Response of Poultry Agribusiness Risk to Financial Fragility and Macroeconomic Shocks in Nigeria (2004-2009)
Odemero Achoja Felix | Okereke Chukwuji Christopher
Financial Fragility and Macroeconomic shocks make poultry agribusiness vulnerable to risk (unsteady profit). This tends to dampen investment drive and inhabits aggregate growth in the poultry sub-sector in Nigeria. To address this problem, time series data of 6 years (2004-2009) were collected from 200 randomly selected poultry farms. Multiple regression and t-test were used to analyse the collected data. T-test of return on investment shows that poultry agribusiness has low financial fragility and could be resilient enough to withstand macro-economic shocks. Co-integration results indicate that poultry agribusiness risks moves together with inflation rate, interest rates and real exchange rate. According to the results of vector autoregressive (VAR) test, it is shown that poultry agri-business risk is sensitive to macroeconomic shocks. But with sound financial structure, poultry agribusiness will be able to withstand financial fragility. The impacts-response analysis shows that increase in macroeconomic distortions leads to increase in poultry agribusiness risk in Nigeria. The results of study provided information on how macro economic shocks and fragile financial structure can trigger risk in poultry agribusiness sector. This information is very crucial to effective policy making and economic planning that will bring development to the poultry sector and the Nigerian economy. Factor analysis confirmed that inflation rate (0.0039) and interest rates (0.1218) are the significant distortion factors (P < 0.01) that exert more impact on poultry agribusiness risk. Regulated interest and inflation rates would stabilize earnings and lead to growth in poultry agribusiness in Nigeria.
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