 (6) / 2012 

6 
 

Stata 10 was used to sort CBMS data base 
with respect to appropriate variables of interest to 
the author. Microsoft Office Excel and statistical 
package for social sciences (SPSS) 16.0 were 
used in further data analysis. 
 
RESULTS AND DISCUSSIONS 
 
Sources of Income and Value of Decline in 
Remittance. Table 1 showed the distribution of 
households’ income and value of decline in re
mittance. Three thousand and nine households 
were judged by the author as deriving their income from agrarian practices. It is important to 
note that all the 3009 households did not gain 
income from all available sources of income but 
must gain income from crop farming in order to 
qualify to be enlisted for this study. This accounts for the reason why other sources of income had lesser number of households than crop 
which had 3009 households. 

 
Table 1 – Sources of Income and Magnitude of Decline in Remittance in 2009/2010 
 

Income Range 
(N) 
Crops 
income 
Livestock 
income 

Income 
from 
Marking 

Income from 
artisanship 

Services/ 
Labour 
Income 
Remittance 
Decline in 
remittance 
amount 

< 5000 
*** 
144(11.4) 
78(9.8) 
93(52.0) 
22(15.1) 
37(2.9) 
64(11.7) 

5000-10000 
840(27.9) 
694(55.0) 
238(30.0) 
30(16.8) 
29(19.9) 
680(53.3) 
441(80.9) 

10001-20000 
416(13.8) 
242(19.2) 
163(20.6) 
25(14.0) 
29(19.9) 
268(21.0) 
24(4.4) 

20001-30000 
440(14.6) 
59(4.7) 
97(12.2) 
9(5.0) 
16(11.0) 
131(10.3) 
5(0.9) 

30001-40000 
441(14.7) 
51(4.0) 
48(6.1) 
9(5.0) 
13(9.0) 
48(3.8) 
2(0.4) 

40001-50000 
377(12.5) 
28(2.2) 
77(9.7) 
4(2.2) 
11(7.5) 
46(3.6) 
4(0.7) 

50001-60000 
152 (5.1) 
17 91.3) 
36(4.5) 
5(2.8) 
4(2.7) 
21(1.6) 
2(0.4) 

60001-70000 
90(3.0) 
6(0.5) 
7(0.9) 
1(0.56) 
7(4.8) 
15(1.2) 
0(0.0) 

70001-80000 
64(2.0) 
0(0.0) 
8(1.0) 
1(0.56) 
8(5.5) 
7(0.5) 
0(0.0) 

80001-90000 
26(0.7) 
4(0.32) 
1(0.1) 
2(1.1) 
1(0.7) 
1(0.08) 
1(0.2) 

90001-100,000 
49(1.6) 
6(0.45) 
9(1.1) 
0(0.0) 
2(1.4) 
4(0.2) 
2(0.4) 

>100,000 
114(3.8) 
10(0.8) 
31(3.9) 
0(0.0) 
4(2.7) 
17(1.3) 
0(0.0) 

Total 
3009 (100) 
1117(100) 
793(100) 
179(100) 
146(100) 
1275(100) 
545(100) 

 
*** People whose crops income fall below N 5000 were not considered as deriving their major income from agrarian practices and thus were excluded for this analysis. Source: computed from CBMS Nigeria 2009/2010; values in parenthesis are 
percentages. 
 
In Nigeria, rural communities or agrarian 
households were associated with poverty. This fact 
is evidence even from the range and frequency of 
their income distribution. Only about 4 percent 
could make above N 100,000.00 from crop income 
while 28 percent were able to make about 
N10,000.00. The trend also existed in livestock income where the majority (55%) was able to generate about N 10,000.00. while only about one percent could make above N 100,000.00. However, 
table 1 showed that the major source of income for 
rural households were crop and livestock farming 
while marketing, artisanship, services and remittance ancillary sources of income. With reference to 
Global financial crisis, the volume of remittance 
decreased. It decreased from less than N 5,000 to 
about N 90,000. The value of remittance was very 
low. Remittance decline appeared to follow the pattern of its receipt. For instance the majority (53%) 
received remittance within the range of N 5,000 to 
N10,000. The majority (81%) experienced decline 
in remittance value within the range of N 5,000 to 
N10,000. Thus, the little remittance reaching the 
agrarian sector also experienced drastic decline. 

