Kenneth Obiajulu is the co-founder and Managing Director of Farmgate Africa, a subsidiary of Farmcrowdy Group. In this interview with Taiwo Hassan, he speaks on the on-going reforms in Nigeria’s agriculture sector and how it is affecting her economy. Excerpts:
What is your assessment of the country’s agric sector in the first quarter of this year? Do you think it performed to stakeholders’ expectations?
Basically, from my objective point of view, even though the National Bureau of Statistics (NBS) is yet to release this year’s first quarter performance of the country’s Gross Domestic Product (GDP), the agric sector has performed better. Based on the statistics that we have received from NBS, if you look at the historical data from 2017/18 and how the sector has grown, you will see that the agricultural sector has performed tremendously well in aggregating the national GDP.
Particularly, our agricultural sector is divided into four sub-sectors, namely: crop production, forestry, livestock and fishing. But that of crop production has taken a significant vast, roughly about 90 per cent of the sector’s contribution. So, if you look at the growth in numbers in the sector, in 2017, it was roughly about 12 per cent, while last year, it was approximately 19 per cent, so you will see that the sector has been growing year-on-year and that for me is a significant growth if we are to go by the numbers from 2017 to 2018. Again, I will say based on the fourth quarter of 2018 performance of the GDP released by NBS, agriculture played a critical role in the country’s non-oil sector of the economy.
For instance, the NBS report showed that in the non-oil sector, the GDP grew by 2.70 per cent in real terms during the fourth quarter of 2018. This was 1.25 per cent points higher than the growth rate recorded in fourth quarter 2017 and 0.38 per cent points higher than the growth rate recorded in third quarter 2018.
However, on an annual basis, the non-oil sector recorded a growth rate of 2.00 per cent in 2018, performing considerably better than 0.47 per cent seen in 2017.
Among the key performing activities during the fourth quarter were information and communication technology, transportation & storage, arts & entertainment, agriculture and manufacturing.
Would you say that the present administration has revolutionised agriculture?
Yes, if you also look at some of the numbers in terms of performance indices, you would see that before 2015, agriculture was good, but not as great as it is now. You will see that lots of businesses are beginning to spring up in the Nigerian agricultural space. You will see that our smallholder farmers are beginning to see agriculture as real business. Look at the crop production data. Rice, for example; you will see that in 2015, the official importation bill of rice was so high. But now, you can see that it has dropped significantly, while the local production has increased immensely. These are as a result of many schemes that government has been able to improve upon. So, if you say that agriculture was one of those key sectors that government has been able to consolidate on, I would visibly agree with you that they have done well, in terms of policies, implementations, creating enabling environment for smallholder farmers to thrive, including small processing processors in the agricultural sector to also thrive and also seeing how we attract more investments into the country’s agric space.
Talking about rice value chain, Nigeria was recently pronounced to be the largest producer of rice in Africa by the Africa Rice Centre. What is your view on this?
I know that there would have been biometric data that was used in determining that new position that Nigeria moved beyond Egypt by the Africa Rice Centre. But if you look at the consumption pattern again, even the excess rice demand from our end, you will see that Nigeria is slowly growing into a nation that is now producing what we are eating or consuming, as against when we were purely dependent on rice importation and our population also helped us well in that area. With over 180 million population, the country has one of the greatest assets to achieve whatever she wants to achieve. You can see that those numbers also justified why the production numbers in rice are looking at our way positively. From some of the data we have on rice, our consumption rate is about 7.9 million tonnes, while production is at 5.8 million tonnes, so it shows that there is still gap that needs to be met and in as much as we produce more of this, we will continue to consume and the numbers will be increasing.
From what the Agric Minister, Audu Ogbeh, said recently, you would see that the country’s official importation bill is barely up to 27,000 metric tonnes as against 731,000 metric tonnes. In 2015/16, we used to import lots of rice into the country. So, now, you can see that there is significant increase in what we have been doing on our local production in rice. You can see that bigger rice mills are springing up with the likes of Olams, which has rice processing mills in Nasarawa State, Walcot, Dangote, Kebbi rice, Lake rice in Lagos, Ebonyi rice and others. So, a lot of facilities for rice production are coming up as a result of government’s reform policies in agriculture. I think the Centre might be right to say we have got to the point where our production of rice is improving tremendously.
But despite this claim of rice sufficiency in the country by government, foreign rice still dominates the Nigerian market, why?
Basically as it has to do with almost every policy that government brings into play, you must find some faults during its process or implementation. For instance, when government said that we have 100 per cent ban on rice importation, people would still go through land borders to bring in this commodity. You can protect the ports but you can’t protect the porous land borders that we have in this country. One of the biggest challenges in the implementation of the federal government rice policy is the ban on the importation of rice and this has opened up illicit smuggling of the commodity from every nooks and crannies of the country. The fact is that we need to work round the clock to be able to block the leakages from our land borders and also work assiduously on how to incentivise our Customs authorities because it is also a theory that if the system is intact there will be no room for individuals to bypass the system.
