Naira Note |
With its status as the largest
employer of labour in the country and its huge potential to become an
alternative foreign exchange earner, Eromosele Abiodun posits that now
is the time to take a serious look at the agriculture sector.
Renowned physicist and Nobel Laureate,
Albert Einstein once said: “In the middle of difficulty, lies
opportunity.” A careful consideration of Nigeria’s current economic
meltdown reveals the truth behind this aphorism and why serious
attention must be paid towards diversifying the economy. In recent
times, the country’s foreign exchange reserves have dropped below $30
billion as at January, 2016 and the currency has continued to lose value
as the gulf between the parallel market and official rates the naira to
the dollar widens further.
Crude oil accounts for over 90 per cent of Nigeria’s foreign exchange
earnings, 35 per cent of gross domestic products (GDP), 75 per cent of
government revenue.
However, with the fall in oil prices,
and with no commensurate cut in production, Nigeria now finds itself in
an economic bind. The current state of agriculture in Nigeria is only a
shadow of what it used to be but it can be said that there are
encouraging signs of improvement.
It is common knowledge that about 80
per cent of Nigerian land is arable and has produced major crops,
including beans, sesame, cashew nuts, cassava, cocoa beans, groundnuts,
kolanut, maize (corn), melon, rice, millet, palm kernels, palm oil,
plantains and rubber, among others. For many decades, the sector has
been under-funded and not received the attention it deserves.
As such,
small holder farming forms a large percentage of the sector within
Nigeria. Poor farming methodologies, lack of access to finance,
post-harvest losses due to lack of storage facilities, unreliable power
supply, poor transport infrastructure and unattractiveness of farming in
terms of returns for many young people are some of the reasons why
agriculture has remained on the back burner of our national life.
Nigeria has huge agricultural potential.
With over 84 million hectares of arable land, of which only 40 per cent
is cultivated; a population of 167 million people, making her Africa’s
largest market; 230 billion cubic meters of water; and abundant and
reliable rainfall in over two thirds of its territory, the country has
some of the richest natural resources for agricultural production in the
world. Not surprisingly, Nigeria used to be a major player in the
global agricultural market in the past, as the world’s largest producer
of groundnuts and palm oil in the 1960s, and the second largest exporter
of cocoa. The country was also self-sufficient in food production
before the emergence of oil in the 1960s.
In the past four years, Nigeria’s agriculture sector has undergone major reforms and transformation.
The introduction of Agricultural
Transformation Agenda (ATA) brought about reforms in the input delivery
or Growth Enhancement Support (GES) Scheme, agricultural financing,
value chain development, including the Staple Crop Processing Zones, and
farm mechanization have yielded an abundant harvest for farmers and
great gains for the country. Between 2011 and 2014, national food
production grew by 21million metric tonnes and led to a sharp reduction
in food imports. Nigeria’s food import bill fell from an all-time high
of N3.19 trillion in 2011 to N635 billion in 2013; a 403 per cent
reduction. Direct farm jobs rose by 3.56million in the period 2012 to
2014 due to ATA interventions. Agriculture has become an exciting
sector in Nigeria.
Contribution to GDP
Agriculture is made up of four sub-activities, namely: Crop Production, Livestock, Forestry and Fishing. In nominal terms, the sector grew by 9.50 per cent year-on-year. This was higher than growth rates recorded in the corresponding quarter of 2014 and the third quarter of 2015 by 3.22 per cent points and 0.16 per cent points respectively.
Agriculture is made up of four sub-activities, namely: Crop Production, Livestock, Forestry and Fishing. In nominal terms, the sector grew by 9.50 per cent year-on-year. This was higher than growth rates recorded in the corresponding quarter of 2014 and the third quarter of 2015 by 3.22 per cent points and 0.16 per cent points respectively.
According to the National Bureau of
Statistics (NBS), growth in the sector was driven by output in Crop
Production accounting for 87.01 per cent of overall growth of the
sector. The NBS in its Q4 2015 national GDP report said agriculture
contributed 22.56 per cent to nominal GDP during the quarter. This, it
stated, was marginally higher than shares recorded in the corresponding
period of 2014 yet lower than the third quarter of 2015 by 0.49 per cent
points and 1.95 per cent points respectively.
“Real agricultural GDP growth in the
Fourth Quarter of 2015 stood at 3.48 per cent (year-on-year), a decrease
of 0.17 per cent points from the corresponding period of 2014. Growth
in the Fourth Quarter was 0.02 per cent points higher from the Third
Quarter of 2015. While positive, growth in agricultural output has been
relatively lower compared to the corresponding period of 2014 as a
result of lower crop output which in turn was as a result of security
challenges during the quarter. The contribution of Agriculture to
overall GDP in real terms was 24.18 per cent in the Fourth Quarter of
2015, marginally higher from its share in the corresponding quarter of
2014, and lower from the Third Quarter of this year by 2.61 per cent
points,” the NBS said.
