Soybean Supply Response to Price and Non-price Factors in Nigeria: Implications for Food Security

Abstract

Productive growth exits side by side with food insecurity just as planned supply does not equate actual soybean supply at all times in Nigeria. Hence, the need to invistigate the speed of response of planned supply of soybean to actual supply for food security is imperative. Time series data spanning from 1960 to 2012 on unit domestic prices, output supply, export prices and volume, acreage and weather condition (rainfall) from CBN and NBS annual bulletins were used for the study. Analyses were done with descriptive statistics, simple ratios and econometric models such as Nerlove partial adjustment and Cob-Dauglas models, cointegration test and error correction mechanism (ECM). The supply fluctuated in a downward trend from 186.9% within 1986-1990 to 4.6% before 2012. The ECM showed a short-run divergence for all the included series with 34.4% of the disequilibrium in the supply of one period being corrected in the next period. There is an inelastic but positive domestic and export prices in the short-run, which slightly improved in the long run, hence the reason for the extended growth in supply. Again, increased rainfall and acreage will increase actual supply, suggesting that irrigation and expanded area of land for soybean cultivation needs immediate attension. Adjustment co-efficient of 0.888 is less than unity and positive, hence the rise in actual supply is never instantaneous but strives to meet the planned supply. Increase in actual production, using cost-effective inputs like expanded land and irrigation facilities are important.