Shannon index was used to measures overall 
income diversification of the agrarian households. 
The result was presented in Table 2. It showed that 
crop farming has continued to be a major source of 
income for the agrarian households after remittance. 
The Shannon index of crop income for farmers 
increased while that of livestock was fairly constant. With respect to non farm income, the Shannon index for remittance increased while others 
such as marketing, artisanship and services decreased. The indexes for remittance were the highest both before and after the crisis. The implication 
was enormous for agrarian sector. It buttressed the 
fact that the rural sector were dominated by aged 
people who relied on remittance probably from 
their offspring who migrated to cities in search of 
greener pasture. The implication was that as the 
food prices increased farmers’ income from it increased while that of other sources excluding remittance declined. It was possible for the price increase 
to result in higher nominal income for farmers but 
real income diminished due to inflation. 
 
 

M. MKPADO, Federal University Oye-Ekiti 

7 
 

Table 2 – Average six months’ income and Shannon index of rural farmers in Enugu State 
before and after the crisis* 
 

Sources 
Average 
income 2002 
Natural 
Share 
Shannon 
index (2002) 
Average  
income 2009 
Natural 
Share 
Shannon 
index (2009) 

Crops 
29012.89 
0.102158 
1.049728 
33272.8 
0.208301 
2.168936 

Livestock 
21418.39 
0.075417 
0.75206 
12322.51 
0.077144 
0.726633 

Marketing/trading 
57488.51 
0.202425 
2.218444 
28198.23 
0.176532 
1.80893 

Artisanship 
26326.51 
0.092699 
0.943524 
10051.91 
0.062929 
0.579924 

Services 
63935.82 
0.225127 
2.491171 
19073.03 
0.119405 
1.176859 

Unclassified income/ 
Remittance 
83815.02 
0.295124 
3.345637 
54806.52 
0.343111 
3.74388 

Total 
283999.10 
0.992951 
10.80056 
159734.00 
0.987423 
10.20516 

 
* Source: computed from Echebiri, 2002 and CBMS Nigeria 2009/2010. 
 
Analysis of the overall welfare of rural populace before and after the crisis showed that rural sector lost. In fact the value of equivalent variation (EV) was <0.  It implied that apparent increase crops income has no positive effect on the 
households’ welfare due to inflation that reduced 
the value of their real income. It may not be a 
surprise that the average nominal income of agrarian households in six months decreased from N 
283999.10 in 2002 to N 159734.00 in 2009 because Arene and Mkpado (2002) noted that the 
average man-days of labour for agrarian households per hectare increased from 65 in 1996 to 86 
in 2000; the output of major crops like cassava 
decreased from 9700kg/ha in 1996 to 9376kg/ha 
in 2000, while the gross margin decreased from 
N 23, 520 in 1996 to N 21,339 in 2000, besides 
the drastic decrease in remittance due to the 
global financial crunch. 
The Crisis Effects on Food Staple Prices 
and Welfare. The global financial crisis impacts 
on inflation depend on the degree of changes of 
commodity prices and the accompanying changes 
in the terms of trade. Owing to the commodity 

price boom, inflation rates rose strongly. Officially, Nigeria started experiencing a two-digit inflation rate from the third quarter of 2008. It is expected that with falling commodity prices, inflationary pressures should subside to some extent 
as well. A strong and extended downward 
movement of the exchange rates will keep inflation levels high, most especially since Nigeria is 
import dependent and has no little foreign earnings to maintain this flair. On the side of the real 
sector, with little investment in infrastructure by 
the government, especially the firms that source 
their raw material from abroad might suffer 
greatly. Impacts and their extent would depend 
on the depth and duration of the crisis: the likely 
liquidity squeeze emanating from the withdrawal 
of foreign portfolio investors from Nigeria, the 
extent to which remittances will decline and, 
more importantly, investors’ confidence in the 
economy. The actual price trends of food staples 
which gives insight into the level of inflation is in 
figure 1 (source; NBS 2007, Enugu State ADP, 
2010). 

