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Breaking Off From Monoculture Economy (1)

Agric Open For Business: Reminder

SIAKA MOMOH

We need to remind ourselves, the Federal Government in particular, that our current economic  issue is not new. It has always been with us, government after government have made efforts to solve it and have not succeeded in doing so.

This writer, in his stints in BusinessDay, Realsectornow (in Vanguard),Realsectornow.com, New Telegraph, Daily Times, Non-Oil Digest,  EnterpriseNow (in Daily Independent) and Enterprisethrob.com, has done stout stories on this issue. For the avoidance of doubt, let us remind ourselves of some of the stories in question perhaps they can help in proffering solutions to our challenge. Afterall, continuity in government is good virtue. Let us forget politics; what Nigerians of good character want currently is result, yes, result. Nothing-else.

The transformation agenda sets out to create over 3.5 million jobs from the rice, cassava, sorghum, cocoa and cotton value chains

Over the years, concerned analysts have not stopped bemoaning the monoculture character of the Nigerian economy which has oil as its main stay. Interestingly, before the discovery of oil, the nation’s economy was mono-product in nature too, with agriculture as the dominant sector.This was before independence and even up to the early 1970s when oil started to dominate the economy. So the sad story is that we have moved from one loathsome state to another.

So the picture we have on ground, up to now, is that Nigeria earns over 80 percent of her revenue from the petroleum industry, according to several reports, but the sector actually accounts for less than 14 percent of the Gross Domestic Product (GDP), whereas agriculture commands an impressive 41.8 percent of GDP and generates two-thirds of employment nationwide.

What obtains therefore is that about 90 percent of Nigeria’s food requirement is produced by farmers (small-scale farmers who constitute the majority of the nation’s poor).  This is the case because they lack access to finance and  so are unable  to invest in basic farming inputs such as seedlings, fertilizers, implements and irrigation. As a result, their yields have remained largely stagnant, leading to pervasive hunger and poverty. Similarly, little or no commercial financing is available to those aspiring to build businesses that could enhance food production and enable farmers to earn sustainable profit.

It is not that efforts were not made in the past to address this worrisome issue, but there was something wrong with the efforts made. For instance, Late Umar Yar’Adua’s administration attention was drawn to the need for diversification of the economy and its response to it was the much-talked-about 7-point Agenda.  Once,  the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) held an exporters’ stakeholders forum in Lagos. The crust of discussion was the need to focus on non-oil export of which agriculture plays a key role. The forum noted with displeasure that the Nigerian economy had been characterized by structural imbalance and that this had been responsible for the macroeconomic instability experienced over the years. 

NACCIMA argued the economy was heavily import-dependent, both for industrial raw materials and finished products, that the implication of this on our lean and scarce foreign exchange “is grave, resulting in huge debt profile, and unfavourable balance of payment, weak industrial base, poverty, and underdevelopment”.

“In realization of this, government since the 1980s decided to make policies to promote exports, as a way of redressing the structural imbalance in the economy, as well as to put the economy on a track of growth and development”. For NACCIMA, government policy focus on the issue of diversification failed to adequately take cognizance of the existing structure of production which reflects inadequate production of exportable surplus that can quickly take advantage of change in relative international prices.  It also noted that no account was taken of the raw material needs of domestic industries, even where it was clear that the supplies of such raw materials could not be increased in the short run. “The effect of this, led to shortages of locally produced raw materials for domestic processing of manufacturing industries, as was the case with cocoa processing industries,” it argued.

Transformation agenda

2011 witnessed the advent of Jonathan administration’s transformation agenda which, going by what we can see on ground, is on course. As part of the Federal Government of Nigeria’s effort to revamp the agriculture sector, ensure food security, diversify the economy and enhance foreign exchange earnings, the Federal Ministry of Agriculture and Rural development (FMARD) embarked on a Transformation Agenda with a focus on the development of agricultural value chains. The transformation action plan is focused on key aspects of value chains, including the provision and availability of improved inputs (seed and fertilizer), increased productivity and production, as well as the establishment of staple crop processing zones. It also addresses reduction in post-harvest losses, improving linkages with industry with respect to backward integration, as well as access to financial services and markets. The Transformation Agenda targets rural communities particularly women, youth and farmers associations, as well as improving rural institutions and infrastructure.

Creation of 3.5 million jobs

The transformation agenda sets out to create over  3.5 million jobs from the rice, cassava, sorghum, cocoa and cotton value chains, with many more jobs to come from other value chains under implementation. The programme aims to provide over N300 billion of additional income in the hands of Nigerian farmers. Over N60 billion is to be injected into the economy from the substitution of 20 percent of bread wheat flour with cassava flour.

 According to our FMARD source, the ministry “would have enabled Nigeria to be food secure by increasing production of key food staples by 20 million tons: Rice: 2 million metric tons: Cassava: 17 million metric tons and Sorghum: 1 million metric tons,” with the programme at the end of the day.

The transformation agenda calls for targeted interventions to increase efficiency and profitability along the value-added chains of these crops. The transformation agenda took off in grand style early August following the appointment of the Minister of Agriculture, Akinwumi Adesina.

Cassava Transformation Action Plan

The Cassava Transformation Action Plan was formulated to move cassava from a food and subsistence crop to an industrial raw material in Nigeria. The plan was developed following a series of consultative meetings with stake-holders.

The strategy consists of two pillars:

  • Create sustainable demand in the industrial food, beverage, and chemical sector for cassava-based products via policy reforms that incentivized
  •  import substitution as a means of stabilizing fresh cassava root prices and raising livelihoods of cassava farmers.
  • Build effective cassava value-chains for High Quality Cassava Flour (HQCF), Starch, Sweetener, Fuel Ethanol, Dried Chips, and traditional food product through organization of farmers into clusters around small and large scale processors; training in supply chain management; demonstration of proven production packages – of modern varieties, fertilizer rates, and cultural practices for increased productivity; and improved access to agro-inputs, finance, and tractorization.

The action plan concentrates on import substitution for high value products that can be made from cassava like HQCF, starch and sweeteners, while positioning the cassava sub-sector to take advantage of opportunities in the dried chip export sector.  Policy interventions to support the industry include: mandatory 10 percent inclusion of HQCF in wheat flour, 12 percent corporate tax waiver for bakeries who blend 40 percent cassava flour in bread, an increase in levies on imported wheat flour and grain, and 10 percent inclusion of fuel ethanol in petrol. A key part of the action plan is the establishment of a Cassava Trade and Marketing Development Corporation (CTMDC) run by the private sector that will represent the sector before government and build much needed market institutions around farmers.

It is important to note that he cassava policy in place before now was not as robust as this.

NEXT WEEK: Agric Open For Business: Breaking Off From Monoculture Economy (2)

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