Maize supply response to price and nonprice determinants in Nigeria: bounds testing approach

• Published date: 01 September 2018
• Date: 01 September 2018
• Author: Kolawole Ogundari
• DOI: http://doi.org/10.1111/itor.12284

Intl. Trans. in Op. Res. 25 (2018) 1537–1551

DOI: 10.1111/itor.12284

INTERNATIONAL

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IN OPERATIONAL

RESEARCH

Maize supply response to price and nonprice determinants in

Nigeria: bounds testing approach

Kolawole Ogundari

Department of Applied Economics and Statistics, University of Delaware, Newark, DE, USA

E-mail: ogundarikolawole@daad-alumni.de [Ogundari]

Received 5 July2014; received in revised form 31 December 2015; accepted 3 March 2016

Abstract

This paper estimates the responses of maize supply to own price, price of yam, price of cassava, rainfall, and

fertilizer use in Nigeria using a fully modified ordinary least squares and ordinary least squares estimators.

I find that in the long run, maize supply responds significantly and positively to own price and yam price,

rainfall, and fertilizer use, but negatively to the price of cassava. I observethat the short-run supply responds

only to the fertilizer use and rainfall, which are positive and negative, respectively.

Keywords:maiz e; price elasticity; rainfall;fertiliz er; Nigeria

1. Introduction

In the mid-1980s, maize emerged as a staple food for many Nigerians, its availability being a major

indicator of food security in the country. Nigeria is the largestmaize producer in sub-Saharan Africa

(SSA). It produces 1.5 tons/ha compared to the world’s average yield of 4.3 tons/ha (FAO, 2012),

which signifies the importance of increasing the volume of production to ensurefood security in the

country.

Maize production in Nigeria is rain-fed, short of inputs, and plagued byprice volatilities (Akanni

and Okeowo, 2011). The low yield of maize in the country is as such not unnatural. Mushtaq

and Dawson (2002) note, however, that empirical understanding of farmers’ supply responses to

price and nonprice factors affecting production could help in highlighting strategies required for

improving production and food security levels. Thus, in this study I seek to estimate the short- and

long-run responsiveness of maize supply to own price in Nigeria and the prices of major staples,

such as yam and cassava, as well as to nonprice determinants that include rainfall and fertilizer

use. I use a co-integration approach that incorporates an error correction model to overcome the

potential problem of spurious regression while using time series data to investigate supply response

C

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