Nigeria: Agriculture As An International Business

There is a reality that we all need to understand and act on; “No Farmer, No Food, No Future”.

In the 1960s, Nigeria was one of the most promising agricultural producers in the world, and export crops were the country’s main foreign exchange earner.

Nigeria was number one globally in palm oil exports, well ahead of Malaysia and Indonesia, and exported around 47% of all groundnuts, ahead of the United State and Argentina.

However, Nigeria status as an agricultural powerhouse declined steeply, on discovering of oil, and its subsequent exploration. As a result, Nigeria which once provided 18 percent of the global production of cocoa, now provide only 8 percent, and a country which once produced 65 percent of tomatoes in the whole of West Africa, is now the biggest importer of tomato paste.

Agricultural Markets And International Trade

Agricultural trade helps to answer possible food production shortages due to climatic or other reasons, and the EU is the first trader in agricultural products of the world, both in terms of exports and imports.

In recent years, global agriculture markets faced an increased instability, which has directly impacted the stakeholders of the food chain. Price volatility makes planning for farmers and buyers extremely difficult and may even result in political unrest, like in the food prices peak in 2007-2008, and the recent bread price hike in Sudan.

Economic models have become indispensable tools in preparing and negotiating policy decisions like trade multi- or bilateral negotiations, and the dynamic development of agricultural markets requires permanent monitoring and prospective analysis.

Let us remember that there are already about 870 million hungry and impoverished men, women, and children in the world today, most of whom reside in rural areas in the developing world.

These people rely on agriculture for their main source of livelihood, and the development of policies which are supposed to benefit these people is often severely out of touch with those exact people who are suffering.

The irony of this situation is that the food insecure countries are dominated by smallholder farmers, and the smallholder farmers constitute about 1/3 of the world population, half of the hungry people, and yet are the food producers.

2.3 billion People rely on smallholder farmers for food production, and the policy development process largely excludes them. It is quite regrettable that the poor have no voice in the development of the policies that ultimately concern them.

It is likely that smallholders will stay small but it is vital that they are integrated into agri-business models, in the agri-business supply chains and incorporated with other actors, especially in the international domain.

Therefore, it is critical that farmers learn about value addition, group marketing and financial literacy, in order to be able to negotiate financial services that are appropriate for their needs.

They must also be made to see farming as a business (an international one) and should be enabled to access innovation and business management training, in order to manage their businesses better. This act will become increasingly important to guarantee food security.

Production and yields in developing countries remain low, but, there is substantial potential for yield improvement. It is necessary that farmers have access to the appropriate technologies and services.

These must also be tailored to specific categories like women and youth, and farmers must also be made to understand sustainable farming practices and consumer needs for food safety.

A profound change taking place in the agro-food economy of Nigeria is the emergence of agro-industrial enterprises as part of broader processes of agribusiness development.

In turn, the transformation of agro-processing from the informal to the formal sector holds significant implications for participants along the entire length of the agricultural supply chain.

Agro-industrialization presents potential valuable opportunities and benefits for developing countries, especially, for those engaged in agriculture, fisheries and forestry, food retailers, traders, and even the final consumer.

These valuable opportunities and benefits come in terms of the overall processes of industrialization and economic development, export performance, food safety, and quality.

Further, agro-industries are changing on a global scale, presenting not only new opportunities but also challenges for developing countries like Nigeria, and suggesting that the future course of agro-industrialization will be somewhat different than in the past.

Developing competitive agro-industries is crucial for employment generation and increasing income opportunities for farmers, and it also contributes to enhancing the quality and the demand for farm products.

Agro-industries have the potential to provide employment for rural populations both in farming, and off-farm activities such as handling, packaging, processing, transporting and marketing of food and agricultural products.

Agro-industries are having a significant global impact on economic development and poverty reduction, in both urban and rural communities, but the full potential of agro-industries as an engine for economic development has not yet been realized in Nigeria, and many developing countries, especially in Africa.

Few factors that are critical for the development of Nigerian agro-industries as international businesses, is to integrate smallholder farmers and enable them to collaborate sustainably and successfully with private sector actors, multilateral organizations and the public sector.

Also, small farmers must ultimately be empowered and have a voice.

Making Agriculture A Businessnigeria_oil and agric

If agriculture is not providing jobs as expected, the fault lies in the following:

  • inadequate financing,
  • infrastructure deficit,
  • Antiquated technology,
  • low literacy,
  • corruption, and
  • The connivance between politicians and importers who compromise the growth of the domestic economy with faulty and self-centered policies.

Unfortunately, in Nigeria, the policymakers do not treat agriculture as a business.

With the right policies, agriculture should offer a way out of the menace of youth unemployment, food insecurity, and women disempowerment. Agricultural policies must be decidedly inclusive, to sweep more Nigerians into the economic web, so that, they should be able to have flourishing livelihoods and careers in agriculture.

Although it may sound like myths, the following are facts concerning Nigeria farming business:

  • India recently came to explore the possibility for Nigeria to produce palsy or peas, which is an Indian staple food.
  • Saudi Arabia is considering buying ram from Nigeria.
  • Nigeria is the world’s greatest producer of sorghum, yam, cassava, cowpeas, and onions.
  • Egyptian cotton that commands a premium price in the international commodities market was developed from cotton seedlings from northern Nigeria.

It’s a shame that despite the enormous potential like ample farming lands, and 230 billion cubic liters reserve of water, Nigeria cultivates less than half of its 68 million hectares of arable land, and imports nearly $22 million worth of common food items like rice, fish, and vegetable oil from other economies.

Contrary to popular and politicized opinion that Nigeria’s importation of food items is going down, the shelf space occupied by imported processed food items puts a lie to that assumption.

Being that agricultural products are time sensitive, and the conducive environment is lacking for Nigerian consumers to buy locally produced food items, or for local industry to buy, efficiently process, and market local farm produce, Nigerian farmers should plan to produce for external trade. Economic goods follow the money.

You see, resulting from poor macroeconomic policies and a high-interest rate introduced by an insensitive Central Bank of Nigeria, farmers cannot be blamed for seeking higher profit abroad.

Nigeria will achieve increased agricultural output only by:

  • Improving the quality and inventory of infrastructure, like power, roads, railway line, cargo airports, etc…
  • provide enough water for irrigation; and
  • Use the media and extension agents to spread and promote agricultural research findings.

Agro-allied industrialists that can efficiently add value to local farm produce must be encouraged to take advantage of domestic and international markets, as there is more money to be made when you add value to primary produce before it is sold.

There must be a holistic, systematic, and sequential value chain approach for long-term planning and Nigeria’s agricultural policy must be conceived in long-term, but executed as interconnected and incremental segments of interconnected tasks.

Agriculture must be made attractive by improving rural amenities and infrastructure, and Nigeria can make use of the hard currency accruable from a vibrant export trade in processed food

To effectively play in the international processed food market, the government must speedily develop policies to correct the poor quality, contamination, and high chemical levels of Nigerian food items.

Nigeria’s porous border is an acknowledgment that there is a robust export trade for raw and processed farm produce, and Nigeria’s agri-business policymakers must decide if the market will extend beyond the country, and act accordingly.

Donor agencies, like the Ford Foundation and the United States Agency for International Development that is offering to train smallholder farmers and small-scale agro-allied processors in new farm techniques, should be welcomed with both hands.

With all these in the making, Nigeria can convert its agri-business into an international one, and with that comes a wide range of benefits.