The Impact of Price Policy Instruments on Cocoa Exports in Nigeria

Abstract

This study investigates the impact of price policy instruments on cocoa exports in Nigeria over the period 1980–2023. The study considered Price policy instruments such as agricultural tariffs, exchange rates, alongside other macroeconomic and environmental variables, including agricultural credit, foreign direct investment (FDI), inflation rates, and climate change (proxied by weather patterns). Data were analyzed using an Ordinary Least Squares (OLS) regression technique. Secondary data were obtained from the Central Bank of Nigeria (CBN), the National Bureau of Statistics (NBS), and international databases, including FAOSTAT. The results indicate that agricultural tariffs and exchange rates have a negative, statistically significant impact on cocoa exports, reducing exports by 0.47% and 0.12%, respectively, for every 1% increase. Conversely, agricultural credit and FDI positively influence exports, increasing them by 0.11% and 0.17% respectively for every 1% increase. Inflation and adverse weather conditions also exert negative effects. The model explains 72.05% of the variation in cocoa exports, and the F-statistic of 15.85 (p < 0.01) confirms the overall statistical significance and reliability of the regression model. These findings underscore the need for policy reforms to reduce agricultural tariffs, stabilize exchange rates, and expand credit access to enhance cocoa export performance. The study recommends targeted subsidies, stable exchange rates, and increased investment in climate-resilient farming practices.