The petroleum industry in Nigeria has brought unprecedented changes to the Nigerian economy, particularly in the past five decades when it replaced agriculture as the cornerstone of the Nigeria economy. The oil industry has risen to the commanding heights of the Nigerian economy,
contributing the lion share to gross domestic product and accounting for the bulk of federal government revenue and foreign exchange earnings since early 1970. However, Nigeria’s considerable endowment in fossil fuel has not translated into an enviable economic performance; rather, the nation’s mono-cultural has assumed a precarious dimension in the past decades susceptible to the vagaries of the international oil markets.
Agriculture forms the most dominant economic activity of Ilaje Community in the Niger Delta. Federal Office of Statistics (F.O.S) in 1985 stated that Crop farming and fishing activities account for about 90% of all forms of activities in the area. They also estimated that about 50%-68% of the active labour force is engaged in one form of agricultural activity or the other including fishing and farming. Agricultural technology has remained relatively unchanged over the years and over 90% of the farmers are subsistent farmers operating on traditional methods using basic tools. Azibolomari 1998, p 67 stated that “Farming technique in the Niger Delta has still remained the use of land rotation or bush fallow system characterised by land and labour being the principal inputs of production.”
The challenge of resuscitating agricultural production and development in Nigeria is an enormous one. This is because of the dramatic shift in the fortunes of the sector over the years: from the dominant sector of the economy (contributed 64.1 per cent to GDP) and supplier of food, income, foreign exchange and employment in the 1960s to a net importer of food contributing less than 5 per cent to total foreign exchange earnings in 2000.
Many policy analysts attribute this to the sector’s neglect following the discovery of petroleum resources beginning from the early 1970s and the accompanying foreign exchange fortunes. Farming was not only abandoned, the structure of domestic demand for food and agricultural products was altered in favour of imports of grains, beverages and vegetable oils and fibres which Nigeria was once reputed as a leading world producer.
The task of resuscitating agricultural production for exports is therefore very daunting. This would require stepping up production to meet and bridge the import gap, provide for strategic food reserves and generate surplus for exports to earn income and sustain farming enterprise in general. It goes beyond resuscitation of traditional exports to conscious effort at developing and promoting new commodities for exports.
1.2 Statement of the Problem
The effect of oil resource extraction on the Nigerian economy especially on the environment of the Ilaje in Niger Delta has been very glaring in terms of its negative effect on the region. Eteng 1997, p 4 stated that “Oil exploration and exploitation has over the last four decades impacted disastrously on the socio-physical environment of the Niger Delta oil- bearing communities, massively threatening the subsistent peasant agricultural economy and the environment and hence the entire livelihood and basic survival of the people.”
Suffice it to note that, while oil extraction has caused negative socio-economic and environmental problems in the Niger Delta, the Nigerian State has benefited immensely from petroleum since it was discovered in commercial quantities in 1956. The Central Bank of Nigeria (C.B.N) 1981 annual report stated as follows, “There is no doubt that the Nigerian oil industry has affected the country in a variety of ways at the same time. On one hand, it has fashioned a remarkable economic landscape for the country, however on the negative side, petroleum exploration and production also have adverse effects on fishing and farming which are the traditional means of livelihood of the people of the oil producing communities in the Niger Delta, Nigeria.
Oil extraction and production has led to adverse environmental impact on the soil, forest and water of the Niger Delta communities. This has ultimately affected peasant agriculture in a variety of ways, which ultimately have caused problems of environmental refugees. Some of the landless farmers migrate to other more fertile lands in other rural communities, putting pressure on scarce fertile lands. While some of the displaced farmers out-migrate to the urban areas in search of other means of livelihood.
Nigeria’s extreme reliance on the crude oil market has triggered structural difficulties for the economy, as earnings from crude oil fluctuate along with market trends which are exacerbated by the country’s neglect of other productive sectors of the economy. This negative trend has persisted despite various economic reforms embraced by successive Nigerian governments since 1980. Unless the country deepens its economic reform initiatives to include effective diversification of the petroleum sector, the performance of the economy will continue its unimpressive trend. Diversification of the economy should also extend beyond the petroleum sector so that the country can become a major force in the emergent global economic order of the 21st century. Policy makers should develop the nation’s vast resources in the agricultural and solid mineral sectors for the global markets and reap the benefits that accompany economic diversification.
1.3 Objective of the Study
The aim of this study is to analyse and evaluate natural oil resource extraction, its impact on the agricultural development in Nigerian and its effect on the agricultural livelihood of people of Ilaje in the Niger Delta community in Nigeria.
The objectives of this study are as follows:
• Reviews the trends in Nigeria’s agricultural policies and production since 1960s to date
• X-ray the major underlying factors behind poor agricultural growth
• Identifies the potential sources of growth of the agricultural sector
• Articulates an agenda for an export-led agricultural growth.
• Analyse the impact of intensive resource exploitation on the agriculture and environment of the Ilaje community in the oil producing communities in the Niger Delta.
1.4 Significance of the Study
This research will be carried out to appraise the effect of petroleum production on agricultural development in Nigeria using the Ilaje community of Ondo State, which is in the Niger Delta area as a case study. The need of the research is to analyse the negative effect of oil on agricultural production and geared relevant authorities towards re-designing an effective way of preventing further dominance of oil in the Nigerian economy.
The research is also expected to be of benefit to various stakeholders in the Nigerian economy as it will enlighten them on the problems facing agricultural development through petroleum production and the provision of suggestions to eliminate such problems.
1.5 Scope of the Study
The research will cover the Ilaje community, Ondo State, which falls in the petroleum producing community of the Niger Delta Area. Ilaje community formed the scope because it is a community that is mainly into agricultural production and at the same time affected by the activities of oil production in the Niger Delta area.
1.6 Research Questions
(i) Why agricultural production did have to decline in the Nigerian economy?
(ii) Could we say that petroleum production will continue for centuries to come thereby sustaining the Nigerian economy?
(iii) In other economies like the United States of America, the discovery of oil is only an avenue to use income from it to develop other sectors of the economy, why is the Nigerian case the reverse?
(iv) Why is the Nigerian economy dependent on petroleum alone?
(v) What will be the position of agriculture in the decades to come?
1.7 Statement of Hypothesis
The following hypothesis will be formulated for the research:
H0: That petroleum production has had negative effect on agricultural development in Nigeria.
H1: That petroleum production has had positive effect on agricultural development in Nigeria.
1.8 Research Instrument
Questionnaires will be administered to respondents in Ilaje community to determine their information perception, as well as its effects.
This is because of their effectiveness and accuracy in reporting trends in behavioural sciences.
CHAPTER TWO
LITERATURE REVIEW
Theoretical Framework
2.1 Introduction
Darwin evolutionary theory’s remarkable legacy in the biological sciences in particular and sciences in general was etching a permanent place for the issue of development. Based on this Darwinian position, organisms started being accorded the ability to change and transformed into a higher, better and higher species. Flowing from this, development in human society started to be seen as a quantitative and qualitative transformation from a state of dependency, poverty, disease, autocracy, backwardness, social decadence, and political subjugation, to one characterized by freedom, abundance, good health, democracy, civility, egalitarianism, social welfare and security, as well as political independence.
