Impact of Agricultural Credit Guarantee Scheme Fund (ACGSF) on Domestic Food Supply in Nigeria

Food supply in Nigeria depends on the rural population who are the main producers of food for the entire population. However, due to the continuous movement of people, particularly, the youths, to the cities in search of lucrative jobs, very few people are left to work on farms. Majority of these farmers engage in subsistence agriculture and lack sufficient funds to operate, expand their business, or even practice mechanized farming, with modern equipment like plough, tractors and other labour saving devices. There is insufficient and limited sources from which funds can be obtained by these farmers. In fact, about a third of the credit needs in rural areas are met by formal lending agencies, which has led to the dominance of informal credit associations like the credit and thrift cooperatives, community development associations and moneylenders. As part of the government effort to guarantee adequate food supply in Nigeria, the government has put in place many policies including an agricultural credit guarantee scheme fund (ACGSF).

Aims: The objective of this paper therefore is to examine the effect of Agricultural Credit Guarantee Scheme Fund (ACGSF) on domestic food supply in Nigeria

Place and Duration of Study: The study was carried out in Nigeria, between the period of 1988 and 2011.

Methodology: The study used secondary data which include annual agriculture credits guarantee funds and the total domestic food output obtained from CBN’s statistical bulletin; the rural population data, obtained from the NBS’s reports; and the average annual rainfall for the country, calculated from the annual rainfall in each state of the federation obtained from the Nigerian Meteorological Agency. The data were analysed using Ordinary Least Square approach.

Results: The results show a robust Adjusted R-square of about 86.3 percent. The value of t-Statistics of each of the explanatory variables shows 3.0323 for ACGSF, 6.8480 for RP and 2.5418 for AAR, indicating that the explanatory variables are statistically significant in explaining domestic food supply (DFS) in Nigeria. Meanwhile, the results give a coefficient of 0.14454 for Agricultural Credit Guarantee Scheme funds (ACGSF), 7.17082 for rural population (RP) and -1.4870 for the annual average rainfall (AAR). It implies that a change of one percent in Agricultural credit facility to the farmers in the agricultural sector, will bring about a change of about 0.14 percent, 7.17 percent and 1.48 percent respectively, on domestic food supply in Nigeria.

Conclusion: It is observed that there has been an increase in the trend of agricultural credits guarantee funds to the farmers within the period of observation, with an average growth of 573.8 percent compared to the average growth of 59.25 percent in the domestic food supply in Nigeria, and the changes in the agricultural credit guarantee fund to the farmers has a significant impact on the domestic food supply.

Recommendation: Based on the finding, it is recommended that the government should encourage agri-business, and the youths, especially fresh graduates be equipped to practice scientific farming. This would greatly improve agricultural production and hence increase food supply in Nigeria.