Africa Farmers AgroBusiness Summit

1. Africa Farmers AgroBusiness Summit AFRICAN FARMING'S 2nd EDITION AGROBUSINESS SUMMIT 27TH -28TH August 2019 Sheraton Abuja Hotel, Nigeria. AGRO-BUSINESS: A TOOL FOR RURAL AND COMMUNITY DEVELOPMENT. A PAPER PRESENTED BY DR. AL-MUJTABA ABUBAKAR Ist DEPUTY PRESIDENT ABUJA CHAMBER OF COMMERCE AND INDUSTRY, ABUJA - NIGERIA

2. Africa Farmers AgroBusiness Summit AGRIBUSINESS- A TOOL FOR RURAL AND COMMUNITY DEVELOPMENT INTRODUCTION Agribusiness is related to the processes of agricultural production from plantation up to consumption. It is the sum total of the entire value chain of agricultural activities. It starts from the farm to the supply of the farm produce to the market/factory and ultimately on the table. The value chain includes farming, farm supplies and processing. The Food and Agriculture Organization of the United Nation (FAO) defines agribusiness as “the collective business activities that are performed from farm to fork”, in other words, the links between farmers and consumers. COMPONENTS OF AGRIBUSINESS Agribusiness is grouped into four primary aggregates: (i) farm supply (ii) farm production (iii) processing (iv) distribution. (a) The Producing Farm Firms: These are crop producers and livestock producers who are farmers scattered all over the country. The growth of this component depends on available large farm lands, implements, improved and competent work force.

3. Africa Farmers AgroBusiness Summit (b) Farm Input Supply Business: This encompasses agricultural chemical inputs suppliers of fuels, fertilizers, pesticides and herbicides, seed and feed concentrate suppliers; agricultural machinery and equipment suppliers; automobile, tube, tires, foam manufacturers; and veterinary services suppliers. This supply component extends to supplies of containers, sacks, crates needed in the packaging activities. Quite important as well are utilities like water, power, telephone, hospital insurance etc. (c) Food Processing Agribusiness: This includes food and fruit juice canners; manufacturers of beer, soft drinks, cocoa drinks, coffee, and tea; producers of confectionary sugar sweets, chocolate, cakes, biscuits; tobacco processors and/or manufacturers; meat processors; wood processors and furniture makers and distributors, paper millers and tissue paper manufacturers; leather and footwear manufacturers; food packaging and cartons manufacturers; cotton processing, spinning, weaving and textile companies; food processors of cornflakes, jam, bread, butter, milk, margarine, and tomato puree; oils, soap, and toothpaste manufacturers, fishing companies, fish processors, packers and distributors.

4. Africa Farmers AgroBusiness Summit (d) The Food Marketing and Distribution Agribusiness: Distributors in the country include private food stores; wholesalers and retailers of various processed food materials and frozen foods including super markets etc. AGRIBUSINESS IN NIGERIA In Nigeria, Agribusiness is a concept that became popular in the early sixties. It arose along with the recognition of the agro-processing sector as the new and emerging sector. Before then, most of the farm produce were exported and returned as processed industrial products. However the flurry of activities of the time which included the desire for development through industrialization created opportunities for development of Agribusiness. Processing industries like Cotton Ginneries, Vegetable oil, Textile companies, sprang up and Nigeria did so well in them then. Unfortunately, with the discovery of Oil in commercial quantity the emphasis of Agribusiness waned and was relegated to the background. Had Nigeria continued with the impetus it started with in Agribusiness, perhaps Nigeria would have been better than what it is now. The potential of the agricultural sector in Nigeria is huge. Nigeria has a substantial base to build upon, its natural assets. The assets include land (39.6 m hectares of arable land, of which 60% is under cultivation), climate and rainfall, its coastal areas and its history as an agrarian economy. Some other crops Nigeria has a significant production capabilities include rubber, cocoa, palm trees, groundnuts, and soya beans.

