We had a chat with seasoned Agriculture expert, Shola Fashedemi about some of the challenges in the Agricultural sector in Nigeria and what we need to do to surmount some of these challenges.
Tell us a bit about your background in Agriculture
My background is in Agricultural extension and rural sociology. I've worked on smallholder farmer development Models, Crop origination and exports. I've also done fast-moving consumer good (FMCG) sales at the retail level, cross border trade between Benin, Togo, Ivory Coast, Ghana up to Senegal: that is the linking crop origination and aggregation through to exports. I have worked with the commodities exchange in East Africa and also a significant part of the development of AFEX commodities exchange in Nigeria. As you know already I head commercials for a subsidiary of FMN. Which primarily that manages farmer engagement, out-grower schemes, value inclusion, financial access and Market Linkage. Basically putting a structure around smallholder farmers/Commercial crop Production and how we can link them to our larger factories. Personally, I'm also a farmer, I have my own Farm.
What do you think are some of the biggest challenges in the Nigerian Agricultural sector?
Let us limit it to the following. Absence of standardization & structure.
Okay. Can you explain what that means?
When I say there's no structure, I mean that people produce without knowing what they're going to do with their produce. Also the people who want to buy, do so without knowing exactly where they're going to buy from. there's that gap in between the two. Some people go into production and they just see it as an avenue to make money but they have no idea where their produce is going or who they are going to sell to.
For example Yesterday I got a call from some farmers up North saying they have 40,000 metric tons of tomato for sale. I started by asking them certain questions like ‘what specific purpose did you plant for? What is the quality of the produce?
From further discussions with them, I realised they had no plan in place when they planted the tomatoes, no plans for the quality, quantity, standards or even possible off-takers. They just planted blindly. This phenomenon is not common to just them but with a lot of agricultural players in Nigeria. Everybody just jumps in head first with no laid out structure
This is an interesting point that you raised. What other challenges can you think of?
Risk mitigation. There is associated risk with agriculture. It is a measurable risk and it is very real all over the world. In some developed countries, wherever there is risk, the government comes in and puts mitigates some of the risk for it, so it creates the comfort, confidence and the right environment for investors to jump in and say, okay, yes we're willing to do agriculture. Agriculture carries a heavy risk in its entirety which must be understood.
Can you expand on that and maybe give us a practical illustration of what exactly risk mitigation might look like in Agriculture?
Well, let me give you a scenario. In South America, the government takes on the full burden of soil testing. They choose a particular area, carry out the soil tests and create a full land profile for that area. They then share the land profile with banks and other financial institutions. When potential investors approach the bank and say, I want to produce on this land, the bank already has access to the land profile shared by the government so they get a full picture of the potential performance of that land. In addition to that, the financial institution makes inquiries about off-takers, financial history of the potential investor and possibly the price volatility of intended produce. This way, they can make a more informed decision on whether or not to grant the loan. The banks also contact the input providers to ascertain the quality of inputs to be used.
It doesn’t end there, the government then sends in extension service officers to monitor and ensure that the stipulated protocol for the desired yield is being followed. Obviously, the better the yield, the more likely it is that the investor can pay back banks on time. They also make sure that there is comprehensive insurance cover on the farm to mitigate any unforeseen circumstances.
It is all very step by step. Can you see how structured it is? It's a process, plug and play because they utilise structured, logical data.
I see. So how do things differ in Nigeria?
In Nigeria, things are very different. What you will find is an individual doing everything and bearing all the risk associated with the value chain I’ll give you an example: If you intend to plant maize and you decide to clear the land, the cost of clearing is already more than whatever profit you are expecting to get from the maize, that’s one. Two, you clear and then you assume that the land is ready for you, it is fertile, and everything is set. That's a risk you are taking because you are not don't know first-hand how fertile the land is. So you have to do some soil testing for that. Three, when you clear land, it's not the first clearing that gets the land flat its repeated cycles of clearing & cultivation.
It's a business, a calculated business, and you have to be specific about certain things, your budget, your costs, overheads etc so that you get the results required by the market.
So, mitigation of risk ensures that players do not have to go in blind right?
Exactly. You are not going in blind for example if you already have the soil profile available from Govt archives/records; you don't spend your capital doing soil testing,
I know the cost behind it, and it's not something that a farmer who is about to do 10 acres is going to jump into happily, he would rather just wing it, put in generic fertilizer and hope for the best rather than do soil tests. Tests will tell you how to plan, how much fertilizer you should put in and so on.
Interesting. What challenge would you like to discuss next?
So who needs to be educated, is it the farmers themselves?
Everybody needs to be educated, the farmers need to be educated, people who claim to want to be middlemen need to be educated, and the off-takers need to be educated. Everybody needs education at almost a basic level about standards, quality, production cycles, the risks. Simple education
Most of the aid agencies, grant foundations expend resources to educate farmers and there's a lot of effort to empower people through education in business, record keeping, best practices. Regardless of this, there is still a huge gap. The benefits must be highlighted and experienced, it goes hand in hand with adoption of what has been taught.
We need to take a very structured and practical approach. We can’t just educate people and leave them to their own devices. We need to handhold them right from the beginning. I'll give you a personal example regarding a project I’m involved in. We have up to 10,000 acres of land and what we do is, we bring in smallholder farmers and ask them to farm using their own methods, then side by side we farm using our own methods and we compare the harvests and yield at the end of the day and see whose is better. When the farmers see that our own methods produce better yields, they are more inclined to adopt those methods. If the case is otherwise, we learn from them and modify our processes for best practice.
In an ideal situation, what would things look like? Especially with the farmers?
Let me paint a scenario of past market systems and the way they were developed initially:
You have one farmer, he does well, he has good yield, realises there are economies of scale to be taken advantage of by increasing scale, so he decides to partner with another farmer. they share common practices and soon partner with other farmers forming a group and that’s when you start to call them a co-operative.
When a co-operative gets big enough, they grow and become an entity and create more cooperatives. They then decide on common goals such as the types of crops they grow, whether or not they want to engage in processing, value addition and so on. At this point, they can create a board/steering team to make decisions on their behalf. The boards of various co-operatives come together and form a market board.
The market board then begins to set directions for planting and cultivating seasons. They put resources together and start to take action such as buying inputs in bulk and distributing to members, buying up and storing harvest on behalf of members, setting market prices, liaising with the government on behalf of members and even sometimes borrowing on behalf of the members.
When the board becomes that big, it becomes a market maker and elevates to become a participant in the commodities exchange. That's the natural flow. Nigeria was on that path up until the boards where dissolved several years ago which cast everybody back into a single farmer hood. They are now commonly called small holder farmers.
What do we need to do to get back to the way things were and even beyond?
Educate, educate, educate as I mentioned earlier. We need to go back to basics and even start from the school level. Teach people the practicalities of Agribusiness in reality. Re-establish agric. Development programs and focus of production competence at each state level. Simultaneously adopt modern methods of farming and technologies. Farming estates and encouragement of large scale commercial agriculture which engages all stakeholders.