Opening Salutations: Excellencies…...
In this keynote, agriculture refers to food systems, from primary production to when the food gets to the table or consumption. The word, “Agriculture” is also used in its broadest sense comprising food and cash crops, livestock or animal husbandry (cattle, poultry, small ruminants etc), fisheries, forestry and wild life.
Why the focus on rural agriculture? The Sustainable Development Goals (SDG) or Agenda 2030 targets eliminating poverty (SDG1) and hunger (SDG2) by 2030. SDG2 or Zero Hunger is central to achieving a sustainable world for future generations.
The majority (75%) of the world’s poor live in developing countries. Where in the developing world do they live? Rural areas. What is the main source of their livelihoods? Agriculture. What type of agriculture? Small scale subsistence (or smallholder) agriculture. What percentage of the food consumed by populations of the developing world do they produce? Up to 80%. So, if we are serious about Zero Hunger, what should we do? We are talking of 500,000 million small farms supporting between 2.5 and 3.0 billion people.
Specifically, for Nigeria, of our 34 ha millions of arable land, 93.3% are under smallholder agriculture. They make up 80% of the farming population but produce 98% of the food we consume.
Agriculture in the 1960s and 1970s contributed immensely to the Nigerian economy in various ways; namely, in the provision of food for the increasing population; supply of adequate raw materials to a growing industrial sector; a major source of employment; generation of foreign exchange earnings; and, provision of a market for the products of the industrial sector among others.
It was indeed the largest industry in Nigeria driven by cocoa in the Western Region, groundnut and cotton in the Northern Region, and timber, oil palm and rice in the Mid-Western and Eastern Regions.
In those days, the 1970s, agriculture accounted for 64% of Nigeria’s GDP and despite the reliance of Nigerian smallholder farmers on traditional tools and indigenous farming methods, these farmers produced 70% of Nigeria's exports and 95% of its food needs. The country was well known for its major export of commodities like cocoa, palm oil, groundnut, cotton, timber, rubber, rice, hides and skin etc. Food shortages and price hikes were unheard of. We even provided food aid to other countries.
That was a period in the 60s and 70s when Brazil, China, Korea, India and Vietnam were in developmental crisis – a million Chinese died from starvation and famine, India was described as a hopeless case, Brazil was dependent on food aid and Vietnam was still at war. South Korea had just come out of war and was dependent on international assistance. And actually, African countries including Ethiopia, Ghana and Nigeria supported South Korea with both financial and human resources.
Those were the years, when Southern Nigeria was known for its timber, rubber and oil palm plantations and the middle-belt with its rich agricultural diversity, provided an abundance of staple foods for both north and south.
What Went Wrong?
How could a country so blessed with thousands of hectares of arable land, an abundance of rainfall, excellent climate with a broad range of agro-ecological zones for growing a variety of crops become a major importer of food? Statistics shows that Nigeria spent about NGN112.88m on food importation in the early 70s but has increased by over 100 percent and in 2017, we spent $9.5 billion on importing food to feed our growing population.
Where exactly did we go wrong and what exactly did we not do right?
Nigeria discovered oil in the 1970s and became a victim of the Dutch disease. The contribution of agriculture to GDP dropped from 64% to 48% in the 90s and ever since, the country has spent its oil money on imports to meet its basic food needs. And today, agriculture accounts for only 21.43% of the country’s GDP.
We discovered oil and neglected agriculture to the detriment of our rural populations who produce the food we eat and investment in rural development was left to willing bi-lateral and multi-lateral development agencies. Our agricultural policies, like in other sectors, are inconsistent, lack continuity and have discouraged the private sector, a pivotal player, from investing in agriculture. Leadership at all levels of the political and social spectrum of the country has fostered corruption, greed and a blind eye to the suffering of the masses and disregard for the rule of law and order is done with audacious impunity.
We talk about industrialization and mechanisation as the stepping stones to civilization but forget that industrialization depends on surpluses and surpluses come from the agricultural sector and our mineral wealth. Without surpluses from agriculture, we cannot develop an agro-industrial sector nor can we talk about value addition when 20-40% of produce is lost to insects, rodents and disease due to lack of infrastructure and poor to non-existent storage facilities.
