Agric sector in 2018: Translating economic diversification rhetoric into a growth catalyst
Growth in the agriculture sector as a component of the Gross Domestic Product (GDP) was rather marginal in 2017, and did not quite reflect the emphasis government has been placing on it. For 2018, some of the industry’s stakeholders who shared their projections with BusinessDay are more optimistic. The challenge of inadequate production in ensuring the country is food secure is expected to record substantial improvement, while obstacles to funding are to be better addressed.
The Nigerian economy exited recession in the second quarter of 2017 after five consecutive quarters of negative growth, and part of the growth has been attributed to agriculture; however marginal it may have been. Growth in the agric sector was 3.14 per cent from the first to third quarters in 2017, reducing by 0.91 points when compared to 4.05 per cent within the same period in 2016, as shown by data from the National Bureau of Statistics which was compiled by BusinessDay.
Agriculture grew by 3.06 per cent in Q3 2017 from 3.01 per cent in Q2 2017, and 3.39 per cent in Q1 2017. While crop production under agriculture grew by 3.19 per cent, it was a decline from 3.21 per cent and 3.50 per cent in the two previous quarters. Livestock consolidated on its growth, recording 2.51 per cent in Q3 2017 from 2.28 per cent in Q2 2017, and 1.72 per cent in Q1 2017. Similarly, Forestry maintained growth, at 3.95 per cent, from 3.89 per cent and 2.59 per cent in the preceding quarters. Fishing however contracted, recording -2.84 per cent in Q3 2017, a sharp drop from 5.49 per cent in Q1 2017 and -2.72 per cent in Q2 2017.
The performance of the different sub-sectors under agriculture could be attributed to a number of factors which if adequately addressed in 2018, will see the sector growing exponentially to match the economic diversification rhetoric.
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, vice president, Dangote group, and president of the Nigeria Agribusiness Group (NABG), noted 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; and 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, expectedly this year, these constraints are expected to be permanently addressed.
Adequate financing also remains a challenge which has hindered the prospects for rapid growth. Even though productivity is required to increase across all sub-sectors of agriculture, funds are however still difficult to access.
“I cannot approach banks for loan at 30 percent interest rate. The Agric intervention funds at single-digit interest rate are not accessible, they are mere political statements,” said Bode Adetoyi, chairman, Poultry Association of Nigeria (PAN), who also lamented that the “poultry industry and feed business is already collapsing and farms, feed mills are closing every day.”
Notable among challenges of the agric sector that will determine the sector’s outlook this year is access to finance. Nigeria’s commercial banks’ credit to agriculture slightly increased from N491.3 billion in the third quarter of 2016 to 491.5 billion in the same quarter of 2017 according to data from the National Bureau of Statistics (NBS).
Ada Osakwe, CEO, Agrolay Ventures, in explaining the difficulty in access to finance, said “In Nigeria’s Agriculture sector, securing capital through commercial banks is typically hard to access and expensive. In spite of the large financing needs of agricultural actors, the public and private sector have not devoted sufficient financial resources for impact. Commercial banks lend only 5 to 10 percent of their loan portfolios to the sector, and focus more on sectors they perceive to be less risky, like the oil & gas and telecoms industries.”
Henry Akintoye, president, Horticultural Society of Nigeria, expresses optimism for 2018, expecting funding for agriculture to improve.
“It should improve in the sense that government wants to focus on Agriculture and if that is the case there is no way you will not give assistance to farmers in terms of capital or farm inputs, so I feel we may notice some few things that are not good but that does not mean that the funds will not improve,” Akintoye said.
The Agriculture Promotion Policy has set 2018 as deadline for attaining sufficiency in local production of some crops such as rice, maize, soya beans, and tomatoes.
For Akintoye, under whose purview tomato production falls, he says in 2018 “we should be able to grow tomatoes all year round. Tomato production is booming in the north because of favourable weather condition and irrigation. It is not all that booming in the south because they don’t have effective irrigation system. So I believe in 2018 there should be increase in terms of having varieties that will survive or complete the growth cycle effectively during the raining season.
“This year, I see more improvement in terms of varieties that people can grow that are of good quality and can compete effectively,” said Akintoye.
The poultry industry has also been one of the sub-sectors that have been adversely affected in 2017. Early in the year, many poultry farms had shut down on account of difficulty to feed their birds largely due to inability to access to feed and other inputs, and later in the year, excessive smuggling that saw local producers unable to sell off their stock.
The poultry industry is expected to grow in 2018 as feed supply improves with increase in maize production.
Onalo Akpa, director general, Poultry Association of Nigeria, projected that this year, “with the prices of maize coming down, if our cost of production is able to come down, then we are able to produce at relatively affordable prices. There is going to be a lot of competition between smuggling and locally produced chicken. But the most important things is patriotism. The locally produced chicken is more preferable than the smuggled one, so the government needs to create awareness on the benefits of locally produced chickens”
The projections for improvement in feed supply corroborate that of Bello Abubakar, president, Maize Association of Nigeria, who said “We are going to provide the industry with enough maize that they may require because, the industry is saying that there is not enough maize and that is why they are importing.
“We want to prove to them that we can meet their demands and have excess production of maize so that we can export some to other countries,” Abubakar said.
In 2018, appropriate legislative backing, well thought out policies and ease of access to funding, are expected to boost growth in the agric sector in the course of the year, and reverse more than $5 billion spent importing food annually.
CALEB OJEWALE & BUNMI BAILEY
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