CHAPTER ONE
INTRODUCTION
1.1   Background of the study
Agriculture as a sector is an instrumental factor for the development of the economy, as it sustains the livelihood of about 75 percent of the population, and according to World Bank estimates, increased at an annual rate of 2.9 percent in 1990-98 (Opportunities in Nigeria’s Agricultural Sector, 2005). The importance of the agricultural sector in any developing economy is generally well known. This is because it is expected to satisfy the bulk, if not the entire food requirement of the country, supply most of the agricultural raw materials needed by the manufacturing sector, provide adequate employment and income to farmers as well as earn substantial foreign exchange, for the execution of capital projects for developmental purposes. Over the years, inadequacy of agricultural infrastructure has hindered progress in agricultural development. While the use of such devices such as modern diggers, ploughs (instead of hand hoes), and non-harmful chemicals for containment of weed, fertilizers, etc. are unaffordable by most of the smallscale farmers. The importance of the agricultural sector in any developing economy is generally well known. This is because it is expected to satisfy the bulk, if not the entire food requirement of the country, supply most of the agricultural raw materials needed by the manufacturing sector, provide adequate employment and income to farmers as well as earn substantial foreign exchange, for the execution of capital projects for developmental purposes. As such, government expenditure, which is a public sector investment, in agriculture is crucial for the transformation of the sector and realization of development policy objectives. Therefore public expenditure can be described to mean the cost or expenses the government incurs for its own maintenance and for the society, with expanding state activities. Therefore, government expenditure on agriculture especially in the area of development of infrastructure, such as irrigation, input distribution, construction of feeder roads, research and extension, are important. These investments have been left to the government, not just because of limited number of private investor willing to take part in the investment in the sector but due to the strong believer of the government that the availability of such infrastructure and improved technology will contribute immensely to the realization of the expected gains in productivity and output growth in the sector. Despite these, the performance of the sector has generally been considered unsatisfactory especially following the 1971-73 droughts and 1975 Rosette virus epidemic (Ukpong, 1993). The expected significant contribution was made towards the attainment of several national economic and social goals. The resultant effect is the huge importation of food, made possible by the enhanced crude oil export earnings, but which served as a disincentive to serious domestic farming. In line with the anticipated contribution agriculture makes to the overall development of the Nigerian economy, several measures were designed in the years preceding the Structural Adjustment Programme (SAP) to stimulate the growth and development of the sector.