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Recession and Nigeria’s hope on agriculture for survival

By Chijioke Nelson and Femi Adekoya
16 September 2016   |   3:47 am
To cushion the effects of recession and boost household income, many Nigerians, according to second quarter figures from the National Bureau of Statistics (NBS), are exploring opportunities in primary agriculture...


Recession in here and may well stay around for sometime, bringing economic hardship the like of which Nigerians had never experienced before.

With accusing finger pointing at the crash in global price of crude and the nation’s dependence on imported goods to the detriment of producing for export, experts now think that the situation is not permanently hopeless.

They believe that Agriculture and ancillary Agro-businesses are the magic wands that can save Nigeria.

To cushion the effects of recession and boost household income, many Nigerians, according to second quarter figures from the National Bureau of Statistics (NBS), are exploring opportunities in primary agriculture and agro-food sector for increased employment and export earnings.

For sustainability and food security, experts believe government needs to consider farming as serious business rather than an alternative to crude oil, if food security will be achieved.

Hinging their arguments on the premise that there is correlation between food availability and security, stakeholders in the agro-food industry have stated that that the achievements of over five decades can be undermined by hunger and poverty if government does not address Nigeria’s food import bill.

The point is, Agriculture and the many offshoots are catalyst for job creation and opportunity to provide food rather than the serial importations of what Nigerians can produce and the associated waste of hard earned foreign exchange.

It is on record that Nigeria has over 84 million hectares of arable land, out of which only 40% is cultivated. Estimated at over 180 million people, it is also emerging as Africa’s largest agricultural market.

Supported by nature, the country’s crops that could earn huge foreign exchange include beans, yams, sesame, cashew nuts, cassava, cocoa beans, groundnuts, gum arabic, kolanut, maize , banana, melon, millet, palm kernels, palm oil, plantains, rice, rubber, sorghum, soybeans and yams. These have potentials of commercial quantities.

Key findings indicate that Nigeria invests the lowest percentage of its budget to agriculture among sampled African countries and the provision for 2016 is a paltry 1.25% of the overall budget.

Agricultural productivity is low in terms of yield per hectare production of cereals, meat, milk and vegetables. Nigeria’s fertiliser use per hectare is also one of the lowest in Africa.

Despite these, agriculture contributes much to Gross Domestic Product(GDP) growth and employment creation in Nigeria and should be recognized as a key driver of economic growth.

Of course, in the past, Nigeria used to be a major player in the world’s agriculture industry- once recognized as the world’s largest producer of groundnut and palm produce, as well as the second largest exporter of cocoa and the country. This is now part of Nigeria’s history.

Currently, Nigeria has several policy frameworks and schemes that seek to promote agriculture and the full value chain approach in the utilization of its products. But we are still below par.

At inception, the President Muhammadu Buhari-led administration promised to continue existing policies in the agriculture sector. This it has done. It also pledged to improve on their efficiency and effectiveness. The administration also promised to subsidise funding for priority segments in the sector like equipping farmers with the right tools, technology and techniques.

Surely, improvements in agricultural production are necessary for Nigeria to attain self-sufficiency in food and indeed meet the larger picture of the right to food of its citizens and residents in Nigeria. This is especially important now that the country is in big trouble of recession.

The right to food is a right recognized by the International Covenant on Economic, Social and Cultural Rights (ICESCR), ratified by Nigeria. This ratification places Nigeria under the obligation to take steps and at maximum, to ensure available resources for the progressive realisation of the right to food of Nigerians.

The budget, a legislative measure, is one. The fulfillment of the obligations has a lot in common with budgetary provisions to promote agricultural production.

The extent to which the budget provides for the activation of the existing policies to ensure the realisation of these noble goals has been doubt .

For one thing, the agriculture budget seems to be lacking in coherence with agreed international standards, such as the Maputo Declaration on Agriculture, particularly in efficiency and effectiveness of federal spending and the capacity of the Federal Ministry of Agriculture and Rural Development (FMARD) to implement budget programmes.

