Evaluation

37. Since independence, two of the major long-run goals of livestock policy have been to raise the low level of supply of animal protein, and to improve and stabilise rural income emanating from livestock production and processing. More recently, concerns with balance of payments problems have directed increased policy attention towards the need to attain self-sufficiency in livestock production (Federal Ministry of Agriculture, 1988). Policies that have been implemented to achieve these objectives were reviewed in the last section. Here, the effects of these policies are analyzed with the aim of determining how successful they have been in helping the government to move toward its objectives.

Impact of policies on livestock output and protein consumption

38. The index of animal productivity for 1971-86 is shown in Table 3. Animal productivity is defined as total output divided by all the animals of that species in the herd. Because the index is derived from data sets that are remarkably weak, the true extent of productivity growth is hard to establish. Nonetheless, only poultry showed a significant increase in productivity during this period. There was a decline in productivity in the case of mutton, while beef productivity increased by 11% or at a maximum of 0.7% of the annual compound rate. In the lower part of the table, changes in total output are disaggregated into changes in the total number of animals with productivity remaining constant and changes in productivity. The table indicates that for mutton and pork more than 80% of the growth in output came from increases in the number of animals, while less than 20% arose from increased production per animal.

Table 3. Animal productivity changes and contribution of numbers and productivity to changes in livestock output in Nigeria, 1971-86

	Beef	Mutton	Goat Meat	Pork	Poultry Meat	Cow's Milk
Production per animal a	111.1	96.1	140.9	110.4	282.3	163.8
Relative contribution (%)of change in
Numbers	41.7	110.3	46.9	81.1	40.5	43.5
Productivity b	58.3	-10.3	53.1	18.9	59.5	56.5

^a 1971 = 100
^b Includes the interaction effect of yield and numbers.

Source: FAO Production Yearbook (various issues).

39. A further breakdown of the 16-year period covered in Table 3 reveals a slightly higher productivity for cattle and sheep during 1979-86 than between 197178. In all the other cases, production per animal was lower during 1979-86 compared to the period 1971-78. The fall in productivity was particularly marked in the case of poultry. The import restrictive policies that were being implemented during this period (e.g. ban on the importation of maize feeds and day-old chicks) seemed to have affected poultry relatively more than the other animal species. The picture painted above with respect to the disaggregation of changes in total output into changes in numbers and productivity remains largely unchanged during the two sub-periods, except again for the lower productivity of poultry between 1979 and 1986. This implies that most of the growth in poultry productivity occurred in the first half of the 16-year period covered here.

40. Not surprisingly, the modest increase in livestock output has not resulted in any significant change in animal protein consumption. According to food balance sheets estimated for the period 1961-85 (Table 4), the share of animal protein in total protein intake has remained more or less unchanged over the 25-year period. Even during the peak of the oil boom, i.e. 1975-81, the increase in animal protein consumption was minimal. Given the daily requirement norm of 75 g of protein (Wagner, 1986), of which about 35 g is supposed to be of animal origin (David-West, 1978), it is obvious that both aggregate and animal protein consumption levels have been markedly below the norm.

Table 4. Estimates of per capita daily protein consumption in Nigeria, 1961-1985

Period	Protein (grams)
	Animal Products	Vegetable Products	Total
1961-63	6.5	44.3	50.8
1964-66	6.6	43.6	50.2
1969-71	7.0	40.8	47.8
1972-74	7.3	43.0	50.3
1975-77	8.0	44.7	52.7
1979-81	10.0	40.9	50.9
1981-83	9.7	39.6	49.3
1983-85	7.0	38.0	45.0

Source: FAO Production Yearbook (various issues).

Impact of policies on prices and incentives

41. Unlike the pre-1986 situation in the crop subsector when commodity marketing boards used to set producer prices for export crops and guaranteed minimum prices for food crops, direct price intervention has not featured as a major policy instrument in the LSS ⁴. However, government's restrictive trade and exchange rate policies have indirectly affected livestock prices through their impact on the entire domestic cost structure. It will be argued that the oil boom, import restrictions and the overvaluation of the currency have all combined to trigger mechanisms which have produced two important consequences for prices and incentives in the LSS.

42. First, restrictive trade policies which were designed to address the balance of payments problem and prop up the overvalued exchange rate appeared to have raised domestic prices above world equivalent prices. As Figure 1 shows, between 1973 and 1984, there was an upward trend in nominal protection coefficients (NPCs) for beef, mutton and poultry meat ⁵. The NPCs have been estimated wing the official exchange rate. Figure I indicates that, although domestic beef and mutton prices were below world equivalent prices between 1973 and 1974, all three products received protection from external competition for most of the period under consideration. The level of protection for poultry was higher than the protection given to beef and mutton partly as a result of the more stringent restrictions on poultry trade and partly due to the downward movement in world prices for poultry during this period. Figure 2 shows that the upward trend in NPC for beef is dampened when the exchange rate is adjusted to account for the overvaluation of the naira ⁶. Although not shown, similar patterns were obtained for mutton and poultry meat. Nonetheless, the government through its restrictive trade policy provided protection to livestock producers by keeping domestic prices above world equivalent prices. The protection provided to poultry no doubt had some effect in stimulating domestic production during this period. Moreover, since the policy affected livestock producers differently, it had some effect on income distribution within the LSS.

43. The other major consequence for livestock prices and incentives came about as a result of the inflow of foreign capital associated with the oil boom. The sudden increase in oil-related capital inflows created a standard case of the "Dutch disease" (Corden, 1984). The influx of foreign capital augmented not only the supply of tradeables, but by raising incomes increased the demand for all goods and services. The ensuing excess demand for nontradeables was curtailed by an increase in their price relative to tradeables, which induced reallocations of expenditure and production. That this process indeed occurred during the oil boom is partly confirmed by the data in Table 5 which show that over the period 1975-85, animal product (traceable) prices declined by about 50% relative to the price of millet (a non-traceable grain that is commonly exchanged for animal products in northern Nigeria). The devaluation of the naira following the introduction of the SAP in September 1986, has slowed down the relative price decline. Nevertheless, it is clear that one consequence of the oil boom was a perceptible change in relative prices in favour of nontradeable goods and services and against the producers of traceable goods.

Table 5. Indices of relative prices of selected livestock products in Nigeria, 1975-86 ^a

Year	Beef/Millet	Mutton/Millet	Poultry/Millet
1975	100	100	100
1976	111	100	98
1977	89	94	90
1978	66	67	72
1979	56	57	55
1980	79	83	79
1981	48	53	53
1982	45	47	56
1983	56	63	66
1984	38	40	41
1985	42	53	52
1986	88	93	87

^a/ 1975 = 100

Sources:

Akinwumi et al. (1979); CARD (1981)
Central Bank of Nigeria, Annual Report and Statement of Accounts (various issues).
Federal Livestock Department. Nigerian Livestock Information
Service (various issues) and World Bank (1985b).

44. In summary, the overall effect of government policies has been to raise the domestic prices of most livestock products above their equivalent world prices with the result that varying degrees of protection are provided for domestic production. However, it appears that up till 1985, domestic prices for most livestock products were simultaneously high by international standards but low in terms of being able to attract domestic resources to increase production. This picture which largely depicted the situation for agricultural traceable products as a whole, was in sharp contrast to the enhanced profitability of investments in the construction and service sectors during the same period (Collier, 1988).