Effect of Naira Devaluation on Production Capability of Cooperative Farmers: Implication to Food Security in Anambra State

Abstract

This study investigates the effect of Naira devaluation on the production capability of cooperative farmers in Anambra State, with a focus on its implications for food security. Utilizing a sample size determined by Taro Yamane from a population of 13,734 cooperative farmers, we employed multiple regression analysis to quantify the relationships between independent variables - exchange rate fluctuations, input costs, inflation rates, cost of credit, and market prices of agricultural products - and the dependent variable, crop yield. Results indicate that devaluation leads to increased input costs, thereby adversely affecting crop yields. Specifically, a 1% increase in exchange rate fluctuations correlated with a 0.65% decrease in crop yield, suggesting significant vulnerability among cooperative farmers. Rising input costs, exacerbated by inflation, directly hinder production capability, with a notable finding showing that an increase in input costs leads to reduction in crop yield. Furthermore, the escalating cost of credit limits farmers' access to necessary funds, resulting in lower productivity levels, while market price fluctuations impede stable income generation for farmers, consequently impacts their ability to reinvest in farming practices. Given these findings, we recommend policy interventions focused on stabilizing the currency, controlling inflation, and providing subsidized inputs and affordable credit to cooperative farmers. Additionally, support programs should aim to enhance farmers' market access and price negotiation power to mitigate the adverse effects of Naira devaluation on their production capabilities. This research underscores the critical need for integrated policy approaches that address currency stability, cost management, and income security in agriculture to strengthen food security in Anambra State. The implications of this study extend to policymakers, agricultural institutions, and cooperative societies advocating for systemic reforms that empower farmers amidst economic volatility.