THE OIL SECTOR VIS-À-VIS THE AGRICULTURAL SECTOR; THE NIGERIAN EXPERIENCE (1981-2007).

CHAPTER ONE/INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Agriculture, according to Omidigi (1993), is an applied science that deals with the preparation of land, cultivation of crops and rearing of animals.

Akinsami (1973:p1) defined agriculture as the production of plants and animals useful to man. It covers not only the cultivation of soil and the feeding and management of crops and livestock, but also the preparation of plants, and animal products for man’s use and the disposal of those products by marketing.

The role of agriculture in transforming both the social and economic framework of an economy cannot be overemphasized. It is a source of food and raw materials for the industrial sector. It is also essential for expansion of employment opportunity, for the reduction of poverty and improvement of income distribution for speeding up industrialization and easing the pressure of balance of payment. In essence, it has been the main source of gainful employment; from which the nation can feed its teeming population, a regenerative, providing the nation’s industries with local raw materials, and as s reliable source of government revenue.

The agricultural sector constitutes one of the most important sectors of the Nigerian economy. Its importance stems from the abundance of agricultural resources and the high percentage of the active population engaged in agriculture. In addition to this, is its contribution to the country’s gross domestic product (GDP) as well as foreign exchange earnings.  (Moro (1995:29)). The contribution of agriculture to GDP, in 1960 was 63%while the percentage share was 74% of the total domestic exports. At this period, agriculture was the mainstay of the Nigerian economy.

Oil or petroleum, on the other hand, is a very versatile and flexible, non –reproductive, depleting natural (hydrocarbon) resource that is a fundamental input into modern economic activity, providing about 50% of the total energy demand in the world, excluding former centrally planned economies. Oil exporting countries of the developing world depend heavily on oil revenue for foreign exchange earnings and for the government budget, in most cases reaching 90% and above.

In Nigeria, the oil sector has assumed a central role in the economy in such a way that it cannot be overemphasized. In fact, Iyoha(2005) had it that between 1981 and 1999,Nigeria received over 228billion US dollars from petroleum export. The inflow of foreign exchange from petroleum export has overwhelming influence on the economy. The growth in GDP since the early 70s is largely attributable to crude oil production.

Moreover, our development plans were focused on the expected earning from crude oil export as a source of finance. More specifically, the Nigerian revenue budget since oil took a primal position in revenue attraction is directly a function of the price per barrel of crude oil and the projected total sales.

Nigeria was a predominantly agrarian economy before the discovery of oil in commercial quantity in 1956 and remained so up to the early part of the 1970s, thereafter oil exerted tremendous impact on the economy.  In Nigeria’s attempt to make oil exploration a lucrative business, there was a shift in its dependence from the agricultural sector to the oil sector, largely based on the innumerable benefits it derived from the later (oil sector). This attitude has brought about a major decline in the agricultural sector and even other sectors of the economy, thereby making the Nigerian economy a mono-economy.

Gone are the days when ships used to sail from Nigerian parts, laden with agricultural products such as cocoa, timber, groundnut, oil palm, rubber, cotton, cassava etc, when the country derived most of its revenue from the export of agricultural products, then the economy was diversified with more focus on the agricultural sector. Then Nigeria’s budget reflected that it was proud of its agricultural heritage. Then, agriculture used to be the backbone of the economy, inviting foreign investors from far and near.

Nigeria’s economy has gradually become one that is almost completely dependent on the oil sector for its sustenance, thereby causing the neglect of the agricultural sector that used to be the foremost of the Nigerian budget.

According to Moro (1995), it is believed that the problem of food crisis has its roots in the gradual transformation of the Nigerian economy accelerated with the impact of the oil price increases during the 1970s, Nigeria who could provide her own food, regardless of its population now has to import staple commodities such as rice, sugar etc.

The agricultural sector has gradually ceased to be what it used to be because of the new rave for oil. States like Delta state Rivers Bayelsa etc are worst as they all have tales of woe to tell, as the catastrophic effects of oil spillage has led to inestimable losses that has led to gradual decline of agriculture in some areas of the region.

Many financial experts are of the view that an economy that largely depends on a sector is definitely not a healthy one. A healthy economy is one that is diversified and not mainstreamed. It appears as if Nigeria has put all her eggs in one basket, standing at the risk of loosing if something should go wrong.

STATEMENT OF THE PROBLEM

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