Past Attempts to Revive Agriculture
The government has had several programmes to salvage the worsening crises in the agricultural sector but suffer setbacks due to lack of long-term vision and continuity. In the mid-70s and early 80s, we embarked on Operation Feed the Nation (OFN under General Obasanjo in order to bring about increased food production nation-wide through the active involvement and participation of all Nigerians.
Although OFN succeeded to some extent in arousing national concern for the growing decline in food production, it failed to encourage increased agricultural productivity on a more sustainable basis. Then the Green Revolution was launched in 1980 by Shehu Sagari administration to boost production of livestock and fish in order to meet home and export needs, to expand and diversify the nation’s foreign exchange earnings through production and processing of export crops. It too suffered setback due to problems bordering on finance, input supplies, distribution and inadequate credit to farmers.
In 1987, the Babangida administration had aimed to open up rural communities through access to roads and market, by creating the Directorate of Food, Road and Rural Infrastructure (DFRRI) program. It too failed due to the enormity of rural under-development and available resources needed to overcome the problem.
Rather than revitalise earlier or existing programs and make them work, successive military governments and their Ministries of Agriculture occupied themselves with ensuring that more food and commodities were available through imports instead of investing in agriculture.
A ray of hope raised expectations when in the early years of the second decade of the 21st Century, in 2013, the country was blessed with a young and dynamic minister for agriculture, Dr Akin Adesina. His Agricultural Transformation Agenda (ATA) and the concept of Staple Foods Processing Zones were short-lived. But not before he had succeeded in dismantling the fertilizer cartel and had introduced an e-wallet system for farmers.
Building on the successes and lessons from Agricultural Transformation Agenda, the Federal Ministry of Agriculture and Rural Development (FMARD) through Chief Audu Ogbeh is today promoting - the “Green Alternative” which is an Agriculture Promotion Policy aimed at working with key stakeholders to build an agribusiness economy capable of meeting domestic food security goals and supporting sustainable income and job growth. With only one year to new elections, it is anyone’s guess of the fate of this programme.
As one national programme after another collapsed in the effort to revive agriculture, so did the number of foreign development assistance (ODA) projects to help Nigeria feed itself increase, while at the same time, the cost of food imports increased. It is an interesting coincidence. To mention a few: the World Bank, AfDB, FAO, IFAD, WFP, USAID, OXFAM, DFID, Syngenta, KfW, DGGF of the Netherlands.
No one saw a major drawback in these efforts. Emphasis was on production, not productivity; the concept of agricultural value chain was absent and agricultural production was not seen as but one element in the national food system. While efforts were concentrated upon inputs (seeds and fertilizers) and outputs (primary products), what happened thereafter in the value chain namely, storage, conservation, transformation and value addition, packaging and marketing and consumption did not exist or only so on paper.
It is baffling that we did not learn from history; that no developed country leapfrogged into that category without going through an agricultural transformation that generates inclusive social and economic growth – from an agrarian revolution to an industrial revolution; England and Europe in the 17th and 18th Centuries; Japan in the 19th Century; China, Brazil, India etc. in the 20th Century. How can any government consider itself legitimate when it is not able to feed its own people?
Preliminary Take-home Messages
From the foregoing, I would like to propose a small set of messages. We will return to them at the end of this keynote.
- Agriculture is the bedrock of development of any country. Ladies and gentlemen, there is no country in the world that crossed the road from developing to developed country without leveraging the potential of the agriculture sector
- We must see agriculture not just as a way of life for poor rural people, but as an economic activity (as a money-generating activity), as a business.
- The development of a country, of a people cannot be imposed from outside but must take root from within.
- The private sector must be seen as a key partner in Nigeria’s agricultural transformation agenda.