5. Africa Farmers AgroBusiness Summit Today, Nigeria is one of the world’s largest producers of cassava, cashew nuts, tubers (sweet potato, yams), fruits (mango, papaya) and grains (millet, sorghum and sesame). In addition, the country’s population represents a large domestic market that can support and sustain local production and processing aside from international market. The Nigeria economy was once dominated by the agricultural sector and foreign trades of agricultural produce had then greatly improved the economy. Agricultural products exported included rubber, palm oil, cocoa, coffee, groundnut and palm kernel. The exportation of these items provided the needed funds for the development of different infrastructural projects in the country. The reliance on the agriculture sector was the case during and just after the declaration of the Nigeria independence. From mid-1970, policies were put in place to supply large scale agricultural enterprises with high subsidized investment and imported materials inputs. This led to the introduction of mechanized agriculture. However still the small farmers who form the vast number in agricultural production were not able to access agricultural inputs in adequate quantities. Agricultural activity dominated the economy through the period of the independence till 1973/74. After independence and up to 1973/74, the agricultural sector accounted for more than 70% of the GDP and about 90% of employment. However, its contribution fell from 1974/75 onwards with the discovery of oil. From 1973-1978, the annual growth rate of the sector was 0.6% while from 1978-1982, the rate of growth was negative. The sector was neglected and resources were devoted to other new sectors such as the oil.

6. Africa Farmers AgroBusiness Summit Agro allied industries were established and this required large expanse of land. There was the establishment of the backward integration process. Thus the agricultural sector was transformed from labor intensive to capital intensive (income concentrating) in the 1980s. This transformation was not fruitful as can be seen from the performance of the sector because the policy neglected the small scale farmers that formed the vast number of the farm producers. Nigeria used to produce a lot of cotton when the textiles industry was functional. At that time, Textile companies in Kaduna, Funtua, Kano, Lagos and Aba generated so much jobs and development. Cotton value chain included farming of cotton, ginneries, cotton seed oil production and Animal feeds. All these companies, a few years ago provided several direct employments and became a catalyst for development because of the number of people it serviced which attracted some other ancillary commercial activities that brought development.

7. Africa Farmers AgroBusiness Summit All successive efforts by the governments to bring back the agricultural sector to its place of pride continue to yield very little result, as the agricultural export remain under 5% since the introduction of structural adjustment program, while the oil sector dominates the export trade (Oni, 2007). CONSTRAINTS TO AGRICULTURE IN NIGERIA. So much has been said by the Government concerning restoring Agricultural activities to what it should be, but why it has not achieved the desired results are as a result of some of the following:

8. Africa Farmers AgroBusiness Summit i. Small Holder Famers: The majority of farmers are smallholders who focus on manual farming. The large-scale mechanized farming operations are very few. Manual farming cannot provide the growth and development envisaged in this paper. Mechanising the farming system would create the improvements of the agricultural value chain in Agribusiness which can generate the desired job and development. However, the bulk of the farmers do not have the wherewithal to own machineries for Mechanized farming. The vast majority of them still use the traditional method of farming by using crude implements like hoes and cutlasses; hence they are unable

9. Africa Farmers AgroBusiness Summit to go beyond subsistence farming. This traditional method of farming is so labour intensive as such discourages the youth from it. Ms. Akinbiyi points to Brazil as an example of where improvement of the agricultural value chain resulted in agribusiness generating 16 million new jobs in 2012 and accounting for 46.3% of exports. “To deliver the numbers we need to meet self-sufficiency targets you cannot use hoes and cutlasses,” she says. “We need to go big on tractors and harvesters, but the mechanization rate is low.” ii. Low productivity: The underdeveloped value chain of production, processing and storage is a challenge holding back growth. Farmers do not have enough of the right kind of fertilizers and pesticides to increase yield and improve the quality of what they produce. Low productivity is exacerbated by Storage and Marketing

