At a World Bank meeting in August 2011, governor of Nigeria’s Central Bank, Sanusi Lamido Sanusi, explained to other attendees: “If you want to understand what is wrong with the Nigerian economy, think of two words – value chain. [Nigeria] is a major exporter of crude oil, yet it imports petroleum products. We have a large cotton belt but we import fabric from China. We are the number one producer of cassava, but we import starch. We have gas resources but we do not produce our own power.”
While this phenomenon is certainly characteristic of Nigeria’s economy in general, I am sure I echo the sentiments of many when I say that this is especially true of the agricultural sector. In a country blessed with many resources, the agrarian economy is currently underexploited. Production is very basic as products simply make their way from the farm to the market. With rising transport costs, poor storage and other commercial woes, farmers continue to barely break even.
What Nigeria seriously needs is value-added agriculture, which involves taking the product to the next level before sale, adding an extra value to the fresh product; an extra level of sophistication, if you will. This can involve industrial processing, packaging, or some innovative marketing strategy. It is absurd that one can pluck mangoes from trees in Abuja, yet has to walk into the supermarket to buy ‘exotic’ mango imported from overseas. While we produce tomatoes, we continue to import tomato puree. Without processing these products, we will continue to receive the shorter end of commercial stick. A cassava farmer, for example, who simply grows cassava, harvests it and then sells it ‘as it is’ in the market will sell it at a price below that of cassava that has gone to a local processor and has been transformed as starch. Indeed, if the farmer sells his cassava tuber for N100, he might end up buying starch to feed his family at N150. In addition, the fresh-market cassava product is usually sold at a price below the cost of production and in the long-run might be unsustainable if the farmer is increasingly unable to cover operating expenses. Moreover, with a small enterprise that can hardly be scaled up, the farmer is more vulnerable to losses such as poor yields in a particular year.
The traditional thinking in agriculture has been that to increase profits, one must increase horizontally – that is, increase volume of production, expand one’s farm, sell more products, and gradually benefit from opportunities of scale – but this is not the only way. Indeed, many small farmers the world over have shown that with a little bit of innovation, profits can be doubled by expanding vertically by moving up the value chain. And many times, this requires less capital than a horizontal expansion project. By simply drying and grating cassava, one can make garri. By mastering the art of extracting the root of the product, tapioca can be made, and from it kpo kpo garri and sweeteners for juices and cereals. With a little effort in packaging the product, it can be sold for a higher price in the market. With a little touch up on the farm, farmers can also venture into agricultural tourism inviting visitors to see how cassava is processed. This will also create a bond between the consumers of the food and the source, especially if this source is so near and they have an idea of how production happens.
In addition, farmers can collaborate with universities and other schools in their areas to have students learn and work on their farms, thereby bridging the gap between their present practice and knowledge of new methods. Alternatively, farmers can pursue a contract to supply food or snacks directly to schools. Imagine getting a contract to supply food to one of the top boarding schools in Nigeria, especially those located in nearby rural areas. Score! NAFDAC-certified foodstuffs can even be supplied directly to supermarkets, thus eliminating the need to vend imported products. What’s more, using mobile phones or some internet access, farmers can market their products online and so attract more consumers, and perhaps with time might be able to set up a delivery service.
Furthermore, when farmers are concentrated in a particular district, they can eliminate the need for middlemen by creating their own (farmers’) markets. With value-added agriculture, cassava can be transformed into cassava flour which, with the new hype, will be vital for baking cassava bread. But whether cassava or rice or tomato, the possibilities are endless for value-added agriculture, depending solely on the creativity of the farmer.
Value-added agriculture is an important ingredient in any agro-economic transformation agenda because it enables the farmer to double or even triple profits. Having worked indirectly with farmers over the past few months, I have discovered that even a small investment in fertilizers and herbicides can improve their crop yield – and profits – by a wide margin. Value-added agriculture extends that margin. On a macro scale, value-adding can be done by connecting farmers directly with intermediaries such as processing plants, and creating incentives for industries, bakeries, etc., to flourish in the country, thus making sure that all end products are produced in the country. In a true Food Republic, the level of unemployment will be very low, with people employed as farmers, marketers and vendors, factory workers, bakers, teachers, and so on.
By owning every level in the value-chain, Nigeria will be able to recoup the profits it currently loses to other markets. In the race to become a food basket of the continent, our ability to ensure that cassava and starch, wheat and wheat bread, cotton and fabric, mango and mango juice, and indeed cow and leather are produced within our borders will make all the difference.
