Abstract:

This study assessed the nexus between federal governments’ agricultural sector expenditure and
agricultural output in Nigeria. The data were sourced from the Central Bank of Nigeria (CBN) statistical bulletin, 2016 edition, World Development Indicator (WDI) of the World Bank, 2016 and
International Labour Organisation, (ILOSTAT, 2017). The study period spans through the period of 1981 to 2016. The method of data analysis employed involved unit root stationarity test with Phillip Perron (PP), co integration analysis with Johansen Maximum likelihood ratio and Vector Error Correction Model (VECM). Evidence from the study indicates that the variables of the study were first differenced stationary series. Further evidence from the study suggests a significant long run relationship between federal government expenditure on the agricultural sector and agricultural performance measured by agricultural sector output. The vector error correction result shows that 91.45 percentage of the total variations in agriculture sector growth was explained by the explanatory variables in the model. Government capital and recurrent expenditure on the agricultural sector indicates a weak positive and negative non-instantaneous impact on agricultural sector growth respectively. The adjustment speed from the error correction term indicates that 16 percent of the errors associated with the system as a result of external shocks are being corrected in subsequent period. The study therefore suggests that concerted effort be put in place to ensure that government provides adequate financial support for the agricultural sector. Higher priority should be accorded to agricultural development projects given the importance of the sector to national development.