Business
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In order to encourage modern agricultural practice in Nigeria, President Goodluck Jonathan has directed the Central Bank of Nigeria to set aside N50 billion as an agricultural mechanisation intervention fund
| By Anayo Ezugwu | Sep. 15, 2014 @ 01:00 GMT |
FARMERS in Nigeria will now have an agricultural mechanisation intervention fund. The fund is designed to encourage the adoption of agricultural mechanisation in the country. Already, President Goodluck Jonathan has directed the Central Bank of Nigeria, CBN, to set aside N50 billion for this purpose. The president gave the directive while inaugurating a 100,000 metric tons silo as well as an agricultural equipment hiring enterprise in Abuja recently. He stated that expanding the country’s food storage capacity was necessary to reduce post-harvest losses.
President Jonathan also said that agricultural mecahnisation would ensure commercial production of agric produce in the country. “As part of our efforts to replace the hoes and cutlasses with modern agricultural equipment, I direct the Central Bank of Nigeria to set aside N50 billion mechanisation intervention fund. This support fund will allow and speed up the full establishment of 1200 private sector driven agricultural equipment hiring enterprises across all states of the federation,” he said.
The president said the silo, which has a capacity of 100,000 metric tons, was one of the several others that had been completed across the country. According to him, “the network of silos across the country will help provide stock for food and will also be leased to the private sector to use to store grains and support agricultural commodity exchange for Nigeria. He explained that his agricultural transformation agenda would support food production and, in turn, make Nigeria a player in global food and agricultural market.
“For too long, our farmers have depended on rudimentary tools such as hoes and cutlasses, the small scale farmers that produce 80 percent of our food have very little or no access to modern agricultural machinery. This low level of agricultural mechanisation limits the ability of our farmers to expand. The federal government is working to enable the private sector to be involved and rapidly raise the level of mechanisation in the country. The federal government will not buy and distribute tractors in partnership with the state; with what we are launching today, government is putting in place a new arrangement where private sector driven mechanisation services and programmes will be rolled out across Nigeria through a private-public partnership,” he said
The scheme, according to the president would offer a minimum of 6,000 units of tractors and 13,000 units of harvest and post-harvest equipment and establish 1,200 agricultural equipment hiring enterprises to provide mechanisation services to farmers. “The first phase which I’m commissioning today will make available immediately 500 units of tractors, 500 power tillers and harvest and post-harvest equipment which will be used to set up 118 agricultural equipment hiring enterprises across the country. The federal government, through the ministry of agriculture and rural development, has made available N4.5 billion through the Bank of Agriculture. The financing arrangement requests the government to provide 35 percent of the loan, Bank of Agriculture to finance 35 percent, the agro machinery vendors to provide 10 percent and the service provider operators will provide 25 percent equity to uptake the agricultural equipment hiring enterprises.”
Akinwumi Adesina, minister of agriculture and rural development, in his remark, said Nigeria’s food import bill has declined from N1.9 trillion in 2009 to N684 billion by December 2013. He identified the challenges of agriculture in Nigeria as low mechanisation, adding that a farmer with access to a tractor would be able to cultivate 10 hectares per day compared to one hectare per day if it’s done manually.
Adesina also said that African farmer’s needed support just like the developed countries support their farmers with massive subsidies. Delivering a paper at the high Policy Dialogue on ‘Research to Feed Africa’ in Addis Abba, Ethiopia, he said while there has always been a debate on subsidies, his position “is that they are needed, especially in the early phases of agricultural transformations to ensure that the poor, especially women, and smallholders benefit from technical change.
“While developed countries support their farmers with massive subsidies, African farmers, who are poor, are barely supported. Lacking access to technologies and with limited financial resources, many do not take advantage of the benefits that new technologies can offer. There is no doubt that investing in agricultural research pays. The challenge is always how to ensure that poor farmers benefit from technical change. What is important is to develop ways of targeting support to reach farmers, while ensuring that the private sector, not the government, delivers farm inputs to farmers. This is what we did in Nigeria,” he said.
The minister noted that “public policies are needed to reduce adoption costs faced by farmers,” adding that when he was appointed minister, he met a system where the government, for decades, had been directly involved in procuring and distributing fertilizers to farmers. “The system was corrupt and benefited rent seekers, not smallholder farmers. We ended four decades of fertilizer sector corruption within 90 days and with it the era of government buying and distributing seeds, and replaced it with a private sector-driven system.”
He said with that the role of government shifted to providing targeted farm support to farmers for seeds and fertilizers via electronic coupons on mobile phones or “e-wallets”. “Between 2012 and 2014, a total of 14 million farmers received their subsidized farm inputs using electronic vouchers on their mobile phones to directly pay private sector input retailers. Dignity was returned to farmers. As farmers expressed their demand, the number of seed companies increased from 5 to 80 within three years.”
With the development, the minister noted that the financial markets took note and for the first time ever, banks began to lend to seed companies and agro dealers in Nigeria. “Bank lending to seed companies and agro dealers rose from $10 million in 2012 to $53 million by 2013, while bank lending to fertilizer companies rose from $100 million in 2012 to $500 million in 2013. Private sector input supply companies began to build their supply chains to reach farmers directly instead of supplying to the government, stimulating economic activity and creating jobs all across the seed and fertilizer sector value chains.”
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