1.1 Background of the Study
The grain sub-sector plays an important role in the economic development of Nigeria. The output of the sub-sector (Ismaila, Gana, Twanya & Dogara 2010; Okunneye, 2003) constitutes a large proportion of staple food stuffs in Nigeria. Between 1985 and 1995, cereal grain accounted for almost 50 % of the total food supply in Nigeria when expressed in grain equivalent (Akpan & Udoh, 2009; Ukoha). On the other hand, Paulino and Sarma (1988) reported that about 70% of the total food crop area harvested in Nigeria was devoted to cereals and the remaining 30% to non-cereals.
The most important cereal grain crops grown and marketed in Nigeria are maize, rice, sorghum, millet and wheat (Akpan & Udoh, 2009; Global Information and Early Warning System on Food and Agriculture (GIEWS), 2008; Ismaila et al., 2010; Oguntunde, 1989; Wudiri, 1992). Of these, rice, maize, millet and sorghum are the major sources of energy staple food available and affordable in Nigeria, and are the commodities that are of considerable importance for food security, expenditure and income of households in Northern Nigeria (Ismaila et al., 2010; Maziya-Dixon et al., 2004).
In most parts of Asia and Africa, cereal products comprise 80% or more of the average diet, in central and western Europe, as much as 50% and in the United States, between 20 – 25% (Food and Agriculture Organization, 1996). Also, the increased demand for cereals, as a result of rapid urbanization, means that food crops must increasingly be produced to meet the needs of the rural and urban population (Balarabe, 2003). According to the Central Bank of Nigeria (CBN) (2000), Okunneye (2003) and Ukoha (2005), most Nigerians depended on cereal grains for their daily dietary needs and the price of these grains is one factor that determines the extent to which Nigerians can pay for these food commodities. Cereal grains availability and prices have become a major welfare determinant for the poorest segments of the Nigerian consumers who also are least food secured (Akande, 2001). Also, CBN (2000), Akande (2001) and Akpan and Udoh (2009) have affirmed that, the nominal or producer price of cereal grains have continuously fluctuated over the past years.