Financial gains, productivity in agriculture impeded by lack of legislative backing
by CALEB OJEWALE
December 22, 2017 | 1:07 am| | | Start Conversation
Transforming agriculture from a largely subsistence based economic activity in Nigeria, to a full commercial venture will not only guarantee food security in Nigeria, but will ensure that the sector delivers commensurate financial (and foreign exchange) returns to match its contribution to GDP. With a contribution of about 22 to 25 percent to Nigeria’s GDP, the agric sector is yet to deliver as much wealth as crude oil for instance, which even though barely contributes 10 percent of GDP, plays a crucial role in the economy.
The need to strengthen agribusiness investments partnership platforms in Nigeria is now being advocated as the panacea to a successful 2018 for the agric sector. The dearth of legislative backing for agriculture in Nigeria has been identified as a limiting factor for the much needed boost in productivity and economic prosperity which stakeholders in the sector yearn for.
Sani Dangote, president, Nigeria Agribusiness Group (NABG), and also vice president, Dangote group, said at NABG’s end of the year press conference this Wednesday, that “There is overwhelming evidence that lack of affordable financing, inadequate infrastructure, lack of supply securities, inconsistencies of government policies and regulations are top among constraints facing agribusiness investments in Nigeria.”
It is in light of this that The National Agribusiness Investment Plan for Food and Nutrition Security in Nigeria bill is being drafted for presentation in 2018, as a measure to remove some of the major constraints facing private sector agribusiness investments in Nigeria. These include;
• Lack of affordable long-term financing
• Lack of government coordination
• Policy inconsistencies
• Lack of supply security
• Inadequate public sector infrastructure investments
• Lack of applied food and agricultural research science and technology transfer capacity
• Lack of consumer insights and nutrition sensitive agriculture best practices
• Lack of local content foreign direct investment policies, regulations, and laws
• Lack of climate smart agriculture best practices
With the passage into law of the National Agribusiness Investment Plan for Food and Nutrition Security in Nigeria, these constraints are expected to be permanently addressed. The importance of legislation in scaling up agriculture can be seen from countries where legal backing is given for the sector to thrive.
In Africa, Kenya is one example among countries where agriculture is backed by enabling legislation to strengthen different aspects of the value chain. The Kenya Agriculture Act provides a legal framework in support of a stable agricultural sector through developing agricultural land “in accordance with the accepted practices of good land management and crop husbandry”. A significant point of focus was increasing food production and securing national food security through a variety of regulatory measures such as the administration of Guaranteed Minimum Returns. The Act also set out rules and regulations on issues such as land ownership; promotion of efficient land use and proper land husbandry even as it created various organs and bodies to oversee a range of regulatory functions, according to information on the Kenya flower council’s website, an industry which has established significant success in exports to Europe.
Similar feats are also possible in Nigeria where a wide range of commodities are produced in abundance but perishing on account of abysmally high post harvest losses, and inefficient supply chain processes, amongst other factors which are avoidable if appropriate legal guarantees are available to secure the flow of activities within the sector.
Neil Hamilton, as far back as 1989 while writing on the role of the law in shaping the future of American agriculture, stated that; one component of the historical development of American agriculture and a major factor in its success is the role that the legal system plays in its operation and performance. Without the existence of legal and institutional arrangements which provide farmers with access to the inputs necessary to produce and market their products, American agriculture would be beset with many of the organizational inadequacies and inefficiencies which hinder food production in developing nations and non-market economies. A brief review of the main contributions of the American legal system to agriculture demonstrates the significance of this relationship. More importantly, a recognition of the role of the law in American agriculture sets the stage for considering the increasing importance of the law in shaping the future of American agriculture.
With respect to the private dimension of agricultural production (that is, the legal arrangements that allow an individual farmer to engage in the efficient production of food) the American legal system makes possible: Access to credit and financing. Agriculture could not operate without a system whereby producers could borrow money to acquire land, production inputs, and animals. The legal system provides a mechanism for lending money, securing repayment of loans through mortgages on land and security interests in personal property, and enforcing debts upon default. At the same time, the legal system protects the equitable interests of the borrower and society.
The Kenyan and American legislations are examples of countries that have gone beyond rhetoric and wishes, in making agriculture a full profitable commercial activity.
Nigeria’s agric sector, though confronted with multifaceted issues, is expected to consolidate on the gains in recent months, if the various groups of farmers across the country can work in harmony to collectively benefit from the many opportunities that are available.
The NABG outlined specific objectives for 2018 which include:
• Launching of the NABG connect online application
• Crowd funding available at affordable single digit interest rates of agricultural investments up from about N700 billion to at least 10 percent target of agricultural contribution to the GDP.
• Fundamental shift towards commercial farming mindset from subsistence farming by millions of small holder farmers, women and youth entrepreneurs
• Scale up of irrigation farming best practices (at least 2 crop cycles for grains and fresh produce) to ensure supply of locally grown raw materials that meets the demand of food and beverage processors.
• Establishment of price stabilization mechanisms to minimize market price fluctuations for producers and processors
• Sharp focus on control of pests and diseases through applied research and technology transfer to farmers in a timely manner
• Targeted public-sector investments in infrastructure development such as agro-industrial parks and staple food processing zones
Other legislations which are expected to boost productivity in the sector include the Seed Bill and the Fertilizer bill.
The seed bill is a legislation embedded with provisions to ensure increase in private sector participation, protection of farmers and promotion of the seed industry. It is expected to address issues of seed adulteration, poor seed quality, and generally, curtailing the activities of those who camouflage as agro dealers. The fertiliser bill on its part is expected to protect farmers from product adulteration, underweight bags, and other sharp practices by fertiliser manufacturers, importers, distributors, and retailers.
All of these legislations will invariably lead to one thing; more money for the agric sector. This will trickle down through the value chain, making it more attractive for investors to commit funds in expanding the agric sector as a boost in productivity becomes more guaranteed. Needless to say, the country will also benefit from having more people employed in the sector, and potentially earning more foreign exchange revenue on account of agricultural exports.
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