Effects of Petrol Pump Price Fluctuation on the Performance of Nigerian Agricultural Sector (1990-2022)

ABSTRACT:This research sought to find out the effect of Petrol pump price on the agricultural subsectors from 1990-2022. The specific objectives were to: evaluate the trend in petrol pump price and performance of agricultural sectors, investigate the effect of Petrol pump price on consumer’s behaviour and determine the effects of petrol pump price fluctuation on the performance of agricultural sector. Secondary data were employed for the study. An autoregressive distributed lag (ARDL) bound test approach was employed to establish co-integration between series. The estimated long and short-run models parameters demonstrated stability, best quality, efficiency, and unbiased results. The result revealed that the coefficient of the trend variable of petrol pump price (0.1491), livestock (0.1548), crop (0.1804), forestry (0.1599), fishery (0.1921) and Total Agricultural GDP (0.1782) respectively were all positive and significant. The compound growth rate results showed a positive growth rate for all the variables while the quadratic equation confirms a deceleration in the growth and agricultural sectors performance. The study also established macroeconomics variables like interest rate, petrol pump price and GDP per capita negative and positive significant relationship with consumer’s behaviour of farmers in the long and short-run. The results of the effects of petrol pump price fluctuation on performance of agricultural sector revealed that macroeconomic policy variables differently influence significantly on the performances of the agricultural sector (livestock, crop, fishery, forestry and total agriculture) in both the long and short-run model. The implications of the findings justify that petrol price should be stabilized to stimulate output in crop production, fishing, forestry and livestock subsectors output in Nigeria. Generally, low and stable growth in petrol pump price should be encouraged. There should be a decrease in exchange rate and inflation to increase borrowing for agricultural production and the purchasing power of consumers which would help increase total Agricultural GDP. This would ensure mild increase in price and encourage producers in these subsectors.