The Lead Director of CSJ, Eze Onyekpere, said: “The overall budget for 2016 is higher by 21.52% when compared to the 2013 figures. The expectation would have been for increased allocation to the sector rather than a reduction. Thus, the Federal Government has not lived up to its commitment under the Maputo Declaration.

“The average percentage allocation to capital expenditure is 49.09% over the four years, while recurrent expenditure was on the average 51.07% over the study period.

The implication is that government spent more on recurrent expenditure, made up of personnel and overheads, than it did on capital expenditure. On the average, while recognizing that farming is mainly private sector driven, it is not a proper composition considering the demand for extension services, inputs and machinery for farming.

“However, the 2016 budget allocated more to capital expenditure, which is a step in the right direction. In 2016, the bulk of the recurrent expenditure went to personnel expenditure and this accounted for 94.7% of overall recurrent. This leaves overheads with a paltry 5.3% of the expenditure. This calls for caution so as not to underfund the non-personnel recurrent components of agriculture expenditure.

The capital component of the 2015 agriculture vote was very low and a paltry 21.62% of the sector’s total vote. The share of personnel in the recurrent vote of the sector in 2015 was 94.16%. Overall, there seems to be no consistency in the distribution of the allocation between recurrent and capital expenditure in the agriculture budget over the four years – it has been oscillating.”

“It was refreshing that the 2016 federal budget made distinct allocations to the various agriculture value chains. However, the total allocation to fertilizers including organic and inorganic fertilizers was N4.656 billion, which is inadequate for the needs of farmers.

Granted, there have been some positive changes in the 2016 budget of the agriculture ministry when compared to previous years when the play on words- “seed, seeds, seedlings, fertilizers” was the order of the day. However, the allocations still have some assessed unclear and apparently inappropriate expenditure heads.

For example, the difference between the allocations to National Council on Agriculture and Annual National Council on Agriculture which got the sums of N70.5 million each is only known to officials of the ministry. For stakeholders and civil society groups, it is only one of the votes that merits inclusion into the budget.

“Again, while the ministry itemized all its projects and programmes and allocated the relevant sums to them, allocating another N141 million for “projects and programmes” is a budget head only understood by officials and remains incomprehensible to date.

Under the duplication of budget heads, “Construction/provision of Agricultural Facilities” appeared twice under different codes gulping N626.037 million and N50 million each. It’s no gainsay that these allocations would have been properly re-directed for more pressing needs of the ministry and economy at large.”

Setting perspectives at a recent stakeholders’ forum, President of the Alliance for the Green Revolution in Africa (Agra), Dr Agnes Kalibata noted that the economies of many African countries are growing faster than anywhere else in the world – and agriculture, which accounts for a third of Africa’s GDP, is poised to be the next installment of the “Africa rising” narrative.

Indeed, the World Bank finds that poverty is down by 33 per cent in Ethiopia since 2000, and agricultural growth is the main driver.

In Rwanda, the bank attributed 45 per cent of the country’s rapid poverty reduction to growth of the agriculture sector and associated industries and services.

With Nigeria struggling to manage its yearly food import bill of $22 billion due to insufficient foreign exchange as well as neglect and low investments in the agricultural sector, the stakeholders warned of the looming crisis and consequences of hunger in the country, as they cited the Venezuelan example.

Besides, the stakeholders noted that despite efforts of investors to improve agriculture’s contributions to the GDP, commercial banks are frustrating efforts to access funds under the Anchor programme of the Central Bank of Nigeria (CBN), even as the Nigerian Shippers’ Council (NSC) explores a regional Cabotage Act to aid market access and connectivity within the ECOWAS bloc.

Chairman, Editorial Board of The Guardian Newspapers, Prof. Wale Omole emphasised the need for government to revisit agriculture as a business if the nation would be self sufficient in food production.

According to him, hunger has serious consequences, as there is bound to be increase in crime rate without food availability.