10. Africa Farmers AgroBusiness Summit The performance in Agriculture in the 60s came from direct government involvement through commodities marketing boards which guaranteed prices for farmers. They were sure to recover their cost and make profit until the Marketing Boards were scrapped. PawaTersoo opined that “A significant worldwide trend in public policy in recent years has been to disengage decades of direct government involvement in the agricultural sector. Price supports, input subsidies, and publicly owned agriculture-related institutions have been increasingly dismantled in favor of private market determination of prices and other incentives. Generally speaking, the arguments in favor of this approach center on the anticipated gains in production efficiency that would arise from free movement of resources.” And this became the albatross to agricultural activities and greatly slowed it down. The farmers could not increase production because there were no market for their produce due to inadequate off takers (Large consumers of the agriproduce like Industries)

11. Africa Farmers AgroBusiness Summit iii. Low return of investment and rural poverty: Often times, the prices of farm produce are not favourable to the farmers. While the cost of production (Inputs, Fertilisers, Land preparation) is high, the price at which the farmers could sell their produce is extremely very low. For example, currently the farm produce are selling at very low prices generally: Cow Peas (White Beans) sells for as low as N12,000/100kg bag whereas it costs about N15,000 to produce. Maize which sells at 6,000/100kg bag costs about N5,000 to produce and a major input for the production of maize, Fertilizer sells at N5,500 per bag at government price which is almost not available to the small holder farmer, so he eventually gets it at a price higher. This affects their ability to increase production and that results in poverty. Often times the prices are not right because of low prices, the farmers would barely recoup their cost with no gain and therefore are discouraged. Industrial users of the agricultural produce often argue that it is cheaper to import their maize needs than procure them locally.

12. Africa Farmers AgroBusiness Summit iv. Finance: Finance is another stumbling block. The peasant farmers who constitute the bulk of the farming population are rural poor dwellers. They have no access to finance. They are engaged in subsistence farming with only a little to spare to the market to meet their domestic demands. As many that would want to produce more than they need would grapple with the challenge of inadequate capital. They have not the capacity to obtain bank loans because of the strident conditions attached to Bank loans. v. Insecurity: Population growth is not commensurate with increasing food production. In 2018 the reported growth in Gross Domestic Production (GDP) was 1.9%. But the population growth was 2.6%. Youth unemployment was 35% and overall unemployment was 23%. The population is growing faster than the economy. The unemployment rate is growing and the number of the unemployed youth is getting bigger. And the result is the security issues the country is facing today: banditry, kidnappings, armed robbery, etc.

13. Africa Farmers AgroBusiness Summit Fulani Herdsmen and Boko Haram activities have greatly affected farming activities, hence have reduced productivity. This phenomenon has scared other would be investors. The insecurity has cut off both large farmers and small holder farmers from their fields. Large farmers for fear of kidnappings and small holder farmers for fear of attacks by herdsmen. Zamfara and part of Katsina states are ravaged by bandits with possibility of a serious fall in farming activities in those areas at the moment. The Boko Haram battle in Borno, Adamawa, and Yobe States, still rages on with the farming population presently in Internally Displaced People (IDP) camps for a number of years. The situation has not abated with the Fulani Herdsmen activities in the farming communities of Benue, Taraba, Nasarawa and Niger States. Villages have been ravaged and people displaced from their homes. Kidnappings are rampant everywhere in the country necessitating that would be farmers cannot go to their farms for fear of the gory experiences in the hands of kidnappers.

14. Africa Farmers AgroBusiness Summit The inability of farmers to go to farm exacerbated food insecurity just as it worsens physical insecurity. People across all value chains feared movement outside protected areas because of attacks by insurgents and herdsmen. Farm workers feared attacks when in the field. Input suppliers had difficulty reaching their customers. Processors dealt with a reduced number of workers available to operate machinery. Both traders and consumers limited their movements to markets due to intermittent attacks. In some cases, the fear of attack displaced people outside the conflict zone, further reducing labor pools.

