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Taking advantage of off-taking, anchor borrowing agric schemes 


Diversification of the economy is not an empty pronouncement. It involves deliberate policies, actions and investments, backed with motivation and incentives. FEMI IBIROGBA writes on how farmers can benefit from the anchor borrowing scheme through off-taking contracts with food processors.
Off-taking of farm produce has been described as a means to deepen crop industrialisation, impetus to rev up agricultural productivity and solution to poor agricultural financing in the country. Also called out-grower scheme, off-taking means guaranteed buying off all the harvests of a group of farmers of a particular crop for industrial processing, with relatively stable and mutually pre-determined prices.  
An industrial operator or processor agrees to buy what the farmers produce, usually backed with an agreement, and companies or processors off-taking the products often provide inputs, funds, technical know-how, latest production technologies, improved varieties of seeds and seedlings, among others.The Anchor Borrowing programme of the Federal Government was launched in November 2015.  
The purpose of the scheme is to create a linkage between companies involved in the process of selecting key agricultural commodities and small holder farmers. The focus of ABP is to provide seed to farmers and cash to grow the crops, and it is expected that this would boost production of the selected commodities and make sure there is constant supply of the commodities to the agro processors.

Target farmers
The programme targets farmers who produce cereals such as rice, maize and  wheat; roots and tubers such as cassava, potatoes, yam and ginger; tree crops like oil palm, cocoa and rubber; legumes such as soybean, sesame seed and cowpea; livestock such as fish, poultry and ruminants. Also included are cotton, sugarcane and tomato.  

The participating banks, which work with the CBN, lend to Anchors at 9% per annum for onward disbursement to the farmers. The loan is repaid by the farmers after the crops have been harvested which must cover the loan principal and interest.However, some farmers have lamented the absence of anchors (off-taking processors) for their produce. The Catfish and Allied Fish Farmers Association of Nigeria (CAFFAN) claimed its members could not participate in the scheme because there is no processor to guarantee and off-take their produce.
National President of the association, Rotimi Oloye, disclosed this to The Guardian. He lamented difficulty in selling the locally produced fish due to harsh price competition against imported and smuggled fish and poultry products, saying absence of large scale processors of catfish had been hampering industrialistion of the produce and hence, sluggish growth of the sub-sector.

Rice farmers and millers
Due to the efforts to reduce the foreign exchange food importation per annum, the first crop that has received greater emphasis and has incorporated as many farmers as possible is rice. Anchors in the programme include Olam Rice, Kebbi and Lagos State government, Dangote Rice, Ebony and Eagle Best Rice. These and other local rice processors facilitate loans, improved rice seeds, fertilizer and agrochemicals to rice farmers, serving as guarantors, and helping to de-risk the investments by insuring with the Nigeria Incentive-Based Risk-Sharing System for Agricultural Lending (NIRSAL).
This requires no collateral from the farmers, who must have been registered under a cooperative. Olam Rice has over 3,000 out-grower farmers who produce paddies for the rice mill of the company at Rukubi, in Nasarawa State. The farmers have access to inputs and technical expertise of the company, which occasionally deploys agronomists to the farmers’ fields for assistance.Existing rice farmers who desire to expand their operations should not hesitate to join a rice farming cooperative to access financing for expansion, the Regional Coordinator of Africa Rice Centre, Dr Francis Nwilene, has advised. 
He said through the off-taking and anchor borrowing, rice farming could become easier for farmers who belong to cooperatives and sourcing quality planting materials from the centre is advantageous to farmers and the country because higher yields are obtainable from the newly developed varieties. Planting grains as seeds, he said, would reduce average yield per hectare.  

Cassava farmers and flour millers
Regional Coordinator for the Cassava: Adding Value for Africa (C:AVA), a Bill and Melinda Gates Foundation-sponsored project promoting value chain development for cassava with the goal of reducing hunger and increasing household earning, Professor Kolawole Adebayo, through off-taking facilitation, even small scale farmers now have access to big cassava processors through the C:AVA project by linking such farmers to supply chain managers for the purchase of their produce at standardized rates.
Professor Adebayo said: “When improved yields are available, some of the farmers have challenges selling their yields because they are not large enough to attract those large buyers. So, we intervene at this stage to help them to access new markets.”

Maize farmers and processors
Maize production is becoming hotcake not only in Nigeria but also globally because of its multipurpose usage. Maize grains are used in flakes, staple processed foods, animal feeds, starch and ethanol, as well as essential oil. There are many off-takers in the animal feeds sector, including Premier FeedMills Ltd, producer of Topfeed brand; Animal Care Consult; Hybrid Feeds and others. Food processors like Olam Grains, Flour Mills Nigeria and a host of others also off-take regularly from farmers, guaranteeing and sustaining ready and stable market at predictable prices.  
Chairman of the Oyo State Commodity Association, Mr John Olateru, admitted that though the group did not have off-takers and had not applied for ABP loans, feed millers and poultry farmers in the association would always buy any quantity of maize produced by members of the commodity association.

Group financing  
The anchor borrowing scheme and the off-taking of produce from farmers make financing easier. Borrowing for farm operation expansions and intensified productivity is enhanced through the scheme, elimination personal collateral security because of ‘triangulisation’ of the system. The bank uses the collateral and goodwill of the off-takers to approve loans for the farmers, who are usually in registered groups.
Loan repayment is also made easier at harvest, because a farmer is paid the balance after deducting the borrowed capital and the interest, giving no room for defaults. NIRSAL also guarantees the loan, de-risking the process if unforeseen eventualities hamper production or loan repayment. 

Access to farmland and mechanisation
Group participation in the schemes makes members have access to cheaper mechanization of farm operations in terms of mechanized land preparation with plowing, harrowing and ridging implements; planting with mechanical planters and weed control, crop protection with boom spraying of agrochemicals.Doing these collectively reduces cost, and prevents delay because large operations motivate tractor hiring firms to mobilize to farm cites on time.  
It is easier and more economical for tractor operators to work on several hectares of farmland in a location than at different locations. Hence, reduction in cost to operators and farmers is an advantage farmers should explore. 


Input supplies
Through the off-taking processors, it is easier for farmers to get best available seeds, seedlings, agrochemicals, and other inputs would contribute to successful farming. These companies could source the input locally or import if not readily available.Quality of seeds and seedlings determine harvest, and access to improved seeds would guarantee bumper harvest. Protecting and boosting yield of the crop is made easier for original chemicals and fertilizer are facilitated by the buying companies.
Use of adulterated agrochemicals has been responsible for failed crop protection and eventual meager harvests have ruined the economies of most farmers in the country. Hence, anchor borrowing and off-taking schemes are sure channels through which farmers could get reliable inputs that would ensure productivity and profit. For instance, Africa Rice Centre, the breeder of most adaptive and high-yielding rice varieties available in Nigeria and Africa, is involved in providing rice seeds to rice farmers in the anchor borrowing and out-grower schemes.
FARO 44, one of the breeds of the centre, is known for high yield of over five metric tonnes per hectare as against two to three tonnes of yields from other varieties. Off-taking and out-grower contracts have become game-changers of sort in commercialization and financing of agriculture, enabling farmers to have access to more resources, to plan and expand bankable farm operations. Though there are challenges revolving around corruption and unethical practices, the scheme, if fine-tuned, is capable of ensuring adequate financing, increased crop productivity and industrialisation of most crops and diversification of the economy.

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