beatcor | June 12, 2020 | 0 Comments

Nigeria’s Looming Food Crisis

A food crisis looms in Nigeria. It’s time for the government and other institutions to intervene.

The Coronavirus outbreak has sparked fears of a recession globally. With the steep drop in oil prices – which is also Nigeria’s major export – there’s a severe downturn in oil earnings and the nation is projected to have a shortfall of about N185billion every month. According to Nigeria’s Vice President, ‘Yemi Osinbajo, a total of 39.4 million people will be jobless by the end of 2020 if the country fails to take prompt pre-emptive measures.

But a different crisis is currently looming in the agricultural sector which, if not addressed, will lead to food shortage in the country. Between June and August this year, about 7million Nigerians will experience food shortage, as 16 Northern states – Borno, Adamawa, Yobe, Benue, Gombe, Taraba, Katsina, Jigawa, Kano, Bauchi, Plateau, Kaduna, Kebbi, Sokoto, Zamfara, Niger and the Federal Capital Territory (FCT) have been identified to face food and nutrition crisis.

Due to the rising number of cases, several state governments including Lagos, Edo, Kano, Enugu, Bauchi, Kaduna, and Kwara states declared a ban on social association, mobility, non-essential economic, and leisure activities. But in the measure to curb the spread, the national lockdown had an economic effect that led to tightening of credit access to farmers, limited access to inputs for farmers, limited access to transport services to transport food, and border closures limiting food imports.

According to the Federal Government, the post-COVID-19 Economic Sustainability Plan presented to President Muhammadu Buhari on 12 June, 2020 would carry out mass programs that will create jobs and utilise local materials. These will include a mass agricultural initiative expected to bring between 20,000 and 100,000 hectares of new farmland under cultivation in every state and create millions of job opportunities.

But as indicated by an Ogbonge Women Farmers representative, government policies have been lacking due to the inability to engage small and medium-scale farmers. In an AGRA study released in 2019, 81% of the food consumed on the continent is provided by African entrepreneurs, and most of them are small and medium-sized businesses. So since we know that that they exist, how can the government and financial institutions help them scale?

  1. Reopening the Economy Will Mean Reopening the Farms

While many states are beginning to ease the restrictions, entrepreneurs are returning to farms covered with rotten produce and weed-dominated farmlands – a significant issue for farmers in South-West Nigeria due to its heavy rainfall. These constraints have a ripple effect on farmers’ expenses on food cultivation, production, processing and transportation, leading to a hike in food prices and limiting the population’s access to nutritious food.

Many farmlands in Lagos, Ekiti, Osun and Ondo States will need heavy machinery to clear their farmlands. While this is easier for commercial farmers, subsistence farmers, many in rural areas, have to depend on equipment rental or ‘labourers’ – which are massively expensive at this time, depending on the scale of work required.

Federal, state and local governments need to work smartly and effectively with farmers’ associations across the country to mitigate these circumstances. Such partnerships will provide an opportunity to recognise farmers who need help in cultivating their farms, while also transporting produce to markets quickly. These will help them scale, reduce costs and maximise benefits for producers and consumers.

  • The Poorest Nigerians also Need a Coronavirus Rescue Package

Nigeria’s annual inflation rate rose for the eight consecutive month to 12.34% in April, driven by higher food prices prompted by the COVID-19 crisis. According to the Nigerian Bureau of Statistics (NBS), it is the highest in two years, with increase in prices of food items such as potatoes, yam and other tubers, bread and cereals, fish, oils and fats, meat, fruits and vegetables.

The World Food Program (WFP) has already warned that the pandemic would unleash a situation of widespread hunger. In response, the agency says it plans to feed 3million of the most vulnerable people, including residents in Kano, Abuja and Lagos who are affected by the socio-economic effects of COVID-19. Others are the millions of victims affected by a decade-long insurgency in the North-Eastern states of Borno, Adamawa, and Yobe States.

Food prices in Borno and Yobe states are relatively higher by more than 10% in June 2020 compared to the same period in 2019. In Damaturu, the Survival Minimum Expenditure Basket, which covers the basic needs of the most vulnerable people who require immediate lifesaving assistance, increased by 2% between April and May (from N13,579 to N13,798). Between April and May, the cost of the Survival Minimum Expenditure Basket (SMEB) for a family of five increased slightly from N17,806 to N17,912 in Maiduguri and Jere LGAs.

Compared to 3months ago, prices of local rice were mainly higher in Bursari (14%), Yusufari, Yunusari (25%), Potiskum (29%), Jakusko (33%), Nguru, Gashua (41%) and Geidam (43%) markets of Yobe state. This was similarly observed in Tashan Bama (14%), Budum (17%), Kasuwan Shanu (19%), Bullumkutu (21%), Custom (23%), Baga road (25%), Abbaganaram (31%) and Monday markets (35%) of Borno state.

