Analysis of soybean supply to price changes in the domestic market in Nigeria: application of Nerlovian adaptive expectation model
The central focus of this study deals with the response of soybean supply to price changes in the domestic markets in Nigeria. Theoretically, the response of farmers in the supply of any agricultural commodity depends on the ruling price, price expectations and some prevailing non-economic factors evolving round the ecology and biology of agricultural production. It is on this basis that farmers respond and decide on the amount of soybean to produce in a current year using last year’s market prospects as a basis for decision thereby justifying the level of profit accruing to them. In this study, three functions (linear, semi-log and logarithm functions) were specified in the Nerlovian adaptive expectation model in the analysis of the response of soybean supply to price changes in the domestic markets in Nigeria between the period (1975-2009). The study showed that farmers’ responses were not encouraging in the production and supply of soybean in the domestic markets with respect to the dictate of prices, price expectations and price of groundnut as a chosen competitive enterprise.
Keywords: Response, soybean supply, price changes, soybean market, Nigeria