|  By Anayo Ezugwu  |  Aug 7, 2017 @ 01:00 GMT  |

THE PricewaterhouseCoopers, PwC, has said that agriculture sector in Nigeria requires massive investments to increase production and to create value chain. It said Nigeria is a big producer of many agriculture commodities, but there is  greater need to increase production and value addition across key agriculture food products, achieve self-sufficiency and deepen diversification.

It stated that agriculture is Nigeria’s single largest economic sector. In 2016, agriculture accounted for 24.4 percent of Gross Domestic Product, GDP. The sector is highly concentrated on crop production, which accounts for 90 percent of output. Fishery, forestry, and livestock, account for the remaining 10 percent.

PwC, in its latest report entitled: “Transforming Nigeria’s Agricultural Value Chain,” noted that though agriculture makes up a sizeable portion of economic activities in Nigeria, the sector’s impact on government and export revenues is relatively small, accounting for only 4.8 percent of total foreign earnings in 2016. In spite of this, the county’s agricultural potential is high because Nigeria has 82 million hectares of arable land, and so far, only 34 million hectares have been cultivated.

According to the FAO, Nigeria is the sixth largest producer of cocoa globally with a production volume of 248,000 tonnes of cocoa beans. However, only 30 percent of the cocoa beans are processed, with the remaining exported. In 2014, processed cocoa generated US$ 144 million. Based on an extensive review of the cocoa value chain, we identify significant scope to increase production by at least 70 percent, driven by an increased supply of improved seedlings, pesticides and fertilisers.

According to PwC, with government’s renewed focus on diversification through import substitution, as well as Nigeria’s large and growing population, agriculture is increasingly becoming important as a source of consumer and industrial demand. “In the last five years, different administrations have focused on agriculture as a means to diversify the economy and several policies have been designed in this regard.

“In 2012, the Agricultural Transformation Agenda, ATA, was introduced to improve farmers’ income, increase food security, generate employment and transform the country to a leading player in the food market. The ATA is reported to have increased agriculture output by 11 percent to 202.9 million tonnes between 2011 and 2014. Also, the scheme is reported to have boosted commercial banks’ lending to agriculture from 0.1 percent in 2011 to 5 percent in 2014, and reduced the 2014 food import bill by N466 billion.

“More recently, the current administration launched the Agriculture Promotion Policy, APP, aimed at resolving food production shortages and improving output quality. In addition, the Economic Recovery and Growth Plan, ERGP, prioritises food security and aims to achieve self-sufficiency in tomato paste, rice and wheat, by 2017/2018, and 2019/2020 respectively. The ERGP projects that the value of agricultural production would increase by 31 percent to N21 trillion in 2022,” it said.

Despite these policy interventions, PwC stated that the agriculture sector is still largely underdeveloped, primarily because the focus is on production, rather than on enhancing value addition across value chain segments. For instance, it noted that analysis from cocoa barometer suggests that in the production of a bar of chocolate, a marginal 6.6 percent of the value addition is in the production, while the remaining is in the processing, marketing, and retail segments of the value chain.

“We expect this trend to be similar across most agricultural products in the country. However, Nigeria’s value chain is characterised by 80 percent small holder farmers and a few commercial processors plagued by inadequate inputs, obsolete technology, and poor financing. In Brazil, the improvement in the country’s agricultural value chain resulted in agribusiness generating 16 million new jobs in 2012 and accounting for 46.3 percent of exports in 2016.

“Also, Brazil has become a global producer of many agro processed commodities including orange juice, sugar and ethanol. Brazil’s agricultural value chain has developed because of the availability of improved seeds, improvement in soil fertility, increased adaptation to technology, and the support of domestic and international research institutions,” the report stated.

Agriculture was the mainstay of Nigeria’s economy before the discovery of crude oil. From 1960 to 1969, the sector accounted for an average of 57.0 percent of GDP and generated 64.5 percent of export earnings. From 1970 to late 2000s, the sector’s contribution to GDP and export earnings steadily declined, because Nigeria focus shifted to petroleum exploration. Over the past five years, the sector has contributed an average of 23.5 percent to GDP and generated 5.1 percent of export earnings.

The recent fall in crude oil prices has triggered conversations around the role of agriculture in economic diversification. Increase in yield per hectare, and land expansion, are two factors which determine growth in agriculture. In Nigeria, however, land expansion has been the primary driver of growth. Yield per hectare has been low, because of poor and limited farming inputs, such as seedlings, pesticides and fertilisers. Moving further down the value chain, processing and marketing activities have been plagued by poor infrastructure, low investment, and unfavourable government policies.