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Harnessing the agro-dollars in agribusiness 14 Dec 2015

“Operation Feed the Nation n'ijoba tun gbe de, won so fun wa nipa ise agbe k'ebi ma pa wa , won so fun wa nipa ise osin ke bi ma pa wa leyin wa ola,” Ebenezer Obey

Those were the lyrics from Chief Ebenezer Obey's song on the government's Operation Feed the Nation policy of the late 1970s. The song, sang in Yoruba language, says, “Operation Feed the Nation is the government's new policy; the policy encourages us to farm and engage in livestock farming so we don't go hungry tomorrow.”
    
The Operation Feed the Nation programme was introduced by the then-General Olusegun Obasanjo's military administration to increase local food production and ultimately reduce imports. Citizens were encouraged to engage in both crop production and livestock farming. Although, as a country, we do not lack good policies, implementation, continuity and sustenance have been our bane.

The Shehu Shagari-led civilian admin-istration came in  after that  and initiated its own agriculture policy which it christened “Green Revolution.” Recently, we saw the inauguration of another agriculture policy by the Goodluck Jonathan administration tagged the “Agricultural Transformation Agenda.” No economy thrives with policies that are as transient as these ones.

The song by Ebenezer Obey is somewhat prophetic. He warned us decades ago to engage in agribusiness so we don't go hungry tomorrow. Sadly, as a country, our tomorrow is here and we are hungry. We are hungry from the scarcity of food and its high cost. The unemployed who should be engaged in agribusiness are busy looking for white-collar jobs and as a result remains unemployed and hungry. We are also hungry because our banks and financial institutions have not been innovative enough to initiate products and services that suit agribusiness.

The importance of agriculture and food security to the growth and development of Nigeria cannot be overemphasized. The oil sector (and its petrodollars) has made both the country and its citizenry neglect and relegate the agriculture sector. Unfortunately, we have seen all the negative ramifications of our reliance on oil.

Investing in agriculture

We need to start investing massively in the agricultural sector; this is the most assured way to unlock Nigeria's potential. While the agricultural sector remains the greatest contributor to our Gross Domestic Product (GDP), its capacity and output is still very low.

The future belongs to those who will from now engage and invest in Nigeria's and Africa's agricultural sector. According to the United Nations and the World Bank, there's a massive food crisis. The two world bodies declared that the crisis is so big that there won't be enough food to feed the global population by 2050. Forget fuel scarcity, food scarcity will be worse and brutal.

For those who are not looking for 'get rich quick' businesses but want to build a lasting legacy of wealth for their generation, agribusiness is the way to go. Our youths who are either under-employed or unemployed should start looking at agribusiness. The younger they start the better. Opportunities abound in every sector of the agribusiness both for local consumption as well as for exportation. I am aware that our level of patience has been shortened by the fast-paced society that we now live in. But those who will be patient will reap the fruits, therein.

As a country, we are blessed with large expanse of arable land, favourable climate and rainfall which favours year-round farming. Recent data from the World Development Indicators shows that, of Nigeria's 923,768Km2 of land, 717,767km2 – representing 77.7% – is arable.

Large-scale commercial farming

Piggery farming, for instance, presents itself as a very viable source of foreign exchange to those who can engage in it on a large scale. China produces the highest number of pigs in the world but it's not enough for local consumption. In 2014, China slaughtered 735 million pigs for food while the United States slaughtered 107 million pigs. China doesn't produce all that it eats, it has to source for the balance from other countries.

At the current population of 170 million, say we spend an average of N100 for food daily, that gives you a total of N17 billion daily. I am not sure we spend that amount on fuel daily. (Various estimates put Nigeria's fuel consumption at 40 million litres per day. At N87 per litre, this leaves Nigeria with an average daily fuel bill of around N3.5 billion.) This size of our food market will continue to grow even bigger as the population grows. That is a huge opportunity!

In 2013, Nigeria spent about $151 million importing tomato paste; Citibank Africa's Managing Director describes this as a shame. Central Bank of Nigeria has recently barred importers of tomato paste from accessing foreign exchange at the forex market. This presents another opportunity for local producers. In 2014, the country spent about $2.75 billion on frozen chicken, despite the ban on them. The president of the Poultry Association of Nigeria believes that given all the necessary support, the poultry industry can make a significant contribution to the national GDP and create thousands of jobs.

