Agric Sector: Abubakar’s Reign One Year Affter
It has been over one year since the Minister of Agriculture and Rural Development, Mr. Mohammad Abubakar, took over the mantle of leadership at the Federal Ministry of Agriculture and Rural Development. Gilbert Ekugbe takes a cursory look at how the nation’s food sector has fared under him
Despite the potentials to be Africa’s food basket and even a net exporter of food to the rest of the world, Nigeria is still struggling to feed itself. Sadly, the nation’s food import bill has continued to surge despite different financial interventions from the Central Bank of Nigeria (CBN) and other multilateral institutions.
According to reports, Nigeria’s food import bill currently stands at $22 billion annually, which could have been channeled to other sectors of the economy begging for development.
Although the National Bureau of Statistics (NBS) in its latest report stated that Nigeria’s agriculture sector grew by 1.20 per cent year-on-year in real terms for the second quarter of 2022, the sector recorded a decrease of 1.96 percentage points from the preceding quarter which grew by 3.16 per cent. It also decreased by 0.10 percentage points from the corresponding period of 2021.
Capital importation into Nigeria’s agriculture sector increased by 3,161 per cent from $1.76 million in the first quarter of 2022 to $57.41 million in the second quarter of 2022. This meant that there was a 3,161 per cent growth within three months.
This was contained in the Nigerian Capital Importation report for Q2 2022 released by the National Bureau of Statistics.
The agriculture sector grew by 13.83 percent year-on-year in nominal terms in Q2 2022, showing an increase of 7.47 percent from the same quarter of 2021.
On the flip side, the value of foreign investment in the sector tumbled 99.23 per cent from $237.83 million recorded in the fourth quarter of 2021 to $1.76 million, according to the latest Nigerian Capital Importation report for Q1 2022 released by the National Bureau of Statistics (NBS) as local and foreign investors blamed insecurity for the nosedive of investments from both local and foreign investors.
Data from NBS show that $59.17 million of capital was imported into the agriculture sector in half-year 2022, down 74.9 per cent from $235.87 million in the same period of 2018.
In the first three months of 2022, foreign investments in the country’s agricultural sector stood at $1.76 million, a 98.7 percent decline from $130.90 million in the same period of 2018.
In spite of the growth rate recorded in the sector, the impact is yet to be felt by Nigerians as food prices continue to rise with more Nigerians dropping into the hunger net on a daily basis.
Food prices have continued to hit the roof and expectedly, with the yuletide, Nigerians have continued to lament as the purchasing power of consumers continue to dwindle pricing food items out of the hands of poor Nigerians.
For instance, the prices of staple foods like rice, beans, wheat, sorghum, yams and potatoes. The price of a bag of rice has continued to soar as food inflation increased to 23.72 per cent in October 2022, from 23.34 per cent in September according to NBS’ Consumer Price Index (CPI)
Abubakar’s policies and initiatives
The Federal Ministry of Agriculture and Rural Development (FMARD), under his watch launched the National Agricultural Technology and Innovation Policy (NATIP) 2022-2027, a document that was articulated to guide sectorial activities for ensuring food and nutrition security in the country.
The five-year policy is premised on 10 thematic areas of stakeholders synergy and alignment, knowledge creation and transfer, rapid mechanisation, establishment of agricultural development fund, revitalization of extension service delivery and livestock development.
Other area of focus included strengthening priority crop value chain, fisheries and aquaculture, marine and inland fisheries development, market development as well as agricultural lands and investments partnership. The policy document also covers the crosscutting areas of digital and climate-smart agriculture promotion, rural infrastructure development, nutrition, and exports standardisation.
Also covered are agricultural lending and insurance, data and information management, and quality agricultural inputs access, agricultural land and water resources usage, women and youth in agriculture, cooperatives revitalisation and national food reserve and food security.
The ministry inaugurated the committee on the implementation of the policy to mainstream gender into climate change for people with disabilities and access to input for women and translating the National Gender Policy in local languages for the domestication of the policy in some states.
Also, under the ECOWAS Agro-ecology Programme designed to provide support to family farms in an agro-ecological transition that strikes a balance between economic performance, food security, strengthening of resilience, preservation of the environment and the health of the population, the ministry sought partnership deals with relevant organisations to promote agro-ecology in the country.