The above conceptualisation of development finds concurrence with Langdon (1994: 123) position which sees development in a state as, “the elimination of poverty among its inhabitants and the emergence of a relatively egalitarian and participatory society, with an advanced material standard of living’. Quite unlike the development implied by Darwin evolutionary theory, development of human society is premised on certain agencies and the coincidence of the interest of these agencies with the implications of development.
The primary agencies of development are the state, the ruling class and its representatives in government. It is in this context that Marx and Engles position in the Communist Manifesto that “the ruling ideas of every society, is the idea of the ruling class” becomes meaningful. It must be stressed that the question of the desirability of development is never accidental, nor is it ever answered objectively. As Ake (1989: 43) argued “Somebody has to determine that development is desirable, that a particular kind of development should be pursued and in a particular manner.”
The second condition for engendering development is what may be called a “barter imperative”, that is, the condition of a sort of double coincidence of want between the ruling hegemony and the imperatives of development.
In order words, the possibility of development, or the character of development is a function of the how the ruling coalition in a state perceives it in relations to its own objective class interest, both on the short and long runs.
The third condition flows from an awareness of the position of Ake (1989) that the state is a specific modality of domination, hence why it is necessarily a living contradiction, a contradiction of interests of powers and of social forces.
Consequently, the nature of, and the ability of the hegemony class to maintain its hegemony and the counter-force deployed by the dominated and oppressed classes in reaction to their domination goes a long way to condition the possibility or otherwise of development. Quite often, as the situation in the Niger Delta and in other part of Nigeria aptly shows, governance is to a large extent dominated by politics, which in turn finds expression in the domination, exploitation, and demobilization of the popular masses. In this way, scarce resources that would otherwise have been used for developmental purposes goes into building arsenal of terror and a militarized state.
From the foregoing, it is understandable why the developmental ideology pursued by the country is one hinged on the capitalist development agenda, despite is obvious drawbacks and crisis potentials. The next concern is interrogating the problematic of capitalist development agenda as championed by the Nigerian ruling class.
Given the liabilities of the capitalist development path and its neo-liberal metamorphosis, as manifest in the commodification of social goods like water, healthcare, education, and the institutionalisation of the primacy of profit, the pertinent question is whether capitalism can promote development in Nigeria? Expressed differently, the objective is to critique the possibility of the capitalist ideological orientation promoting development in Nigeria, and by extension, examine its capability of ensuring sustainable development in Nigeria. This become particularly germane against the background that the crisis and contradictions engendered by dependent capitalism in Nigeria prevent effective planning. This constitutes a fundamental obstacle to the possibility of any development, and by extension of sustainable development.
The year 1980 was very important for global developmental thinking concerning the issue of sustainable development. 1980 marked the beginning of a global fear that mankind monumental development. The year the Industrial Revolution, and more importantly after the end of the World War II may turn out to be a fluke. There was palpable and justifiable fear that the world may witness large-scale developmental reversal due to the careless and non-programmatic conventional developmental path under the influence of capitalist self-interest that was hitherto followed.
Consequently, globally, questions as to the cost and implications of present development on the possibilities of future development and the lives of future generations become serious issues, which commanded worldwide concern. With the Brundtland report; the report of the World Commission for Environment and Development (WCED, 1987), the issue of sustainable development gained popular currency.
The WCED report called for a change in the conventional development paradigm for one oriented towards sustainable development and in which the concern for the long-term survival of humanity is accorded primacy. The report thus defines sustainable development as “development that meets the needs of the present without compromising the ability of the future generations to meet their own needs. (WCED, 1987: 8). This definition has been criticized as a statement of objectives rather than a definition.
Because of the confusion and ambiguity of the WCED definition, the United Nations Environmental Programme (UNEP) in 1992 put forward three definitions; sustainable development, sustainable economy and sustainable living. According to UNEP (1992):
“Sustainable development means improving the quality of human life while living within the carrying capacity of supporting ecosystem.”
“Sustainable economy is the product of sustainable development; it maintains its natural resource base and it can continue to develop by adapting to changing circumstances and through improvements in knowledge organization, technical efficiency, and wisdom.”
“Sustainable living indicates the lifestyle of an individual, who feels the obligation to care for nature and every human individual, and who acts accordingly.
A more embracing definition was that by UNU (1996) which see sustainable development as:
“Consisting of policies, strategies, plans, production systems, and technologies used in executing projects and programmes aimed at satisfying real human needs in perpetuity while maintaining environmental quality, biodiversity, the resilience of the ecosystems, and the welfare of all organisms by national, regional, and global levels.”
The ingredients for sustainable development, according to WCED (1987), include:
“A political system that secures effective citizen participation; an economic system that is able to generate surpluses and technical knowledge on a self-reliant basis; a social system that provides for solution for the tensions arising from disharmonious development; a production system that respects the obligation to preserve the ecological base for development; a techno-logical system that can search continuously for new solutions; an international system that fosters sustainable patterns of trade and finance; and an administrative system that is flexible and has the capacity for self correction.”
(Emphasis original)
Similarly IUCN/UNEP/WWF (1991), in “Caring for the Earth: A Strategy for Sustainable Living” articulated the following nine principles for sustainable development: respect and care for the community of life; improve the quality of human life; conserve the earth’s vitality and diversity; keep within the earth’s carrying capacity; change personal attitudes and practices; enable communities to care for their environments; provide a national framework for integration, development, and conservation, and create a global alliance.
From the above, the primacy of qualitative and meaningful existence of the people as central desiderata for sustainable development is firmly established. To this end, the people must have the opportunity to be involved in all aspects of development, just as they must be empowered intellectually and technically to take decisions and be consciously engaged in the developmental process. The political, social, economic, and technological systems must be harnessed in an organic synergy that contributes to bringing out the best in the individual citizen and the environment.
2.2 The Ilaje Community
The Ilajes are a distinguished, distinct linguistic group of the Yoruba stalk made up of four geo-political entities namely Ugbo, Mahin, Etikan and Aheri.
They were said to have left ILE-IFE their original ancestral home/settlement in the 10th century. They mainly occupy the Atlantic coastline of Ondo State of Nigeria while a large population of them settles on land in the hinterland. The area they occupy today remains the Ondo State of Nigeria only outlet to the sea.
ILAJELAND is bounded by the Ijebus to the West, the Ikale to the North, the Itsekiri to the East. The APOI and Arogbo Ijaw to the North East, while the Atlantic ocean formed the southern boundary. No doubt, the Ilajes are one of the most dynamic and enterprising people in Nigeria. Their aquatic skill, coupled with their high adaptational ability enable them to conquer their hash geographical environment and turn it to a big advantage. Consequently, they were able to build large communities like Ugbonla, Aiyetoro, Zion PePe and Orioke. Aiyetoro for example in it’s hey-days had the highest per capital income in the whole of Africa and attracted visitors, tourists and researchers from all over the world especially Europe, Canada, and America.
