CHAPTER ONE
INTRODUCTION
1.1 Background Information
Nigeria has been an agricultural economy since the colonial period up to the 1970s when we witnessed the oil boom. The agricultural sector contributed over 60% to the country’s Gross Domestic Product (National Technical Working Group (NTWG), 2009). From early 1970s to mid-1980s, rapid expansion of the oil sector played a role in eroding the competitiveness of agriculture. The nation grew to rely heavily on earnings from oil exports without making the investments needed to diversify the economy through sustained agricultural growth (NTWG, 2009). However, it has been realised that agricultural sector in Nigeria is currently a key sector that can address the multiple challenges which has kept the country from achieving broad-based economic growth, increasing household incomes, increasing employment, and reducing food/nutrition insecurity and poverty (Stakeholder’s Forum, 2009). The forum stated that agriculture provides 88% of non-oil foreign exchange earnings. According to NTWG (2009) and National Bureau of Statistics (NBS) (2013), agriculture contributes about 42% of Gross Domestic Product (GDP) as against 13-13.5% of Oil and Gas as well as employs two-thirds of Nigeria’s entire labour force.
According to Enete and Achike (2008), no less than a quarter of the world population belongs to the households. One way or another, their livelihoods depend on agriculture (Department for International Development (DFID), 2002). This is to say that agriculture and allied activities are the mainstay of the people living in rural areas (Pal and Biswas, 2011). According to National Planning Commission (NPC) (2004), the bulk of agricultural production in Nigeria takes place in the rural areas. Ogwumike and Akinnibosun (2013) stated that agriculture is the economic stronghold of majority of households in Nigeria and is the source of livelihood for about 90% of the rural population and provides raw materials for agro-allied industries. In addition, the rural households are the country’s major hope for sustained agricultural production as major investments in agriculture are targeted in arable lands in the rural areas.
Households have many challenges which include income variability (Adebayo, Akogwu&Yisa, 2012). This is because high levels of income inequality are likely to create a hostile atmosphere for economic growth and development (Adepoju&Oyewole, 2014).Enete and Achike (2008) asserted that unstable income of households could be accounted for by unfavourable weather changes, outbreak of plague, pollution in coastal waters, eruption of negative externalities, and other uncertainties which pose threats to farming activities and yields, thereby causing income to fluctuate erratically. The continuous increase in the rate of poverty in Nigeria and the dwindling nature of income of individuals has made and still make people look elsewhere for succour through income diversification (Adeyemi, Ijaiya&Ijaiya, 2007;Ijaiya, Ijaiya, Bello, Ijaiya& Ajayi, 2009; Adebayo et al., 2012). There has been a drive on the part of a vocal contingent of consumers, producers, researchers and policy makers who call for a transition toward a new face of agriculture. Within this vision, diversifying income with respect to farming system has emerged to maintain ecosystem services critical to agricultural production (Bowman &Zilberman, 2013).
Most rural households in developing countries are undergoing the process of diversifying their income sources (Zhao & Barry, 2013). Delgado and Siamwalla (1997) and Gomes and Livdan (2004) opined that rural households adjust their activities to exploit attractive new productive opportunities. Rural households in many different countries have been found to diversify their income sources allowing them to spread risk (Ellis, 1998, in Ibrahim, Rahman, Envulus&Oyewole, 2009). The food crisis experienced in 2006 which soared in 2007 (Stakeholders Forum, 2009) seemed to have driven Nigeria to delve into diversification. Several researchers maintained that these adjustments in agricultural activities are found to have an important impact on income, income distribution and welfare across rural households (Ellis, 2000a; Reardon, Taylor, Stamoulis, Lanjouw&Balisacan, 2000; Block & Webb, 2001; Hoogeven, 2001; Canagarajah, Newman &Bhattamishra, 2001 and de Janvry&Sadoulet, 2001).