An Econometric Model for Nigeria’s Rice Market

Abstract

A dynamic econometric model of Nigeria’s rice market was designed to serve as a base for future policy analyses. Using time-series data spanning 38 years, the model contains four structural equations representing paddy area harvested, paddy yield, per capita demand, and producer price variables. Estimates for these equations were obtained using the autoregressive distributed lag (ARDL) cointegration approach. Results of the paddy production and yield sub-models showed that paddy area harvested, and paddy yield was price inelastic. Furthermore, the paddy area harvested responded favourably to technological advancement. For the demand sub-model, estimated own price and cross-price elasticities showed that rice has an inelastic demand response, with wheat being a substitute. A series of validation tests strengthened the reliability of the model for use as an empirical framework for forecasting and analysing the effects of changes in policies such as rice import tariff reforms on production, consumption, retail price, and imports.