He also introduced new set of incentives targeted at improving high-level private sector participation in Nigeria’s food production and processing industry. Some of the incentives included tax and duty-free holidays for a period of five years for agricultural production and processing in Nigeria; tax-free agricultural loans with a moratorium period of over 18 months and repayment period of not more than seven years; and zero-tariff rates on the importation of agro-chemicals.
To address the longstanding agricultural mechanisation problem, the minister launched the Green Imperative Programme. The aim of the programme is to ensure adequate supply of tractors and other implements to farmers on a public-private partnership arrangement. The model adopted is sustainable and would ameliorate the low production challenge due to lack of sufficient machinery.
Food insecurity still a threat
The AFEX, Nigeria’s leading commodities market player, expressed concerns over the incessant floods that have continued to ravage farmlands, predicting that flooding would escalate the problem of food insecurity in the country.
It made this disclosure in its 2022 wet season crop production report released recently in Abuja as the report projected an average decline in production of up to 11.5 per cent across commodities like maize, paddy rice, sorghum, and cocoa.
It, however, forecasted that soybeans and sesame would experience about 6.5 per cent increase in production levels.
The company noted in its report that Nigeria’s most consumed grains are currently faced with declining food balance sheets as consumption levels rise than production levels, thereby worsening food insecurity.
The report tracked data from six key commodities and their performance in the preceding season. The commodities are maize, paddy, soybeans, cocoa, sesame and sorghum.
It stated that price and market changes across maize paddy, sorghum, soybean, cocoa and sesame have been affected both by predictable seasonal effects and activities in the agricultural value chain as well as larger macroeconomic and events.
Presenting the reporpt’s findings, AFEX’s Head of Market Data and Research, Mr. David Ibidapo, stated that higher prices were forecasted across all commodities in the report.
Specifically, he said, maize which faced a projected decline in production levels of up to 14 per cent is subsequently projected to reach a higher average price point ranging between N214.980/MT and N220.000/MT by end of Q4 2022 compared to an average price of NGN210.229/MT in the fourth quarter of 2021.
Also, he said, soybean price is projected to rise by six per cent by May 2023, adding that the projected price hikes across commodities in the report were also tied majorly to incidence of flooding resulting from incessant rainfall in key producing regions.
This, he added, is expected to heighten the gap between production and output levels by farmers.
He also said that the effects of the Russia-Ukraine crisis is still being felt in the local agricultural commodity market especially because of the hike in the price of fertilizer.
The report forecasted that paddy will be the most susceptible to production and output pressures, facing close to a 22.47 per cent in production volumes this year in the wake of the crisis-induced fertilizer price hike.
The report reads in part: “In the last three to five years, Nigeria’s journey towards achieving food security has been confronted with major global shocks, climatic changes and more, with implications for food affordability, availability, and accessibility. Nigeria’s most consumed grains are currently faced with declining food balance sheets as consumption levels rise faster than production levels, worsening food insecurity.
“We expect to see further decline in food balances in some key commodities caused by the ongoing Russia-Ukraine crises and recent flash floods experienced in several states. The war in Ukraine has caused major supply disruptions and led to historically higher prices for several commodities especially in the global space.
“On the back of higher price effect on fertilizers, and further worsened by floods across states, Nigeria is expected to grapple with lower output in the new season as farmers consumed less fertilizer during the 2022 wet season planting as revealed by our survey. This is a major insight of the report.
“Our survey also revealed that most farmers were unable to increase the number of hectares they cultivated compared to the previous year. However, farmers resorted to using more herbicides and more local seeds varieties to compensate for low fertilizer usage to protect their yields.
“We expect to see some level of sustained rally in the prices of commodities in the new season especially in maize, sorghum and paddy on the back of key factors like slump in production level, increased international demand, weakening of the Naira and higher energy prices with impact on logistics.”