Apart from petroleum which is largely found in the area for which Ondo State today is recognized as an oil producing State. Other mineral raw materials that are abundantly available in Ilajeland include Glass Sand, Salt, Tar Sand, Quartz and Clay while Agro raw materials include fish, poultry, maize, Palm oil vegetables, Timber, Rafia, Poultry Okro, Cocoyam, Banana, Cassava, and Piggery.
The natural environment of Ilajeland is particularly suitable for the development of large scale Rice plantation and Salt industry.
The occupational activities of the Ilajes include fishing, canoe making, lumbering net making, mat making, Launch building, farming and trading.
Igbokoda, the Ilaje local government headquarters is fast becoming an international trade center as its popular market attracts traders not only from other part of Nigeria, but, also from other Africa countries especially Togo, Benin, Ghana, Cameroon and Gabon.
The closeness of Ilajeland to Lagos which is only about 75 kilometers and its aquatic environment present the area as a suitable environment for Tourism development. It is hoped that the Ondo State Government and indeed the Federal Government of Nigeria will realize the importance of the pleasant natural geographical condition of the area and develop it into a world class Tourist Attraction/Center.
In the past the entire area suffered serious neglect and marginalization in the hand of government. However, it appears that the Ondo State Government has come to realize the importance of Ilajeland not only because it is her only outlet to the sea but also because it is her economic power House. The State is now constructing a net work of road linking the area with the hinterland and has promised to provide basic social amenities including electricity and drinkable pipe bone water.
The Highlight of the Ondo State recent development effort or project in the area is the acquisition of about 200 hectares of land to be developed and built as a satellite town for the people displayed from their homes in towns and villages on the Atlantic Coastline as a result of petroleum drilling and exploratory activities.
No doubt, there is a big future for the area especially with the Olokola Development project by Ondo and Ogun State Governments.
The Ondo State Government and indeed the Federal Government of Nigeria should see or recognize ILAJELAND as an important visible economic asset and focus invest and embark on the speedy development of the area.
2.3 Historical perspectives of Nigeria’s Petroleum Industry
Although the search for oil deposits started in Nigeria in 1908, records show that Shell Darcy drilled the first well in 1938 (Aigbedion, 2004, Anyawu et al., 1997). In 1955, Mobil Exploration incorporated received concession over the whole of the former Northern region of Nigeria, where the company carried out relevant geological survey. It also drilled some wells in Western Nigeria before abandoning its concession in 1961.
Shell petroleum discovered oil in commercial quantity in Nigeria in 1956 and began production of the commodity immediately thereafter. Apart from the initial discovery of oil at Oloibiri in the Niger Delta further discoveries at Afam and Bomu confirmed Nigeria’s status as a major oil-producing nation. The petroleum industry grows rapidly from 1960 and subsequently in 1970; it has replaced agriculture which was the cornerstone of the nation’s economy (Obadan, 1998). The manifestation of the Nigerian petroleum industry includes one of the World’s largest proven reserves and of the production in excess of 2 million barrels (Van Buren, 2001). At the top of the petroleum industry is the federal Government-owned parastatal, Nigeria National Petroleum Corporation (NNPC) that operates a Joint Venture (JV) agreement with trace other foreign multi-national oil companies in Nigeria to produce both the nation’s crude oil and gas. The nation four refineries, which produce petroleum products and derivatives for the nation’s domestic consumption was sold by the administration of chief Olusegun Obasanjo due to its privatization policy in early 2007.
2.4 The Nigerian economy and the petroleum industry: contemporary trends and developments
The growth of petroleum industry in Nigeria appears to have brought dramatic changes in the structure of the economy since 1970. In less than a decade, agricultures share of gross domestic product (GDP) declined from roughly one-half to less than 30% and its erstwhile pre-eminence as generators of state revenue and foreign exchange all but vanished.
Crude oil become one of the world’s most strategic natural resources required as a crucial input in contemporary economic activities. A versatile, non-renewable natural resource, crude oil is a highly demanded commodity in both rich and poor countries, providing about 50% of the global energy requirements (Anyanwu et al., 1997, Igbatayo, 2004).Crude oil consists of a mixture of many substances, mainly hydrocarbons with other elements, including sulphur, nitrogen and oxygen.
The operation of petroleum industry is divided into the upstream (exploration and production) and downstream sector (refining, marketing and servicing). Crude oil and gas have assumed a predominant role in the global economic framework, providing much of the energy that drives the economy in both industrialized and developing countries. Oil deposits are distributed around the world, existing in large quantities in various continents. Huge production takes is taking place in Alaska, Texas, the Gulf of Mexico, Venezuela and Brazil in South America. The North Sea produces crude oil, as well as the Arabian Peninsula; there are proven oil reserves that make the region the world’s most predominant producer of the commodity. In Africa, huge oil reserves also exist in the Niger Delta, as well as in the Gulf of Guinea, where Nigeria, Cameroon and Angola are major producers of the commodity.
In view of the strategic nature of the petroleum Industry as the predominant source of global energy, it has become a prime source of revenue generation to many countries, particularly in the developing world. In this res respect, the organization of petroleum Exporting Countries (OPEC), which comprises eleven countries from the developing world, has played a leading role in the global oil industry, promoting market stability and ensuring a steady flow of revenue accruing to member countries of the cartel. The emergence of oil as a major commodity in the global market has transformed the economies of major producers of the commodity in the developing world. In some cases, it has served to boost economic growth and accelerated development, in others, it has heralded structural difficulties which have undermined economic performance and compounded development trends, with little real benefits for the majority of the people in the countries concerned (World Bank, 2000; UNECA, 2005).
The petroleum industry has assumed a primate position in the Nigerian economy accounting for 80% of the nation’s GDP in the recent times (Lukeman, 2003). The industry has also pushed Nigeria to the forefront of the global industry, making the country the 6th largest exporting and 7th largest producer of oil in the world. Revenue from petroleum sector comprising export earning, petroleum profits tax and royalties has grown steadily over the years. Between 1970 and 1998, earning from oil rose from 75.3% to a peak of 84.1% of the total federally generated revenue (CBN, 1998).
Also, IMF estimates showed, Nigeria’s earnings from crude oil increases from US $8,500 billion in 1989, and to $10.600 billion in 1990. By 1995, these earnings had declined to $7,001 billion and declining further to $5.276 billion in 1998. However, crude oil prices have increased steadily in the new millennium following the implementation of strict production quotas imposed by OPEC on member-countries to stem the flow of excess crude oil in the global marketplace.
