This could be a bit confusing, but the pattern of growth in Nigeria’s agricultural sector is defying logic. As the sector grows in one year, it declines the following year, and the cycle repeats itself. Even budgetary allocations over the last eight years have failed to give an indication of what correlation could be drawn in the sector’s abnormal growth pattern, an indication that the sector was run on a Trial and Error basis over at least eight years.
Nigeria’s agricultural sector has not grown in the last two calendar years, following six years of haphazard growth, which is best described as a zigzag pattern. Growth in the sector has failed to track the rhetoric of economic diversification through the sector by successive administrations. Instead, it recorded a distorted growth pattern in the eight-year period from 2011 to 2018.
This observed pattern follows BusinessDay’s analysis of Gross Domestic Product (GDP) data by the National Bureau of Statistics (NBS), revealing that between 2011 and 2018, for every year the agric sector recorded a growth, it would decline the following year, and as abysmal as this is, it was an established pattern for six years between 2011 and 2016. In 2017, however, the sector declined in growth rate, and this decline continued in 2018.
BusinessDay analysis of NBS data shows that in 2011 the Agricultural Sector recorded a GDP growth rate of 2.92 percent in real terms. In 2012 the sector improved, recording 6.7 percent, but the following year, 2013, the growth rate declined to 2.94 percent. It again rose in 2014 to 4.27 percent, and going by the now established pattern, declined yet again in 2015 to 3.72 percent. It increased in 2016 to 4.11 percent, and as now established to be the pattern, declined to 3.45 percent in 2017. The sector however failed to grow the following year, 2018, it was expected to grow again, going by the pattern established over time, but instead further declined to 2.12 percent.
“Short-term year to year moves on any index are hard to explain, and determined by a multiple of factors. However, long-term trend, declining, even with all the interventions (by government) is what is worrying,” said Mezuo Nwuneli, managing partner, Sahel Capital Agribusiness Managers Ltd, in a chat with BusinessDay.
The growth rate of real GDP is often used as an indicator of the general health of the economy, according to the International Monetary Fund. In broad terms, an increase in real GDP is interpreted as a sign that the economy is doing well. When real GDP is growing strongly, employment is likely to be increasing as companies hire more workers for their factories and people have more money in their pockets.
Extrapolating this to the pattern of growth in Nigeria’s agricultural sector, for every year agriculture creates new jobs and money, it is followed by another year of decline, indicating that the gains made over at least the last eight years have not been sustained.
About 90 percent of the agriculture sector in Nigeria as captured in GDP data is crop production. Ironically, the bulk of intervention programmes by governments in Nigeria favour crop production, from rice, to maize, cassava, cotton and other crops supported either directly by government at the Federal or State level, or by the Central Bank of Nigeria.
“When government does interventions in agriculture, it is almost always directed towards crop production,” stressed Ayodeji Balogun, country manager, AFEX Commodities Exchange Limited.
Further analysis of the GDP data, shows that crop production as a subsector, has followed the zigzag pattern of growth in the agric sector. As noted by Nwuneli whose company invests across the agricultural value chain in different parts of Nigeria, the “agric GDP index primarily measures crop production and is effectively saying that the pace of growth has declined significantly.
“My view on this is that there have been factors which have been hampering (agricultural) production over the past 10years, and which have increasingly been getting worse – in particular the security situation in the north and middle belt rural areas, alongside with farmer-herder crisis,” said Nwuneli.
He further explained that a contributing factor in the haphazard agricultural growth is climate change and its impact on rain and flash floods, noting that at least twice in the last seven years there have been major floods across the country that devastated farmlands. There have also been smaller floods, which occurred and isolated to particular communities. Invariably, all these factors combine every year to hamper the country’s agricultural output.
“Production increases, and then prices fall,” said Balogun, AFEX’s country manager, giving an insight into another explanation for the haphazard growth. He explained that over time, a lot of effort is put into production, forgetting there is a market and other aspects of the value chain that need to be optimised.
Invariably, for every year of increased production, there is a glut in the market, and farmers flee production the following year. This is followed by a dip the following year when many have run away from a particular crop production to do something else. Logically, it creates an illusion of demand again when there is insufficient supply, and the farmers again come back to produce, followed by yet another glut and the cycle continues.
“Government interventions are always focused on one side, so if they focus on production they increase volume produced, but they don’t provide any solution for market,” said Balogun. “So, if the farmers produce, they don’t have anywhere to sell, then you have a slump the following year, and it goes up and down and the pattern continues.”
Balogun also expressed the view that the size of money going into agriculture is at complete variance with the size of the sector. The agricultural sector is large, and relative to the size, amount of funding being committed to it is nothing.
Worse still, the funds and interventions being committed to the sector are not structurally designed, so, a lot of it goes into wastage and very little gets to the farmers, according to him.
If more money is going into agriculture, it would have been expected that the sector would at least maintain a steady growth, but at least for the last eight years from 2011 to 2018, this has not been the case. The sector, it appears, is being run on a trial and error basis, with the same things being done every year, and as should be expected, giving the same results of inconsistent growth. By the end of this year (2019), it will be seen how the growth pattern will continue.
CALEB OJEWALE
