CBN’s shower of funds in agric bears fruits

For several decades, long before Nigeria gained independence in 1960, agriculture was the main driver of economic growth and development. However, the discovery of crude oil at Oloibiri in present-day Bayelsa state in 1956, four years before Nigeria’s independence, changed the narrative in agricultural capacity. It prompted the country to lag in the production of almost all food crops and commodities.

Long years of disinvestment and the inability of Africa’s most populous country to sustain and improve its food production, has led to a sharp decline in productivity.

However, succour came to Africa’s biggest economy when its government began making efforts to tap opportunities across the agricultural value chains to create millions of jobs and earn foreign exchange amid revenue shortfalls.

The government is seeking to stimulate socio-economic development through agriculture and pivotal in this drive is the Central Bank of Nigeria (CBN) through intervention programmes such as the Anchor Borrowers’ Programme (ABP), the Targeted Credit Facility (TCF) and Agricultural Credit Guarantee Scheme among other agricultural credit schemes.

The ABP initiative, which started in 2016 to provide single-digit interest rates for smallholder farmers and guarantee off-takers in key staples has impacted the country’s agricultural sector tremendously and increased food production.

Also, it spurred demand in crop and livestock products across the country and created investment opportunities for potential investors across the agricultural value chains, among others. Under the scheme, the country has increased local rice production significantly and is now able to meet up with local demand for the grain.

The ABP initiative has led to an increase in the country’s paddy production from about four million to seven million metric tons annually, according to data obtained from the National Bureau of Statistics (NBS).

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Numbers of rice mills both integrated and cottage mills, have also increased by more than 50 percent as the government and private sector continue to make more investments in processing.

Similarly, the average yield of the crop has risen from 2.5 metric tons per hectare to an average of five metric tons of the same acreage, owing to the initiative.

Currently, the United States Department of Agriculture (USDA) has projected Nigeria’s mid-year 2021/22 rice production to hit 9million tons, a 20percent increase compared to other mid-year projections.

According to the USDA, Nigerian farmers are increasingly moving from singular seasonal rice farming to multiple seasons.

“The prospects of multiple cropping rice seasons are contributing to increased national production,” USDA said in its report.

Also, data from the Thai rice exporters association shows that Nigeria imported a total of 436 metric tons in the first-five months of 2021 valued at $210,463 (N86.3million based on official exchange rate of N410 per dollar) as against 1,029 metric tons in the corresponding period of 2020, valued at $450,992 (N185 million).

This shows a 57.6 percent decrease in 2021 – despite farmers in major rice growing regions challenged by the devastating effects of climate change.

“Lots of rice farmers are increasing their production areas because there is a huge market for paddy today than before,” Aminu Goronyo, national president, Rice Farmers Association of Nigeria told BusinessDay in a 2020 interview.

“This is because millers are patronizing rice farmers now and off-taking all that they produce immediately,” Goronyo said.

Under the initiative, the apex bank said it has disbursed N756.5billion to 3,734,938 smallholder farmers, cultivating 4.6 million hectares of land, to boost food security, and rice farmers are the major beneficiaries.

Godwin Emefiele, CBN’s governor in an interview said the apex bank is ready to offer effective partnership to deliver on the country’s critical national mandate of attaining self-sufficiency in food production.

Emefiele said the ABP, which is an essential part of President Muhammadu Buhari’s drive for economic diversification, had improved the fortunes of rural farmers as well as transformed agriculture into a potential catalyst for economic growth.

The resilience that the country has built unwittingly against the COVID-19 pandemic in the area of rice production is a testament of the Anchor Borrowers Programme. Despite food prices making rapid climbs in the country owing to accelerating inflation in Africa’s most populous country, local rice prices were relatively stable when compared to other grains and this is largely due to the adequate supply.

The increasing demand for rice in the country has also created investment opportunities for potential investors.

“Lots of youths made investments in rice production owing to the border closure policy. Some invested in the aggregation of paddy for millers while others in the cultivation of the crop,” said a rice dealer who requested anonymity. He further explained that new farmers are going into rice production because of the huge market.

“We are now consuming our rice and this is a market for farmers,” he said.

For oil palm, the country’s narrative is gradually changing for good with the private sector tapping opportunities in its production to create wealth and boosting productivity amid government policies and the apex bank’s support to the sector.

Palm oil producers benefited from the blacklisting of some 41 items including oil palm by the Central Bank of Nigeria in 2016 and the fifteen-month border closure of 2019. Also, the Central Bank of Nigeria supported smallholder oil palm farmers to boost local production.

The apex bank through its intervention programmes said in April 2020 that it had disbursed a total of N34.3billion to major oil palm companies to support the industry with a plan to plant 100,000 hectares of palm oil trees by 2025, from 20,000 hectares in 2020.

Through the interventions, Nigeria has seen its crude palm oil production increase as new plantations spring up owing to expansion by existing players and support to smallholder farmers.

Data from the Food and Agricultural Organisation (FAO) shows Nigeria’s oil palm fruits production has risen from 8.5million MT in 2016 to 10 million MT in 2019.

Similarly, Malaysian Palm oil Council (MPOC) data shows that its exports to Nigeria declined 20.6 percent year-on-year.

Nigeria’s crude palm oil (CPO) import from Malaysia declined from 95,621 metric tons (MT) in the first four months of 2020 to 75,948MT in the same period of 2021.

The increase in production has helped reduce the country’s palm oil imports, drive local demand and forestall constant pressure on the Nigerian foreign exchange market.

The upswing in the industry is an indication that Africa’s largest economy is making an attempt to take its proper place in the comity of global palm oil producers.

Data from National Bureau of Statistics (NBS) shows that investment into the sector has been growing at an annual average of 82 percent since the government renewed support for agriculture.

As a result, food production has been rising steadily and requests for FX for food importation have also reduced and this has contributed to the growth of the economy.

The sector was one of the major sectors that contributed to bringing the country out of recession in the fourth quarter of 2020. The Nigerian agricultural sector grew by 2.17 percent in 2020 and contributed 23pecent to Gross Domestic Product for the period, data from the National Bureau of Statistics (NBS) shows.

Growth in the agriculture sector was driven by output in crop production accounting for 91.4 percent of the overall nominal growth of the sector.

However, despite the progress made in the country’s agricultural space, fundamental issues in the sector that would have stimulated robust growth and sustained progress are still lacking.

Experts have attributed the slower growth and trade deficit in the sector to the inability of the government to address certain fundamental issues. They noted that the country can only drive robust growth in the sector when agricultural products become highly competitive.

The need to increase mechanisation scale to meet the ever-increasing demand for food is emphasised as a prerequisite, before the country can talk about earning foreign exchange through the sector.

It has also been said that the government must provide the needed infrastructures such as power and motorable roads to drive down production costs, effective and efficient rail transportation linking where the food is produced in the north and markets in the south as well as irrigation facilities to aid all-year farming.

With all these in place, it is expected that Nigeria’s agricultural products will be competitive in the market and as a result, importation will be largely discouraged.