ABSTRACT
This study examined the economic
effects of crude oil exploitation on cassava production in Delta State.
Specifically, the effect of crude oil exploitation on land productivity, farm
income and cassava yield was explored. The costs and returns, and hence
profitability of cassava production as influenced by oil pollution, the farming
systems and socio-economic characteristics of cassava farmers were critically
examined. Copies of well structured questionnaires were used to collect primary
data from a sample of 204 small scale cassava farmers drawn using stratified
and simple random sampling techniques from the three (3) agro-ecological zones
of Delta State between October 2007 and February 2009. Data were analyzed using
descriptive statistics, costs and returns analyses, net margin and regression
analyses. The results revealed that total fixed cost per cassava farmer was N27,624.49
while total variable cost per cassava farmer was N19,108.68. Total
output of cassava product (garri) before and after oil spill incidents were
48,636kg and 40,549.22kg with an average yield of 328kg and 274kg respectively
per cassava farmer. A net margin of N27,846.43 and N19,206.43
before and after oil spills incidents per cassava farmer, indicating a 31%
reduction in profit, was also revealed. Using the Ordinary Least Square (OLS)
multiple regression method to estimate the effect of crude oil exploitation on
the major dependent variables, the linear functions had the best fit with
adjusted R2 of 0.432 and DW- statistic of 2.08 for land
productivity, adjusted R2 of 0.953 and DW-statistic of 1.537 for
farm income and adjusted R2 of 0.950 and DW-statistic of 2.015 for
cassava yield. The results of the regression analyses and all the hypotheses
tested using the paired t- test statistic at 1% and 5% probability levels,
indicated that crude oil exploitation had a negative and statistically
significant effect on cassava production in consonance with a prior
expectations. Thus, it is recommended among other measures that government at
all levels should take pragmatic steps at enacting and enforcing stringent
environmental laws that will protect the oil producing farming communities as
well as guaranteeing the people a better means of livelihood.
CHAPTER ONE
INTRODUCTION
1.1 Background Information
One of the most discussed issues
in Nigeria in recent time is that of sustainable development. Sustainable
development, according to the Bruntland commission, is development that meets
the needs of the present generation without compromising the ability of future
generations to meet their own needs (World Commission, 1987).
Agriculture plays fundamental role
in the development of any economy. Thus, according to Uwakah et al,
(1991), agriculture is the bedrock of the economic development of most
developing nations. Edordu, (1986) put it succinctly as follows: “experience
has shown that no modern developed country around the world achieved rapid
industrialization without having previously or simultaneously attained a marked
increase in agricultural production”. The contribution of agriculture to
development, most especially in the developing countries includes provision of
food supplies, employment, capital formation, release of labour for industrial
development and fibre needs of industries (Okorie and Eboh, 1999; Njoku, 2000;
FAMRD, 2002). This implies that agriculture is very crucial to the social and
economic development of Nigeria.
Agriculture is a vital business
enterprise having various components. One of these components that is
productive in nature is crop production-a component that dominates largely the
Nigerian agricultural scene. It is noteworthy that agriculture in Nigeria is
dominated by small scale farmers who are responsible for about 90 percent of
the total production (Olatunbode, 1990). The small holder farmers usually have
farm sizes ranging between 1-4 hectares and cultivate mainly staple food crops
(Obinne and Mundi, 1999).
In recognition of the importance
of crop production in the Nigerian economy, successive governments in Nigeria
have undertaken various policy measures to revitalize the agricultural sector.
However, none of these measures has yielded adequate fruitful result. This is
an evidence of the fact that the bulk of Nigeria’s foreign currency earning presently
comes from crude oil and gas. NNPC, (2004) reports that the national budget
depends heavily on the revenue expectation from oil and gas and this will
remain for a while. Thus, the dominant role of crude oil has pushed
agriculture, the traditional mainstay of the economy from the early fifties and
sixties, to the background.
According to Onwudiwe, (2003),
there are eighteen oil companies operating currently in Nigeria. These
companies operate over 159 oil fields and produce from over 1,481 oil wells. Of
this figure, the Shell Petroleum Development Company (SPDC), controls about
half (83 oil fields and 748 oil wells). All of these are almost exclusively in
the Niger Delta region.
Oil production in Nigeria has come
a long way from the early days of the 1950s. Today, of Africa’s proven crude
oil reserves of some 66 billion barrels, Nigeria accounts for 25 billion
barrels, more than 35 percent of the total. Therefore, the significance of oil
in Nigeria’s political economy has grown considerably. From accounting for one
percent of Nigeria’s export earning in 1958, it now accounts for up to 98
percent of export earnings; and from accounting for some 70 percent of total
government revenue in 1970, it now accounts for between 80 and 90 percent. This
phenomenal rise is attributable to crude oil output, which grew from 1.88
million barrels in 1958 to 822.75 million in 1974 and to 547.08 million in 1985
(NNPC, 1985). This figure rose significantly to 751.8 million barrels as at
1996 (CBN, 1996)......
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