Food vendors in Maiduguri have also indicated an inability to restock due to price inflation, access to credit and limited supplies from wholesalers.  The prolonged disruption in market supply and loss of employment, including daily labour due to the COVID-19 and persistent insecurity, remains a constraint for market-reliant households in the Northeast.

There is a growing need to provide stimulus packages for farmers to produce more food locally in the coming months, which will reduce the cost of food prices. Several corporations organisations, including financial institutions and FMCGs – in a partnership with the federal and state governments, also need to spearhead policies and programs that can improve the livelihood of the poor to reduce total reliance on food assistance and prevent further deterioration of the food and nutrition security situation.

  • An Urgent Action on Nigeria’s Economic Diversification to Agriculture

According to the Vice President, the new Economic Sustainability Plan was motived by the need to provide succour to Nigerians, taking into account the dangers posed to the economy by the global slowdown, drastic fall in crude oil production and prices, which created severe implications for government revenues and foreign exchange earnings.

Under the mass agricultural program unveiled by the Federal Government, between 20,000 and 100,000 hectares of new farmland will be cultivated in every state of the federation, which will create millions of direct and indirect job opportunities and boost local production. Already, some agricultural research institutes led by the International Crops Research Institute for the Semi-Arid Tropics (ICRISAT), and the Nigerian government recently launched a seed support initiative. Consequently, farmers in 13 states will receive improved seeds of sorghum, pearl millet, cowpea and rice as part of an effort to cushion the pandemic’s impact on food systems.

Other factors undermining production include reliance on rain-fed agriculture, low productivity due to poor planting material, low fertiliser application, a weak agricultural extension system and absence of long-term accessible cheap funds. Rural infrastructure is practically non-existent, so urgent action requires that both government and banks consider a Public-Private Partnership (PPP) approach towards the provision of infrastructure in the rural areas where currently, over 70% of agricultural production takes place.

  • Retooling Nigeria’s Agriculture Value Chain

In theory, the transportation of essential goods was permitted during the nation-wide lockdown. But practically, drivers carrying essential products constantly suffered harassment and abuse from security personnel at multiple checkpoints resulting in food supply gap and price spike. Even before the pandemic, these bottlenecks have always affected small scale farmers who were unable to access supplies and markets, leading to an income hiatus.

With states beginning to ease restrictions, governments have announced guidelines for citizens to keep safe. But production hurdles have always significantly stifled the performance of the agricultural sector, and the pandemic has only further expanded its susceptibility and vulnerability to external factors. At a recent webinar, a member of the Fisheries Society of Nigeria (FISON) stated that stocking and harvesting plans of fish farmers had been heavily disrupted.

Due to the lockdown, farmers were forced to keep fish in ponds which increased operational costs for feeding and reduced profits. The arrival of fish seed was delayed due to transportation restrictions, while delays in harvesting and decreased consumer demand caused significant financial impact for farmers. As most of the fish meal used in Nigeria is imported, it is expected to become scarce due to trade disruptions. Some farmers have also reported not having enough income to purchase feeds and, as a result, had to sell smaller fish for low prices.

A survey by AFEX Commodities Exchange Limited found that Nigeria’s fertiliser stocks are currently 20% below normal levels. The stock, many other inputs, are only enough to farm 1million hectares out of the roughly 30million typically farmed.

Both federal and state governments need to create an enabling environment for private investments in produce transportation and cold-storage facilities for on-farm and off-farm operations. Such investment will improve expansion, access to raw materials, working capital, asset acquisitions, employment generation and value creation. Most importantly, it will massively impact the productivity level across many agro chains in the country.

  • Access to credit facilities and household grants

The Central Bank of Nigeria (CBN) recently introduced a N50billion Targeted Credit Facility (TCF) as a stimulus package to support households and micro, small and medium enterprises (MSMEs) affected by the COVID-19 pandemic. Such an initiative is critical for a sector that employs two-thirds of the entire labour force. A few commercial banks also have products intended to support farmers across the country.

But the challenge is that these government initiatives, including those by many financial institutions, have stringent modalities and requirements to access the facilities. For example, these institutions, apart from collateral, demand that farmers, and rural entrepreneurs, send their requests through online loan applications. As a result, farmers end up spending extra money to engage a tech-savvy individual to fill the forms on their behalf.

In many cases, farmers are not even aware of such credit facilities since government and financial institutions prefer to invest with commercial farmers. In May, the NIRSAL Microfinance boss, Abubakar Kure, said that it received 80,000 applications for the facility, out of which 40,000 of them were households. With the hardship experienced by farmers within 4 months of the pandemic, this represents a low number.

More farmers need better opportunities to access cheap and long-term credit for Small and Medium-Scale Enterprises (SMEs) and large corporates. Governments need to develop and strengthen pro-poor policies that bring financial services and security to the poor and the vulnerable and also expedite the development of venture capitalists for nurturing new ideas and engendering Nigerian businesses to compete globally.

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