Natural Rubber: An Alternative to Nigeria’s Economic Diversification

Abstract

The oil boom of the 1970s led Nigeria to neglect its strong agricultural and light manufacturing bases in favor of an unhealthy dependence on crude oil. Presently, the country is suffering from a declining as well as fluctuating income from its heavy dependence on oil exports. In Nigeria, agricultural exports have played a prominent role in economic diversification by providing the needed foreign exchange earnings for other capital development projects. This Paper examined Natural rubber as an alternative to Nigeria’s economic diversification. Secondary data from the Food and Agricultural Organization (FAO) Statistics and Central Bank of Nigeria (CBN) Annual Report of various years were used. Data were analyzed using frequencies and line graphs. The study employed annual time series data covering the period from 1960 to 2013.This period is categorized into four eras (i) 1960-1970 (pre 1970) (ii) 1970-1985 (pre SAP era) (iii) 1986-1994 (SAP era) and (iv) 1995-2013 (post SAP era).The result of the analysis showed among others that natural rubber recorded a decline in the pre SAP and post SAP eras. The decline was associated with mass migration from agriculture in the rural areas to urban areas in search of non-farm jobs. With ageing farm population and plantations, productivity was on the decline. The situation was however exacerbated by exchange rate induced high cost of farm inputs, given Nigeria’s import dependence. It is recommended among others that for production of natural rubber to increase through cost reduction, the naira exchange rate policy of government would need to be re-examined and a need to review Government’s price input subsidy and also mechanism should be strengthened to ensure access to these inputs.