DETERMINANTS OF DOMESTIC SUPPLY OF COCOA IN NIGERIA (1980-2019)

This study examined the factors influencing the domestic supply of cocoa in Nigeria. Time series data covering the period between 1980 and 2017 were used in the study. Data on the domestic supply of cocoa, domestic and international prices of cocoa, volume of cocoa exports, exchange rate, inflation rate, and agricultural gross domestic product (agGDP) were obtained from reputable secondary sources such as the Central Bank of Nigeria (CBN), the National Bureau of Statistics (NBS) and Food and Agriculture Organization Statistical databases (FAOSTAT). Data were analysed using Augmented Dickey-Fuller statistics, Johansen’s co-integration test, descriptive statistics, trend model, and error correction models at a level of significance α = 0.05. There was a high fluctuation in the trend of the domestic supply of cocoa over the study period. The average annual percentage change in the domestic supply of cocoa was 8.092 percent. The coefficients of variation revealed a high degree of instability in the domestic supply of cocoa, ranging from a low of 11.510 percent in the 2010-2017 sub-period to the highest of 122.340 percent in the 2000-2009 sub-period. The producer price of cocoa steadily decreases over the study period. The average producer price of cocoa over the study period was ₦1935.80 per tonne. The average annual percentage change in producer price of cocoa over the study period is 4.900 percent. The coefficient of variation ranged from a low 25.130 percent in the 2000-2009 sub-period to the highest 130.370 percent in the 1990-1999 sub-period, showing high instability in the producer price of cocoa over the study period. The contribution of cocoa to agricultural exports is unstable over the study period. The average percentage contribution of cocoa to agricultural export over the study period was 84.300 percent. The results of error correction analysis revealed that the domestic supply of cocoa is negatively influenced by interest rate, inflation rate, and producer price of cocoa. Thus, it can be concluded that cocoa is a significant agricultural export commodity, but there is a need to pay significant policy attention to these macroeconomic variables for an increased domestic supply of cocoa.