- In conclusion, there can be no overall national development as long as our rural areas remain under-developed or undeveloped. Neither can we speak of a rural transformation occurring without rural enterprise development. Successful agricultural value chains are a driver for rural enterprise development
As a footnote on the nation’s private sector actors, mention must be made of the Dangote Group who until recently had monopoly over importation of many staple commodities but is now investing massively in agriculture, particularly on rice; AACE Foods, established in 2009, partners with small cluster farmers in rural communities to facilitate their access to microfinance and farming technologies, gradually displacing imports and promoting exports; Olam International, a leading agribusiness was established in 1989, and has a large network of farmers, suppliers and wholesalers and buying agents. Olam, apart from its commercial concerns, has a network of 500,000 thousand farmers and supports initiatives for rural communities to improve electrification and water facilities, farmer’s yield and labour practices, and access to markets. , Coscharis Farms, established in 2014, formerly COCHEDS Agro Industries Ltd that was established in 1985. It is in its early years of operation. Sahel Capital, a private equity firm exclusively focused on the food and agribusiness sector in West Africa since it was established in 2010 and are also the fund managers of FAFIN (Fund for Agriculture Finance in Nigeria) which is focused on transforming the food and agriculture sector, enhancing the lives of smallholder farmers, creating jobs, and strengthening priority value chains.
It is worth understanding why Sterling Bank has given agriculture particular attention. Agriculture is one of five focus areas that the Bank has chosen for its field of interest and investment. Seeing agriculture as a business which must grow to encompass the ambition of future generations from which to generate wealth and prosperity, explains why Sterling Bank is particularly opportunistic in embracing CBN’s various schemes, facilities and funds that target agriculture in order to unlock its potential. It is an active participant in CBN’s Anchor Borrowers’ Fund Scheme with activities in five states including Kebbi where rice yields rose from 2.5 t/h to 4.5 t/h and thanks to assured off-takers, the season ended exceedingly well for farmers.
Although not an exhaustive list, this shows the extent of the country’s private sector interest in its agricultural renaissance being aware of the potential and opportunities that the country is endowed with.
As an endnote to this footnote, we must dispel the notion that the Private Sector is only after profit. Every business has to make profit for it to be sustainable particularly SMEs, smallholders, cooperatives etc. And government makes the most profit in any society that is disciplined and where the rule of law and order prevails, from increased tax revenues to peace and stability.
Other Areas of Relevance
Nigeria and its Youthful Population: Africa is the youngest continent in the world with over 50% of our population below the age of 25. The same statistic applies to Nigeria. Every year, 10-12 million young Africans enter the job market competing for less than 200,000 jobs. With one out of four or five Africans being Nigerian, one can well imagine how many of our young women and men are unemployed and under-employed. Yet, agriculture, the largest employer, is unattractive to our youth. With the average age of farmers in the country between 55 and 60 years, who will grow the food on our rural farm lands in 2030 and beyond?
Our youth need to see the largely untapped reservoir of opportunities in farming beyond the hoe – a reservoir that not only feeds people, creates wealth and employs people along the whole value chain both on farm and off-farm. It is not how to make farming attractive but how to attract young people into the food system. A good example is IITA’s Young Agripreneur (IYA) programme.
The highly vocal thousands of urban youth are a small number compared to the millions of job-seeking rural and semi-urban young women and men who will migrate into urban areas and in no time constitute the thousands who daily attempt to cross the Sahara or the Mediterranean Sea in desperation, frustration and hopelessness.
Feminisation of Agriculture and Rural Areas: With increasing migration of rural men and boys to urban cities, there is a growing feminisation of our rural towns and villages. Consequently, women make up a large percentage of the workforce in agriculture and food systems in Nigeria. Along with specific traditional gender roles, women’s empowerment and control over resources are key factors that influence outcomes on staple food production. And they are more likely to be better managers of resources than men; better carers of children and aged parents than men. They deserve better attention, support to their associations and groups and equal access to both land and financial resources.
