Journal of Agricultural Science; Vol. 5, No. 11; 2013 ISSN 1916-9752 E-ISSN 1916-9760 Published by Canadian Center of Science and Education 49 Budgetary Allocations to the Agricultural Sector in Nigeria: Implications on Investment and Productivity Margaret Nseobong Ita 1 , Inibehe George Ukpong 2 & Ineye Douglas Ekpebu 3 1 Department of Agricultural Economics and Extension, University of Calabar, Nigeria 2 Department of Food Economics and Marketing, School of Agriculture, Policy and Development, University of Reading, United Kingdom 3 Department of Agricultural Extension and Management, Federal Polytechnic, Ekowe, Bayelsa State, Nigeria Correspondence: Inibehe George Ukpong, Department of Food Economics and Marketing, School of Agriculture, Policy and Development, University of Reading, United Kingdom. E-mail: inibehe2000@yahoo.com Received: June 19, 2013 Accepted: August 9, 2013 Online Published: October 15, 2013 doi:10.5539/jas.v5n11p49 URL: http://dx.doi.org/10.5539/jas.v5n11p49 Abstract The study analyzed the budgetary allocations to the agricultural sector in Nigeria. The mean difference test, percentages and trend analyses were used to compare the allocations by the Federal and State levels of government. Results show that there was instability in the way budgets were allocated to the agricultural sector, and there was no significant difference between the allocations made to the sector by the federal and state levels of government. The study recommends that the government at all levels should ensure stability and increment in allocation to the agricultural sector to promote growth and development of the sector. The government should ensure proper monitoring and effective service delivery with regards to allocations to the agricultural sector, while farmers should ensure efficient use of allocated resources for agricultural development. Government should also ensure proper implementation of suitable agricultural policies that would promote increased investments and productivity in the sector. Keywords: budgetary allocation, agricultural sector, investment, productivity, Nigeria 1. Introduction Agriculture remains important in the history of economic development in Nigeria. It generates employment for both skilled and unskilled labour, and contributes enormously to national and state gross domestic products. Agriculture helps to provide raw materials to the country’s industrial sector and foreign agro allied industry, and enhances both national and state food security. However, there has been a systematic neglect of the sector at both national and state levels since the discovery of crude oil in the country in the 1960s. Agriculture is the major source of livelihood in most rural Nigerian society (IFAD, 2013); hence, neglect of the agricultural sector has opened the way for increased rural poverty, rural-urban migration, hunger and crimes (Iruo, Sogo, & Ukpong, 2010). Nevertheless, part of the effort by the government to sustain the country’s agricultural sector is evidenced by its various allocations to the sector in terms of lending and budgetary provisions. Budgetary provisions are often made for specific programmes or projects in agriculture, under numerous sub-sectors mainly; crops, livestock, fisheries, and forestry (CBN, 2003). These allocations are often expended either on physical structures, grants and other inputs distributed to farmers or funding to agencies that perform agriculture-related services. The allocation is normally specified in the government budget. A budget is a financial plan of action to a firm, which provides details of projected inflows and outflows within a stated period of time, and becomes a critical element for effective management decisions (Petershie, 2008). Budgetary allocation is the finances allocated to plan for growth and development of a sector. Budgetary analysis is thus an important tool that helps to promote economic assessment of all sectors of the economy including the agricultural sector, and it is useful for planning and management at the farm level (Abang, Agom, Enyenihi, & Ele, 2008). Government budgetary allocations make capital available for agricultural production by helping to secure inputs, technology and management, hence promoting increased agricultural production. Government contributions to the agricultural sector therefore enable capital investments that help in the development and growth of the sector