Effects of Fluctuations in Cocoa Price on its Production and Export in Nigeria: A Nonlinear AutoRegressive Distributed Lag Approach
DOI:
https://doi.org/10.31181/sa21202421Keywords:
Fluctuations, Cocoa price, Cocoa production, Cocoa export, ARDLAbstract
The study examined the influence of prices on cocoa production and exports in Nigeria. The variables under review included key aspects of cocoa production such as Cocoa Output (CO), Yield (YE), Area Harvested (AH), and Cocoa Export (CEX), as well as cocoa World Price (WP) and Producer Price (PP). Secondary data spanning from 1980 to 2020 were sourced from reputable national and international sources such as the Food and Agriculture Organization (FAO), quarterly bulletin of cocoa statistics, and World Bank commodity price data (the pink sheet), among others. Analytical tools employed in the study included descriptive statistics, a growth function model and graphs and a Nonlinear Auto-Regressive Distributed Lag (NARDL) model. The result of the growth function analysis indicated a slow growth rate in YE, CO, AH and CEX while WP and PP have a relatively faster growth rate. The result also confirmed significant acceleration in WP, PP, CO, AH and CEX while for YE, there is stagnancy. The influence of WP and PP on cocoa production and exports in Nigeria was examined using a novel cointegration technique, NARDL. The findings indicated that both positive and negative decomposed partial sums of PP and WP had insignificant effects on CO, while they had significant effects on CEX. Based on these results, the study concluded that prices of cocoa had significantly impacted CEXs in Nigeria. Cocoa farmers are encouraged to step up their game to achieve increased production and export so as to benefit more from the upward trend of cocoa prices. It is also recommended that the government should introduce price-related reforms that will improve the transmission of WPs to farmers and ensure transparency and accountability in implementing such reforms.
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