A strong and efficient agricultural sector has the potential to enable a country feed its growing population, generate employment, earn foreign exchange and provide raw materials for industries. The vibrancy of the sector has a multiplier effect on any nation's socio-economic and industrial fabric, because of multifunctional nature. Therefore, the fact remains that the
agricultural sector is the engine of growth in virtually all developed economies.
Although oil has undoubtedly become the number one foreign exchange earner for Nigeria, relegating agriculture to a distant background, the latter nonetheless remains relevant to the nationâ€™s economic development and growth. This is partly because food, which is a primary benefit of agriculture, is the basis for human existence.
It is common knowledge that food in appropriate quantities and quality is required for a healthy and productive life. It is in appreciation of this fact that food is given priority in the scheme of activities involving humans.
In Nigeria, agriculture contributes more than 30 percent of the total annual GDP, employs about 68 percent of the labour force, accounting for over 70 percent of the non-oil exports, besides providing over 80 percent of the food needs of the country. But this does not amount to food security in the true definition of the phrase.Â
Food security, as enunciated by the Food and Agricultural Organisation, exists â€œwhen all people, at all times, have physical and economic access to sufficient, safe and nutritious food to meet their dietary needs and food preference for an active and healthy lifestyle.
In line with this, the present administration has evolved a 7-point agenda, aimed at guaranteeing a better life for all Nigerians. A key aspect of the agenda is the attainment and sustenance of food sufficiency and security for all citizens.
The National Food Security Programme (NFSP), developed by the Federal Ministry of Agriculture and Water Resources, is designed to ensure sustainable access, availability and affordability of quality food to all Nigerians, and is targeted at making Nigeria a significant exporter of agricultural commodities.
Governmentâ€™s intention in the short term is to improve production in all aspects of agriculture. By 2011, the target is to significantly boost productivity, attain large scale production while also improving storage, processing and marketing infrastructure to achieve sustainable food stability. In the long run, on the other hand, it plan is to derive over 50 percent of the nationâ€™s foreign exchange through agricultural exports.
The country, realised over N50.6 billion ($341.8 million) from export of agricultural produce such as cocoa, cocoa butter, cocoa cake, ginger, sesame seeds, cashew nuts, sheanuts, cotton lint, palm kenel cake, shea butter, rubber, chilies, among others in 2008.Â
This is N2.9 billion higher than the N47.7 billion realised in 2007.The increase in export value was attributed to increase in export of some produce like cocoa beans from 141,084 tons and to 159,189 tons; ginger, 2,052 tons to 2,712 tons; cotton lint, 14,054 tons to 20,695 tons and cashew kernels, 693 tons to 4,531 tons. On the other hand, export of cocoa butter, cocoa cake, cocoa powder, gum Arabic, sesame seed, cashew nut, sheanut, palm kernel, shea butter, rubber, and hibiscus flower recorded a significant drop.
The contribution of the banks through Agricultural Credit Guarantee Scheme Fund (ACGSF) cannot be ignored. Between 2005 and 2009, loans guaranteed by banks reached N18, 992.408 million. The breakdown of the loans showed that year 2005 accounted for N3,046.739 million; 2006, N4,263.060 million; 2007 N4,425.862 million; 2008 N6,721.075 million; and 2009 (i.e January & February ) N0.536 million.
Most of the loans were used for food crops. Specifically, N15, 462.331 million or 81.41 percent went to food crops. Livestock farming accounted for N2, 238.581 million; fisheries reached N789, 975, while N363, 460 went into cash crops. Other sectors received N122, 850. Under the review period, N2.887 billion loans previously guaranteed under the scheme were paid.
In terms of state, between January and February 2009, Oyo State got the highest guarantee worth N81, 950; Katsina State followed with N74,480; Benue state received N58,646; Adamawa N56,000; Ogun N43,535; Imo N34,280; Delta N31,480; Gombe N26,936; Enugu N20,570; Kogi N19,550; Kwara N18,170; Anambra N15,341; Rivers N15,000; Borno N13,435; Cross Rivers N10,000; Plateau N5,900; Lagos N5,500; Edo N2,100; Nassarawa N1,500 and Akwa Ibom N1,300.
Agricultural purposes for which loans under the ACGSF can be guaranteed are the establishment or management of plantations for the production of rubber,oil palm, cocoa, coffee, tea and similar crops; the cultivation or production of cereal crops, tubers, fruits of all kinds, cotton, beans, groundnuts, sheanuts, benniseed, vegetables, pine-apples, bananas and plantains. There is also animal husbandry, which includes poultry, piggery, cattle rearing and the like, fish farming and fish capture, among others.Â
Furthermore, the global financial meltdown is one of the major instruments that have turned the attention of the high and mighty in the banking industry to the downtrodden of the agricultural sector. First Bank was apparently the first to kickoff a moving campaign to support agriculture; with their â€˜First Bank Agriculture, You First Campaign, and advertisements in the Nigerian media trying to sell the message to the people.Â
Not long after First Bank,s campaign, the United Bank for Africa (UBA) made a resounding N50 billion stake towards agriculture financing. This initiative, called the Agricultural Support Scheme, is one of the largest private sector initiatives to support agricultural development in Nigeria. The fund is targeted at all segments of the agriculture chain, from small and medium-scale farmers to large, industrial projects.
The entrance of Central Bank of Nigeria (CBN) into the race to save the nationâ€™s agriculture through the approval of N200 billion for on-leading for large-scale agriculture by the National Economic Council serves as a Federal Government endorsement of some sort.Â
So, it is a signal to other banks who are still contemplating this investment direction.
The Commercial Agricultural Credit Scheme (CACS) package of N200 billion is exclusively dedicated to intervention in the agro sector. Except for the N40 billion reserved for state governments, it bears all the hallmarks of a medium-term commercial leading programme -five years maximum with the additional unique feature of a single digit fixed interest rate.
Agricultural experts, however, believe that government and financial institutionsâ€™ efforts to save the agricultural sector may be better late than never. It has now dawned on government that the only way the economy can survive is to diversify it from one entirely dependent on crude oil to one with multiple streams of income from other sectors; such as the agricultural sector.
Above all, government is conscious of the need to remove all bureaucratic bottlenecks in ensuring that farmers who have little or no formal education have access to credit.Â
The strategy is to encourage and strengthen micro finance instructions through the provision of adequate funding by state and local governments, as provided in the National Micro Finance Policy and Regulatory Guidelines.
In addition to the contributions of some banks in agriculture financing, Nigerian Agricultural Insurance Scheme (NAIS) is also taking root in providing protection to farmers from the effects of natural risks. In 2008, Nigerian Agriculture Insurance Corporation (NAIC) paid N102 million as claims to farmers out of the N156 million expected to be paid to the farmers during the period under review while the balance of N54 million was still being processed for payment. The breakdown of the amount showed that N39.8 million was paid for crops, N79.7 for livestock while N22.3 was for other forms of claims.Â
Also the corporation underwrote businesses worth N20.6 billion during the same period, including crops, N6.5 billion; livestock, N5.1 billion, and N8.9 billion for other businesses.Â
The development has put the corporation on the right track to continue to provide the much-needed risk management services for the Agricultural Insurance Scheme and other general insurance services.Â