15. Africa Farmers AgroBusiness Summit v. Infrastructures: The state of infrastructure in Nigeria has remained a matter of concern given its importance in the growth of agriculture and for the overall economic well being of the populace. However, various performance indicators with respect to these physical infrastructure facilities point to the fact that their efficacy has not been satisfactory. The major areas of concern are:

16. Africa Farmers AgroBusiness Summit Power Nigeria's current electricity generation is between 4,000 and 6,000 Megawatts (MW). South Africa with a population of about 50 million persons have about 50,000 MW electricity generation compared to Nigeria's 6,000mw with a population of about 200 million people. If we take the highest figure for Nigeria, about 0.00003 MW is being produced per person. As for South Africa, 0.001 MW is being produced per person. For a developed country like the USA, the power production per person is 0.00357 MW. So even by the South African standard, our power production today should not be less than 200,000 MW. The precarious power generation for Nigeria could be seen. Which country could increase economic activity with such a precarious power generation? If in fifty seven years after our independence we could not generate more than 6000 MW, how long would it take us to generate 200,000 MW to even catch up with South Africa. This is on the erroneous assumption that South Africa would not improve on its current generation!

17. Africa Farmers AgroBusiness Summit Transportation The state of the Nigerian roads in general can best be described as grossly inadequate. The Nigerian roads are having large potholes with some completely cutoff. In particular the feeder rural roads that would aid rural agricultural activity is lacking in most places. The Railway narrow gauge which coverage was relatively across the country have in some locations been removed. There is virtually no rail service in Nigeria. So compared to countries that have developed, a lot of work is needed to reach the standard acceptable level.

18. Africa Farmers AgroBusiness Summit Education The educational system is in a deplorable condition in many states of the Federation. Government schools are no longer suitable for privileged Nigerians with a lot of them sending their children and wards abroad to attend even kindergarten. Of specific importance to this discussion is the dearth of Agricultural extension workers. All the available extension workers now are ageing ones that will be soon retiring. No new ones are trained and hence the farmers have no new knowledge on improved farming techniques. No wonder the farmer would produce a crop that will be rejected abroad for not meeting quality standard often times because of the lack of knowledge of the effect of the herbicides he uses to control weeds on his produce. What he needs to do to reduce its harmful effect.

19. Africa Farmers AgroBusiness Summit Irrigation Infrastructure: Past governments at the State and Federal Government levels had done marvelously at Irrigation Infrastructure. The Kano irrigation scheme which was built in Kano over fifty years ago easily comes to mind. There is the DadinKowa and TalataMafara Projects in Gombe and Zamfara States built by the Federal Government. All these Irrigation Schemes are still being used today. They enable farmers to work on their farm round the year. More of these are needed especially in the Northern States where the duration of the rain fall in the year is only about three to four months.

20. Africa Farmers AgroBusiness Summit THE BENEFITS OF SUCCEEDING If Nigeria were to succeed in building adequate infrastructure, and revamp it Agro-Business potentials, the gains are huge. Listed below are some of the major gains. A. Creating Employment. Agribusiness is undoubtedly the industry that can solve the huge unemployment challenges in the country among other benefits in view of the peculiarities of Nigeria. Agriculture and its entire value chain activities can mop up to 70% of the unemployed persons in Nigeria if it is developed. This situation is accentuated by the size of its arable and fertile land, weather and large population which readily provides market for the farm produce.

21. Africa Farmers AgroBusiness Summit The sum total of the value chain of agricultural produce provides both a tool for development and massive job creation. Some of these cash crops produced are in high demand abroad. Produce like Cocoa, Ginger, Turmeric, and Rubber have industrial value abroad. Beyond farming them, processing them further to a level would provide more job opportunities and generate wealth. Rather than sending farm produce abroad in their raw state, it will be of immense advantage to improve their state before exporting them. In some cases, they can be processed to their final stages. All of these processing requirements provide employment opportunities. The recent ban on the importation of rice has stirred up a chain of activities in the Rice value chain thereby creating thousands of jobs both directly and indirectly and also conserved foreign exchange.

