Martins Hile, Editor, Financial Nigeria magazine
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Subjects of Interest
- Social Development
Progress in Nigerian agriculture has been weak 18 Dec 2019
Once upon a time, Nigeria had a commanding agricultural economy. Crop exports provided the country's main foreign exchange earnings for the predominant part of the 1960s. But towards the end of that decade, as Nigeria became more reliant on the petroleum industry, the country lost its status as an agricultural powerhouse. From being self-sufficient in food production, Nigeria has since become a net food importer.
Sliding further down the pecking order of the global food system, Nigeria's food security situation has worsened in recent years. About 3.7 million Nigerians across 16 states are food insecure, according to the United States Agency for International Development (USAID). The number of food-insecure people in the country has been growing due to rising food prices, attacks by Islamist terrorists and armed herdsmen – which have displaced millions of people – as well as natural disasters. Hunger is considered to be at a 'serious' level in the country, according to the 2019 Global Hunger Index, which ranks Nigeria in the 93rd position out of 117 countries.
Since coming to office in 2015, a major plank of the development agenda of President Muhammadu Buhari has been significant growth in agricultural production. Rising food import bills had become fiscally unsustainable, given the fall in oil revenue. In 2016, when the government launched its Agriculture Promotion Policy (APP) 2016-2020, former Federal Minister of Agriculture and Rural Development (FMARD), Audu Ogbe, put the country's annual food import bill at about $22 billion. As Africa's largest consumer of rice, Nigeria was importing much of its 4 million tonnes of rice deficit. Other items in the Nigerian food deficit basket included wheat flour, fish, milk and poultry.
A key objective of the APP is to improve productivity of the agriculture sector by expanding access to inputs and enhancing production processes. The policy is part of the broad agenda of this administration to promote import-substituting industrialisation (ISI). As a development strategy, ISI in the agriculture sector aims to foster domestic production of imported food, enhance food security and help to diversify the country's foreign exchange earnings. The government has been advancing this policy with subsidized government loans and steep tariffs on food imports.
One of the financing incentives is the Anchor Borrowers' Programme (ABP) by the Central Bank of Nigeria (CBN) in partnership with FMARD. The CBN said it has disbursed N146 billion to 849,480 rice farmers across the country under the ABP. Surely, this intervention has recorded some level of success. The U.S. Department of Agriculture said Nigeria is now producing 4.78 million tonnes of rice, compared to 3.03 million tonnes in 2013. However, the output is still a far cry from meeting the 7.2 million tonnes of demand in the country. Hence, the “rice revolution” that Ogbeh said the ABP would usher into the country still falls short.
The government is betting on the farm to boost the productivity of the agriculture sector. But smuggling of food into the country, especially rice, has been a major support for food supply and decent price levels, though it is undercutting the agenda for domestic production. To curb the smuggling crisis, the government closed the border in August. But the border closure has now been admitted by the CBN and the Minister of Finance, Budget and National Planning, Zainab Ahmed, as inflationary.
There is also the question about whether all the liquidity the CBN is injecting into the agriculture sector is rightly channeled. Supply-side gaps still remain, even in the critical commodities the CBN's interventions are focused on. Moreover, data from the National Bureau of Statistics (NBS) has not shown a significant boost in the country's agricultural output. The agriculture sector, which grew at an average of 4.64% between 2012 and 2014, declined to 2.12% in 2018. In Q3 2019, the sector grew by 2.28%. Indeed, the contribution of the sector to total GDP flatlined in Q3 2019 at 29.25%, same as Q3 of last year.
Apart from better targeting of interventions, including the ABP, it is now important to intervene across the value-chain. Based on my conversations with a couple of smallholder farmers in Benue State, undertaking rice milling is an onerous task due to inadequate milling and processing capacity. Many farmers who are not in the ABP end up getting shortchanged by middlemen who purchase the rice from the farm at below market prices.
But low agriculture productivity in Nigeria is not only a function of lack of financial access to farmers – even if the credits were well-targeted. The sector is dogged by other myriad challenges, one of which is the variability in weather patterns, which has heightened due to global warming.
ReliefWeb, the humanitarian information portal, said flood disasters in Nigeria are exacerbating the crisis of food insecurity. It has caused severe economic losses and suffering, particularly this year. Climate experts say agriculture is the most vulnerable sector to climate change. For this reason, development of a climate-resilient food production system must be a top priority of the government.
Developing resilient agriculture will require educating farmers on climate risks. One of the ways of adapting to erratic weather patterns might even entail altering the traditional farming season in the country. Constructing drainage and irrigation systems across farming communities in Nigeria would mitigate flooding and drought. Countries like Zambia are effectively tackling drought through adoption of conservation farming, which has improved crop yields.
Nigeria's weak agriculture system is dominated by smallholders who are still using crude methods of farming. One of the fundamental challenges Nigeria faces with regard to its food security is providing extension services to these farmers to improve agronomic practices as an essential component of productivity growth.
Fostering a modern and innovative farming system is the only way Nigeria can accelerate agricultural productivity, drive inclusive economic growth, and participate in the high-value agricultural markets where emerging economies like Brazil are major players.
From beef, sugarcane, soybeans, coffee, cocoa and other crop exports, Brazil records about $100 billion per annum in revenue – far more than Nigeria's combined earnings from crude oil export in 2017 and 2018. According to the Organization of the Petroleum Exporting Countries (OPEC), Nigeria earned $37.983 billion and $54.513 billion in 2017 and 2018, respectively. If Brazil can successfully transition from being a net food importer in the 1970s to a net food exporting powerhouse today, Nigeria can achieve same, specifically because that's where we started from as a nation.
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