Climate change and agricultural export supply in Nigeria: a co-integration analysis (1970 – 2015)

Abstract

Climate change is one of the greatest threats to agricultural growth in developing economies of the world in the twenty first century. In Nigeria, substantial decline in agricultural export supply due to adverse climatic conditions has led to significant loss in revenue earned from the export of agricultural commodities. It is against this backdrop that this paper examined the effect of climate change on agricultural exports supply in Nigeria. Three (3) agricultural export crops (cocoa, seed cotton and palm kernel) and two (2) climatic variables (annual rainfall and temperature) were selected for the study. Secondary data spanning the period 1970 to 2015, on annual temperature, rainfall and annual output of the selected agricultural export commodities, were obtained from the Nigerian Metrological Agency (NIMET), the Food and Agricultural Organisation (FAOSTAT) database, the Central Bank of Nigeria (CBN) Statistical Bulletin, and the National Bureau of Statistics (NBS), Nigeria. Time trend analysis was used to examine the trends in the movement of climate variables and the output of the agricultural export crops, while co-integration analysis was used to understand the relationship between the output of the selected agricultural export crops and climatic variables. Results  revealed that there were fluctuations in the trends of the export supply of the selected agricultural export crops. Palm kernel recorded the highest average annual domestic supply, followed by cocoa and seed cotton. Similarly, palm kernel recorded the highest average annual per cent growth, followed by cocoa and seed cotton. The highest mean annual rainfall of 96.54mm was estimated between 1990 and 1999 while the lowest of 88.55mm was estimated between 1980 and 1989. Similarly, the highest mean annual temperature of 27.44^oC was estimated between 2010 and 2012 and the lowest mean daily temperature of 26.63^oC was estimated between 1970 and 1979. The co-integration analysis revealed a long run equilibrium relationship between the annual rainfall and temperature and the export supply of the selected agricultural export crops. The resulting error correction model revealed that annual temperature positively affects export supply of seed cotton, but negatively affects export supply of cocoa and palm kernel. Also, annual rainfall positively affects the export supply of cocoa and palm kernel, showing that the climatic variables are significant determinants of export supply of agricultural export commodities.

Therefore, embarking on appropriate climate change mitigating and adaptation strategies will go a long way in minimizing the negative effect of climate change on agricultural export supply in Nigeria.

Keywords: Agricultural export crops, Climatic variables, Co-integration analysis