Farmers Organisations, Cooperatives and Rural Groups: The most successful agricultural and rural development investment projects while I served as President of IFAD were those where we helped to build and or support strong farmers’ organisations. The power of aggregation, collective or group action, sense of community and transparent governance are best exemplified among rural populations. Their ability to negotiate with partners, both government and the private sector, enforces fairness and diligence which cannot be achieved by individual rural farmers. They are a foundation for successful rural SMEs and community development.
Finance, Mechanization, Input-Output Supply and Markets: Smallholders and youth are at much disadvantage when it comes to accessing loans at commercial rates but there are several successful cases both in Nigeria and elsewhere where the banking sector has partnered with farmers. The CBN Small and Medium Enterprise Development Fund of NGN220.00 billion where IFAD provided a guarantee fund is of note; the establishment of NIRSAL, a risk-based sharing system for agricultural lending , although only a few years in operation, the reactivation of the Agriculture Bank is under watch, and Sahel Capital’s FAFIN (Fund for Agriculture Finance in Nigeria) are commendable efforts. But the banking sector still needs to be more innovative and not be too risk averse.
And as mentioned earlier, in recent years, the CBN has demonstrated commitment to support agriculture, viz: Commercial Agriculture Credit Scheme, Agriculture Credit Guarantee Scheme, Real Sector Support Facility, and the Anchor Borrowers’ Fund Scheme.
“Rural farmers do not invest”, a myth that we dispelled several times over during my career. Putting the cart before the horse is a common error made by so-called development experts. “Give them tractors and fertilizers” and see what happens. But smallholders are smarter than we think. In the absence of credit and loans, assured markets or out-takers of produce, and guaranteed prices, the results are always the same: a glut in supply and price crash. In the absence of assured markets and policy support systems farmers are forced to the only risk insurance they know best: re-adjust their production systems. Farmers’ organisations and cooperatives are a better assurance to commercial banks than individual smallholders.
Crop loss, Food Waste and Consumption: In 2017, Nigeria experienced food loss to the tune of 50% of food produced. Perishable produce such as fruits and vegetables were even higher than 50%. Post-harvest losses alone had risen to USD9 billion annually (FIIRO, 2017). Some food products never get to leave the farm before they experience spoilage, damage or waste. When they do, smallholders lack appropriate mechanisation and infrastructural facilities, good roads, processing and storage facilities and poor market distribution to support them and so reduce losses.
Danfoss Nigeria claims that Nigeria loses USD750B annually to food waste but it is not clear whether this is postharvest and waste combined. It certainly includes produce such as tomatoes, pineapples and other perishables which are wasting on roadsides and in open market places due to absence of cold storage and poor market linkages. Irrespective of causes, it is obvious that we lose up to 75% of food that is produced compared to what reaches our tables.
Consumers have a role to play in domestic market dynamics. With the increasing number of young Nigerians entering into the middle-income bracket, diets and food habits change, traditional foods give way to western diets, imported processed products replace the mortar and pestle, and foreign supermarkets become more attractive. To eat well and be healthy calls for a return to basics, think global but act local.
On-Farm-Off-Farm Dynamics and Rural Transformation: Increased agricultural production and productivity in themselves do not translate into rural development nor does agricultural development necessarily lead to agricultural or rural transformation. Both agricultural development and transformation hinge on multi-dimensional and multi-sectoral dynamics that are driven by an overall national development strategy on rural transformation that is socially inclusive for an agricultural transformation to occur. In other words, successful on-farm outputs should drive off-farm activities while the latter also creates demand for increased on-farm outputs. Both drive the emergence of an agro-industrial sector, resulting in a structural shift in farming populations and lifestyles. The following two selected evidence-based conclusions from IFAD’s 2016 Rural Development Report provide better explanation.
While inclusive rural transformation hinges on agriculture, which retains its importance as the transformation unfolds, it requires that distinct agricultural policies be adopted at different stages of rural transformation. Because of strong interactions between structural transformation and the agrifood system, the national and subnational political economy of inclusive rural transformation hinges on the role and importance assigned to agriculture as the transformation unfolds.
