ECONOMIC EFFICIENCY AND POLICY DISTORTIONS IN WHEAT PRODUCTION IN JIGAWA STATE, NIGERIA: A POLICY ANALYSIS MATRIX (PAM) APPROACH.

Abstract

Several policies were designed to create a protected market environment that incentivizes wheat farmers to engage in and expand wheat cultivation. However, a critical concern is whether the observed growth in wheat production in Jigawa State is driven by genuine economic efficiency and a comparative advantage or it is primarily a creation of substantial government policy support. The current study assessed the competitiveness and comparative advantage of wheat production in the state. A multi-stage random sampling procedure was employed to select 312 farmers. The study employed the Policy Analysis Matrix (PAM) framework was the analytical tool to assess the economic efficiency and policy distortions in wheat production. Results revealed that wheat production is financially profitable at Private Profit of ₦619,390/ha and exhibits a strong comparative advantage with a Domestic Resource Cost of 0.52, indicating efficient use of domestic resources. However, high policy transfers significantly inflate profitability, as evidenced by substantial output protection Nominal Protection Coefficient on output of 1.56 and a net positive incentive Effective Protection Coefficient of 1.59. The study concludes that while Jigawa State possesses an inherent comparative advantage for wheat production, its current profitability is heavily sustained by policy support. The study recommends facilitating a shift from import bans to tariffs, reforming input subsidies towards productivity enhancing investments, implementing farmer capacity building programs, and strengthening local input supply chains to ensure long term sector sustainability.