Binuomote and Adeyemo Greener Journal of Agricultural Sciences, Vol. 5 (4), pp. 110-117, July 2015. ISSN: 2276-7770 Research Paper Manuscript Number: 050115052 (DOI: http://doi.org/10.15580/GJAS.2015.4.050115052) Determinants of Palm Oil Production in Nigeria: (1971-2010) 1Binuomote SO and *2Adeyemo AO 1Department of Agricultural Economics, Ladoke Akintola University of Technology, P. M. B. 4000, Ogbomoso. Nigeria. 2Department of Agricultural- Economics, Afe Babalola University, Ado-Ekiti, Nigeria. Email: 1sobinuomote @lautech .edu.ng; Tel: +2348033879828 *Corresponding Author’s Email: boladeadeyemo@ gmail. com; Tel: +2348034129007 Abstract This study examined the determinants of palm oil in Nigeria between 1971 and 2010. Palm oil productivity measured by palm oil gross output in tonnes was specified as a function of factors such as exchange rate, crude oil price, palm oil price and structural adjustment programme (SAP). Quantitative estimates, based on Augumented-Dickey Fuller unit root test, co-integration and error correction specification, indicate that the exchange rate, palm oil price and time trend are the major determinants of palm oil productivity in the long-run while the price of crude oil is the most important determinant of palm oil productivity in the short-run. The result further shows that the error correction mechanism (ECM) indicated a feedback of about 99.8% of the previous year’s disequilibrium from long-run domestic palm oil production. It is concluded that the price of crude oil indeed has a negative effect on palm oil productivity in Nigeria. The result of this study show that good price and exchange rate policies and factors inherent in time such as infrastructural developments, expenditure on agricultural research and extension, applications of modern techniques, use of genetically modified seeds for oil palm cultivation which are all captured by time trend are needed to bring about the much needed change in the Nigeria palm oil sector. Keywords: palm oil, production, crude oil price, error correction mechanism. Return to Content View [Full Article – PDF] [Full Article – HTML] [Full Article – EPUB] Post-review Rundown View/get involved, click [Post-Review Page] References Adegbola, A. A; Are, L. A; Ashaye, T. I and Komolafe, M. F. (1979), Agricultural Science for West African Schools and Colleges, Ibadan, Nigeria; Oxford University Press. Dada, L. A. (2007). The African export industry: what happened and how can it be revived? Case Study on the Nigerian Palm Oil Industry, FAO, Agricultural Management, Marketing and Finance, Working Document 17. Dickey, D.A. and Fuller, W.A., (1981). Distribution of the estimators for autoregressive time series with a unit root. Econometrica 49, 1057–72. Egwuma, H., Shamsudin, M. S., Mohamed, Z., Kamarulzaman, N. H., and Wong, K. K. S. (2016) “A Model for the Palm Oil Market in Nigeria: An Econometrics Approach” International Journal of Food and Agricultural Economics ISSN 2147-8988, E-ISSN: 2149-3766 Vol. 4 No. 2, 2016, pp. 69-85 Engle, R. F. and Granger, C. W. J (1987) Co-integration and error correction: Representation, estimation and testing. “Econometrica (55): 251-275. Gbetnkom, D. and Khan, S. A. (2002). Determinants of Agricultural Exports: The Case of Cameroon. AERC Research Paper 120, AERC, Nairobi, Kenya. Hendry, D. F. and N. R. Ericsson (1991). “An Econometric Analysis of UK Money Demand in Monetary Trends in the United States and the United Kingdom by Milton Friedman and Anna J. Schwartz.” American Economic Review: 8–38. Johansen, S. (1988) “Statistical Analysis of Co-integrating Vectors”. Journal of Economic Dynamics and Control (12); 23-254. Kajisa, K., Maredia, M.K., and Boughton, D. (1997). Transformation versus stagnation in the oil palm industry: A comparison between Malaysia and Nigeria. Michigan State University, Department of Agricultural, Food, and Resource Economics. Kremers, J.N. Ericsson and J. Dolado (1992), ‘The Power of cointegration tests’, Oxford Bulletin of Economics and Statistics (54): 349-367. Nzeka, U. M. (2014). “Nigeria Provides Export Market for Oilseeds and Products”. GAIN Report, USDA Foreign Agricultural Service. Olagunju, F. (2008) Economics of Palm Oil Processing in Southwestern Nigeria. International Journal of Agricultural Economics and Rural Development 1(2): 69-77. Osterwald-Lenum, M. (1992) “A Note with Fractiles of the Asymptotic Distribution of the Maximum Likelihood Cointegration Rank Test Statistics: Four Cases”, Oxford Bulletin of Economics and Statistics, 54, 461-472. World Rainforest Movement (2001). “The Bitter Fruit of Oil Palm: Dispossession and Deforestation”. ISBN 9974 – 7608 – 4 – 4