Rural transformation does not happen in isolation, but as part of a broader process of structural transformation shaped by the interlinkages between agriculture, the rural non-farm economy, manufacturing and services. Rural transformation is essential for structural transformation. And rural transformation does not just happen; it must be made to happen.
In the following pages, I will summarise examples of successful smallholder agribusiness projects or enterprises where IFAD was a major partner. I will be happy to answer questions and provide more information on successful cases in other African countries. I will conclude by drawing lessons from my experience which span four decades of professional work in Africa, Asia, Europe and Latin America.
Proof of Concept
From the foregoing discourse, my proposition is that Nigeria has both the potential and the opportunities to transform its rural sector from zones of economic misery into zones of economic prosperity. Where has this happened before?
Earlier in this paper we argued the case of transformative changes that occurred in the last Century in China, India, Brazil and South Korea. Agriculture was key but so also was the role of government and the right investment choices in rural infrastructure, policy, education, health etc. Recent examples on successful farmers’ organisations and rural cooperatives can be show-cased from the period of my tenure as President of IFAD: in Guatemala (AGRISEM), Rwanda (tea), Uganda (oil palm in Kalangala district), low interest loans to farmers in Kenya (Equity Bank), and in Benin and Sierra Leon (rural finance institutions). Details can be provided by IFAD. But so also here in Nigeria, we have success stories from organised rural enterprises. I will give brief summaries of three of them. The first is an on-going programme.
Value Chain Development Project (started in 2013): This $75.4million value chain project for cassava and rice, was the first approved project for Nigeria during my second term as IFAD President. It has turned out to be very successful and is exemplary of the potential of rural areas to become successful and viable economic entities. It is being implemented in six states (Anambra, Benue, Ebonyi, Niger, Ogun and Taraba). Main elements are productivity enhancement, private sector partner engagement (in this case OLAM) which serves as a reliable off-taker of produce in Benue; and financial inclusion through an embedded financial incentive for access to credit and assured buy-back/pay-back system.
In the 2017 crop season, farmers produced 140MT of rice at an average of 4.4t/h. OLAM injected USD9.2million (NGN2.9B) in Benue’s economy through buy-back of 25MT of rice paddy and generated 3,700 jobs through engagement with OLAM and IFAD.
Other outcomes of this project have been that it served as a pilot for the Agricultural Transformation Agenda (ATA) of the previous administration of which the Staple Crops Processing Zones was one of its components. Similarly, in order to meet the demand for seed, a youth seed production model is being scaled up by FAO and AfDB with 200 youth trained by the Africa Rice Centre of the CGIAR.
The Nigerian government has requested IFAD for a second phase of this project through a loan of USD100M to include other crops as well as scaling out to other states.
Root and Tuber Expansion Programme (2002-2010): This $40million cassava project was implemented in 24 states of the country. It catapulted Nigeria to become the largest cassava producing nation in the world. Cameroon and Ghana also benefited from IFAD’s investment. Companies like Unilever, SaabMiller and others contracted farmers for their produce. Unfortunately, the Federal and State governments did not give much consideration to value addition, processing and marketing aspects. Products from cassava can be used in composite flower for bread and pastry, bio-fuel, animal feed, industrial starch; sorbitol as a substitute for yeast and much more.
Community Based Agricultural and Community Development Project (2003-2013): This AfDB and IFAD financed project was based on a community driven development (CDD) approach that was implemented in the northern states of the country. A major outcome of this project was the development of strong community development associations that evolved into strong and cohesive governance structures and were described as the Fourth Tier of Government by the northern states. It built and strengthened rural governance structures that generated a sense of trust and confidence in rural communities
Elements for a Value Proposition
From my experience, a one-size fits all proposition is already flawed. Context and content must drive every effort at rural transformation. Change does not just happen but must be made to happen. This is no rocket science. However, certain lessons can help explain the paradoxes that have characterized the Nigerian story. When tailored to context and informed by experience, the relevant pieces begin to come together. Think BIG, act small and let it grow!
