OPINION: The Immolation Of Nigeria’s Agribusiness by Richard-Mark Mbaram

Nigeria’s agricultural sector has witnessed series of dramatic events in recent times, each of these experiences gathering considerable doses of either positive or negative implications for the economic well-being of the nation.

It is futile to state that agriculture is a critical sector for Nigeria’s economic survival. The sector does not only account for 22.9 percent of the country’s GDP- going by figures supplied by the National Bureau of Statistics (NBS) for the Q2”17, as supported by the recently released Q3”17 results – but is a veritable engager of a vast percentage of its productive workforce, some 60 percent.

A corollary to the foregoing is that any action or inaction with capacity to compromise the agricultural prospects of Nigeria should be a grave concern not just to the sectorial players, but any well-meaning citizen of the country. The ‘Tomato Ebola’ experience will make easy reference as a case in point.

Farmers lost their cropping for the year and Nigerians suffered in their pockets, as the price of Tomato soared to unbelievable heights.

Sectorial Unease Key Minefield Indicator

From the recently released 3rd Quarter 2017 GDP figures, it is easy to discern that all is not well with the Nigerian economy.

On the face of it, the country is out of recession, posting an overall growth rate of 1.4%, but the reality is that this recovery is not a sustainable one, being overwhelmingly fossil fuel dependent. Put simply, if the country’s oil revenues tank for any reason, Nigeria will be right back in the red, economically.

Many Nigerians, principally the policy makers and executors, will readily pontificate about the country’s urgent need for economic diversification, but when you look critically, it becomes clear that much of Nigeria’s economic woes are primarily self induced. This view is pinioned on bare facts.

Again, for clarity, let’s return to the economy and the need to diversify. A poster on the door leading into the office of the director, Agricultural Land Department, Federal Ministry of Agriculture and Rural Development (FMARD) rightly points out what is a truism; “Nigeria’s economic salvation does not rest with oil, but soil”.

Hence transforming the country’s agriculture is the fastest way to put an end to her perennial economic embarrassment.

But mere lip service will not grow Nigeria’s Agriculture. It will take serious, deliberate and cogent sets of action. In other words, no silver bullet exists, nor can a magic wand be waved. It is about getting down to do what needs to be done.

The economy needs to be “grown” and this presupposes deploying a set of well intentioned measures to progressively nurture it towards different stages of well-being.

So, in doing this, there is no room for arbitrariness as one cannot be rascally in handling a tender plant and not expect to bruise and ultimately destroy it.

So why is Nigeria not taking her agricultural sector seriously? Why are the interests of major agribusinesses and high stake investors being toyed with? Why is the absence of a regime of coherent, consistent policies that will guaranty a mutually reinforcing growth of the real sector of the economy not a concern?

These questions are pertinent because Nigeria is gradually becoming a scary business proposition for agribusiness investors. The most recent economic data released by the National Bureau of Statistics (NBS) is a clear pointer in this regard. The country’s manufacturing sector – a key driver of economic prosperity – has been haemorrhaging.

The sector is still in the red, having posted a “Real GDP” rate of -2.85% which, though higher than the year on year average, was lower than the Q2”2017 figure by -3.49% points. If anybody needed a measure of the economic temperature of Nigeria, such a one needs look no further. The manufacturing industry is indeed the main off-taker of agricultural produce, turning them into many end-products. Because of its mutually reinforcing relationship with agriculture, the state of this sector must be a cause for concern to stakeholders in the Agro-allied production space.

Little wonder that there is so much unease in the agricultural landscape of Nigeria in recent times.

An apt example is the ‘Maize Debacle’. As at press time, Wacot, a major agro-allied industry player has been barred from taking delivery of its shipload of maize at the Apapa Port, Lagos. The reason given by the authorities centered on a range of allegations, including the protection of the local production economy. Reliable information posits that Wacot has incurred huge demurrage on the consignment.

Trouble started when a farm-based Organisation; Nigerian Farmers Group and Cooperative Society, raised alarm over the importation of maize into the country. According to the group, the importation spelt doom for local maize production, as the price of the commodity would free-fall. It insisted that the interest of local farmers would be compromised and the government appears to have agreed.

The Maize Power
It bears mentioning that in Nigeria, maize is a very important crop due largely to its immense commercial viability – it is a crucial input in food and feed production. Statistics credited to the FMARD put local maize demand in Nigeria at 15.5 million metric tonnes and local production at some 10.5 million metric tonnes. Thus, at peak production, the country has a shortfall of 5million metric tonnes a situation further compounded in recent times by a 40% loss attributable to the Fall Army Worms (FAW) outbreak in 2016.

Crop loss for 2017 currently stands at 25% going by estimates supplied by a local maize value chain actor.

According to Sunny Ameh, Nigeria country director for Syngenta, “this situation puts local agribusinesses that rely on maize in serious trouble”. While underscoring that Syngenta has a chemical solution to the problem, Ameh points to the losses incurred as being directly responsible for the recent buying decisions of key industrial players.

Interestingly, high maize price has been a persistent reality for a long time in Nigeria. The Poultry and Aquaculture industries have had to endure excruciatingly high cost of feed on this account, a situation which has seen a kilogram of feed skyrocket from between N60 -70 to N140-150. Many poultry and aquaculture businesses have been smothered on account of this hostile reality. If anyone is wondering why food inflation is at an 8 year high of 20.3%, here is the answer.

The brief is that while a large percentage of cultivated maize caters for feed production, the manufacturing industry alone guzzles about 60% of the country’s output for production of cornflakes, malt drinks, beer, flour, syrup and dextrose – a demand that still must be met. To stay in business therefore, the producer companies embarked on a spate of importation from supplier nations like Argentina, U.S.A, Brazil and Ukraine.

Dire Need for Clear Policy Direction

The fear being entertained by Nigerian farmers is a very plausible one. The country cannot afford to allow for massive importation of maize from other climes.

According to a closely followed report by the United States Department of Agriculture (USDA), a total of 185, 000 MT of maize arrived Apapa, Tin Can and Calabar ports between January – October 2016.

Nigeria needs a clear plan to fix the situation. In doing this however, there is need for a balancing act. Big agribusinesses like Chi-Wacot, Dangote, FlourMills and OLAM all have sizable maize requirements, which cannot be wished away, but must form the basis of an informed plan which will factor in the short, medium and long term practicalities. It must also take account of all the genuine interests at play.

Indeed, it is an unenviable, delicate balancing act requiring front-end policy framing capabilities on the part of the country’s economic managers.
Accordingly the recent knee-jerked reactionary approach witnessed cannot be acceptable.

It is undoubtedly the reason for the dismal Q3”2017 manufacturing indices and a pointer to the fact that Nigeria cannot be wooing investors on one hand, and then on the other, be actively emasculating the interests of existing investors.

Agribusinesses like FlourMills, OLAM Dangote, Wacot etc. are exactly the kind of demand-driven actors that the Nigerian economy needs at this time.

They are the market for agricultural producers and can, through a well thought out government inspired recovery effort, be induced into building a veritable backward integration plan for the maize value-chain.

The past administration achieved it in the aquaculture and rice value chains; nothing says it cannot be repeated in maize.

Going Forward
Consensus exists as to the urgent need for coherence in the policy framing and implementation eco-system. It is impossible, in today’s world, to run an arbitrary economic eco-system without a concomitant backlash. Care needs to be taken to defuse the current situation, Nigeria cannot continue down this path of economic self immolation.

Mbaram, a Laywer and CEO of AgroNigeria, wrote in from Lagos.

Source: LeadershipNG