Poor GDP performance questions FG’s food security drive

…Agric sector growth, output stagnate

The lower-than-expected gross domestic product (GDP) performance of the agriculture sector has raised questions about the Federal Government’s chances of achieving food security.

In the second quarter (Q2) of 2024, the agric sector grew by 1.41 percent year-on-year in real terms, reflecting a decline of 0.09 percentage points from the corresponding period of 2023(1.50 percent), according to the latest GDP report by the National Bureau of Statistics (NBS).

An analysis of the agric performance in six quarters showed that the sector contracted by 0.9 percent in the first quarter (Q1) of 2023, even though it returned to growth of 1.5 percent in Q2 of 2023.

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It reported a growth of 1.3 percent in the third quarter (Q3) of 2023 and 2.1 percent in the fourth quarter (Q4), before slowing again to 0.18 percent in Q1 of 2024 and 1.4 percent in Q2 of 2024.

The sector’s contribution to Nigeria’s GDP stood at 22.61 percent in Q2 2024, a decrease when compared with the 23.01 percent recorded in the same quarter of 2023.

Output has not met the demand, reflecting on high food prices seen in the last two to three years.

Economists say the performance casts doubt on the effectiveness of the government’s food security drive, raising concerns about its ability to achieve intended goals.

Muda Yusuf, an economist and chief executive officer, Centre for the Promotion of Private Enterprise, said if agriculture, a sector that is supposed to contribute over 26 percent to the Nigerian Gross Domestic Product (GDP), is experiencing declines, then there is a question mark on the performance of the food security committee set up by President Bola Tinubu.

“If the agricultural sector, a key pillar of our economy, is experiencing a decline, it raises serious concerns about the role of the food security committee.

“The implications are far-reaching. Food insecurity means more people are going hungry, which can disrupt the economy and lead to job losses.

“This is why we’ve seen protests. People are desperate because they are hungry. Many farmers have now become internally displaced persons, further exacerbating the food insecurity crisis. Farmers are not safe on their farms anymore.

“The worsening food insecurity can drive up the headline inflation, which highlights the urgent need for government intervention.”

He said to address this, the government must work towards mechanising the agric sector to attract the younger generation and provide incentives to farmers.

“We need to look into the path for people to be able to import machinery, to import agrochemicals, fertilizers,” he said, stressing the importance of removal of tariffs and taxes, and provision of even simple subsidies.

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BusinessDay recalls that while inaugurating the Presidential Food Systems Coordination Unit (PFSCU) in July 2024, President Tinubu had said that Nigeria is “in a food security crisis but it also provides us the opportunity to re-engineer and reposition the nation on a firmer footing.”

As contained in the NBS report, crop production grew by 1.7 percent; forestry, 2.8 percent; fishing, 0.4 percent; while livestock contracted by 1.7 percent.

Ken Ife, an economist and lead consultant on private sector development to the ECOWAS Commission, noted that the growth, which was driven primarily by crop production, remains insufficient to meet the country’s needs, given the higher rates of population growth and urbanisation.

He warned that this could exacerbate food security issues, considering recent setbacks like floods and a break in August that affected crop yields.

“The challenge is that the growth is much lower than population growth rate of 3 percent and urbanisation rate of 4.6 percent, which signals continuing food security challenge,” Ife further noted.

“Worse still, Q2 is the cyclical peak, and with flood and one-month break in August which affected lots of crops.

“It remains to be seen how duty free imports will compensate for the harvest losses.”

Uche Uwaleke, president of the Capital Market Academics of Nigeria, said that the agricultural sector undeniably holds the key to the country’s macroeconomic stability, as food is the key factor driving inflation in Nigeria today.

“The marginal moderation recorded in headline inflation rate for July was primarily due to the drop in the food index. According to the NBS, food inflation accounts for over 50 percent of the inflationary pressure.

“Similarly, the agric sector occupies a pivotal place in aggregate economic output, given that it contributes over 20 percent to the GDP.

“Sadly, the growth rate of this sector has been very weak due to a number of factors, including the subsistence nature of farming in Nigeria and insufficient attention by all tiers of government to agric mechanisation.

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“This tepid growth in the agric sector makes it difficult to positively impact the economy. The consequences have been elevated inflation, rising unemployment and poverty.”

“As a medium to long term measure, the Federal Government should consider making the study of Agric Science in our tertiary institutions tuition free to encourage more youths to be involved in the agric value chain.

“Government at all levels should increase their budget for research as a way to increase agric yield. The CBN can also help by reforming and resuming some of the interventions in the agric sector such as the Anchor Borrowers Program,” he added.