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Power failure, price fluctuation, conflicts still mar agric sector

By Femi Ibirogba, Head, Agro-Economy
30 May 2019   |   4:24 am
Indications have emerged that unresolved power failure, fluctuating prices of agricultural products, unhealthy competition and scarcity...

• Specialists recommend agric trust funds, others
Indications have emerged that unresolved power failure, fluctuating prices of agricultural products, unhealthy competition and scarcity of developmental funds for the sector have marred the agricultural policies of the government.

In the Agriculture Promotion Policy (APP) 2016-2020 of the Federal Government, also known as the Green Alternative, the President Muhammadu Buhari government said the thrust and objectives of the policy would revolve around food security; import substitution; job creation and economic diversification, but subsequent developments point to the contrary.

Also, the government stipulated in the policy statement that the guiding principles would include treating agriculture as a business and as key to long-term economic growth; treating having access to food as a human right and putting emphasis on value chain development.

However, how much effort has been made in terms of policies and programmes to encourage agriculture remain subjects of controversy, especially on issues bordering on budgetary allocations to the sector and implementation; downstream sector financing and conducive environment for value chain development to achieve the four cardinal objectives outlined in the policy.

Food security
Food security means production of adequate food and importing zero of major foods. This is the most fundamental of the objectives, and the mission is to rev up local production to minimise exposure of the populace to foreign foods and the economy to leakages and deficits. Eating foreign foods economically implies exporting job opportunities in a country where over 80,000 million people are estimated to be willing and able to work but unable to secure one.

Also, there cannot be food security where commercial banks cannot afford lending to farmers due to associated risks and low interest rates; where a bank for the sector is dysfunctional and where there is no developmental bank to take care of long-term facilities needed to develop the sector.

Till now, the figure of rice production in Nigeria is controversial. While the government claims Nigeria is 90 per cent rice-secure, stakeholders, like AfricaRice and US development agency, said importation is still very high, and local rice processors do lament unhealthy competition with smuggled brands of rice.

Parts of the efforts to ensure food security is the Central Bank of Nigeria (CBN) managed Anchor Borrowers’ scheme, but despite this, Nigeria is far from self-sufficiency, according to reputable agencies and processors.

The Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele revealed late last year that Nigeria’s monthly food import bill fell from $665.4 million in January 2015 to $160.4 million as of October 2018, and that the reductions in food import recorded on rice, fish, milk, sugar and wheat, within the 34 months helped the country to save $21 billion.

However, experts believe that the shortfalls in food imports are being smuggled through the borders, for imported rice, fresh fruits and other grains are still brought in through the neighbouring countries, climaxing in the threat by the minister to close the borders in 2018.

Specifically, the Executive Director of the National Horticultural Research Institute (NIHORT), Ibadan, had told The Guardian during a seminar that Nigeria is deficient in tomato production with 500,000 metric tonnes yearly, producing 1.8 million tonnes of the yearly demand of 2.3 million. The same institute disclosed that the country suffers a deficit of 415 million litres of citrus, while the country also imports 350 million litres of ethanol, a cassava root derivative that the country is capable of producing, according to data presented to The Guardian by a director of Atlantic-Allied Distilleries, Agbara, Ogun State, Mr Rajavelu Rajasekar.

Similarly, crude palm oil, according to the Managing Director of Aden River Estate, Mr Emmanuel Ibru, is being augmented with the import of about 400 million litres.

Import substitution
Import substitution is finding a local alternative to an imported raw material or food crops such as wheat, tomato paste, fish, poultry and palm products.

Wheat constitutes the bulkiest of the raw material crops imported into the country, and a good substitute is high quality cassava flour of about 20 per cent, but politics of legislation that would have emplaced the substitution has been suicidal, for the bill on the cassava flour substitute driven by a former Minister of Agriculture, Dr Akinwumi Adesina, has not sailed through in the National Assembly.

The same narrative applies in the tomato, palm produce and fish value chains. President of the Catfish and Allied Fish Farmers Association of Nigeria, Mr Rotimi Oloye, said the fishery subsector had been in crises for alleged malpractices and manipulations by fish importers, and a ban on the export of smoked fish from Nigeria to the United States of America.

Rajasekar, a director with Allied-Atlantic Distilleries, said if the government wanted to support businesses in the country to encourage import substitution, it should come up with policies that would improve the agriculture-based sector.

For example, he said, “Nigeria is importing ethanol but we are producing it. Let them give us incentives by increasing the tariff on importation of ethanol. Unscrupulously, crude ethanol is imported to this country with a tariff of five per cent. That is why we are unable to compete with them and no investor wants to join in the production of ethanol.

“Actually, they should increase the tariff to increase home productivity. This will bring more factories up in the industry.”

He also disclosed that Nigeria could use cassava roots, which are produced abundantly in the country, to produce ethanol used in production of wine and alcoholic drinks, but the country still imports about 350 million litres yearly and produces only about six per cent of the national need.