As a result of the dominant role played by the oil sector in the nation’s economy, economic performance has been linked to oil prices in the past three decades. This rather unenviable development has inspired the current administration to diversify the nation’s economy away from its dependence on crude oil by harnessing natural gas, bitumen and other solid minerals. In year 2000, thanks to the oil windfall, the growth rate of oil GDP improved by 4.8 % compared with the previous year. The unexpected boom in the international market helped to propel the growth performance of the entire economy (UNECA, 2005). Oil prices rose from $18.00 a barrel in 1999 to $28.00 in 2000. Also, OPEC quota for Nigeria increased from 1.885 million barrels a day in March to 2.033 million in April, 2,091 million in July, 2,157 million in October and 2,178 million in November. Of the total daily production, around 1.88 million barrels a day were exported from 1.66 million in 1999.
Although oil is largely an enclave sector in Nigeria, having a few forward and backward linkages with the rest of the economy, however, it remains a decisive force for economic performance. Its impact is transmitted through the income effect, mediated through public spending and imports. In recent times, oil GDP is clearly more volatize than non-oil GDP. Due to the volatility of oil prices, the sector often experiences rapid growth in value added on year followed by an equally rapid decline in the next, with the trend usually reflected in volatile growth for the economy as a whole. Table 1 shows the contribution of various sectors to the nations between 2001 and 2004.
2.5 Petroleum Production and Exploration in Nigeria
As of 2000, oil and gas exports accounted for more than 98% of export earnings and about 83% of federal government revenue, as well as generating more than 40% of its GDP. It also provides 95% of foreign exchange earnings, and about 65% of government budgetary revenues.
Nigeria’s proven oil reserves are estimated by the US EIA (United States Energy Information Administration) at between 16 and 22 billion barrels, but other sources claim there could be as much as 35.3 billion barrels. Its reserves make Nigeria the tenth most petroleum-rich nation, and by the far the most affluent in Africa. In mid-2001 its crude oil production was averaging around 2.2 million barrels (350,000 m³) per day.
Nearly all of the country’s primary reserves are concentrated in and around the delta of the Niger River, but off-shore rigs are also prominent in the well-endowed coastal region. Nigeria is one of the few major oil-producing nations still capable of increasing its oil output and unlike most of the other OPEC countries, Nigeria is not projected to exceed peak production until at least 2009. The reason for Nigeria’s relative unproductivity is primarily OPEC regulations on production in order to regulate prices on the international market. More recently, production has been forced to a halt intermittently by the demands and actions of the Niger Delta’s inhabitants who feel they are being exploited.
Nigeria has 159 total oil fields and 1481 wells in operation according to the Ministry of Petroleum Resources. The most productive region of the nation is the coastal Niger Delta Basin in the Niger Delta or “South-south” region which encompasses 78 of the 159 oil fields. Most of Nigeria’s oil fields are small and scattered, and as of 1990, these small unproductive fields accounted for 62.1% of all Nigerian production. This contrasts with the sixteen largest fields which produced 37.9% of Nigeria’s petroleum at that time. As a result of the numerous small fields, an extensive and well-developed pipeline network has been engineered to transport the crude. Also due to the lack of highly productive fields, money from the jointly operated (with the federal government) companies is constantly directed towards petroleum exploration and production.
Much of Nigeria’s petroleum is classified as “light” or “sweet”, meaning the oil is largely free of sulphur. Nigeria is the largest producer of sweet oil in OPEC. This sweet oil is similar in constitution to petroleum extracted from North Sea. This crude oil is known as “Bonny light”. Names of other Nigerian crudes, all of which are named according to export terminal, are Qua Ibo, Escravos blend, Brass river, Forcados, and Pennington Anfan.
In terms of exportation, the U.S. remains Nigeria’s largest customer for crude oil, accounting for 40% of the country’s total oil exports; Nigeria provides about 10% of overall U.S. oil imports and ranks as the fifth-largest source for U.S. imported oil.
There are six petroleum exportation terminals in the country, Shell owns two, while Mobil, Chevron, Texaco, and Agip own one each. Shell also owns the Forcados Terminal, which is capable of storing 13 million barrels of crude oil in conjunction with the nearby Bonny Terminal. Mobil operates primarily out of the Qua Ibo Terminal in Akwa Ibom State, while Chevron owns the Escravos Terminal located in Delta State and has a storage capacity of 3.6 million barrels. Agip operates the Brass Terminal in Brass, a town 113 km southwest of Port Harcourt and has a storage capacity of 3,558 barrels. Texaco operates the Pennington Terminal.
Nigeria’s total petroleum refining capacity is 445,000 barrels per day (bpd), however, only 240,000 bpd was allotted during the 1990s. Subsequently crude oil production for refineries was reduced further to as little as 75,000 bpd during the regime of Sanni Abacha. There are four major oil refineries: the Warri Refinery and Petrochemical Plant which can process 125,000 barrels of crude per day, the New Port Harcourt Refinery which can produce 150,000 barrels per day (there is also an ‘Old’ Port Harcourt Refinery with negligible production), as well as the now defunt Kaduma Refinery. The Port Harcourt and Warri Refineries both operate at only 30% capacity.
It is estimated that demand and consumption of petroleum in Nigeria grows at a rate of 12.8% annually. However, petroleum products are unavailable to most Nigerians and are quite costly, because almost all of the oil extracted by the multinational oil companies is refined overseas, while only a limited quantity is supplied to Nigerians themselves.
2.6 Industry nationalization and Nigeria’s Petroleum Industry Development (1970-1979)
In May of 1971 the Nigerian federal government, then under the control of General Yakubu Gowon, nationalized the oil industry by creating the Nigerian National Oil Corporation via a decree. Following the war with Biafra, the government felt it necessary to secure and gain more control over the oil industry. Nationalization of the oil sector was also precipitated by Nigeria’s desire to join OPEC, which required that member states acquire 51% stake and become increasingly involved in the oil sector. Although the Nigerian government had maintained involvement in the industry prior to 1971, this was accomplished mainly through business deals on concessions of the foreign firms in operation. The creation of the NNOC made government participation in the industry legally binding. The federal government would continue to consolidate its oil involvement throughout the next several decades.
However, it was during the years of Gowon and his successors Murtala Mohammed and Olusegun Obasanjo known officially as the Heads of the Federal Military Government of Nigeria,who ruled amidst the oil boom of the 1970s that the political economy of petroleum in Nigeria truly became characterized by endemic patronage and corruption by the political elites, which plagues the nation to this day. At both state and federal government levels, power and therefore wealth has typically been monopolized by select interest groups who maintain a strong tendency to ‘look after their own’ by financially rewarding their political supporters. At the state or community level this means that interest groups in power will reward and protect their own; this is typically based on ethnic/tribal or religious affiliation of the interest group. The heavy patronage based on tribal affiliation has fueled ethnic unrest and violence throughout Nigeria, but particularly in the Niger Delta states, where the stakes for control of the immense oil resources are very high. At the federal level, political elites have utilized patronage to consolidate power for the ruling government, not only by rewarding their political friends in the federal government, but also by paying off major interest groups at the state or tribal level in order to elicit their cooperation. Inevitably these financial favors are distributed unequally and inefficiently, resulting in concentration of wealth and power in the hands of a small minority. Nigeria is in fact ranked by the Corruption Perceptions Index as the sixth (ranked 152 out of 159 countries surveyed) most corrupt nation on Earth and maintains the second lowest ranking in Africa, ahead of only Chad.