“Food is security. It is indeed a national security issue. There are stories of how hungry citizens now steal pots of soup from the kitchen. This kind of crime is triggered by hunger. When there is hunger, there is bound to be anger, belligerence, aggression and robbery”, he added.

Emphasising the need for value-addition, Omole said: “Producing raw materials alone cannot lead to wealth creation unless we do more value-creation business with our raw materials. We should consider how one company that manufactures chocolate, can earn seven times more than a whole country that farms and exports cocoa.”

Consul-General Consul-General, South African Consulate, Darkey Ephraim Africa, noted that the continent is looking up to Nigeria and South Africa in using their strength for the development of the continent, stressing the need for institutional cooperation between the two countries.

“We think that it is important to align investment in agriculture towards local economic development, particularly in rural areas. The flow of oil must not be allowed to trap us into a perpetual single commodity economy. The tragic story of Venezuela and our own economic dynamics must inspire in us, a new urgency to avoid the same fate that befell this rich oil state.

“The country, with more oil than anywhere else, is crumbling, inviting more social and economic problems than any other time in its history. Nigeria must work hard to avoid that scenario. South Africa will always be there to ensure the success of Nigeria. Working together, we can achieve more for our countries and Africa’s renaissance”, he added.

Member, Technical Committee, British American Tobacco Nigeria Foundation (BATNF), Fatai Afolabi stated that the problem with the agric sector is more of talk than implementation, noting that many Local Government Chairmen and their Councillors don’t know about food production in their environment as many of them concentrate on obtaining levies and taxes on the roads.

“Nigeria needs to produce more to cater for its needs. Import substitution is key to ending the $22 billion expended on food importation. We need to strengthen the domestic market before exporting, except in the case of special commodities. We cannot cheap chasing export aggressively when the local demands have not been met”, he said.

Executive Secretary and Chief Executive Officer, Nigerian Shippers’ Council (NSC), Hassan Bello argued that exportation is crucial for survival of any country, adding that Nigeria has been having issues with its foreign exchange because many vessels leave Nigeria with empty containers.

He explained that the ability of a country to sell her products on the international market is a precondition for their survival in our present predominantly globalized trade environment.

According to him, trade policy has in recent years, moved beyond mere support of export growth and attention is being paid to the creation of conducive enabling environment for sound logistics to facilitate the business of traders in both export and domestic markets.

“The more a country is able to produce and export to other countries, the more the country can satisfy its needs through foreign exchange and increasing her investment domestically. This is because the inflow of foreign exchange earnings from export becomes available to service a number of important and worth-while activities which have multiplier effects on the general public and the national economy”, he said.

Managing Director, Poultry International Company Limited, Mrs Yemisi Iranloye advocated increased support for farmers and investors in the out-grower scheme adding that government needs to incentivise activities in the agric sector for its contributions to the economy to be meaningful.

She noted that small-holder farmers are often ignored, yet the nation depends on them for food.

Worried by the inconsistency in the continent’s agricultural practice, especially in relation to investment in large-scale commercial farms, former Secretary-General of the United Nations, Kofi Anan and other stakeholders have decried neglect of smallholder farmers, stating that more than 80 per cent of African agricultural production come from them.

According to the stakeholders, Africa’s smallholders are more than capable of feeding the continent—so long as they boost their yields by using the latest agronomic practices in combination with appropriately adapted seeds and fertilizer.

Although investors in Nigeria’s agricultural value-chain may have found appeal in out-grower schemes, the stakeholders noted that allocating large blocks of land to foreign investors, reserving water for industrial-sized operations, and concentrating research and development on a few cash crops doesn’t help most farmers.

To the Director-General, African Centre for Supply Chain, Dr Ogiora Madu, for government to address competitiveness challenges, inefficient logistics needs to be addressed as it raises the costs of trading and reduces the potential for global integration.

“This is a hefty burden for developing countries trying to compete in the global marketplace. Since 2007, the Logistics Performance Index (LPI) has been informing the debate on the role of logistics for growth and the policies to support it in such areas as infrastructure, service provision, and cross-border trade facilitation”, he added.