Agriculture credit up, but Nigerians pay more for food

Credit to the agriculture sector has consistently increased since 2015, from both banks and government interventions, appearing to solve the problem of access to finance for most farmers.

However, it has not translated into abundance of food or lower prices. The cost of food items have increased exponentially, not reflecting the abundance that should come with increasing productivity, making consumers spend more.

Food inflation rose to 18.3 percent in November 2020, after consistently increasing over 30 months, driven by low productivity, weaker naira, challenges in accessing markets including insecurity and bad roads, then the border closure that appeared to break the camel’s back.

Since 2015, the incumbent administration of Muhammadu Buhari has been relatively fixated on agriculture, like previous governments. While the president recently said the country is better today than it was five years ago, a cursory look at major themes in the sector shows the government may have a different definition of growth.

While there are relative positives in terms of access to credit and market, primary production, particularly for crops, has become more life threatening than it was five years ago. It is only the living that farm, as such, interventions will matter less when there is no security to produce.

Also, while government and farmers say production has been increasing, Nigerians continue to pay more for food, in proportions higher than when the country relied on importation. It is a mix of both good and bad, but even the positives are hardly justified, first, the seemingly ‘good trends.’

Access to credit

The Buhari-led government has been committed to increasing credit to the agric sector, promoting initiatives like the Anchor Borrowers Programme (ABP), Targeted Credit Facility (TCF) and the Accelerated Agriculture Development Scheme (AADS), among others.

This has increased credit availability as the Central Bank of Nigeria (CBN) has committed more than N200 billion since 2016 to support over a million farmers under the ABP.

In addition, credit by banks to the sector has risen consistently since 2015, from N1.9 trillion to N2.7 trillion in 2019, according to National Bureau of Statistics (NBS) data.

The 2020 figure is expected to be higher even as government unveiled various programmes to support farmers and other players to cope with the economic fallout from the pandemic.
However, the reality in food availability and affordability is at variance with how much is being committed. Worse, farmers till the soil under varying degrees of insecurity that could see them lose their entire work and investments.

Read Also: How rising food prices stretch cash-strapped Nigerians’ wallets

Agric exports

Despite efforts by the Federal Government to diversify the country’s economic revenue from oil, Nigeria is yet to record a significant increase in its agricultural export contribution to total exports in the last five years.

Data from NBS trade report shows agriculture contributed 0.6 percent to total export in 2015 and 1.2 percent in 2016. In 2017, the sector’s contribution to total export increased marginally to 1.3 percent to total export in 2017, and further increased to 1.6 percent. It dropped to 1.4 percent in 2019.

While the sector’s contribution to exports could be said to have ‘doubled,’ experts say potential for trade still barely scratches the surface. They have attributed the marginal growth in agricultural contribution to total exports to low value addition and gridlock experienced at the country’s major seaports.

“We can only increase the value of our agricultural exports by stimulating value addition,” said Babatunde Shodipe, senior manager, Export Development Financing, African Export-Import Bank (Afreximbank), at a First Bank agribusiness summit.

Nigeria’s non-oil exports have increasingly come under threats over the worsening state of the Apapa and Tin Can roads leading to the nation’s major seaports in Lagos.

GDP growth rate

The growth rate of the agric sector since 2015 has declined despite the attention the Buhari administration appears to have been giving to the sector.

BusinessDay analysis of GDP data from the NBS shows that the sector recorded a real growth rate of 3.7 percent in 2015, when Buhari was sworn-in as president.

In 2016, the sector’s growth rate increased to 4.1 percent but slowed to 3.5 percent in 2017. In 2018, the growth further slowed to 2.1 percent and only increased marginally to 2.4 percent in 2019, which is still lower than growth rate in 2015.

Experts expect growth for the sector in 2020 to decline even further, owing to the impact of the COVID-19 pandemic on the agric sector. Growth in the three quarters in 2020 has slowed down consistently from 2.2 percent in Q1 2020; further slowing to 1.58 percent in Q2 2020, and finally 1.39 percent in Q3 2020, while the statistical body is yet to release data for the full year.

The sector’s overall contribution to GDP over the five-year period has been marginally consistent.

Security of farmers and agric investment

A multi-million or billion naira investment in agriculture could be wiped off in a day or less, when bandits attack a farming community, or cattle herders bring their livestock to graze on crops that cost so much money and time to cultivate. The threat of further violence could make an investor even pack up shop completely and never return.

“Everyone except the people around the president knows that the security situation is worse now than in 2015, especially in the South West where our farms are,” said Oluwafemi Abioye, president, Igangan Agro Park Investors Association (IAPIA), saying, “The killer herdsmen have turned South West to how Benue State was in 2015.”

Across Nigeria, millions of farmers share the view expressed by Abioye, with many feeling helpless about the unsafe environments they have to produce food for the rest of the country.

Last year, it was reported that farmers in some Northern states had to pay bandits before they could be allowed to harvest from their farms, this, apart from series of violent attacks they have endured in recent years. From all indications, nothing is being done to stem the tide of violence in agrarian communities.

Food security

By many internationally defined parameters, Nigeria is not food secure, even after years of declaring focus on agriculture. Even though President Buhari expressed the view that Nigeria has achieved food security, the country does not fit the definition of a food secure nation.

For instance, the 2019 report on ‘The State of Food Security and Nutrition in the World,’ identified Nigeria as a country facing food crisis, driven largely by “High food prices and low purchasing power.”

Food security exists when all people, at all times, have physical, social and economic access to sufficient, safe and nutritious food to meet their dietary needs and food preferences for an active and healthy life. The four pillars of food security are availability, access, utilisation and stability. The nutritional dimension is integral to the concept of food security, as defined in the draft declaration of the United Nation’s World Summit on Food Security in 2009.

The State of Food Security report jointly produced by FAO, IFAD, UNICEF, WFP and WHO, noted in 2015 that Nigeria had 12.9 million undernourished people. At the time, the report did not state the number of Nigerians facing moderate or severe food insecurity, which in the 2020 report was 86.4 million people.

To compare directly with the parameter used in 2015, the number of undernourished people had increased to 24.6 million in the 2020 report.

A lot of attention has been given, or at least appears so, in driving agricultural growth in Nigeria, but the realities on ground do not seem to justify the rhetoric and investments.