 

 
Figure 1 – Food Prices per Kilogram Before and After the Financial Crisis 

0

20

40

60

80

100

120

140

160

2002
2004
2006
2007
2008
2009

BEANS

RICE

MAIZE

G/NUT

Russian Journal of Agricultural and Socio-Economic Sciences, No. 6 (6) / 2012 

8 
 

The soaring prices of food crops in 2008 
have triggered several responses in the economy. 
One of the implications is that food price increase 
in Nigeria has sent inflation rates up from 5.4 
percent to 5.8 percent. The level of the composite 
food index was higher than the corresponding 
level a year ago by 12.4 percent (National Bureau 
of Statistics (NBS), 2008). The NBS attributed 
the rise to the sharp increase in the prices of rice 
and other staple foods and vegetables. Reactions 
from various farm families indicate that the percentage share of income spent on food crops has 
tripled over the last three months, as the poverty 
gap seems to be widening in other sectors of the 
economy (IFAD 2009). Figure 1 illustrates trends 
in prices of staples. In some cases, prices have 
more than doubled, and in a few countries there 
have been absolute scarcities of foods available 
on local markets. In Nigeria producer prices for 
staples (e.g. millet, maize, and sorghum) have 

increased by about 100 to 200 per cent over the 
past year (IFAD 2008). 
The Global Financial Crisis and Agriculture Sector policy responses. Government 
supply of micro credit has been one way to help 
the agrarian households cope with the global financial crisis. The Agricultural Credit Guarantee 
Scheme Fund (ACGSF) has been the major 
source of micro credit from federal government 
to farmers. 
Taking a base in 2002, table 3 showed that 
the number of beneficiaries of the ACGSF has 
been on the increase. A similar pattern followed 
the average volume of fund allocated only that 
the 1st quarter of 2009 experienced a decrease. 
The efforts of the government here is commendable because even as the foreign reserve drastically decreased, efforts was made to sustain domestic micro credit supply (Olu Ajakaiye and 
’Tayo Fakiyesi 2009). 
 
Table 3 – Trends of Performance of ACGSF before and after the Crisis 
 
Year 
Number  of Beneficiaries 
% Over 2002 
Average fund 
% Over 2002 

2002 
18,575 
- 
33.42566 
- 

2004 
26,208 
29.12469 
44.70979 
25.23861 

2006 
30,808 
39.70722 
66.75545 
49.92819 

2008 
31,171 
40.40935 
98.41152 
66.03481 

2009 
13,496  
65.59166* 
86.18531 
61.21652 

 
* Calculation for 2009 value was based on equivalent value for 1st quarter 2002, because only 1st quarter 2009 was available. 
Source: computed from CBN Publications on ACGSF. 
 
The federal government commenced a comprehensive review of its agricultural policy, with 
a focus on large-scale private sector commercial 
agriculture as a means of increasing production 
and productivity. In response to the global food 
crisis and the concomitant increase in prices, the 
federal government released 53,610 tonnes of 
grains (sorghum, maize and millet) between 
March and May 2008 from the National Strategic 
Grains Reserves (NSGR) to the States in Nigeria. 
The government also approved a tax holiday for 
importers of rice for the period May-October 
2008. Moreover, credit facilities were provided to 
various farmers to ameliorate the food problem, 
the federal government has continued to subsidized interest on agricultural loan with effect 
from January 2006 so that farmers now pay about 
9%, and rehabilitation of infrastructure was undertaken. The index of agricultural production 
increased by 4.8% in the first half of 2008, compared with 7.4% recorded in the first half of 
2007. All agriculture sub-sectors contributed to 
this growth. The output from staples rose by 
4.9% in 2008, compared with 10.7% in 2007. 

