Impact of Inflation on Compensation for Crops and Economic Trees on Land Compulsorily Acquired for Public Purposes in Niger State of Nigeria

Abstract

This paper examines the impact of inflation on compensation for crops and economic trees on land compulsorily acquired for public purposes in Niger State of Nigeria. The study utilised secondary data obtained from the Niger State Ministry of Lands and the Central Bank of Nigeria (CBN). These include the current compensation rates for crops in the State, applicable since 2018 and food inflation rates in the country from 2018 when the compensation rates for crops and economic trees in the state were last reviewed till date. It argues that the current compensation rates payable by the government for crops in the state do not incorporate the impact of inflation in its computation and as such cannot adequately compensate the claimants (farmers) in the present inflationary economy. It found that the overall proportion of compensation for crops lost to inflation by farmers in the state is about 148.56% of actual compensation approved by the government. The variation between the approved compensation and inflation –adjusted compensation was also found to be statistically significant for crops (F=29.95552, P< 0.05) and economic trees (F=64.76883, P < 0.05) respectively. It concludes that compensation for crops and economic trees on farmlands in the state compulsorily acquired by the government for overriding public purposes should be computed based on inflation – adjusted compensation rates (IACR) so as to adequately compensate the farmers for the compulsory acquisition of their crops and economic trees in an inflationary economy and to enable them reinvest their capital in alternative agricultural investments elsewhere.