• Wednesday, February 21, 2024
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BusinessDay

Nigeria’s self-help faming business

Rethinking Africa From The Ground UpSince Nigeria’s return to democratic governance, efforts have been made to revive the dwindling fortune of the country’s agribusiness, most especially farming business. Both the state and federal governments have come up with a number of measures, the latest of which was the launch of N50 billion agric mechanisation fund.

Till today, the sector is still one of the largest employers of labour in the nation. There is therefore the need to reverse the trend wherein we spend a sizeable amount of our national income importing farm produce we could as well produce here in the country.

Meanwhile, one of the ways to measure the progress being made by farmers is to evaluate how much small farm holders realise yearly as income. And to do that, the recent publication of the National Bureau of Statistics (NBS) entitled ‘Agricultural Export Commodities Report 2012/2013’ will be handy. The said report presents useful data that relate to farming in 2011/2012 season which analysis may help us understand better the state of things in the sector at the moment. The report was based on the survey that focused on 14 exportable crops which are cashew, cocoa, coffee, cotton, garlic, ginger, gum Arabic, kola nut, oil palm, rubber, sesame seed (beniseed), shea nut, sugarcane and tea.

In terms of farmers’ annual income, the publication categorised farmers into six distinct groups. These are the farmers that earned less than N10,000 in that period (Group A); minimum of N10,000 but less than N25,000 (Group B); minimum of N25,000 but less than N50,000 (Group C); minimum of N50,000 but less than N75,000 (Group D), and minimum of N75,000 but less than N100,000 (Group E). The last group (Group F) is for farmers that made N100,000 and above.

Across the six groups, 6,812,128 farm holders cultivated different sizes of farms all of which realised about N489.27 billion in 2011/2012 farming season. Furthermore, Group F accounted for 3.08 million members or 45 percent of the entire population of farm holders. Next in line is Group C with 969,221 members or 14 percent of the farmers’ population. Then comes Group E, 13 percent; Group D, 12 percent; Group B, 11 percent, and Group A, 5 percent of the entire farm holders captured in the report.

Almost reflecting the structure of the farmers’ population, the earnings capacity follows a vertical pattern in the sense that the farmers in the highest income band made the most revenue. Group F, which is the highest income band, made N308 billion and that accounted for 63 percent of the entire revenue earned by all the farm holders. Group E realised N78.9 billion or 16 percent; Group D, N49.4 billion or 10 percent, just as Group C made N36.3 billion or 7 percent. Also, Group B made N12.7 billion or 3 percent, while Group A made N3.4 billion or just 1 percent of the total earnings.  The fact that most of the farmers are in the highest income band is a manifestation of how lucrative farming business is.

How farmers performed in the six geopolitical zones

Using gross revenue as a metric, the north-west performed creditably well on the gross revenue scale as small farm holders realised N160.19 billion as revenue. Involved in the generation of the said money were 2,000,476 farm holders, and that brings the NW per capita revenue to N80,076, the third highest in the country. In the south west, a total of 980,871 farm holders were involved in the generation of N82.05 billion as revenue during the 2011/2012 farming season. That brings per capita revenue of the SW to N83,654, which is the highest in the country.

The north east came third in absolute revenue generation posting N76.14 billion which was made by 1,054,094 farm holders. The region’s per capita revenue stood at N72,223. The north central came fourth as farmers made N72.62 billion in revenue, while N65,760 is the region’s per capita income. Farm holders in the south-south geopolitical zone earned N70.6 billion and that was generated by 874,630 farm holders, in much the way the south east with 797,700 farm holders made N27.64 billion and having a regional per capita income of N34,650. Accordingly, the south west (1st), south-south (2nd), northwest (3rd), north east (4th), north central (5th) and south east (6th) performed, respectively, on per capita income scale.

On a state-by-state analysis, Ondo, Ekiti, Osun, Akwa Ibom and Cross River have the highest per capita income in that order. Their per capita incomes are N90,543; N90,162; N88,772; N86,554 and N86,316, respectively. All the south eastern states except Abia occupied the least positions on the per capita income scale.

Having the highest per capita income might be connected with the fact that the states fall within the region with the highest cocoa production. Cross River and Ondo cultivated the largest landmass for cocoa just as Ondo and Osun recorded the highest cocoa output during the period. Of importance is that cocoa seeds, both raw and semi-processed, have been a great source of non-oil export earnings to Nigeria from 2010 till date. Non-oil export earnings stood at N1,907.8 billion in 2010 and rose by 17.3 percent to N2,237.9 billion in 2011. It further increased to N2,628.8 billion in 2013.

Sources of funding for farmers

Farming was financed majorly by self-help. Own funds pooled by smallholder farmers to finance their farming activities amounted to N134.19 billion in 2011/2012 season. That amount represents 63 percent of the facilities farmers sourced during the period under review and it goes to show the extent agriculture in Nigeria relies on self-help. It can also be used to determine who actually benefitted from state and federal government’s intervention programmes in the sector. In particular, farmers in Kano, Kaduna, Kogi, Rivers, Plateau, Gombe and Sokoto States pooled the highest facilities through own funds.

Micro-credit institutions were another reliable source of funding, as facilities obtained from these institutions totalled N36.48 billion. Other sources include friends/relations, N13.63 billion; cooperative society, N12.63 billion; local money lender, N9.52 billion, and least source was community banking institutions. Altogether, farmers across the nation pooled N211.55 billion to finance their farming activities in 2011/2012 farming season.

States’ profit margin versus efficiency ratio 

The agric expenditure of smallholder farmers nationwide totalled N211.55 billion in 2011/2012 farming season. Meanwhile, they were able to realise N489 billion as revenue. By implication, a gross profit of N277.46 was earned by the smallholder farmers across the nation altogether. With that, we obtained a national gross profit margin of 57 percent and a national efficiency ratio of 0.56. That is, an average farmer spent 56 kobo during the period under review to earn a naira worth of income.

Eighteen states performed creditably well on this metric with Jigawa State topmost on the ladder.  The state’s agric expenses for the period under review stood at N1.66 billion whereas farmers realised N28.17 billion as revenue, implying that farmers in the state made a gross profit of N26.51 billion.  Again, Jigawa had the best efficiency ratio in that farming season. It cost an average farmer 6 kobo to earn a naira income as against the 56 kobo national efficiency ratio.

To finance their farming activities, farmers in Jigawa State mobilised N990 million as own funds, N130 million from friends and relations, N60 million from cooperative societies and N480 million from microcredit institutions during the period under review. No facilities were obtained from community banks, the Bank of Agriculture, commercial banks and local money lenders.

Furthermore, among the top 10 states with the best profit margin and efficiency ratio, only four states sourced loans from the Bank of Agriculture and commercial banks in the country. Besides, only farmers in Osun State got loans from all the sources of funding identified in the report.

 

Teliat Sule