The output from the livestock, fishery and forestry sub-sectors rose by 5.8%, 4.1% and 1.2% in 
2008, respectively, compared with 4.0%, 9.3% 
and 1.1% achieved in 2007. Furthermore, the 
composite food index rose by 0.9% in January 
2009. The rise in the index which was higher 
than that of the previous year, was caused by increases in the price of staple foods like maize, 
yams, millet, meat, fruits and vegetables (Olu 
Ajakaiye and ’Tayo Fakiyesi 2009). Budgetary 
allocation to agriculture as well as other sectors 
has increased. 
Government also encourage local growers 
through program’s and projects; such intervention on agriculture include: Nigeria Agricultural, 
cooperative 
and 
rural 
development 
Bank 
(NACRDB)  Agricultural  credit  guarantee 
scheme  fund  (ACGSF), National  Agriculture 
insurance company (NAIC), Agricultural Development Programme (ADP), River Basin Development Authorities, (RBDA),  special  programme on food security (SPFS),  Community 
based Natural resources Management programme, Niger Delta South-South Co-operation 

M. MKPADO, Federal University Oye-Ekiti 

9 
 

Initiative, National Economic Empowerment Development strategy (NEEDS), Fadama  I,  II and 
III  projects, Roots and Tuber Expansion project 
(RTEP), Presidential initiatives on cassava, rice  
vegetable oils, Tree crops, livestock, Fishery and 
Aquaculture and so on. For instance, Fadama III 
project is a follow up to the successful Fadama II 
project, which increased beneficiary income by 
about 60% and targeted the poor and vulnerable. 
Nigeria also implemented a community driven 
development (CDD) program through the Fadama II project, which targeted the poor and economically vulnerable groups. The Fadama II 
project was implemented in 12 states and was 
rolled out to all states in 2009 through the Fadama III project. Nigeria’s other multi-donor country strategies have also followed a CDD approach 
(Binswanger-Mkhize et al 2010) In other to cover 
the whole country the Federal Government has 
increased budget for fadama iii to the turn of 
US$447. In fact, the the US$447 million budget 
for Fadama III (World Bank 2010) is approximately 2.7% of the 2007 US$16.145 billion federal budget, or 36% of the 2007 US$1.26 billion 
agricultural and water development budget (Bisong, 2009). 
 

CONCLUSION 
 
The study has examined effects of global financial crisis on income, remittance and prices in 
rural Nigeria as well as government responses. It 
has been informative to explore different the dynamics of agrarian households in the face of financial crisis. It was noted that their income declined, food prices increased and their welfare 
decreased.  It was observed that Nigerian government made a number of efforts to reduce domestic food prices, provided micro finance services and implemented other policies to encourage agriculture. However, there may be need to 
continue investment with a view to improving the 
capacity of agrarian poor.  The study recommends that:  
• government can continue to sustain the 
supply of micro credit to the agrarian poor as 
well as the programmes for improving agricultural output like fadama; 
• prudency should characterized activities 
of firms, households and governments to avoid 
going into economic crunch. 
• farmers should try to increase their capacity in production and storage to meet the 
growing demand and shocks. 
 
REFERENCES 

Arene C.J. and M. Mkpado (2002) Counter Urbanization and Agricultural Input Productivity in Imo State, Nigeria. Journal of Agriculture and Rural Development in the Tropics 
and Subtropics Vol. 103 No. 2. pp. 117-123. 
Binswanger-Mkhize H., J. P. de Regt and S. 
(2010) Local and community driven development. In Spector (eds) Moving to scale in 
theory and practice. World Bank. pp 276. 
Bisong F. 2009. Sustainable Land Management 
Public Expenditure Review in Nigeria. Unpublished Mimeo IFPRI/Fadama Abuja Nigeria  
CBN 2008. Central Bank of Nigeria Annual Report Abuja Nigeria. 
Echebiri, R.N. (2002) An Analysis of the influence of Socio-Economic Variables on 
Household Income, Consumption expenditure and Savings in Rural Southeastern Nigeria. 
Dirk Willem te Velde (2008) “The Global Financial Crisis and Developing Countries: 
Which Countries are at Risk and What can 
be done?” Global Financial Crisis Discussion Series-Background Note pp.1-5 Overseas Development Institute, London. 