Proposition #1: Agriculture, irrespective of size or scale, is a business, a money-making venture. Farming, whether of crops, livestock or fisheries, is not just a way of life; it is an economic activity that produces food, feeds people, creates jobs and employment, brings wealth, empowers and transforms people. It is the pathway to sustainable development. This calls for a major shift in our mind-set. Farmers, whether small or big, must be seen as agri-business entrepreneurs and the business of smallholder farmers as rural enterprises. They must be seen as the largest group of private investors in agriculture with the same rights and access to resources as big farm owners and companies.
Proposition #2: Development must start from within. Development is not something we do for or to others. Development is something people do for themselves; rooted in their own soil. It is an internal process, it starts from within. This is a pivotal recognition which stimulates and generates action and growth.
This is what Brazil, China India and Korea did. They were not transformed by ODA. They invested in their own people, in rural development and in sound policies; in education and health and in social protection. They saw agriculture as pivotal to their development; they saw the nexus between rural and urban areas and invested in both. And above all, they invested in their people and in good governance!
Without good governance our efforts at development will always remain crippled. Poor governance results in mediocrity, weak institutions, blatant corruption, inconsistent policies and dysfunctional societies.
Proposition #3: If we do not resolve the increasingly volatile youth unemployment challenges by engaging the youth in agriculture, our rich demographic dividend will in no time become a demographic time-bomb.
Proposition #4: The finance structure for agriculture should also be improved. With little or no access to finance for smallholder agriculture, commercial interest rates at over 20%, poor infrastructure, inconsistent policies and volatile markets, both young and old farmers have little incentive to invest their time and resources in agribusiness ventures. The formal financial sector needs to be more innovative and less risk averse. IFAD’s Rural Finance Institutions (RFIs), Kenya’s Impesa and the system of SACOS (Savings and Credit Organisations) in East and Southern Africa are good examples to emulate.
Proposition #5: The power of aggregation should be optimized through building and supporting smallholder associations, groups and cooperatives. Successful models exist in Nigeria and elsewhere to learn from. Their ability to aggregate, negotiate fair price, have access to markets are vital for the survival of their business and a transformation of mind-set. These are precursors to rural economic empowerment.
Proposition #6: The private sector has a role to play in supporting farmers’ organisations and cooperatives to achieve better coherence, product quality, assured markets and a lasting partnership between producers and buyers.
A primary prerequisite is an enabling policy environment, continuity and consistency in policy structure and implementation, not changing from one administration to another or from one political leadership to another. A policy environment that is an incentive to private sector investment, particularly for the domestic private sector.
Proposition #7: The role of government is not to grow food or to import it but to create the enabling environment for producers, buyers and consumers to prosper. Good governance, informed policies, durable basic infrastructure, maintenance of rule and order are as important if not more, as winning an election. These are the basic ingredients for lasting development.
Proposition #8: None of the above can be done by one individual alone, by one institution or by one Ministry alone. A dynamic and vibrant profit-making food producing rural community in partnership with an engaging private sector both operating in an enabling economic and social environment that is fostered by a people-centered government is the ideal recipe for a win-win partnership in rural transformation. The power of fair partnership should be optimized.
We belong to a country called Nigeria. It has a total land area of 910,770 km2 equivalent to 98 million ha. 77% of the total land mass is described as agricultural land but only 7.14% is cropped area and most of that (93.3%) is under smallholder agriculture, that is, those who cultivate less than 2 ha per household or own 1-2 cows, or a few chickens, goats or sheep. They make up 80% of people in agriculture but produce 98% of the food consumed by Nigerians. Yet, they are the poorest. Is this a challenge or an opportunity? To transform the rural economic spaces from zones of misery into zones of prosperity is the greatest opportunity for any generation of Nigerians.
Add to the opportunity or challenge that only 0.3% of our agricultural land is irrigated as against India with 37%; and fertilizer usage is at 10.88 kg/ha as against India’s 165kg/ha.
Ladies and gentlemen, change does not just happen, it must be made to happen. We are sitting on a goldmine! The constraints to mining this wealth are man-made. We are the culprits of our own failure!