Determinants of Rice Import Demand in Nigeria

Abstract

Primarily, the study examined the determinants of rice import demand in Nigeria by assessing the short run and long run dynamic model  relationships among the determinants, trends and extent of causality among per capita income, population, exchange rate and price of rice imports were equally examined, using data obtained from the Central Bank of Nigeria (CBN) and National Bureau of statistics (NBS) over the period 1961 to 2013. Data obtained showed the perceived determinants of imports demand for rice in Nigeria were local rice production, rice import price, rice consumption, per capita income, and exchange rate, price of local rice, domestic stock variation, maize price, meat price and demographic  development. The short run dynamic model result showed that rice consumption, price of meat, price of maize, local rice quantity, demography development and stock variance are statistically significant at 5%. The significance of the coefficient of the error correction term confirmed the
appropriateness of the error correction approach which also showed that ignoring the long run relationship is detrimental. The result however, revealed that rice import demand increases significantly with increasing rice consumption, increasing price of meat, increasing price of maize (keeping that for imported rice unchanged) and increasing demography development. Rice import price, per capita income, price of local rice and exchange rate had no significant effects on rice import demand. The study therefore recommends that locally-produced rice should be intensively improved.

Keywords: demography, determinants, Error correction mechanism, rice import demand