Overtaking Oil, Manufacturing Sectors
Analysis of the performance of the three
sectors in the fourth quarter of 2015 showed that the agricultural
sector is doing well. There are 13 activities in the Manufacturing
sector; Oil Refining; Cement; Food, Beverages and Tobacco; Textile,
Apparel, and Footwear; Wood and Wood products; Pulp Paper and Paper
products; Chemical and Pharmaceutical products; Non-metallic Products,
Plastic and Rubber products; Electrical and Electronic, Basic Metal and
Iron and Steel; Motor Vehicles and Assembly; and Other Manufacturing.
Nominal GDP growth of manufacturing in
the Fourth Quarter of 2015 according to the NBS, was recorded at 6.93
per cent (year-on-year), 12.19 per cent points lower than the 19.12 per
cent recorded in the corresponding period of 2014 partly as a result of
higher operating costs.
“Growth was 2.13 per cent points higher
than the Third Quarter 2015 recorded at 4.80 per cent. On a
Quarter-on-Quarter basis, the sector grew by 0.33 per cent. Contribution
of Manufacturing to Nominal GDP was 9.09 per cent in the fourth quarter
of 2015, lower than the 9.11 per cent recorded in the corresponding
period of 2014, and 9.67 per cent in the third quarter of 2015.
“In the fourth quarter of 2015, real GDP
growth of the manufacturing sector slowed by 13.09 per cent points to
0.38 per cent (year-on-year) from 13.47 per cent growth recorded in
fourth Quarter of 2014. Growth was however 2.13 per cent points higher
than rates recorded in the Third Quarter of 2015, (Figure 6). On a
quarter-on-quarter basis, the sector slowed on the margin by 0.03 per
cent, with oil refining and motor vehicle and assembly weighing on the
sector manufacturing, “the NBS said.
It added: “During the period under
review, Oil production stood at 2.16million barrels per day (mbpd) 0.3
per cent lower from production in Q3 of 2015. Oil production was also
lower relative to the corresponding quarter in 2014 by 1.0 per cent when
output was recorded at 2.19mbpd. As a result, real growth of the oil
sector slowed by 8.28 per cent (year-on-year) in Q4 of 2015.
“This represents a decline relative to
growth recorded in Q4 of 2014 recorded at 1.18 per cent. Growth also
declined by 9.33 per cent points relative to growth in Q3 of 2015.
Quarter-on-Quarter, growth also slowed by 19.10 per cent. As a share of
the economy, the Oil sector contributed 8.06 per cent of total real GDP,
down from figures recorded in the corresponding period of 2014 and in
Q3 of 2015 by 0.91 per cent points and 2.21 per cent points
respectively.”
However, with its status as the largest employer of labour in the country, its huge potential to become a major foreign exchange earner and help boost the nation’s revenue base, now is the time for everyone, government, citizens and corporates to take a serious look at the sector, even as the nation moves away from over dependence on oil.
Corporate Bodies to the Rescue
However, it is heartwarming to see that
corporate bodies such as the Dangote Group, Guinness Nigeria Plc,
British American Tobacco Foundation, have picked up the gauntlet in the
drive to give agriculture the oxygen it needs to thrive. During the
company’s pre-annual general meeting briefing in Lagos, Managing
Director of Guinness Nigeria Plc, Peter Ndegwa, had said that the
company has a target of sourcing over 80 per cent of its raw materials
locally in the coming years.
He said that this was a fundamental part of the company’s social and economic contribution to the Nigerian market and this commitment is reflected not only at local but also at regional level as the Diageo Group has a target to reach the 80 per cent mark on Local Raw Materials (LRM) for Africa by 2018.
Ndegwa noted further that the multiplier
effect of this strategic move of the company on society and the economy
will far outweigh the challenges that may be initially faced.
Apart from driving down costs for the
manufacturers and ease the pressure on the nation’s dwindling foreign
reserves, local raw materials sourcing will also play an important role
in creating employment opportunities, boost income levels and empower
farmers along the agriculture value chain as well as small and medium
enterprises who serve as suppliers to big businesses thereby resulting
in such benefits as application of modern technologies, improved quality
control, higher output, product marketing and self-sufficiency.
