Food production increased 21m MT in 2014

Production/prices

National food production increased by 21 million metric tons in 2014, according to figures released by the Federal Ministry of Agriculture and Rural Development.

Compared with previous years when food prices rose astronomically, especially at festive seasons, prices of locally produced foodstuffs remain relatively stable throughout 2014, as a result of increased food production except in the security-challenged areas of the North.

The devaluation of the naira by the Central Bank of Nigeria (CBN) towards the end of 2014, therefore did not have much effect on the prices of foodstuffs even during the yuletide.

Investors

This increased food production is driven more by key private sector food companies such as Dangote, Olam, Stallion that made massive investments in farming/agribusinesses. Akinwunmi Adesina, minister of agriculture and rural development, stated that private sector investments in Nigeria’s agriculture sector from 2012 to November 2014, had hit $5.6 million. By estimation, as at end of 2014, private sector investment in the sector hovered at about N1 trillion.

In addition, more citizens such as civil servants, retired military officers, other retirees, politicians, young and old professionals, fresh graduates and undergraduates got involved in food production with increased efficiency. Aside a little more commitment from the Customs in intercepting contraband foods such as poultry products, the citizenry also developed greater appreciation for food produced in Nigeria.

Employment

According to the Federal Government, the increased production and increased demand for Nigeria foods have resulted in the creation of 3.5 million jobs between 2011 and 2014. Retirees, fresh graduates and unemployed producers have created self-employment for themselves by starting farming or agric related businesses. Except in cases where medium and large farms/agribusinesses employ large numbers of first and second degree holders, many of the paid jobs were taken by secondary school certificate holders, undergraduates working on part time, under-employed professionals and citizens who are not lettered.

ATA

Also, in 2014, farmers, processors and other agribusiness players enjoyed greater lease of life in their businesses through the Agricultural Transformation Agenda (ATA), which has touched many commodities from rice, cocoa, cassava, cashew, vegetables to fish and livestock, especially poultry. The Growth Enhancement Scheme (GES) that provides subsidised inputs to producers of some these commodities and the e-wallet through, which fertilisers and seeds were allocated to farmers, still went on in 2014.

Deliberate efforts continued to be made to increase sales for farmers. For instance, though majority of the cassava producers are small farmers, the demand for cassava flour is mainly from the high-end market. Due to deliberate government policies, foreign retailers such as Spar operating supermarkets in the country now use between 10 percent to 20 percent locally produced cassava flour and 80 percent to 90 percent imported wheat flour in the production of bread, cakes, doughnuts and other confectioneries, which are patronised mainly by the growing middle-class citizens.

Funding

As a result, commercial banks that hitherto hesitated in giving loans to cassava farmers are somewhat more willing to provide financing to them and producers of other commodities. But issues of demand for collaterals by banks and high interest loans still linger. The single-digit interest loan opportunities provided by Bank of Agriculture and Bank of Industry are not adequate for the large number of seekers of credit financing. The Nigerian Incentive Based-Risk Sharing for Agricultural Lending (NIRSAL) also did not adequately address this financing challenge.

Credit to the sector has however increased beyond the 5 percent of bank portfolio it was in 2013. Industry watchers expect it to hit 10 percent by the time official figures on bank lending to the agric sector for 2014 is released. Other funding opportunities such as the Fund for Agricultural Financing (FAFIN), a private equity and quasi-equity, and debt fund which will deploy $100 million in long-term finance to agribusinesses are also being floated by the Federal Government in collaboration with foreign lending institution.

Services

Agribusinesses providing support services to farmers and processors have also increased. These include ICT services, agric equipment hiring services, commodity warehousing, consultancy, training, and so on, for players along the agricultural value chain.

Challenges

But in spite of these, challenges still exist which include infrastructure deficit, security, input supply challenges, government regulations, tax and policies, human capital, access to land.

To address some of these challenges, in 2014, the Ministry of Agriculture and Rural Development made more concerted efforts to tackle them through the operations of the Staple Crop Processing Zones (SCPZs). This has contributed to the increased contribution of agriculture to the nation’s Gross Domestic Product (GDP) each quarter in 2014.

Lack of collaboration in the implementation of government policies by Ministries, Departments and Agencies of government also still exist. One is the non-compliance on the zero duty on importation of agricultural equipment and machineries. Another is conflicting signal in the implementation of policies such as waivers on imported commodities, which serve as disincentives to local producers of the same commodities.

Legislation

Another major disincentive that has prevented some investors from making more investment in the sector is uncertainty in the sustenance of the reforms due to the fact that the country’s lawmakers expect to be lobbied before passing bills, and therefore sustain the agricultural reforms. In some cases, this has prevented local producers that can create wealth and jobs from producing some commodities from doing so, while the country imports and consumes in large quantities the end products of such commodities.

Coordination

To help protect and hopefully sustain reforms in the agric sector, the National Agribusiness Group (NABG) came full swing in 2014. Speaking on NABG, the minister of agriculture said the NABG will help drive farm production, improved processing, value addition and market opportunities for farmers through the development of integrated value chains for all agricultural commodities. Emmanuel Ijewere, coordinator of NABG in 2014, gave credence to this by saying, “The NABG is expected to help sustain the investment inertia of ATA.”

In a similar vein, Sani Dangote, chief executive, Dansa Foods and chairman of NABG, said: “We have this unique opportunity in 2014, to align on one channel of communication to build confidence in government policy reforms that cut across several MDAs.”

Others

Issues of access to land for genuine investors are also being addressed by the stakeholders. There are programmes to improve weather forecasting by operational weather stations in the country to reduce risks. Also in 2014, Nigeria built up its silo storage capacity network to 1.3 million MT, making it the largest in West Africa.

Untapped opportunities

The contribution of the agricultural sector to the nation’s GDP has been on the rise in 2014, as a result of the expanded activities in the sector. But even at that, there are still huge opportunities waiting to be tapped as less than 15 percent of the country’s arable land is currently under cultivation and the current ATA has opened up more massive opportunities along the value chain begging to be tapped. 2014 has proven more than any other year since crude oil took centre stage in the country’s economy that Nigeria’s economy is sure to become great if it pursues actively and with greater precision the development of its agriculture sector. The country’s leadership can either fully take advantage of this or bungle it, and posterity to judge them.

 

OLUYINKA ALAWODE

 

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