So I think holistic approach needs to be looked at when trying to block all of these things affecting the country’s rice sufficiency programme. When you look at the activities in the country’s rice space, for instance, see what FADAMA is doing with rice, which also accounted for the boost in rice production. You see the Anchor Borrowers Programme of the Central Bank of Nigeria (CBN) where about 12 million rice farmers were given credit to boost rice farming. So the rice policy programme is boosting rice production in Nigeria, but the prices are not as great as in imported rice and we are getting to that point soon. I think Nigerians are beginning to have that self-confidence that it’s our rice and we should be able to consume what we produce.
Post-harvest loss in Nigeria has been a source of concern to government and agric stakeholders, as it threatens food security. Could this be as a result of lack of exposure to modern technology by farmers in the country?
Of course, you can see that Nigeria produces a large chunk of agricultural commodities, but sadly, over 50 per cent are lost to post-harvest and this has severe economic implication. For instance, let’s take tomatoes, you will see that in this period of March/April, when you go to a state such as Kano for example, you will literally be stepping on tomatoes on the floors because of the excess production and lack of storage facility even when you have produced them in abundance and during the time of scarcity to also bring them out for sale.
So, there is a technological issue right there. When you also look at some of the activities in the tomatoes value chain, such as cool storage facility, for instance, once a farmer harvest his tomatoes from the farm, he moves the product to the Southern part of the country where he transport them in rough baskets and you know when you transport them with such baskets, they will be compressed and release a chemical that stalls their preservation. But if you are able to get an access to technology such as cool storage facility that cools these tomatoes or train our farmers on how to dry tomatoes, then it could go a long way in helping to solve transporting tomatoes in retainable plastic crates, as against rough baskets. So they go a long way in reducing the post-harvest loss.
If we don’t address the issue of post-harvest losses in Nigeria’s agriculture, we will keep producing but we will not be seeing the impact as over 50 per cent will be rotting away. For example, look at yams in Benue State and other yams producing states, statistically, we are the largest producers of yam in the world but more than two third of our yams get spoilt on the ground because we cannot consume all of it at a particular time. We have not developed our processing facilities to be able to process them into urban applications so a lot of them are spoilt on the ground. These are the things we should start looking at on how we increase the shelf lives of our agro commodities in this country.
On the post-harvest loss threatening food security as you asked, yes, of course, in every nation post-harvest losses will always threaten food security if you don’t bring it down to the barest minimum. It means that the more you produce, the more you lose. And if you look at the numbers that we lose annually, for example, the total annual valuation for tomatoes is N1.5 billion. If you lose 40 per cent, you have lost that amount coming into the coffers of farmers or Nigeria’s economy, that is, a whole lot and I mean that is money that should have been spent on doing something that is significant to the economy.
Nigeria is Africa’s second largest producer of tomatoes with nearly two million tonnes annually, yet up to 50 per cent of the crop never makes it to the market, thereby impacting food security and smallholder farmers’ incomes.
Recently, you launched Farmgate Africa in Lagos, what is the purpose of this in the continent’s agric value chain?
What we are saying is that Farm Crowdy Group leverages the Farm Crowdy fund platforms in order to be able to raise funds that will be used to address certain areas in the agricultural value chain, called production. And we have seen that in agriculture, we have four core challenges, namely, productivity, post-harvest losses, access to finance and market linkages. We’ve been able to innovatively disrupt the market by looking for the best approach in raising funds that we can deplore to the farmers. But in every single time, we deplored this fund to the farmers. We also have not been able to address the last part of the challenges, which is market linkage. So what Farmgate Africa was developed for is to address the issue of market access. Our farmers can produce crops, but they have to go through several layers of intermediaries to be able to meet a processor that will give them premium price for all they have been doing for a whole year. Even if the processor can buy it up, they have to go through intermediaries and at the end of the chains both parties are losing money. So what Farmgate Africa was trying to do is to bring those farmers closer to the major processors as an intermediary by collapsing multiple intermediaries and ensuring that we transfer that premium to the farmers and also create some cost savings to the processors by doing all of that. Our mandate is very simple; to be able to get the smallholder farmers to the processors and international buyers as much as possible.
Funding is one of the biggest challenges facing agriculture sector at the moment. How is your organisation planning to tackle this?
Basically, what we have done at Farm Crowdy Group is that we have been able to raise some substantial amount of money from the United States and other platforms. Recently, we announced another seed round of $1 million that is geared towards boosting the business into the future. So we’ve been able to raise funds in Nigeria and outside Nigeria. So far as a group, we have been able to raise from individuals a substantial amount in the excess of $9 million, that is, from individuals that want to partake in agriculture but don’t have the knowledge on how to go about it but they have seen our platforms as avenue for people to invest. As a group that is what we have leveraged on and that is what we keep doing.
For Farmgate Africa, we have strategic premium investors that reach out to us and want to invest in the certain core areas of the trading activities and that is what we have been able to deploy that capital to, to ensure that we are able to drive profitability from a commercial point and we have also been able to increase the livelihoods of the farmers that normally would have had to go through various layers of intermediaries. We are also bringing cost savings to the major processors. So it’s a three-way fold.
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