Following the NNOC’s genesis, the Nigerian government persisted in garnering control over oil revenues, in 1972 it declared that all property not currently owned by a foreign entity is legally the property of the government, which gained jurisdiction of the sale and allocation of concessions to foreign investment. The military regime oversaw the implementation of a number of other important milestones related to oil:
1974: Participation in oil industry by government increases to 55 percent.
1975: Decree 6 increases federal government share in oil sector to 80%, with only 20% going to states.
1976: First exploration and development venture by NNOC undertaken and drills to uncover commercial quantities of petroleum off-shore.
1978: Perhaps most importantly, the federal government created the Land Use Act which vested control over state lands in control of military governors appointed by the federal military regime, and eventually led to Section 40(3) of the 1979 constitution which declared all minerals, oil, natural gas, and natural resources found within the bounds of Nigeria to be legal property of the Nigerian federal government.
1979: In an effort to establish further control over the industry, the government merges and restructures the NNOC and the Ministry of Petroleum to form the Nigerian National Petroleum Corporation, an entity which would exert more power over the allocation and sale of concessions than the NNOC. By 1979, the NNPC had also gained 60 percent participation in the oil industry.
Table 1. Growth rates and contributions to Nigeria’s GDP growth by sector (2001 – 2004).
Sector Average annual Growth Rate (%)
2001 2002 2003 2004 Share of GDP Share
in 2004(%) Contribution
of GDP in 2004(%)
Agriculture 4.0 5.0 5.0 6.0 51.5 3.08
Industry 2.0 1.0 1.0 3.0 20.7 1b.33
Manufacturing 0.0 -4.0 4.0 4.0 – –
Building and
Construction 6.0 6.0 4.0 4.0 2.1 0.08
Wholesale trade 1.0 3.0 2.0 2.0 11.0 0.23
Retail trade 4.0 4.0 4.0 4.0 28.1 1.123.84
Sources: UNECA, 2005.
2.7 Impact of Petroleum on the environment in the Niger Delta
The Niger Delta is comprised of 70,000 km² of wetlands formed primarily by sediment deposition. Home to 20 million people and 40 different ethnic groups, this floodplain makes up 7.5% of Nigeria’s total land mass. It is the largest wetland and maintains the third-largest drainage area in Africa. The Delta’s environment can be broken down into four ecological zones: coastal barrier islands, mangrove swamp forests, freshwater swamps, and lowland rainforests. This incredibly well-endowed ecosystem, which contains one of the highest concentrations of biodiversity on the planet, in addition to supporting the abundant flora and fauna, arable terrain that can sustain a wide variety of crops, economic trees, and more species of freshwater fish than any ecosystem in West Africa. The region could experience a loss of 40% of its inhabitable terrain in the next thirty years because of extensive dam construction in the region. The carelessness of the oil industry has also precipitated this situation, which can perhaps be best encapsulated by a 1983 report issued by the NNPC in 1983, long perform popular unrest surfaced:
We witnessed the slow poisoning of the waters of this country and the destruction of vegetation and agricultural land by oil spills which occur during petroleum operations. But since the inception of the oil industry in Nigeria, more than twenty-five years ago, there has been no concerned and effective effort on the part of the government, let alone the oil operators, to control environmental problems associated with the industry.
2.7.1 Oil spills
Oil spills in Nigeria occur due to a number of causes which include: corrosion of pipelines and tankers (accounts for 50% of all spills), sabotage (28%), and oil production operations (21%, with 1% of the spills being accounted for by inadequate or non-functional production equipment. The largest contributor to the oil spill total, corrosion of pipes and tanks, is the rupturing or leaking of production infrastructures that are described as, “very old and lack regular inspection and maintenance”. A reason that corrosion accounts for such a high percentage of all spills is that as a result of the small size of the oilfields in the Niger Delta, there is an extensive network of pipelines between the fields, as well as numerous small networks of flowlines—the narrow diameter pipes that carry oil from wellheads to flowstations—allowing many opportunities for leaks. In onshore areas, most pipelines and flowlines are laid above ground. Pipelines, which have an estimate life span of about fifteen years, are old and susceptible to corrosion. Many of the pipelines are as old as twenty to twenty-five years. Even Shell admits that “most of the facilities were constructed between the 1960s and early 1980s to the then prevailing standards. SPDC [Shell Petroleum and Development Company] would not build them that way today.” Shell operates the Bonny Terminal in Rivers State, which has reportedly been in operation for forty years without a maintenance overhaul; its original lifespan was supposed to be twenty five years.
Sabotage is performed primarily through what is known as “bunkering”,whereby the saboteur attempts to tap the pipeline, and in the process of extraction sometimes the pipeline is damaged or destroyed. Oil extracted in this manner can often be sold for cash compensation.
The Nigerian National Petroleum Corporation places the quantity of oil jettisoned into the environment yearly at 2,500 cubic meters with an average of 300 individual spills annually. However, because this amount does not take into account “minor” spills, the World Bank argues that the true quantity of oil spilled into the environment could be as much as ten times the officially claimed amount. Among the largest individual spills include the blowout of a Texaco offshore station which in 1980 dumped an estimated 400,000 barrels of crude into the Gulf of Guinea and Shell’s Forcados Terminal tank failure which produced a spillage estimated at 580,000 barrels. One source projects that the total amount oil in barrels spilled between 1960 and 1997 is upwards of 100 million barrels.
Oil spillage has a major impact on the ecosystem into which it is released. Immense tracts of the mangrove forests, which are especially susceptible to oil (this is mainly because it is stored in the soil and re-released annually with inundation), have been destroyed. An estimated 5-10% of Nigerian mangrove ecosystems have been wiped out either by settlement or oil. The rainforest which previously occupied some 7,400 km² of land has disappeared as well.
Spills in populated areas often spread out over a wide area, taking out crops and aquacultures through contamination of the groundwater and soils. Though the consumption of dissolved oxygen by bacteria feeding on the spilled hydrocarbons also contributes to the death of fishes. In agricultural communities, often a year’s supply of food can be destroyed by only a minor leak, debilitating the farmers and their families who depend on the land for their livelihood. Drinking water is also frequently contaminated, and a sheen of oil is visible in many localized bodies of water. If the drinking water is contaminated, even if no immediate health effects are apparent, the numerous hydrocarbons and chemicals present in oil are highly carcinogenic. Although, people often do manifest sickness following consumption of polluted water.
Offshore spills, which are usually much greater in scale, contaminate coastal environments and cause a decline in local fishing production.
