Greener Journal of Agricultural Sciences

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. 

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