PROSPECTS OF A PRODUCTIVE AGRICULTURAL SECTOR IN NIGERIA
Agriculture in Nigeria
Agriculture remains the base of the Nigerian economy irrespective of the Nation’s concentration on oil, providing the main source of livelihood for most Nigerians. It employs two-thirds of the entire labour force (FAO, 2018). The sector faces many challenges from notably an outdated land tenure system that constrains access to land (1.8 ha/farming household), a very low level of irrigation development, high cost of farm inputs, poor access to credit, inadequate storage facilities and poor access to market have combined to keep agricultural productivity low (average of 1.2 metric tons of cereals/ha), the production hurdles have stifled the performance of the sector. Food production increases have not kept pace with population growth, resulting in the increase of food imports and declining levels of national food self-sufficiency (FMARD,2008), it has been estimated that Nigeria has lost $10 billion in annual export opportunities from cocoa, cotton, palm oil and groundnut alone due to the continuous fall in the production of those commodities (FAO,2018).
The main factor undermining production include reliance on rainfed agriculture, small-scale farmers, and low productivity due to poor planning materials, low fertilizer application, and a weak agricultural extension system.
The present government took office in Nigeria 2015 during the beginning of an increasing economic crisis, while just a year before the country overtook South Africa as the continent’s biggest economy. Optimism faded as oil prices reached an all-time low selling below $50 a barrel leading to renewed militant activities in Niger Delta (BBC,2014), This resulted in an economic slowdown which was later manifested by a recession in the summer of 2016 (that ended November 2017), this pushed the government to focus on the task of reducing the country’s reliance on oil, which accounts for 11 percent of the country’s GDP but 95 percent of the country’s export revenue (World bank,2014). One of the important reasons for the present administration focus on agriculture is to increase and expand job opportunities by making it attractive to the youths through processing, marketing, and other business opportunities along the value chain, while patronizing agriculture is sound, many reforms will have to be enacted on if the sector is to reach the modern agricultural sector height.
Challenges for a more productive Agricultural sector
Poor inputs distribution
Access to quality inputs is a challenge for farmers despite schemes like the Growth Enhancement Support Scheme (GESS) that represents a policy and pragmatic shift within the existing Fertilizer Market Stabilization Programme and it puts the resource-constrained farmer at its centre through the provision of series of incentives to encourage the critical actors in the fertilizer value chain to work together to improve productivity, household food security and income of the farmer and other policies. A survey carried by NOI polls Ltd in November 2016 which concluded that the lack of fertilizer was the biggest barrier faced by farmers with 61 percent citing it as the number one concern (NOI,2016).
Nigeria does not produce enough fertilizer to meet its required needs and the restrictions placed on the transport of urea-based fertilizer due to fears of it being used as explosives by the terrorist cell Boko Haram had reduced its distribution but mid-last year, the government partnered with the government of Morocco to produce fertilizers and sell at discounted rates.
Seed availability is also a problem for farmers as the research pipeline for new seeds varieties has broken and poor quality of seeds have flooded the market with the absence of a functioning regulatory system.
Low rates for access to mechanical farm tools such as tractors and crop sprayers this prevents farmers from utilizing their labour efficiently.
Poor market access
In most parts of Nigeria, farmers do not access to a market for their goods due to underdeveloped value chains, the absence of adequate storage facilities for their goods means many farmers have no choice but to sell off their farm produce immediately after harvest when their prices are at their lowest or let their produce rot. The Agricultural Promotion Policy (APP) notes that Nigeria’s estimated demand for tomatoes is 2.2 million tons per year. While annual production is 1.5 million tons, almost half—0.7 million tons—is lost postharvest (Federal Ministry of Agriculture and Rural Development, 2016)
Access to credit
Nigerian banks are wary of extending loans to farmers, Loans to agriculture sector account for 1.4 percent of total bank lending (Ugwuede,2016). Nigeria has undertaken different incentives to promote more lending to the sector, most notably is the Nigerian Incentive-Based Risk Sharing System for Agriculture Lending (NIRSAL) launched by Central Bank of Nigeria (CBN) in 2013 which guarantees loans extended to farmers and offers rebates to receipts who pay back the money on time, However, the recession choked the lending and by September 2016 the average interest rate of loans to the sector had risen to 26 percent (Mbamalu,2016)
Poor political commitment
Nigerian governments often offer support for agriculture as a tool of economic diversification but always fail to implement policies or provide budgets. Legislation aimed at improving the enabling environment for agriculture has sat in the National Assembly for years.