The decline in ecologic sustainability parallels the increase in oil production since operations began four decades ago. Furthermore, operating companies such as Shell have made public proposals for increasing production significantly in the near future which, because of the careless nature of oil operations in the Delta, will cause the environment to grow increasingly uninhabitable.
2.7.2 Problem of Natural gas flaring
Nigeria flares more natural gas associated with oil extraction than any other country on the planet, with estimates suggesting that of the 3.5 billion cubic feet of associated gas (AG) produced annually, 2.5 billion cubic feet, or about 70% is wasted via flaring. This equals about 25% of the UK’s total natural gas consumption, and is the equivalent to 40% of the entire African continent’s gas consumption in 2001. All statistical data associated with gas flaring is notoriously unreliable, but AG wasted during flaring is estimated to cost Nigeria US $2.5 billion on a yearly basis.
The reason for this practice, which is generally agreed world-wide to be wasteful both economically and environmentally, is that in order to maximize production of crude oil, the associated gas accompanying it is often burned off. Even though companies operating in Nigeria also harvest natural gas for commercial purposes, they prefer to extract natural gas from deposits where it is found in isolation, this isolated gas is known as non-associated gas. This occurs because it is costly to separate commercially viable associated gas from the oil. Therefore the AG found with oil is often burned off in order to increase crude production.
Historically, gas flaring began simultaneously with oil extraction in the 1960s by Shell-BP. Although, the British government subsequently acknowledged that the flaring was unacceptable, it was allowed to continue without any real efforts to change infrastructure and prevent the waste of the gas. This is in contrast to Britain’s policies on gas flaring in their own territory, where gas flaring has been reduced to a minimum.
In fact, in western Europe 99% of associated gas is used or re-injected into the ground. Gas flaring is generally discouraged and condemned by the international community, as it contributes greatly to climate change. Which ironically can display its most devastating effects in developing countries like Nigeria, and particularly in the semi-arid Sahel regions of sub-Saharan Africa. The Niger Delta’s low-lying plains are also quite vulnerable as they lie only a few meters above sea-level.
Gas flaring in Nigeria is also highly inefficient and releases large amounts methane, which has very high global warming potential. The methane is accompanied by the other major greenhouse gas, carbon dioxide, of which Nigeria was estimated to have emitted more than 34.38million tons in 2002, accounting for about 50% of all industrial emissions in the country and 30% of the total CO2 emissions. As flaring in the west has been minimized, in Nigeria it has grown proportionally with oil production. The volume of associated gas produced and therefore burnt off, is directly linked to the amount of oil produced. So even though the percentage of gas flared from 92% in 1981 has fallen to around 70%, the overall amount of flared gas has increased from 2.1 billion cubic feet to 2.5 billion cubic feet.
It seems that the international community, the Nigerian government, and the oil corporations are all in agreement that gas flaring has a negative impact and needs to be stopped. However, in reality, efforts at stemming gas flaring have been slow to be implemented. The practice of gas flaring as it has been allowed since oil production began under British, has become set in stone, and would be costly to overhaul to reduce flaring. As a result, little is done by oil companies. This is in spite of the fact that gas flaring in Nigeria has technically been illegal since 1984 under section 3 of the “Associated Gas Reinjection Act”. However, none of the regulations stipulated by this document have ever been made public.
OPEC and Shell, the biggest flarer of natural gas in Nigeria, alike claim that only 50% of all associated gas are burnt off via flaring at present. However, this statistic is accepted by few. The World Bank reported in 2004 that, “Nigeria currently flares 75% of the gas it produces.”While other sources make similar projections, between 70 and 75% is the generally accepted percentage of gas flared.
Gas flares can have potentially harmful effects on the health and livelihood of the communities in their vicinity, as they release a variety of poisonous chemicals. Just some of combustion by-products include nitrogen dioxides, sulphur dioxide, volatile organic compounds like benzene, toluene, xylene and hydrogen sulfide, as well as carcinogens like benzapyrene and dioxin. Humans exposed to such substances can suffer from a variety of respiratory problems, which have been reported amongst many children in the Delta but have apparently gone uninvestigated. These chemicals can aggravate asthma, cause breathing difficulties and pain, as well as chronic bronchitis. Of particular note is that the chemical benzene, which is known to be emitted from gas flares in undocumented quantities, is well researched as being a causative agent for leukemia and other blood-related diseases. A study done by Climate Justice estimates that exposure to benzene would result in eight new cases of cancer yearly in Bayelsa State alone.
Often gas flares are located close to local communities, and regularly lack adequate fencing or protection for villagers who may risk nearing the tremendous heat of the flare in order to carry out their daily activities. Many of these communities claim that nearby flares cause acid rain which corrodes their homes and other local structures, many of which have metal roofing. However, whether or not the flares contribute to acid rain is debatable, as some independent studies conducted have found that the sulphur dioxide and nitrous oxide content of most flares was insufficient to establish a link between flaring and acid rain. Other studies from USEIA (U.S. Energy Information Administration) report that gas flaring is, “major contributor to air pollution and acid rain”.
Flares which are often older and inefficient are rarely relocated away from villages, and are known to coat the land and communities in the area with soot and damage adjacent vegetation. Almost no vegetation can grow in the area directly surrounding the flare due to the tremendous heat it produces.
In November of 2005 a judgment by, “the Federal High Court of Nigeria ordered that gas flaring must stop in a Niger Delta community as it violates guaranteed constitutional rights to life and dignity. In a case brought against the Shell Petroleum Development Company of Nigeria (Shell), Justice C. V. Nwokorie ruled in Benin City that the damaging and wasteful practice of flaring cannot lawfully continue.”
2.8 Export diversification and the Nigerian Economy
Nigeria’s contemporary development has been sustained by extreme dependence on one single primary commodity, that is oil, and it account for more than 95% of the export earnings. Also, crude oil also contributes more than two-thirds of government revenue and 12% of the GDP (UNDP, 2000). Extreme dependence of the Nigerian economy on crude oil has rendered it most vulnerable to the instability of market forces with grave implications to the nation’s economic growth and development.
Therefore, in order to foster economic stability and become a full partner in the global economy of the 21st century, Nigeria must embark on export diversification and take advantage of its huge stock of natural resources. Nigeria’s diversification approach should cover production and export, including agro-processing, manufacturing and services. It should also extend to non-traditional agricultural goods and eventually non-traditional industrial products (World Bank 2000a).
Export diversification is important for two main reasons, first, export receipts are needed to finance imports of consumer for the, intermediate and capital goods. Reliance on exportation of traditional commodities is fraught with dangers associated with price volatilility, and the long-term decline in the prices of primary commodities.
Secondly, there is need to penetrate dynamic markets in the developed and emerging economies may provide the best avenue to attract high and productive and accelerated development.