Cash crops

Castor oil, cashew nuts, plantain, palm oil and cassava production all present themselves as huge income earners for both the farmer and the government. Castor oil, derived from Castor seeds, is powerful oil, used by hairdressers, the military and paint manufacturers. Cassava has also been found to be a huge foreign exchange earner; China buys lots of cassava chips and pellets from Thailand and, more recently, Nigeria.  Nigeria is the world's largest producer of cassava. The policy of the Jonathan administration stating that companies must add 10% cassava flour to all wheat flour has also made it more lucrative locally.

The good news is that the current administration of President Muhammadu Buhari realizes that the development of the agriculture sector is important to the economy. For starters, the government has indicated it will focus on rice production. Between January 2012 and June 2015, Nigeria spent $2.41 billon importing rice. Imagine half of that going into the hands of our local farmers. The President stated recently that about N1 trillion is spent on importing food yearly and added that this was unsustainable; he is right.

Apart from providing food for local consumption, agribusiness remains a platform for effective job creation, wealth creation and leap-frogging our economy. For Nigeria to truly develop, it must be efficient and competitive in its area of comparative advantage. Our area of comparative advantage is agriculture; but unfortunately, we are not efficient in it.

The sector is fraught with many challenges, chief of which is funding. The former CBN Governor, Lamido Sanusi Lamido stated that the annual demand for agribusiness financing over the next 40 years is about $6.5 billion. That's a huge financing gap. Other challenges are lack of access to basic farming inputs, like seedlings, fertilizers, resource scarcity, technology and infrastructure inadequacies.

Food self-sufficiency strategies

There are countries and states that have become self-sufficient in food or jumpstarted their economies with agriculture. One of such is Turkey, a country with similar weather and arable land like Nigeria, where agriculture is still their mainstay. It's one of the few self-sufficient countries in the world in terms of food. 76% of its total agricultural production is vegetable products. Based on recent statistics, it's the world's biggest producer of hazelnuts, figs, apricots and raisins, 6th biggest producer of tobacco, 8th biggest producer of wheat and the 10th biggest producer of cotton.

Saskatchewan, a province in Canada has become an international player in agribusiness. The province is a world leader in all the crops it cultivates. In 2014 Saskatchewan exported almost $14 billion in agricultural products, thereby cementing its position as Canada's top agri-food exporting province. Today, China is the largest importer of Saskatchewan's peas.

This did not come easy; the government of Saskatchewan did its part to create a competitive environment for the companies to thrive, working with the industry to remove red tape and initiating new incentive programmes to help agribusinesses. Now, this can be replicated in most states in Nigeria, making them economically viable as well as putting money in the hand of farmers.

Ethiopia is another great example. It has witnessed rapid economic growth in the last 10 years with real GDP growth averaging 10.9%. If the current growth is sustained, the country would be lifted from being the second-poorest in the world in 2000 to becoming a middle income country by 2025. According to a new report, services and agriculture were the main contributors to this accelerated growth. Initially, agriculture was the main contributor; but aided by a construction boom, the services sector has taken over.

To get to where it is today, Ethiopia implemented various reform policies as well as massive infrastructure investments. Turkey's agricultural strategy include the establishment of a farmer's registry system where farmers enrol for direct income support from government. Chemical fertilizer support, diesel fuel support as well as training for new agricultural techniques, are also done directly through the registry.

Incentivizing agriculture

With the right polices and political will, Nigeria and Nigerians can become great through agribusiness. For this to be achieved, agribusiness financing and training must become an integral part of the government's economic policy.

All relevant agencies and institutions; the Bank of Industry (BOI), Nigerian Export-Import Bank (Nexim Bank), Bank of Agriculture (BOA), CBN, Nigerian Investment Promotion council (NIPC), Nigerian Export Promotion Council (NEPC), Federal and state ministries of Agriculture, commercial banks, Microfinance Banks (MFBs) and other stakeholders should as a matter of urgency come up with a truly practical and workable solution to our agriculture development. Topmost on this should be innovative financing and funding solutions for agribusiness. They should also work in collaboration with relevant international agencies like the International Finance Corporation (IFC) , International Fund for Agricultural Development (IFAD), African Development Bank  (AfDB) and the  Afreximbank.

They should come up with a framework that incentivizes farming as well as encourages the teeming youth to start engaging in agribusiness. This will be a great start. When this happens, then the declaration by the President of the AfDB, Akinwumi Adesina, that Africa's future billionaires and millionaires will make their money from agriculture may be on its way to fruition.