Evaluation of Exchange Rate Policy on Agricultural Trade in Nigeria

Abstract

The objective of this study was to evaluate the effect of exchange rate policy on agricultural trade in Nigeria. Secondary data were used for the study and were analyzed using multiple regression analysis and correlation analysis. Data were collected from 12970-2003. The regression resul ofts showed total output of cocoa, worls price of cocoa, exchange rate and average rainfall to be the significant determinan ts of cocoa export; world price of palm oil and rainfall for palm oil; and the significant determinants of rice importa wre world price of rice, time trend, exchange rate and local output of rice. The correlation results showed that there is a positive and significant relationship between exchange rate and export volume of palm oil and import volume of rice respecctively. Government support to farmers in the form of credit and input subsidies is a veritable policy option that would enab le the farmers to enhance their productivity. These would lead to increase export of cocoa and palm oil and reduced importation of rice. These would invariably enhance the foreign exchange earning capacity of the country as well as helping in the match towards acheiving self-reliance and self-sufficiency in food production.