This, he added, is so because basic infrastructure and social utilities to support industrialization are absent, making importation cheaper than local production.

Professor Kolawole Adebayo, however, said infrastructure and power supply should be emplaced to really strengthen local production and processing, then the government could increase tariffs on imported agricultural materials and finished products that the country can produce using alternatives and substitutes.

From citrus juice, tomato paste, ethanol and rice, Nigeria still remains a net importer after four years of an administration that claims diversification of the economy through the agro-industrial sectors.

Job creation

A Rice farm.

Agriculture has been documented, times without numbers, as the greatest employer of labour in the country and in Africa. However, most farmers drag beggarly existence doing subsistence farming.

Brandishing some figures on employment during the last electoral campaign, the Federal Government claimed to have created over 500,000 jobs in the last few years across the sectors, including agriculture through the N-Power attachment scheme.

However, some farmers’ associations claim that the difficult business environment, characterised by high cost of power generation and inputs, as well as unfair competition have forced many smallholder operators out of agricultural businesses.

A former chairman of the Poultry Association of Nigeria (PAN), Mr Banji Akanji, disclosed to The Guardian that over 40 per cent of the workforce in the poultry sub-sector had been laid off since the recession in 2016.

Most of the poultry hatcheries, he said, utilise about 10 per cent of their capacities, saying more jobs have been lost than created.

And PAN said in the last four years, about 40 per cent of chick hatcheries and large-scale poultry producers have stopped production due to very difficult operating environment and extremely poor power generation and distribution in the country.

Revenue from agriculture
According to the Nigerian Gross Domestic Product Report (Full year 2018) released by the Nigerian Bureau of Statistics (NBS), Nigeria’s agricultural sector grew by 2.12% in 2018, contributing 25.13% to the Gross Domestic Product (GDP), up from 25.08% in 2017.

The sector grew by 18.58% year-on-year in nominal terms in Q4 2018, showing an increase of 8.45% points from the same quarter of 2017, and 0.26% points increase from Q3 2018. Crop production remains the major driver of the sector, accounting for 89.84% of nominal agriculture GDP.

The sector contributed 23.08% to nominal GDP in Q4 2018, which is higher than its contribution in Q4 2017 (21.93%) but lower than it was in Q3 2018 (25.52%). On an annual basis, the sector contributed 21.42% to nominal GDP in 2018. The sector grew by 2.46% (year-on-year), a decrease by –1.78% points from the corresponding period of 2017, but an increase of 0.55% points from the preceding quarter. Annual 2018 growth was 2.12%, which is lower than the 3.45% recorded in 2017.

However, experts said with available renewable natural resources especially in agriculture, by now, Nigeria should be getting about 50 per cent GDP from the sector yearly.

Professor Bamidele Omitoyin, Dean of the Faculty of Renewable Natural Resources, University of Ibadan, said overdependence on oil as a major source of revenue earning to the country had prevented maximum exploration and utilisation of renewable agricultural resources for socio-economic and industrial development.

Threats to non-oil industry
Prof. Samuel Olakojo said animal grazing and conflicts with farmers constitute threats to lives, property, and food production in the country if nothing aggressively done to tame the trend.

He suggested enactment of legislations as other advanced countries of the world to encourage purchase and development of individual farmland by livestock farmers to rear their animals in captivity intensively.

He, however, recommended credit facilities that attract an interest rate of not more than five per cent.

Supporting this, Dr Olufunmilayo Adejinmi, Provost of the Federal College of Animal Health and Production Technology (FCAH&PT), said the food basket of the nation had been depleted by about 30 per cent as a result of Boko Haram insurgency, ethnic conflicts, cattle rustling and herder-farmer crises.

Going forward, she advised the government to legislate against open grazing nationwide, encourage the establishment of private ranching and educate farmers and herders on the need for peace, food security and avoidance of conflicts.

“I think … that open grazing should be discouraged, and if possible, banned. However, herders should be given adequate training on ways to feed their animals by establishing ranches, use of crop by-products for feeding the cattle and feed lots.

“Finally, the old National Grazing Reserves should be revived and equipped to meet the needs of the herders,” Olujinmi told The Guardian.

Professor Damian Chikwendu, Team Lead of Cultivating New Frontiers in Agriculture (CNFA) said kidnapping, insurgencies and banditry constitute distortions to farming in the country, especially in the north which produces most of the food grains.

Power supply has been a burning issue since the outset of the new dispensation of democracy. And data on the current power generation from the Transmission Company of Nigeria (TCN) as of last week indicated a drastic drop from about 3,700mw of electricity to about 2,441mw.

Power, according to the poultry association, is responsible for the collapse of most of the chick hatcheries in the country, causing a high cost of purchasing day-old chicks and giving advantage to smugglers of poultry products. Though very dangerous to human health and to the economy, imported poultry products are cheaper than home-grown products, PAN said.