22. Africa Farmers AgroBusiness Summit B. Provide Food Security. It enables self-sustainability and export promotion which brings in foreign exchange thereby reducing over dependence on oil and diversifying the economy in order to mitigate any fluctuation in oil prices which come at huge economic cost to the country. If the country can produce its food, it can start the import substitution of food, and therefore reduce appetite for foreign exchange, that way preserve foreign reserve and use that to support currency stability.”

23. Africa Farmers AgroBusiness Summit C. Community Development. Agriculture, aside from the fact that it will provide both income and employment to the community, it also will attract development to the community. The flurry of activities in the value chain of Agriculture will necessitate the provision of amenities because of the traffic of people it will attract to the community. Agricultural commercialization and investment are some key strategies for promoting, modernizing and attaining a sustainable growth and development. One challenge for Nigeria is identifying the constraints that limit the growth and development in the agricultural sector, and removing them and replacing them with something better which will attract investors and therefore improve the sector as well as the economy.

24. Africa Farmers AgroBusiness Summit Until recently the location of Olam Factory on Kaduna road was only a farmland that was not noticed by passersby. But now, that location has all trappings of a developing community. D. Impact on the Nigerian economy In the last two decades the Nigerian economy has witnessed the relocation of some companies like Michelin and the collapse of others like the textile companies. This situation directly affected the rubber and cotton farmers.

25. Africa Farmers AgroBusiness Summit With the signing of the African Continental Free trade Agreement (AfCTA) it has become necessary for the improvement of the Agribusiness value chain to take maximum benefit of the agreement. Failure to do so will further worsen the dumping of goods in Nigeria. Until Nigeria industrializes, it cannot compete favorable in the free trade space. Agriculture is a fruit that is waiting to be plucked and eaten. Nigeria should just reach out, pluck and eat. If countries like Morocco could develop its Agriculture, Nigeria can do it. What it needs to do is to simply harness its potentials and develop them.

26. Africa Farmers AgroBusiness Summit THE CHALLENGES TO GOVERNMENT Can the governments deliver? The following would be some major challenges the governments must overcome to succeed: Government functionaries at all level of governance, Federal, States, and Local Governments, are well aware of the need to improve on Agri-Business. Also they are very much aware of the consequences of not doing enough in that sector. On the August, 19th, 2019, the President addressed the ministers designate at the beginning of a two day orientation retreat. ThisDay Newspapers reported the what the President, Muhammadu Buhari said in regard to improving the welfare of Nigerians. A sub-heading quoting what he said, read: 'Nigeria's impending population explosion frightening.' In the body of the report, the Newspaper narrated, 'Speaking on the country's looming population, Buhari said by the UN estimates that Nigeria would be third in terms of population density, behind only China and India come 2050, the situation would only be dreadful if the country opted to be idle by waiting for development partners to proffer solutions. He added that solutions are not with foreign partners but "within us."'

27. Africa Farmers AgroBusiness Summit Funding of Infrastructure: The most severe limiting factor is funding for the Governments. Raji Fashola had said during his recent ministerial screening that Nigeria would need to float a Bond of N10trillion to "fix the alarming infrastructure currently bedeviling the country." Another source quoted $3.00 trillion. We are running a structure of governance that is one of the most expensive in the world. With the exception of a few States, at the Federal Government, States, and Local Government levels, the administration costs annually range between 50 to 70 percentage of annual revenue. What is left is always not enough to fund developmental projects. Very often, to fund projects, the Federal Government and many States resort to borrowing. There may be need therefore to review the structures of governments and adopt structures that are less expensive to run.

28. Africa Farmers AgroBusiness Summit Very Low Commitment: Apart from the deficiency in funding the infrastructure, a major handicap is the very low commitment within all government functionaries. The low commitment results in gross mismanagements of commercial public ventures, and theft of public funds.