2.9 Trend in Agricultural Exports
In the 1960s agriculture accounted for about 65-70 per cent of total exports and declined to about 40 per cent in 1970 prior to the oil boom. By 1996 agricultural export accounted for less than 2 per cent of exports. Agricultural exports not only shrank from the traditional baskets of about 12 to 15 commodities in the 1960s, when Nigeria was known to be among leading producers of cocoa, palm produce, rubber, cotton and groundnut, it actually became a net importer of these commodities. For instance, it is a well known fact that Malaysia got the oil palm seed from Nigeria but has become a leading producer, while Nigeria’s output not only stagnated but now import large quantity of vegetable oils.
Also, the market for Nigeria’s agricultural export did not change appreciably as roughly all of it still go to the European Community, and almost in its primary form without any appreciable value added.
2.10 Agriculture and Global Market
During Nigeria’s political independence in 1960, agriculture was the mainstay of the nation’s economy, providing food to feed the population and fetching the bulk of the nation’s foreign exchange earnings. However, the emergence of crude oil since the early 1970s has changed the nation’s economic profile, marginalizing agriculture in favour of the petroleum industry. In order to enhance the nation’s economic growth, it is necessary to diversify the economy into non-traditional exports. There-by reducing vulnerability to price instability associated with the crude oil markets. In the agricultural sectors, diversification could be horizontal or vertical. These require processing primary agricultural commodities into intermediate and finished products, with considerable value-added. This process is expected to fetch higher export earnings with such commodities as cocoa, cotton, palm produce, rubber, etc. Also, export diversification into non-traditional agricultural commodities can become a veritable source of foreign exchange earnings. This may include exportation of cut flowers, fruits, vegetables, herbs and several sea foods. These agricultural commodities have a high dynamic potential because of their high unit value and high elasticity demand. Therefore, successful diversification into such products generally requires introduction of new technologies. If these are put in place, positive linkages may be created with domestic industry in food, beverages and tobacco sector which are likely to spur export orientation, as well as the emergence of domestic firms processing agricultural commodities that may eventually become large enough to compete in international markets (UNCTAD, 1998). Despite agriculture’s crucial position in the national economy, it has remained below its production potential, particularly in the past three decades. This negative trend is reflected in the under-capitalization, which accounts for its lack of competitiveness in the global markets. However, this unenviable position can be reversed by injecting additional resources into the agricultural sector from the windfall earnings that accrue to the petroleum industry from time to time. For example, in the aftermath of the recent crisis in the Middle East, where American-led coalition forces invaded Iraq in 2003, oil prices have reacted sharply, rising in recent times beyond $40 (USD) per barrel to the current price of $83 (USD) per barrel in September 2007. Additional resources generated from the windfall can provide the nation’s agricultural sector with the support it needs to tackle food insecurity, and foster export diversification.
More resources from the oil industry should be used to boost agricultural development, targeting small-scale farmers, who are responsible for the bulk of the nation’s staple foods and export crops. New resources for the nation’s agricultural sector can be tailored to assist small-scale farmers and their organizations through the following schemes: (a) Micro-credit programmes, (b) Provision of agricultural inputs with subsidies where necessary, (c) Additional funding to assist the nation’s agricultural research institutes to generate novel agricultural technologies, (d) Capacity building for both private and public extension agencies to disseminate sustainable agricultural techniques, (e) Fostering enduring partnerships between farmers’ organizations, governmental bodies and international development agencies, (f) Developing, export markets for the nation’s primary and processed agricultural commodities and (g) Upgrading social and physical infrastructure, particularly in rural areas, where they are in dismal conditions.
2.11 Major Sources of Agricultural Growth
There is great potential in Nigeria to resuscitate and expand production of traditional agricultural exports as well as new ones given the current level of resource endowments and the new market potential offered by regional integration.
Available data show that of the total land area of 91,077 thousand hectares, about 35 per cent or less is currently crop land, about 23 per cent is pasture land while about 15 per cent is forest. The land mass can also be classified into three main vegetations: swamps/rain forest, savannah and semi-arid savannah. This suggests that about 73-75 per cent of Nigeria’s land mass is amenable to farming and can support a wide range of tree and staple food crops, livestock and forestry production. Also blessed with a long marine coastline and numerous rivers and lakes, it can boast of fishing and aquaculture.
The potential therefore exists to resuscitate traditional export crops such as cocoa, rubber, palm produce, coffee through replanting of aged plantation and in some cases cleaning up abandoned ones. There is also potential to corner exports of staple crops such as cassava and yam that Nigeria is renowned as a major producer while the savannah zones support a wide range of traditional grains such as sorghum, maize, beans and oil seeds. Indeed, our land resources are one that can guaranty that the nation is self-sufficient in the production of a wide variety of food crops and livestock. The greatest supply side challenge would therefore to strive to raise productivity through technological change (use of intensive chemicals, fertilizers, integration of livestock into farming systems, better irrigation methods, hand-tools and storage methods and improved animal and crop husbandry
The large domestic market provided by agro-allied industries especially the food and beverage industries offer opportunity to add value to traditional non-export grains such as sorghum and cassava mainly to target ECOWAS market. This would represent a major dividend of the current regional integration effort. Opportunities also exist to substitute traditional grains for imported ones by industries such as sorghum and maize for malted barley in the brewery industry, cassava and other grains in the flour and feed industry instead of wheat and a host of others. These are immense opportunities for resuscitating and inducing agro-allied exports.
There is also great potential for piggery and other livestock production targeted mainly at export markets.
One area of comparative advantage that has been relatively unexploited is cultivation of fresh fruits, vegetables and horticulture for export. Almost all flora and fauna can grow in Nigeria with very little effort. The major challenge lies with post harvest handling and market opportunities.
2.12 Factors Behind the Poor Agricultural Export Performance
The poor performance of agricultural production for export has been blamed on three main factors viz.: decline in world commodity price (shocks) that have been persistent, poor management of public resources and inappropriate incentives and more fundamentally structural factors especially technological constraints.
2.12.1 Unfavourable Terms of Trade
Persistent decline in commodity prices resulted in unfavourable terms of trade for traditional exports such as cocoa, rubber and palm oil beginning from the mid-1980s to date.
This was at a time when the country had recourse to import competing grains to augment domestic supplies, a situation that was strained further by the oil shock of the 1980s.
2.12.2 Lack of Appropriate Public Sector Programme and Incentives For Agricultural Export Promotion
Lack of appropriate export development programme and incentives are two major factors behind the poor performance. Firstly, in spite of the fact that agricultural exports was the backbone of the Nigeria economy prior to the advent of oil fortunes, there was no concrete plan for its development within our economic development framework. Instead, the focus was on industrialization through the adoption of import-substitution strategy. Worse still was that even when such industries were agro-allied, they depended upon imported grains and commodities for their source of raw materials and inputs. Indeed, efforts at developing agriculture did not target commodities in which Nigeria had comparative advantage, but promoted use of modern inputs indiscriminately. Rather than embarking on replanting and resuscitating abandoned plantations that produce mainly for exports, the concern over satisfying domestic food demand led to undue emphasis on public sector interventions in favour of non-exportable.
