For Nigeria to drive sustainable growth in its various agricultural value chains and create millions of jobs, experts say the country must adopt the Brazilian coffee and Egyptian cotton models.
The experts say that the country must capture more value for the production of its various agricultural commodities by promoting local consumption and enforcing quality.
The experts who spoke at the First Bank 2019 Agric Expo with the theme ‘Agricultural Value Chain: Spotlighting Opportunities and Managing Risks’ say with more concentration of investments in the higher value chains the country will be able to hedge against price volatility and generate employment.
“We need to adopt the Brazilian coffee model and the Egyptian cotton model to grow our agricultural commodity value chains. We need to create markets that can sustain the industry for decades,” Babaunde Shodipe, senior manager-export development financing, African Export-Import Bank (Afreximbank), said in his keynote address.
“The government and the private sector should learn how Brazil grew its coffee production by stimulating local demand for the product and value addition,” Shodipe who represented Bernard Oramah, president and chairman Afreximbank.
He noted that more value is captured in the value chains that are closer to the consumers, saying that processing to retailing accounts for 80 percent of the entire profits in the agricultural sector.
Brazil was able to grow its coffee production by targeting consumers that were not taking coffee. Brazil educated her citizenry of the health benefits in the consumption of the crop and introduced it to the public schools across the country.
The initiative, which was championed by the Brazil’s Coffee Association, spurred local consumption of coffee while also boosting production.
Today, Brazil is the top global coffee producer and with processing of the commodity and local consumption the country is able to hedge against price volatility of the crop. Brazil’s coffee boom is posing huge challenges for coffee farmers in other countries.
The experts say Nigeria can adopt the model to drive cocoa and other commodities consumption in which the country has a comparative advantage by introducing it into the school feeding programme.
This they say will stimulate local consumption and investments in value addition as well as hedging farmers against cocoa price volatility.
The Egyptian cotton has the reputation of being one of the most luxurious cotton globally, making its premium high.
The experts attributed this to the creation of standards and enforcement of quality by the Egyptian government for its cotton.
“Nigeria must create value addition that is about quality and standards which must be met and maintained by key actors. Without quality, our produce cannot compete and get a fair price,” Shodipe said.
Also speaking at the event, Adesola Adeduntan, CEO of First Bank of Nigeria Plc, identified policy flip-flop and low understanding of the sector by the banking industry as some of the risks associated with financing the sector.
“We have found out that policy has not been sustained because the support for agriculture is not short-term but long-term and this becomes a challenge when the policies are not sustained,” Adeduntan said.
He said that agricultural financing has been and still remains a core part business of First Bank, adding that the bank has supported 118 projects out of the total 509 projects supported by all banks put together in the country under the Commercial Agriculture Credit Scheme (CACS).
“We are also supporting research and development through the endowment of professorial chairs in Agriculture in some Nigerian Universities. We have also provided infrastructure to support learning and development in Agriculture and associated fields in Nigerian universities,” he said.
Mohammed Sabo Nanono, Minister of Agriculture and Rural Development, in his goodwill message said that the country cannot grow its agricultural value chains sustainably without reviving the agro-allied industries.
Nanono added that development in the sector cannot be done without investments in research. This he stated that his administration intends to change in the next four years.
“We cannot develop agriculture if the research institutes are not adequately funded. This is what I intend to change as the minister of agric,” he said.
