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A Look at Agriculture and Agribusiness in Nigeria

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A Look at Agriculture and Agribusiness in Nigeria Forum A Look at Agriculture and Agribusiness in Nigeria Interview: Ndidi Okonkwo Nwuneli griculture in Nigeria as seen by a Nigerian specialist. In ([email protected])________________ Asome respects, the circumstances in Nigeria resemble those of neighbouring countries. In this analysis, the emphasis is on pragmatic approaches and the spirit of enterprise, whether family-run businesses or larger-scale operations. Born in Nigeria, Ndidi Grain de Sel: What is your diagnosis of the agricul- GDS: What are the respective roles of the public and pri- Okonkwo Nwuneli has a tural sector in Nigeria? vate sectors for developing agriculture in Nigeria? Master’s degree in Business Administration Ndidi Nwuneli: Agriculture is the most important NN: e public sector is responsible for creating from Harvard Business sector in the Nigerian economy. It employs of an enabling environment for agriculture to thrive. School. She began her Nigerians, including many rural women, and con- It also needs to invest in addressing the key issues career as a management tributes up to of the country’s GDP. As in many that currently hinder the sector by reinforcing trade consultant with McKinsey other African countries, agriculture in Nigeria is policies and land tenure policies; investing in strong & Company in the United largely focused on food crops for the domestic mar- agricultural educational and research institutions; States and in South Africa. ket, given the Nigerian population estimated at easing government engagement in fertiliser, seed and She returned to Nigeria in million people. In spite of this reality, Nigeria remains input supply, distribution, and financing; providing to promote a net importer of food, for many reasons. First of all, incentives for financial institutions, especially banks entrepreneurship and the majority of the agriculture-focused operations and insurance companies to support the private sec- leadership development in in the country are small-scale, with limited innova- tor; ensuring strong and effective extension support Africa. Aer a stint as tion regarding inputs, harvesting, processing, distri- services, and agriculture development programmes pioneering director- bution, and access to markets. e vast majority of at the local government level; and providing adequate general of the FATE people engaged in agriculture operate at the subsist- infrastructures, especially feeder road networks and Foundation, she founded ence level, are uneducated and have limited access consistent and affordable electricity. Moreover, ag- LEAP Africa and NIA, two to training. Moreover, of the country’s exports riculture needs to be recognised as a key business structures that provide are dominated by petroleum and related products, sector in Nigeria, and like other sectors, requires the ethics, leadership and which has shied focus away from agriculture. As engagement of the organised private sector across management training, and a result, until recently, there has been severe under- critical value chains. e sector presents tremendous coaching for youths, investment in agriculture by the public and private opportunities for the emergence of small and me- business owners, social sectors, civil society and bilateral and multilateral dium-sized enterprises which can create value and entrepreneurs and the agencies. is has been intensified by weak, un-en- jobs across critical value chains. e private sector public sector. She is also a forced, poorly implemented and oen conflicting can provide financing, support systems—including co-founder of AACE Foods, policies at all levels of the country. equipment, processing, transportation, distribution a local agro-processing and marketing support. company in Nigeria, and of GDS: Isn’t there strong potential for agricultural de- AACE Consulting, a velopment in Nigeria? GDS: What is required to strengthen the agricultural consulting firm specialised sector in Nigeria? in agricultural strategy NN: e potential of the agriculture sector in Ni- and policy. geria is huge. e country has a substantial base to NN: ere is an urgent need for improvements in build upon: its natural assets including land (. productivity, via access to improved seeds, fertilisers, m hectares of arable land, of which is under water management techniques, equipment, financ- cultivation), climate and rainfall, its coastal areas, ing, and markets. Today, only about of Nigerian its history as an agrarian economy. Today, Nigeria smallholders use improved seeds because there are is one of the world’s largest producers of cassava, significant problems with seed availability, quality and cashews, tubers (sweet potato, yams), fruits (mango, pricing. Four seed companies dominate seed produc- papaya) and grains (millet, sorghum and sesame). tion; and there is a significant amount of bad seed in In addition, the country’s population represents a the system due to the poor quality of produce from large domestic market that can support and sustain seed companies. e fertiliser application rate is ap- local production and processing. Nigeria also plays proximately kg per hectare of arable land, a small a key role in West Africa and there are tremendous fraction of the global average of kg/ha. Only opportunities to access regional markets. Unfortu- of farmers receive extension services. Rudimentary nately, there is limited collaboration across regional technology is still used for cultivation, harvesting value chains; there is greater collaboration between and processing, which increases overall production the West African countries and their former colonis- costs. Storage capacity is poor; there is limited access ers or the United States, than with their neighbours. to good packaging and no organised warehouse sys- is has resulted in significant lost opportunities in tems, generating large post-harvest losses and wide sectors such as rice, cotton and cocoa, and continued price fluctuations. Packaging is inadequate and inap- dependence on imports. propriate, due to poor communication between the Ü Grain de sel 27 No. 51 — July – September 2010 Forum Initiatives sistence level, we have shrinking and depleted farms, an ageing population with limited interest from the youth to engage in agriculture; there is an urgent need to explore the potential profitability of every agriculture investment and to determine whether it makes financial sense to proceed in the short, me- dium and long-term. GDS: Are there interesting agribusiness undertakings in the field now? NN: ere are very few examples of thriving and ef- ficient value chains in the Nigerian context. Com- panies such as Olam, Nestle and Nigerian Breweries successfully source their produce from smallholder farmers and support growth across the value chains. In the case of Olam, through support from USAID Markets, it has been demonstrated that coordinated and targeted interventions can generate significant increases in yields. By organising smallholder farm- Û different players across the chain and lack of aware- ers into groups, providing training, extension serv- ness of the processors’ packaging needs. Direct and ices, and inputs on credit, the farmers experienced indirection distribution circuits are fragmented and significant increases in yields, resulting in greater oen hastily improvised, at very high cost. In addi- supply of rice for the Olam processing facility in tion, high oil prices have dramatically increased the Benue state, Nigeria. cost of transportation. ere is an urgent need to address the energy chal- GDS: What can be done for agribusiness? How can lenge in West Africa, particularly electricity supply. the private sector grow? Energy is required for processing, packaging and storing agricultural produce. Unfortunately, electri- NN: It is important to recognise the need for compre- fication is limited in rural areas, and the provision hensive interventions to ensure sustainable growth of electricity is sporadic even in urban areas. Many and job creation. For example, the cassava value chain, processors are compelled to rely on generators, and one of the most important value chains in Nigeria, to devote a large percentage of their operating ex- benefited from a presidential campaign for cassava penses to paying for increasingly expensive petrol and its products, including cassava chips, flour, etc. and diesel. With minimal investment in research, provision of Alleviating these constraints will ensure that Ni- market information, access to subsidised fertiliser, gerian produce is competitive relative to imports and links to international markets, cassava received (today’s combination of low yields, averaging . a major boost in the country between and . tonnes/Ha, and high labour costs results in paddy is boost has resulted in a glut on the market, ob- prices of around US /t, compared with - viously disappointing farmers. is demonstrates in ailand) and affordable for local consumers. Be- that a focus on increasing yields, without investing yond the issue of yields, considerable emphasis has in processing and other aspects of the value chain to be placed on value chains, in order to ensure that will lead to short-term gains, but not long-term sus- they are not only efficient, but also effective. tainable growth and development for actors across the chain. GDS: What do you mean by “agribusiness”? GDS: In your opinion, what types of farming should NN: e term “agribusiness” simply refers to the be encouraged? breadth of businesses engaged in all aspects of agri- culture,
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