# **I. INTRODUCTION**

The Nigerian labor force, like that of many countries in Africa, is heavily concentrated in agriculture. The sector employs about 60 percent of the labor force and contributes over 40 percent to GDP. Despite its importance, the agricultural sector in Nigeria is far from reaching its full potential. The agricultural sector has the highest poverty incidence in the country (Phillip et al., 2009); to reduce poverty, it is critical for households to earn more from their income generating activities. The World Development Report (WB, 2008) emphasized the importance of agriculture for poverty reduction and growth in Africa. Improving the agricultural sector in Nigeria is vital to increasing food security and reducing poverty, especially in rural areas. Most farming in the country is still done at the subsistence level with minimal commercialization.

According to World Bank reports, the agricultural sector in Nigeria grew by about 6.8 percent annually from 2005 to 2009. However, these relatively high growth rates were not due to increased efficiency in the sector, but rather can be attributed to population growth and the farming of larger expanses of land most likely by commercial farmers. Given the importance of the sector, there is a great need to improve efficiency, especially for smallholder farmers in order to push them beyond farming at the subsistence level. Increased agricultural productivity can translate into higher incomes and lower poverty in the sector. Towards this end, the government has recently launched the Agriculture Transformation Agenda (ATA), which stresses the importance of growth in agriculture as a path out of poverty, particularly through increased commercialization among smallholder farmers.

In recent decades, the international development community has emphasized the importance of improved agricultural productivity as a path out of poverty and to rural development for developing countries (WB 2008; Anríquez and Stamoulis, 2007). The centrality of agricultural production in the lives and livelihoods of rural households in Nigeria highlights the importance of a thorough understanding of the determinants of agricultural productivity in the country, as well as the relationship between productivity and economic outcomes. Low agricultural productivity can contribute to rural poverty at the farm level and can be viewed as one of the main causes of rural poverty (Kiresur et al., 2010). Diao et al. (2009) found in their study that if the agriculture targets set by the Nigerian government can be achieved, the country will achieve a significant reduction in poverty.

This paper focuses on the determinants of agricultural productivity and highlights the factors (land ownership, input use, labor, plot management, land tenure, and household characteristics) most important for smallholder productivity. Most studies examining the determinants of agricultural productivity and the link to poverty in Nigeria are region or crop specific (Anyaegbunam et al., 2012; Nwafor et al., 2011; Ike, 2012; Igwe, 2011). This paper examines both of these linkages using nationally representative data from the first wave of the GHS-Panel survey conducted in 2010/2011. The analysis will also explore differences in the determinants of agricultural productivity between small and large landholders, as well as poor and rich agricultural households – while poverty and landholdings are correlated, they are not synonymous. Increased agricultural productivity is expected to result in lower poverty, but at the same time, poverty contributes to lower agricultural productivity through poor access to inputs and credit.

2