Rejecting Agricultural land as collateral limits investment potentials

Nigeria has about 84 million hectares of arable land which can cultivate a wide range of crops; to boost domestic food security requirements and also enable increased exportation. Segun Adewumi, National President of the Nigeria Cassava Growers Association (NCGA), speaks with BusinessDay about the potentials and challenges in increasing investments in agriculture, particularly the cassava value chain.

There is so much talk about food security and Industrial Potentials of cassava. What can you say about this?

Yes, cassava provides over 20 domestic food types for Nigerians and that includes, Gari, fufu, lafun, starch, tapioca, pupuru etc. At the same time it has five major industrial products namely, Ethanol, Industrial Starch, Cassava flour, Glucose syrup and Sweetener. Incidentally, they are also Raw Materials to numerous utility items with limitless domestic and export market potentials. Cassava can trigger massive industrial revolution that will earn Nigeria over 20 trillion Naira yearly. Cassava is actually the answer to the economic woes of Nigeria.    

What can we do to achieve these potentials you have identified?

All we need is to devote 5 million out of the 84 million hectares of arable land in Nigeria to cassava development and that will yield 200 million MT of cassava. Using Industrial Starch as example, 200 million MT of Cassava will produce 50 million MT of Starch. 50 million MT of Starch presently sells for N350,000 per ton and that will generate 17.5 trillion Naira. Fortunately Cassava can be cultivated in all parts of Nigeria. It is even better cultivated in the North where weeding is easier and land clearing is less expensive.

Is the Government aware of this opportunity?

Yes, we made a comprehensive Presentation to the Honourable Minister of Agriculture stating all the facts and our presentation was well received and appreciated.

What do you think is delaying take off for the Program?

I think the government is taking her time to ensure that the programmes are well delivered. All that is required is provision of enabling environment for Agriculture and Industry to prosper. Right now we have some impediments that need to be removed for inflow of foreign Investments and prosperity of the local investors.

Can you expatiate on some of these impediments?

The first is the Non Acceptance of Agricultural land as collateral security for loan.

On account of the failure of Nigerian Banks to accept Agricultural land as collateral security for loan, many Investors have relocated to other countries like Ghana. Recently an America Investor who intended to install 100,000 litres Ethanol plant per day for Cassava Growers relocated to Ghana because the land for which farmer had spent hundreds of millions to acquire could not form part of the collateral for Bank Guarantee that is required  for foreign loan.

Secondly, there is a need for modern agricultural practices. We appreciate the Anchor borrowers’ programme by the Central Bank of Nigeria. It will boost food security. At the same time, Agricultural Commodities required for Industrial use need to cost less in order for products to penetrate the International market. This is beyond what our aging farming population can provide. We need modern practice of Agriculture that only the educated youths can do. For example, Malaysia and other countries have started to use micronutrients to upscale Cassava yield from between 10-22 MT with average 18% Starch content per hectare which is obtained in Nigeria to over 100 MT yield (in Malaysia) with 40% Starch content. Apart from Garri, no Nigeria Cassava product can penetrate the International market on the account of its cost of production. All the noise about Cassava chips are blatant lies. It costs N100,000 in Nigeria to make a ton of chips that sells for N40,000 in the International market. Right now, Nigeria has over 70% of her population as farmers but also import over 70% of her food. It implies that an average farmer in Nigeria cannot feed his family, whereas Ireland exports over 90% of her food to other Countries. Prosperity in Agriculture can only be achieved through the practices of modern Agronomy.

Recently there were complaints that our foods especially from the Northern part of Nigeria are being marketed to some North African Countries and the fear that this situation will cause food shortage. What can you say about this?

I see it differently; I think export of food is a most positive development capable of triggering the real diversification of our economy that we yearn for. As said earlier, we have 84 million hectares of arable land, we have millions of youths that have no job, and all we need is to commence serious Agricultural Revolution now that ready market is available. People like me, may be, out of ignorance of some important facts, wonder why we continue to destroy and burn down illegal Oil Refineries. Why not upgrade them and license them as alternative to using our meager resources to import refined oil. We need a well articulated, focused and result oriented economy policy that will bail us out of our predicament.

How do you think can we Finance Agriculture?

We can finance through the Bank of Agriculture (BOA). We are aware of the effort of the Federal government to recapitalize Bank of Agriculture (BOA) but consider this very unnecessary.  All the government needs to do is to re-organize the banks and support it to draw money from local and foreign money market with Federal Government guarantee and to mitigate the interest on the loan to 5%. Monies wasted by the government as subsidies that never got to the farmers should be used to mitigate interest in Agricultural loan. These agricultural loans will be in two categories. One is long term loan that will be available for Land Clearing/Development and tree crops while the second category is the Yearly loan that will be available for arable crops.

But how will the loan be recovered from farmers?

If our proposal is considered, default of repayment of Agricultural loan will be less than 10%. Cultivation of crop must be market pull, determined and oriented which is to say off-takers of the commodities are readily available before crops are cultivated. Crops will be cultivated in clusters around the off-takers. For example a cassava farm could be in the size of 5,000 Ha around a Processing Factory that uses 240MT of cassava per day. A tripartite agreement is drawn between the farmers, off-taker and the Bank. Bank finances cultivation, off-takers pays the bank upon harvest and the profit of the farmers are worked out and paid into his account. In this way farmers are not in position to decide whether to pay or not.

How realistic will this be and who supervises it?

This is where the Agricultural Transformation Agency comes in. There should be a National Planning on every Agricultural Commodity. Consultant who will own vast land will be appointed for different crops. The consultant may not be a farmer but businessman who will employ professionals as Extension Officers (EO) under whom farmers will be grouped. The Consultant will give youth farmer monthly allowance, the total sum of which will be deducted from the proceeds of his crop at harvest.

How do we encourage the youth to take farming as a carrier?

This is very simple, for example we can demarcate cassava farm into ten Hectare blocks and allocate a block to the youth farmer. From 10 hectare block he will make a profit of about two million Naira. 5 Hectare is added to his portion yearly until he manages 25 hectares and can make up to six million naira as profit in a year. In addition youth farmers will be formed into cooperative that will own specialized farming equipment like planter and Harvester and even Processing Industries. With this, our youths will prefer farming to the white collar jobs of the urban cities.

What is your advice to the Government?

Already we have Federation of Agricultural Commodity Associations of Nigeria (FACAN) the umbrella body of commodity Associations under the ministry of Trade and Investment. This body can work with the Federal Ministries of Agriculture for a proper re-organization of commodities Associations in line with the suggestion made above. It requires only the Political will of the government to change the recession into prosperity under two years with concerted efforts. For instance, Thailand has only five months of Rain in a year yet the country feeds many other countries with Rice. Malaysia took palm kernel seed from Nigeria but now make money from her palm kernel project more than twice what Nigeria makes from oil. Also, Ireland used to import food in the past but now exports 90% of food produced in the country. Nigeria can become a food basket of the world if these suggestions are well considered.