Interestingly, Diageo’s brands have
always been closely connected with agriculture. In the 1800s, Arthur
Guinness, the son of the brewery’s founder, served in the Farming
Society of Ireland. Currently, maize and sorghum constitute 80 per cent
of the Guinness Nigeria’s agricultural raw material input. Therefore,
building strategic partnerships with banks, agricultural NGOs, donor
agencies and research organisations and leveraging these partnerships to
mitigate some of the challenges that currently affect the sorghum value
chain will take the industry to the next level.
Sourcing Raw Materials Locally
Guinness Nigeria, which has been in the
brewing business in Nigeria since 1950, was the first major brewing
company in Nigeria to begin sourcing its raw materials locally. In 1984,
the brewery acquired a 3000 hectares farm in Mokwa, Niger State for the
production of maize. Between 1995 and 1998, the company had established
an out grower scheme primarily for the promotion of ICSV 400, a
particular sorghum variety among farmers in Nigeria.
The variety made it cheaper to process
sorghum for malting than other varieties. By 1997, the company started a
contract grower scheme with farmers in Kano, Kaduna, Katsina and Taraba
States. The objective of the company’s contract growers’ scheme was to
create awareness about the improved variety and consequently get a large
group of farmers to adopt and grow the crop. With this rich pedigree of
engagement in agriculture, it therefore does not come as a surprise
that the company has made a strategic commitment to continually increase
the quota for its locally sourced raw materials.
Job creation and economic empowerment,
Ndegwa acknowledged, remain major challenges in Nigeria, but the local
content initiative will substantially address these challenges by
targeting the poorest areas and channeling investments into job-creating
segments in the agriculture value chain.
Similar initiatives by other private
sector entities will decidedly trigger a huge impetus towards
diversifying Nigeria’s economy and reclaiming its primacy as a leading
agricultural economy. The Lagos state government recognises this fact.
Lagos, Kebbi States Initiative
Recently, the state governor, Akinwumi
Ambode announced the plan to work with Kebbi state to provide food for
Lagosians, stressing that the future of Lagos State was partly tied to
deliberate resolution on food security.
He stated this during the signing of Memorandum of Understanding between Lagos and Kebbi State on the development of Commodity Value Chains.
He said food production and
self-sufficiency required its immediate attention at policy and
strategic levels to sustain the state, adding that Lagos State is the
largest consumer of food commodities in Nigeria by virtue of its
population.
“We have the market, with the required purchasing power also. Lagos State has an estimated consumption of over 798,000 metric tons of milled rice per year which is equivalent to 15.96 million of 50kg bags, with a value of N135 billion per annum.
“We have the economic prowess to produce
rice locally. The era of imported rice is gone. The reality is for all
of us to embrace the consumption of local foodstuff and commodities. In
addition to rice, Lagos is currently consuming 6,000 herds of cattle
daily which may increase to 8,000 in the next five years,” he said.
According to Ambode, the bulk of the
vegetables produced in the country end up in the Lagos markets as the
state is one of the largest producers of poultry and thus had a large
demand for maize for livestock feed production.
He said: “The state also houses most of
the industrial users of wheat and sorghum; mostly flour mills, bakeries,
breweries and food manufacturers. Kebbi State, on the other hand, is
blessed with a vast arable land suitable for the cultivation of rice,
wheat, groundnut, maize, sorghum and sugar cane.
“It is an agrarian State with over 1.2
million hectares of arable land characterised by very large floodplains,
lowland swamps and gentle slopes. In the 2014/2015 wet season, over
600,000 hectares of land was deployed for rice cultivation in the three
senatorial areas of the state.
“The numerous thousands of our market
women and men can become key employers of labour as distributors of
‘Ibile Rice’. We can also brand and package rice in the names of our
distributors and market women. As a state, we shall adopt our local rice
as a state dish in all ramifications.”
He explained that the special purpose
vehicle will allow the entrance of private sector investors and other
states in expanding the rice mill at Imota, Ikorodu and other locations.
We have already designated the 100 hectare land at Imota as the Agric
Park in the State. Other locations in and outside the State will be
vigorously activated to fulfill our mission in record time,” he stated.
Speaking, Governor Atiku Bagudu of Kebbi
State said that the two states had a long history of trade partnership
and were just making it stronger with the MOU, adding that the
partnership would provide 60 to 70 per cent of the country’s rice need.
He said his state had four emirates,
including Gwandu, Argungu, Yauri and Zuru Districts in some particular
goods and that they would all contribute to the commodity value chain.
“We believe in the vision of President Muhammadu Buhari to transform Nigeria from dependency on oil. We believe that the two states can significantly contribute to and improve food sufficiency and food security for our country. We believe that our states can benefit from this cooperation and we can jointly add value by creating employment,” he said.
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