The collapsed power sector, analysts and industrialists said, is the most fundamental challenge that successive political administrations have been battling with in over two decades, with huge financial resources going down the drain. Fixing the power sector, they added, is therefore the basic expected from the administration to make the agro-industrial sector grow.

[FILE PHOTO] Nigeria’s Minister of Agriculture Audu Ogbeh

Special agric funds and commodity boards
Pinpointing that financing is a critical factor in the agricultural value chain development, the National President of the All Farmers Association of Nigeria (AFAN), Mr Ibrahim Kabir, said the government should create a three-year $10 million National Agriculture fund, identify regional crops, as well as livestock competences and incentivise duly identified interested youths to be engaged in developing the various value chains.

“This will make Nigeria food sufficient in the first instance, enable us to cut a niche in West and North Africa agricultural trade. Our contribution to the global food security will be ensured, and by so doing, our economy will sustainably become robust and fully diversified,” the AFAN boss said.

A similar suggestion was earlier made by the Acting Executive Director of the Nigerian Stored Products Research Institute (NSPRI), Ilorin, Dr Patricia Pessu, while delivering a keynote at the National Cereals Research Institute (NCRI), Badeggi, Niger State recently.

She had advocated the creation of Agricultural Research Trust Fund (AGFund) to address research and development challenges and fast-track technological solutions in the sector.

Similarly, Dr Olabisi Awoniyi, Chief Agriculture Officer, Commercial and Training of the Lower Niger River Basin Development Authority, Ilorin, said, “agriculture should be taken as a business if the country must overcome the present challenges it encounters.”

He added that planning and projections seem unrealistic due to fluctuations in prices, but farmers could use previous prices to plan future production and calculate likely profit if stable.

He, therefore, called for the re-introduction of commodity management boards for different crops such as Cocoa Board and Grain Boards to stabilize prices on which farmers could plan.

Talking on resolving challenges of farmers to re-motivate them, Dr Akin Oloniruha, a former Provost of Ahmadu Bello University College of Agriculture, Kabba, Kogi State, identified low return on investments as one of the major problems because farmers do sell at very low prices.

He suggested that farmers should be encouraged to aggregate their produce and seek viable markets instead of allowing middle men to fleece them, adding that some inputs like seeds, fertiliser and day-old chicks are expensive and not readily available and he advised the government to provide more incentives to investors to produce these inputs locally.

Funding, he voiced, is very difficult because the interest rate in most banks is around 29%, saying, “This is too much for agricultural and industrial production. The government needs to improve on the funding of specialised financial institutions and reduce the bureaucratic bottlenecks associated with accessing these funds by farmers while also encouraging transparency.”

Professor Samuel Olakojo, a breeder at the Institute of Agricultural Research and Training (IAR&T), Ibadan, said the challenges of agricultural production include climate change and its effects. The solution to this, he added, is focusing on any farming system that reduces heat generation, emissions of high carbon, and adoption of varieties of crops that can cope with the effects of climate change.

Olakojo also said marketing is a major problem for farmers. Farmers should be assured of a guaranteed market and off-take of produce before going to the field to minimise waste and debts.

Poor rural infrastructure such as good road, water and electricity for storing perishable goods for enhanced profit should be emplaced, he suggested, and that private investors might be involved in the development and be earning the revenue from it through a coordinated approach for sustainability.

Mitigation of agribusiness risks and quality inputs
Mr Ayoola Fatona, Head, Micro and Agric Insurance, Leadway Assurance, said to be meticulous, investors in agriculture must take risk management seriously to make it profitable. Risks, he argued, are numerous and they pose threats to investors’ capital and food security in agriculture.

“Investors must adopt the value chain approach in agricultural projects and learn to use insurance as a risk mitigation tool to de-risk across the value chains they intend to play in. And agricultural investors must continue to build their capacity in new technologies to improve the output from agricultural production,” he said, “and access to finance must be made as easy as possible to increase output.”

Professor Moruf Adebisi, a plant breeding specialist at the Federal University of Agriculture, Abeokuta (FUNAAB), said one of the ways of tackling challenges in the sector is to use superior seeds. Farmers, he argued, should have access to high quality seeds.

“High quality seeds will improve agricultural practices and will guarantee superior yields, better income to farmers and improved standard of living of the farmers and their households. From research, high quality seeds can increase crop yield by 30-40 per cent,” he said.

He also suggested bridging the gap between farmers and extension agents, saying “The 36 states’ Agricultural Development Programmes (ADP) should be strengthened with periodic training and capacity building in new technologies in agriculture.”

The breeder called on the Federal Government to recruit more agricultural extension agents to complement the efforts of the states in reaching out to the farmers and that farmers should be supported with subsidiaries in agro inputs.