Maigari: It’s Risky to Put Serious Money into Agriculture

In this exclusive chat with James Emejo, the Director-General, Nigerian Agri-Business Group, Mr. Manzo Maigari, laments the inherent risks and loopholes in the agricultural sector, proffering possible solutions. Among other things, he said agricultural insurance in Nigeria is paralytic and required an overhaul.

What really does NABG set out to achieve?

The Nigeria Agri-Business Group is an organised private sector platform that was contrived by the federal government to administer private sector players in agriculture and serve as the voice for their concerns through advocacy and policy direction, and so basically, that is what the NABG does.

Is your membership restricted to agri-businesses operators alone?

Well, over 70 per cent of the industries you see in Nigeria are agri-businesses. For example, the Dangote Group, besides the cement they produce, everything else is agriculture; is it Nestle, Flour Mills, TGI group – but what is important here is that the membership of NABG is not individual, it has to be corporate – you are either an association or a corporate entity – they represent the interests of members in their respective associations. So, when we sit here to do things, we are looking at the generality of the impact of government policy actions on the agricultural sector.

As an active player in the agricultural sector, why do you think food inflation has refused to abate in spite of bountiful harvests in recent times?

What is happening basically is that it is a systemic problem.

We don’t think in form of systems, we think and act individually and in silos. If we have a systems mentality, things would be different. And I am going to tell you; go to Benue today, there is a perpetual glut of cassava, yet a bag of garri in Abuja is more than N30,000; go to Benue today there is a perpetual glut of oranges and mangoes yet one piece of mango or orange sells for N50 sometimes even N100 – why is it so? It is because the farmer that produces it there cannot evacuate it and come and sell it in Abuja, neither can he take it to Kano or Lagos – he relies on a middleman, and he has no connection with the market at all.

Then, the middleman comes and takes it for N5 and he makes N20. Then, you have to factor in issues like diesel, because you move these things over distances on small trucks. Imagine there was a train that can move goods at once – like a hundred trailers at once and you burn diesel just once and move goods worth a hundred trailers -prices would crash…also look at it, a trailer load of 30 cows which may not be more than N2 million, cost about N2.5 million from Maiduguri to Lagos. So, automatically, the cost of diesel has more than doubled the price and value of that cow by the time it gets to Lagos.

But because we do not have a system, we don’t run things systematically, which is why we have problems. Where the system works- all over the world, it is healthier to eat cold meat than hot meat. It doesn’t make sense to move a live cow, which is 65 per cent waste – 35 per cent to 45 per cent of the cow is the meat you eat, yet you move the whole waste to Lagos and you more than double the price and the consumer pays. But if we have a system, the business opportunities will become clear and predictive…These are the issues but added to that recently also, we have banditry which has reduced production because most of these farmers are in the bush and in fact, because of the clashes between them and these bandits, of course, many of them are not able to produce as much as they should and that has also added to food inflation.

In view of these challenges, what is your organisation doing to change the agri-business narrative going forward?

We are currently in discussions to see how best to make the Nigerian Commodity Exchange private sector-driven and viable because once you have that, all these things I have talked to you about would just key in; farming would become predictive and viewed as a business. And once we have all the standards ratings and certification systems in place, you can get upfront contracts and even get mobilised to produce for specific companies or for a specific off-taker, but as it is now, because of the broken nature of the value chain, it is too risky to put serious money in agriculture. I don’t know whether you are aware that Olam just lost 10,000 hectares of rice in Nasarawa State to flooding. Now, Olam would probably have to bear the whole of that cost because agricultural insurance in Nigeria is paralytic.

But imagine that there was insurance – but who would go and insure a farm of that size when you cannot predict or forecast? All these things are intertwined into the ecosystem. We have to create an ecosystem that enables agri-businesses and businesses generally to thrive. We have to create a community of practice; working in isolation and everybody doing his or her thing somewhere doesn’t solve the problem.

But, most importantly, a commodity exchange will activate a mechanism for price and market discovery. The man in Kano producing tomatoes does not even know the price of tomatoes in Lagos and Port Harcourt at the time that he would harvest. He has no connection with the market at all, let alone know the price. However, once you have this system in place, there would be a system that enables him to receive price predictions for the whole year for his product and he can choose whether to produce tomatoes or cucumbers…this is how agri-business thrives but we have not been able to achieve that and the reason is simple; since independence, Nigeria has approached agriculture from a development perspective and every time, they were just throwing money into agriculture for a subsidy, you know at a time, the biggest subsidy scam in Nigeria was fertilizers. Now, we’ve gone past that but up till this point in time, we are yet to actually find out where exactly we need to subsidise agriculture.

Most of the time, because the government still has the belief and mentality that agriculture should be a development tool, we have not paid attention to the dynamics that things are changing and that agriculture should be a business.

Are you saying that the government is not funding agriculture as it should?

The government does not even have the money to fund agriculture and I will give you one example – Nigeria has the lowest mechanisation rate in the world. It has been estimated that we need about 10,000 tractors to meet the benchmark for agricultural mechanisation. Do you know how much 10,000 tractors would cost? There’s no tractor that is less than $20 million today. Nigerian budget of both federal and state for five years would not be able to buy those tractors. So, what do we need to do? It is to create an enabling environment where the private sector can come in and provide those tractors. If they are providing them on a lease, they should be able to make their money but for them to also make their money, the food prices have to be such that the farmer would be able to pay and still make a profit. 

No doubt, insurance remains a major challenge in agriculture, how best do you think this could be tackled?

Agricultural insurance is very paralytic in this country and I will highlight the anomalies therein. We have the Nigerian Agricultural Insurance Corporation (NAIC). Now, NAIC regulates agricultural insurance in Nigeria but it is also a retail insurance service provider in Nigeria.

So, it’s like you being a player in the field and you are the referee – it cannot work.

What we keep saying is that look, the business of agriculture is a very serious one, and therefore, NAIC should just be a department in the National Insurance Commission (NAICOM) and focused on agricultural insurance coming up with all kinds of innovations that would meet our peculiarities in agri-business.  But instead, they are a player and a regulator, and there’s no way that can work.

Secondly, you’ll find out that in all the interventions that government gives to farmers like the Anchor Borrower Programme and others, government precludes any other insurance company from providing the insurance cover; it’s only NAIC that can provide that insurance and your guess is as good as mine if anybody ever gets compensated. So, these are the issues.

As I speak to you, I have 500 hectares of rice in Benue which is completely submerged for more than three weeks now and it is a total loss and that’s an investment of over N100 million. What are you going to do? So, these are real issues.