European Journal of Physical and Agricultural Sciences Vol. 3 No. 1, 2015 ISSN 2056-5879 Progressive Academic Publishing, UK Page 22 www.idpublications.org ACREAGE RESPONSE OF SOYBEANS TO PRICE IN NIGERIA OREFI ABU, 1 * AKANDE RUFAI OLAIDE 1 & VICTORIA ADA ODU OKWOCHE 2 1 Department of Agricultural Economics, University of Agriculture, Makurdi, P.M.B 2373, Benue State, NIGERIA 2 Department of Agricultural Extension and Communication, University of Agriculture, Makurdi, P.M.B 2373, Benue State, NIGERIA * Corresponding Author’s Email: orefi@yahoo.com ABSTRACT The decision with regards to allocation of area to any crop by farmers among other things depends on the prices of the individual crop. The extent to which farmers respond to economic incentives is thus crucial to policy makers. This study was aimed at estimating the acreage response of soybean to changes in price in Nigeria from 1976 to 2012. Time series data in respect of soybean area harvested (hectares) and producer price of soybean in local currency (Naira/tonne) were obtained. Augmented Dickey Fuller (ADF) test and, the Johansen co integration technique were employed to test for the stationarity of the variables and the long-run relationship between variables respectively. Result indicates the presence of one co integrating long run equilibrium relationship between the variables. The Vector Error Correction Model (VECM) estimates showed that soybean price had a negative influence on the area harvested. Suggesting that a decrease in soybean price will result in reduction in area cultivated, leading to a decrease in profit and a decrease in profit gives disincentive to farmers to produce more. Therefore, positive price policy would undoubtedly encourage farmers to bring more area under soybean crop to boost the production of soybean in Nigeria. Keywords: Acreage response, ADF, VECM, Soybean, Nigeria. INTRODUCTION Agriculture is the principal source of food and livelihood in Nigeria, making it a critical component of programs that seek to reduce poverty and attain food security in Nigeria (Philip et al., 2008). As a result, raising agricultural productivity is an important policy goal for concerned governments and development agencies. According to Molua (2010), expanding cultivated area is a feasible option for increasing production. However, understanding how producers make decisions to allocate land among crops and how decisions about land use are affected by changes in prices and their instability is essential for predicting the supply of staple crops and, consequently, evaluating the global food supply situation (Haile at al, 2013). Responsiveness of farmers to economic incentives such as price could influence contribution of agriculture to the economy (Mushtaq & Dawson, 2002). This could be attributed to crucial roles played by agricultural prices in achieving efficient allocation of production resources (Niamatullah and Zaman, (2009). Price is generally the channel through which economic policies are expected to affect agricultural variables such as output, supply and export and income (Phillips and Abalu, 1987; Dercon, 1993). According to Narain (1965), economic theory suggests that prices are significant determinants of economic behavior and normal farmers should adequately react to changes in prices of output. In a viable economic system, prices of commodities give signals