Dimieari Von Kemedi, co-founder and managing director, Alluvial Agriculture, shared insights during a session hosted by AZA between leading experts on the African continent, exploring a year of rapid development from finance to farming. Alluvial is engaged in a program to tackle root causes of hunger and poverty through a $20.4 million commitment by the Mastercard Foundation that will support more than 3 million people in sub-Saharan Africa over the next two years and directly benefit 65,000 farmers through quality land, seeds, fertilizers, mechanization, and storage. Excerpts:
When you look at the price of various grains right now in the market, it is really, really scary. You wonder how people are managing. Paddy rice, for instance, right now is over 200,000 naira per ton, up from about 120,000 last year. That’s a very significant increase in price, which will be passed on to consumers at the end of the day.
There has not been as much farming as last year because of supply line challenges, particularly around the inter-states blockades in March and April, which was in fact the most critical period for transporting equipment and inputs to farmers. Even though special dispensation was given for agricultural inputs, challenges were unfortunately still experienced in places like Kebbi, that are very central to rice production in Nigeria.
Fertilizer is one critical category of inputs. Not all the components of fertilizer are made in Nigeria and there was a fear that there might not be enough fertilizer. I think the government did a great job in coordinating with fertilizer blenders to make sure that fertilizer was available, however it was not available for the advertised price, so that impacted on farmers.
Seeds are the other category of inputs that needed to move to farmers and were impacted. What that means is that some farmers will simply plant the grains from the previous year, which they normally do anyway, but this year they will have had to do more of that, and this will impact on yields.
While Covid-19 impacted farmers, this has been a very difficult year for farmers for other reasons too. Let’s not forget that this year serious floods also impacted in some places as well as drought. In some parts of the south west of Nigeria there were almost 50 days of no rain and this happened shortly after people had planted. Now, we are in November, and the rains are still not coming as they did last year.
One of the things that we found out recently, when I was in Niger state, in one of the communities, is that the farmers used to lease their land in the dry season to people who come from other parts of the country. But now they want to go back to planting in the dry season, and the reason is that the rainy season is no longer predictable: it either comes with drought or it comes with floods, so they want to gain more certainty by using tube wells to provide water for their crops.
I really salute the farmers who are using these relatively inexpensive tube wells as a method to prepare for the dry season. If Nigeria is to survive the coming food crisis, we really need to plant massively during this dry season and, unfortunately, dry season farming requires a little bit of infrastructure, which is expensive. It takes time to put in place as well.
The involvement of digital payment systems is another critical innovation. A farmer who plants only one hectare of rice is looking at revenue of about 600,000 naira, maybe 700,000. That’s well over US $1,000. But she is very eager for the payment to come immediately, so she takes the rice paddy to the market. Typically when you are transacting in volumes, you can’t use cash. At the same time, even if the farmer has a regular bank account, you can’t pay into a bank account that quickly. That’s where the digital channel comes in, even for farmers that have bank accounts. You are able to pay farmers very quickly without needing to issue checks to them or instructing the banks to manually pay the farmers, which can keep the farmers waiting for as much as a week, not because the money is not there but because there is a long line of farmers that need to be paid.
As part of our partnership with Mastercard Foundation, we are developing jointly with Mastercard Farmers Network a payment system that can take care of those who only have phone numbers, without a bank account, and also those who have accounts in various banks. Hopefully before the end of December we will have that system ready.
Food waste is another very critical issue. Sometimes people describe it as the post-harvest problem but actually it is a supply chain issue. It is critical that smallholder farmers, who are responsible for more than 90% of food production in the continent, are fully linked with the processors and the market. This can be enhanced by digital solutions. Sometimes people say, because of the low rate of numeracy and literacy in Africa, that it’s very difficult for digital solutions to be as successful as in other parts of the world. Yes, it is a challenge, but it can be addressed.
At Alluvial, for instance, the method by which we have been able to work with large numbers of farmers is by creating what we call community blocks. Each block consists of a minimum of 500 farmers. That means that you are able to bring 500 farmers, even 1,000 farmers, as a block into a supply chain, and it will not be relevant whether every one of these farmers can operate a sophisticated app; you are able to then link them up to that supply chain.
As part of our collaboration with Mastercard Foundation, we are also building a digital extension service to reach 1 million farmers in Nigeria alone. It helps the farmers through USAID to access basic information. We are not trying to provide all the information in the world but the most essential information for the activities of the farmers.
Overall, our project will produce 260,000 tons of grains to add to food security in Nigeria. That is a very significant number. That is about 8,666 30-ton truckloads of food that this project will be producing directly. It will yield revenue of US $72 million to these 65,000 farmers collectively. It will also bring them financial inclusion because the project enables: we are registering them with banks so the banks can see that they are able to execute and that the farmers are able to make a tiny repayment, which builds a comprehensive credit history for them in readiness for the post-Mastercard phase. In fact, we will soon be announcing, actually much earlier than I expected, that the financing is already waiting for the farmers after this Mastercard Foundation catalytic stage.