Related to this is the pursuit of inappropriate structure of incentives for agricultural production for exports in general. Large state monopolies controlled prices and most of the time pay farmers below world market prices, which represented implicit taxation of farm incomes.
Others were credit and foreign exchange allocations that did not reach the intended farming sector beneficiaries. The net result was that farming and production for export was unprofitable because of the implicit bias against it inherent in the industrial incentives structure.
2.12.3 Structural or Supply-Side Problems
The major constraints to resuscitating agricultural exports are the enormity of the supply-side problems. Among them are:
• Undue dominance of primitive farming system whose productivity is low and characterized by use of traditional tools such as hoes and cutlasses; very small size of holdings and seldom use of modern inputs such as agro-chemicals and improved seeds.
• Unfortunately this sector accounts for more than 90 per cent of agricultural output
• Lack of appropriate intermediate technology. Efforts at modernizing the farming system had stressed the use of modern technologies such as fertilizers, tractors, modern road transports often outside the reach of the dominant traditional farming sector. Yet affordable intermediate technologies are scarce. There seem to be a “missing middle” which impedes progress towards revamping agriculture in general.
• Deficient rural infrastructure. The setback to predominantly subsistence farming was the deficiency of rural infrastructure. Better market incentives are often blunted if the physical barriers and economic costs of transporting goods to and fro rural markets are high. Also poor storage facilities and lack of power impedes the efficiency of postharvest handling.
• Land tenure problems which leads to fragmentation
• Environmental degradation, which manifest in deforestation, bush burning, overgrazing and the removal or weakening of vegetative cover that expose the soil to rain and wind erosion.
• Weak capacities to respond to good enabling environment. This is reflected in lack of adequate capital and human capacities to manage land rights, procure inputs, access credit and market products efficiently given the limitation imposed by the scale and method of farming.
2.13 Resuscitating Agricultural Production In Nigeria
The challenge of resuscitating agricultural production for exports in Nigeria is an enormous one. This is because of the dramatic shift in the fortunes of the sector over the years: from the dominant sector of the economy (contributed 64.1 per cent to GDP) and supplier of food, income, foreign exchange and employment in the 1960s to a net importer of food contributing less than 5 per cent to total foreign exchange earnings in 2000.
Many policy analysts attribute this to the sector’s neglect following the discovery of petroleum resources beginning from the early 1970s and the accompanying foreign exchange fortunes. Farming was not only abandoned, the structure of domestic demand for food and agricultural products was altered in favour of imports of grains, beverages and vegetable oils and fibres which Nigeria was once reputed as a leading world producer.
The task of resuscitating agricultural production for exports is therefore very daunting.
This would require stepping up production to meet and bridge the import gap, provide for strategic food reserves and generate surplus for exports to earn income and sustain farming enterprise in general. It goes beyond resuscitation of traditional exports to conscious effort at developing and promoting new commodities for exports.
Getting incentives right for farming in general and in particular for export crops production holds the key to resuscitation of exports. The focus should not be mainly on reviving the dwindled fortunes of traditional export commodities, but also to target new commodities, add value to traditional ones and new markets through appropriate pricing and marketing incentives and through the provision of an enabling environment that can spur agricultural development.
Among the principal policy measures required are the need to:
• Mobilize the private sector through appropriate pricing and market incentives for all classes of farmers, fostering rural savings and credit schemes and through improving rural infrastructure so as to stem the rising rural-urban drift and market transaction costs. Market incentives could include price support schemes at the onset as a veritable instrument of spurring production beyond domestic markets.
• Harnessing technology through the search for higher-yielding varieties, expanding fertilizer use, controlling pest and diseases, irrigation water availability and control, agricultural equipment, livestock, measures to promote fisheries, better agricultural research, improving agricultural extension and the supply of inputs and reorienting agricultural education. In particular, effort should be made to bridge the missing middle in technology as well as shift away from undue emphasis on mechanical technologies to biological and chemical ones that are scale neutral and have extensive application scope.
• Protect the rural environment through reforestation schemes, avoiding cultural practices that results in land degradation but stresses soil and water conservation.
• Providing rural infrastructure: roads, water, electricity and cheap source of mechanical energy. These are important for curtailing production and transactions costs as well as fostering appropriate link with urban markets for sales of produce and purchase of necessary inputs.
• Developing farmers’ associations and recognizing the role of women. These would empower the people to collectively take advantage of capital and other intensive resources required for production.
• Redefining land rights to grant access to new investors, women and make the current traditional system amenable to modernization.
In conclusion, the key to resuscitation of agricultural exports is to make the farm sector more productive through better policies and stronger institutions, and most of all, developing and empowering the people.
CHAPTER THREE
RESEARCH METHODOLOGY
3.1 Introduction
This chapter highlights the methods adopted in gathering relevant data for the study. Such methods may include population size, instrument used in data collection, and method of data analysis.
It is a breakdown of various methods adopted in making sure that relevant data were gathered in the course of the study.
3.2 Research Design
This research can be said to be a survey research of the effect of petroleum on agricultural development in Nigeria using Ilaje community of Ondo State and which falls within the Niger Delta region of Nigeria as case study.
It is important to note that petroleum has become the mainstay of Nigeria’s foreign earner thereby confining other sectors of the economy into the doldrums. For the purpose of this study, dwindling agricultural development fortunes became the focus of the study.
3.3 Population and Size of the Study
The population of the study is the entire Nigerian landscape but special foucs and attention is given to the Ilaje community in the Nigerian context and the sample size include 100 selected respondents from Ilaje community, Ondo State.
3.4 Research Instrument
The major instrument of this study is the Questionnaire. It is to be administered to respondents from selected population sample from Ilaje community of Ondo State, so as to be able to know the effect of petroleum on agricultural development in Nigeria. Thus, apart from the revenue aspect of agricultural production, which has continued to deteriorate to the detriment of petroleum product; other effect also taken into consideration includes; environmental impact of petroleum on livelihood and economic activity of the Ilaje community is also considered of importance.
100 respondents will be randomly selected from locations around Ilaje community; questionnaire will be administered to the respondents with interview to access information on the research topic.
3.5 Method of Gathering Data
3.5.1 Primary source;
This is basically applied through interviews and questionnaires from which the questionnaires were given to respondents and views gotten from each respondent on the research topic.
3.5.2 Secondary source;
Secondary source is the instrument or tool for gathering information, as elaborated in the literature review. These include; the school library, textbooks, newspapers, the Internet, magazines, bulletin on petroleum development in Nigeria and other relevant materials.
3.6 Method of Data Analysis
Data analysis is the transformation that data collected go through to form the basis by the researcher about the relationship that exists from the data made available. For the purpose of this study, the simple percentage and the Chi-square analytical tool of data analysis are used to answer the hypothesis formulated for the study.
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