Stakeholders lament poor budget allocation
Key agriculture agencies in the nation’s agriculture sector such as Action Aid Nigeria (AAN), Small-scale Women Farmers Organisation in Nigeria (SWOFON), Comprehensive African Agriculture Development Programme (CAADP), Non-State Actors Coalition (CNC), have lamented over the 1.11 per cent (N228.4 billion) budgetary allocation to the agricultural sector, saying that economic managers are still not taking the food sector serious despite the looming food crisis expected to hit the country next year
Their dissatisfaction on the 2023 agriculture budget allocation was made known during a media conference in Abuja where leaders of the groups took turns to read the joint address tagged “2023 Proposed Agriculture Budget.”
According to them, the analysis focused on the proposed 2023 agricultural sector’s budget to x-ray how the Nigerian agricultural sector is funded and positioned for growth, employment generation, meeting domestic food demand, and generation of foreign exchange via exports within the perimeters of the CAADP framework.
They also expressed concerns about how the budget would addresses smallholder farmers, women, and youth; irrigation; climate resilience and sustainable agriculture, value chain development; access to credit; extension services; mechanisation, and post-harvest losses, among other issues.
“Out of the N20.5 trillion, the agricultural sector allocation is N228.4 billion (1.1 per cent), which is rather low in terms of its proportion to the entire budget. In the last seven years or more, the budget for the agricultural sector has not exceeded two per cent of the total budget,” the agric stakeholders lamented.
“Given that the agricultural sector is judged to be the sector with the potential to transform the entire economy and employ the teeming youth, adequate funding must be prioritised for it in the national budget.” they added.
Pointing at the CAADP benchmark, they argued that if the government is to allocate 10 per cent of N20,507,942,180.704 (the budget amount), it, therefore, means that the expected amount should be N2,050,794,218,070.4, which with the current amount allocated to the sector indicates a shortfall and a huge gap of N1,822,365,529,668.4.
The Country Director of ActionAid Nigeria, Ms. Ene Obi, who was represented by the Director of Resource Mobilisation and Innovation, Mr. Andrew Mamedu, stressed that a paltry 1.11 per cent allocation to agriculture is no longer acceptable.
Obi also noted that if the government adequately supports smallholder farmers, they would faithfully pay taxes to the government and generate huge revenue for the country.
Her words: “We just had an emergency. Just a few weeks back, thousands of farmers were affected by the flood, and we think it is business as usual? That calls for an extra emergency fund for agriculture. If we are not getting the message definitely it will wait for us.
“Food is critical. So even if we are borrowing money, we are borrowing money to invest. We should invest in the agric sector, 1.11 per cent budgetary allocation to agriculture is not acceptable.”
Reports had stated that the FMARD’s headquarters got an allocation of N185 billion while its departments and agencies received N106.3 billion, and in 2023, the headquarters received an allocation of N131.7 billion while its 45 agencies, including universities of agriculture, received N97.7 billion.
Stakeholders in the sector condemned the sharing formula and said it is unfair and should be adjusted in order for implementing agencies to have a larger chunk of the total budgetary allocation to execute expected projects, programmes and policies.
They further noted that some of the weaknesses in the agricultural budget include: an an amount too low to achieve the National Agricultural Technology and Innovation Policy, NATIP; unclear support for smallholder agriculture; poor funding for climate change mitigation and adaptation, and others.
Speaking further, the groups pointed out that threats to the implementation of the 2023 agricultural budget included preparation towards the 2023 general elections; late release of funds and the main ministry’s dominance over implementing departments and agencies.
Recommendations
On measures that could be implemented to mitigate the impact of the food crisis, AFEX report urged the government to come up with a short-term priority that would provide targeted support to poorer households facing higher food and energy prices.
Also, it recommended a dual approach to moderate prices across commodities while stemming inflationary pressure on food in the coming season by addressing overall production levels as well as seasonality of supply.
The report also stated that there is need to intensify efforts to spur production levels, adding that reserves could be held across all grain commodities and released strategically during the season.
On the back of lower production output this year, it added that investors could be well positioned to take advantage of possible price appreciation in the new season across commodities.
“We believe investment in commodities in the new season remains a better hedge against looming inflationary pressures compared to other asset classes.
“Against the commodities market, investors could be exposed to downside risks amid the CBN’s hawkish monetary stance in the battle of inflation and pre-election bearish effects on equities performances. Also, the Nigerian fixed income space is still largely characterized by a negative return environment,” the report added.