IFAD (2009) Enabling the Poor to Overcome 
Poverty: Country Programme EvaluationNigeria. 
http://www.ifad.org 
[Accessed 
12.10.2010]. 
IFAD 2008 Soaring food prices and the rural 
poor: feedback from the field. http:// 
http://www.ifad.org [Accessed 12.10.2010]. 
NBS 2008 National Bureau of Statistics: Agricultural Survey Report 1994-2006 Abuja 
Nigeria. 
NPC 2007 Census Results of the 2006, Abuja 
Nigeria (April 2007). 
Olu Ajakaiye and ’Tayo Fakiyesi 2009 Global 
Financial Crisis Discussion Series Nigeria 
Paper 8: Global Financial Crisis Discussion 
Series Paper 8: Nigeria Overseas Development Institute May 2009. 
WDR (2008) World Development Report. The 
World Bank 2008. 
World Bank (2010) Managing land in a changing 
climate: An operation perspective for SubSaharan Africa. World Bank mimeo. Report 
No.: 54134-AFR. 
 
 

Russian Journal of Agricultural and Socio-Economic Sciences, No. 6 (6) / 2012 

10 
 

TECHNICAL EFFICIENCY OF SORGHUM PRODUCTION IN HONG LOCAL 
GOVERNMENT AREA OF ADAMAWA STATE, NIGERIA 
 
Abba Mohammed Wakili, Researcher 
 
Federal College of Education, P.M.B. 2042, Yola, Adamawa State, Nigeria 
E-mail: boyaabba@yahoo.com  
 
Received June 18, 2012 
 

ABSTRACT 

This paper investigates the technical efficiency of sorghum production and its determinants, using the 
stochastic frontier production function which incorporates a model of inefficiency effects. Farm level 
data were collected from a sample of 100 sorghum farmers in Hong local government area of Adamawa state using structured questionnaires. The empirical result shows that land, seed, and fertilizer 
were the major factors that influence changes in sorghum output. Farm specific variables such as 
education, extension contact and household size were found to have significant effects on the technical 
inefficiency among the sorghum producers. The technical efficiency of farmers varied from 0.1562 to 
0.9214 with a mean technical efficiency of 0.7262. The implication of the study is that efficiency in 
sorghum production among the farmers could be increased by 28% through better use of land, seed 
and fertilizer in the short term given the prevailing state of technology. This could be achieved 
through policy interventions by the government in terms of better access to land, improved seed and 
fertilizer .The inefficiency effect also shows that improved farmer’s educational levels through better 
education and literacy campaigns would help tremendously to increase efficiency. 
 
KEY WORDS 

Production functions; Efficiency; Sorghum; Local government; Agricultural economics; Nigeria; 
Family labour; Hired labour; Production; Econometrics. 

Agriculture plays a significant role in the 
economy Nigerian. The sector provides food for 
the timing growing population, employs about 
70% of the labour force, and provide raw materials for our young industries (Adegboye, 2004). 
In view of the above, since independence the federal government of Nigeria has focused its attention of its agricultural policies on the small-scale 
farmers who constitute majority of the farming 
population. The rate of growth of Nigeria food 
production has been very slow; food production 
grows at the rate of 2.5% per annum in recent 
years while food demand has been growing at the 
rate of more than 3.5% per annum due to the rate 
of high rate of population growth of 2.8% (National Bureau of Statistic, 2010). 
The importance of sorghum in Nigeria cannot be over emphasized, because it provides food 
for both man and animals. Food and agricultural 
organization (F.A.O., 2003) reported that world 
annual sorghum production is over 60 million 
tones, of which Africa produces about 20 million 
tones. This makes sorghum the second most im
portant cereal grain in Africa after maize. According to Akinyele, (2006) he said that the production of the commodity is not given due consideration despite its importance in Nigeria. This 
can be seen in the decline in output of the commodity in the savannah zone, where sorghum is 
grown on an estimated area of 4.5 million ha with 
an annual production output of about 6 million 
tons (NAERLS,2007).This is a threat especially 
to those  who widely cultivate the crop and consume it. The commodity is used in making alcohol and non alcohol drinks in Nigeria, particularly in the northern part of the country, it is also 
used for feeding  of livestock and the stalks is 
used  for making houses and making fences. 
Therefore to increase sorghum productivity, there 
is a need to understand the efficiency of production, since increase productivity is directly related 
to production efficiency, it is necessary to raise 
productivity of the farmers by helping them to 
reduce their technical inefficiencies. 
Efficiency is concerned with the relative 
performance of the processes used in transferring