Neglected agricultural research system
Nigeria’s agricultural research system, the largest in sub-Saharan Africa, has stagnated and become disconnected from the priorities of Nigerian farmers with the organization seen as a monitoring agency that supervises other research institutes whereas its responsibility is to monitor, coordinate, supervise and make recommendations. The system has been starved of federal funding and become overly reliant on foreign donor funds (Flaherty and Abdullahi,2014).
The present administration’s agriculture policy the Agricultural Promotion Policy (APP) identifies these issues and has set a broad agenda to tackle them to achieve the objectives of becoming self-sufficient in food and developing vibrant export markets. Its proposals include developing domestic value chains for commodities like rice, wheat, maize, and soya beans; strengthening agricultural export markets for products including cocoa, cassava, oil palm, and sesame; providing a better enabling environment for agricultural development by improving infrastructure, designing clearer policies, and improving working relationships between the tiers of government; and providing better inputs, tools, and training that allow farmers to increase their yields.
Promising Approaches so far:
Expanding market access through the Nigeria Expanded Trade and Transport Project (NEXTT).
The NEXTT Project, run by USAID, has focused on increasing business opportunities along the Lagos-Kano-Jabiya corridor, Nigeria’s most important internal transport route. The project has taken practical steps to increase traffic flow along the route, which suffers from chronic congestion. One of the solutions has been to work with the Ministry of Transport on a tender to build truck stops so that vehicles awaiting entry to Lagos port can pull off the road rather than blocking it for other users. NEXTT has also provided seed funding and consultancy services to businesses seeking to establish themselves along the corridor. Most beneficiaries have been agribusinesses.
Securing credit for farmers: Anchor Borrowers’ Program (ABP) and capitalization of Nigeria’s Bank of Agriculture
The Nigerian government has undertaken several promising initiatives intended to stimulate and increase the flow of credit to farmers, both large and small. The Anchor Borrowers’ Scheme, introduced in 2015 by the CBN, has tried to incentivize domestic production of rice and wheat, two agricultural commodities that have traditionally been imported in huge quantities. The ABP seeks to incentivize smallholder production by providing loans of up to 250,000 Naira (Komolafe,2015) at competitive rates of interest (9 percent per year), to be used to buy agricultural inputs. In addition to advancing credit, the ABP seeks to link farmers to processors, such as rice millers, to ensure that producers have a guaranteed market for their product.
Reducing postharvest loss and advancing credit through warehouse receipts
Another approach to increasing farmer access to credit while addressing the very high levels of postharvest loss has been to develop an electronic warehouse receipt scheme. Africa Commodities Exchange Ltd (AFEX), a holding company set up by Nigerian and U.S. investors, tried to link farmers and commodity merchants with agricultural and financial markets. One of the ways it is doing this is by strengthening the warehousing system in Nigeria, in part by leasing and rehabilitating government grain storage facilities. For a small fee, farmers can deposit their produce at these facilities, confident that it will be safely and securely preserved. In return, they receive a receipt grading the value of their produce that can be used as collateral. In this way, participating farmers can hold back their product and sell when the price is right, rather than immediately after harvest (Downie,2017)
Harnessing research capacity to develop quality inputs
Approximately 70 percent of the fertilizer used in Nigeria is a generic brand containing a fixed ratio of nitrogen, phosphorus, and potassium although the balance of nutrients in soil vary across the country (USAID,2016). Through its Nigeria Agro-Inputs Project, USAID is working with the private sector to produce blends that best suit the local soil conditions. Their partnership utilizes soil analysis commissioned by the Nigerian government, including the production of a geo-ecological map of Nigeria. According to a USAID official, some farmers are seeing 30 percent better yields as a result.
As Nigeria tries to diversify its export economy and strengthen its weak economy, attention on the agricultural sector is long overdue the agriculture sector recorded growth in every quarter of 2016 even while the overall economy shrunk (Dowie,2017). The agricultural sector growth not only has positive impacts on the GDP, it will create jobs and boost food security, the federal government has prioritized the sector but has yet to match its vision for the sector with a significant budget to implement its plans nor has it established strong working relationships at the state level.
The best way for the Nigerian government to show its commitment to transforming agriculture would be to put the conditions in place to incentivize farmers and processors, attract investment, and increase competitiveness. Policy consistency and predictability are particularly important. It should then step out the way to allow the private sector to take the lead, assuming a regulatory role instead.
Olugbenga Adereemi-Williams is an Intern at ACIOE Associates where he specializes in engagements relating to Agriculture, while also providing support to other core sectors.
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