29. Africa Farmers AgroBusiness Summit Gross Mismanagement Anyone that has travelled widely to many countries would note that Nigeria is one of the freest countries in the world. We are one of the few countries who could not successfully manage public economic ventures. Egypt Air, Ethiopian Airlines, and South African Airlines are still operating. Nigeria Airways which started almost the same time with them has long been forgotten. So much money had been sunk into Ajakuta Steel with nothing so far to show for it. All the Government Refineries are virtually dead. The Government Tomato Pury Company at DadinKowa was meant for rural development. It is also dead. The list of the carcasses of the Government commercial projects are simply mind boggling. The irony is that no one has ever been called upon to answer for any of the failures. Adequate accountability is lacking. And many who caused the failures of organizations, were even celebrated as heroes by their communities. Nobody dared to touch them for what they had done. The culture is; rather than manage public commercial ventures profitably and improve upon them, we must kill them for personal gratification! This attitude is still with us!

30. Africa Farmers AgroBusiness Summit Pervasive Corruption As a result of the freedom Nigerians enjoy in not being held accountable, there is pervasive corruption. Many World reports had classified Nigeria among the worst corrupt nations in the world. Corruption has caused unimaginable damage to the Nigerian economy. Apart from outright theft of funds, many government functionaries had embarked on projects not because of their far reaching benefits to the majority of the populace, but because they were the only means through which the functionaries could make maximum intake for themselves. Thus carcasses of abandoned projects are all over the place. It is only now that Government has started tackling corruption. Can we improve on the tempo to an acceptable level, and maintain it? If we cannot then all our loadable economic plans would remain perpetually on paper. There would be little meaningful improvements to our economic well being.

31. Africa Farmers AgroBusiness Summit THE WAY FORWARD. Agricultural development is considered to hold the key to economic development for most Sub-Saharan African countries including Nigeria. In Nigeria, the discovery of oil shortly before independence shifted the focus of the government from agriculture to oil. As a result of this there has been low investment in agriculture by both the public and private sectors. But with the recent upsurge of attention to resuscitation of the Agricultural sector the Government would have to consider he immediate short term and long term measures as follows.

32. Africa Farmers AgroBusiness Summit Short Term Measures: The major short term measures are: 1. Provision of Land through land reforms. 2. Provision of Infrastructure, most especially, a robust rail system 3. Attracting the Private sector into the Agri-Business. No Country develops without a vibrant Small/Medium Scale Businesses (SME & MSME).The Government should provide the enabling environment for the players to thrive in terms of:

33. Africa Farmers AgroBusiness Summit 4. Access to Credit. Funding is crucial to any business endeavour. One critical factor inhibiting growth of Agribusiness is the number of farmers that are able to access funding. The Government intervention through Anchor Borrowers program and Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) does not appear to have solved the problem and the government would need to do more. 5. Scale up capacity and capabilities of small holder farmers through education and training. Train Agriculture Extension workers and Research. • Developing suitable agricultural markets to achieve price stability. 7. Promote alliance between Research Institutions and Key players

34. Africa Farmers AgroBusiness Summit Long Term Measures: On the other hand, the long term measures that the Government should give serious attention to consist of the following. Raise Long Term Funding Through Micro Pension; Government has launched the MICRO PENSION (MP) scheme. The estimated potential contributors of the MP scheme are estimated at about 70 million Nigerians. They constitute the informal working class. They would also be the highest beneficiary of the success of Government in developing the infrastructure. So Government could partner with them by giving them attractive incentives to save. For instance if Government could offer a contribution of a certain percentage to savers contribution, huge funds could be attracted that could used to fund infrastructure. The resulting enhancement of the economic activity would be a win-win for everyone.

35. Africa Farmers AgroBusiness Summit Restructuring The Government Structures: The running of the current government structures is very expensive. It can be restructured to a less expensive one. We can still go back to the Parliamentary System which is less expensive to run. This would require a restructuring of the geo/political structures currently in operation. India which is also a culturally diverse country, and almost six times larger than Nigeria, is operating a Parliamentary System, and it is working for them. Why should it not work for Nigeria?