Competitiveness Key to Farmer Prosperity and Lower Food Prices

FROM THE FARM

Dimieari Von Kemedi

Take the same farmer with the same size land, growing the same rice crop. One feeds his family comfortably, the other is in perpetual struggle. What’s the difference?

It’s a riddle that goes to the heart of our agriculture challenge. The first farmer, in Asia, produces an average of 6.7 tons of rice per hectare for every harvest. The second, in sub Saharan Africa, produces just 2.1 tons, according to the Food and Agriculture Organisation.
But the cruel distinction doesn’t end there. While the Asian rice producer will enjoy a second and even a third season depending on weather conditions, at least 95 per cent of the African farmer’s meager earnings will come from a single harvest.

What this means is that the Asian farmer is typically between six and twelve times more productive than the African farmer given the better yield and higher frequency of production. When adding in factors such as the cost of funds, operational efficiency and the knowledge gap, the African farmer’s disadvantage becomes devastatingly wide.

The consequence of this dichotomy is that the price of food in Africa must be inflated to sustain local production. Big importers keep their prices just below the locally produced food to maximise their profits from our high-cost market.

Because our farmers are not competitive, governments are forced to adopt stringent measures to protect local production. These include tariffs, outright import bans and forex restrictions, which contribute to even higher food prices. Meanwhile, in some cases lucrative smuggling networks manage to deliver packaged rice cheaper than our own unprocessed paddy.

Most Nigerians end up spending a disproportionate percentage of paltry pay on food, leaving very little for healthcare, education, housing, and other primary needs. As a result, we are less healthy and therefore less productive as a population. Lower life expectancy strikes us down just as we have acquired the necessary experience, contacts and resource base to jump the next hurdle. Furthermore our relative under-investment of family income in education produces a sub par work force.

As for holidays, investments and other luxury items, these remain but a dream, which causes another cog to fail in the wheel of our economy: diversification is hobbled by the low spending power of the domestic market.

The direct and indirect cost of our poor competiveness is too high. We must fix it urgently.

The first step is to understand how we are capping our farmers’ earnings. From my own experience of supporting smallholder programs, the farmer is lucky to make an income of 100,000 naira per season or – based on a single season per year in production – 8,611 naira a month. That equates to $23 per month – less than a dollar per day.

Clearly, rice production based on one hectare per farmer cannot lift anyone out of poverty. And if they are not earning enough, farmers can’t make much progress for the country.

Even so, most sub Saharan African smallholder support programs – both local and international – prescribe an average of one hectare per farmer.
In Nigeria, all the key financing institutions champion this cliché – the origin of which no one remembers. If we are trying to deploy agriculture as a means of lifting everyone out of poverty, it will not work – the most agriculturally productive countries in the world have the lowest proportion of their populations in direct farming.
And if we fear the farmer will not be able to manage more than one hectare, it’s because we assume the operations will be manual rather than mechanised.

Smallholders will remain poor as long as they are restricted to one hectare of land to cultivate. What we are doing in effect is using intervention funds to subsidise poverty.
These programs even require the poor to make a strictly monetary equity contribution. This serves no purpose other than reduce the number of farmers able to join the effort to increase local production. Most financing institutions would have noticed that every year they fall short of their targets- if they are wondering why this is the chief reason.

Higher productivity by fewer farmers will create a cadre of economically empowered rural dwellers who will consume goods and services that employ people in the rural and urban areas.

Our first step towards global competitiveness is to come up with a plan that moves the farmer to the middle-income category. Improving competiveness can only happen as a result of high-level strategic macro planning and effective micro level execution. The most logical first move is to redefine smallholder farming as five to ten hectares per farmer and allow the one-hectare farmer to become known as a micro-holder. Such plots might be suited to those taking up farming for a hobby or side business, or for those who are taking the first desperate step out of absolute poverty.

Without doing anything else, simply reassigning smallholders to between five and ten hectares will immediately increase their incomes four- to eightfold while reducing food prices by ten to twenty per cent and creating jobs and revenues in mechanization and other farm services. Nigeria does not lack for arable land, so what is constraining our farmers from expanding the area under cultivation?

Adding irrigation to achieve twice-a-year planting further enhances production, providing for substantially more income and cheaper food domestically, from which importers will take their cue.

Still there will be more room for improvements- deploying technology to optimise yield, adopting climate smart approaches, and obtaining insurance will all further enhance competitiveness.

All of these can be done relatively quickly to move from the incremental progress we are already making to the quantum leap that our situation demands.

Dimieari Von Kemedi (kemedi@alluvialtrade.com) works with smallholder farmers as the co-Founder of Alluvial Agriculture.