DETERMINANTS OF PALM OIL OUTPUT SUPPLY IN NIGERIA

This study analyzed the determinants of palm oil output supply in Nigeria. A time series data, from the period of 1970-2014 were collected from the Food and Agricultural Organization data base and other sources. Trend analysis, ADF unit root test, co-integration test and error correction model were used to analyze the data. The trend in the output supply of palm oil shows significant growth rate based on the coefficient of the time trend (b1). The unit root test using Augmented Dickey Fuller test (ADF) shows that all the variables have constant mean except for palm oil yield which led to the Autoregressive Distributed Lag (ARDL) co-integration test which reveals the presence of long run relationship existing between the variables and short run relationships with error correction term. Imports of palm oil has negative significant short run and long run impacts on the output supply of palm oil while in the short run palm oil exports has a significant negative impact on the palm oil output supply and a significant positive impact in the long run. The error correction model (ECM) suggests a high speed of adjustment of the dependent variable to changes in the independent variables. The import of palm products affects the output supply of palm oil negatively as this impedes the local production of palm oil. Export of palm oil was positively signed indicating that export of palm oil encourages the farmers to increase their output supply. This study therefore, recommends the promotion of export and formulation of export promotion policies to stimulate international market for our palm oil and encourage our farmers to boost their output.