Analysis of the Impact of Selected Economic Variables on Sorghum Prices in Nigeria
Nigeria is the world's leading producer of sorghum intended for use as food grain. Likewise, there has been growing industrial demand for sorghum in the livestock breeding and brewery sectors. As sorghum prices have been on the increase, it becomes pertinent to identify the determinants of this development in order to nip the imminent food crisis in the bud. This study relied on time series data spanning from 1970 to 2015 retrieved from FAOSTAT and World Bank databases. Analytical methods employed include the unit root test, cointegration test and error correction mechanism. The diagnostic tests indicated the presence of autocorrelation which was subsequently adjusted with the Cochrane-Orcutt procedure. Subsequent tests indicated that variables fit well to the model. As shown by the ADF unit root test, the modeled variables were non-stationary but became stationary after first differencing. At a significance level of 5%, the sorghum price was determined by gross domestic product (GDP), annual money supply, official exchange rate and crude oil price, both in the long and short run, whereas the lagged price of sorghum also had an effect on prices in the short run. The study recommends that macroeconomic variables such as GDP, annual money supply and official exchange rate be taken cognizance of when planning the agricultural development in Nigeria. (original abstract)
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