Value-added agriculture scheme to expand across Nigeria

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Nigeria is taking its agricultural value-added programme nationwide after initial trials resulted in higher crop yields and increased efficiency.

On October 26 Vera Onyeaka-Onyilo, the knowledge management and communications advisor for the Value Chain Development Programme (VCDP), told local media the initiative would be rolled out across the rest of the country following the success of its pilot programme.

Established in 2015 by the federal government and the Italy-based International Fund for Agricultural Development (IFAD), and since joined by multinational agri-business firm Olam, the inaugural VCDP aimed to increase rice and cassava value chains across six states – Anambra, Benue, Ebonyi, Niger, Ogun and Taraba – by increasing private investment and public sector participation.

Through the initiative, Olam provides smallholder farms with 15% of inputs – such as feedstuffs and fertilisers – on credit, to be repaid with future sales. In return the company agrees to purchase 75% of paddy at market prices, with 25% to remain for local consumption.

The federal government offers grants on 50% of inputs for the first two years of the programme, while Olam has committed $57m towards infrastructure investment through the construction of a series of rice collection depots, expansion of milling capacity and improvement of logistics warehouses.

The project has been widely considered a success, with the number of farmers involved increasing from 30 in 2015 to 4978 in 2017, according to IFAD data. Meanwhile, the 150,000 tonnes of rice produced saved some $63.6m on imports, Onyeaka-Onyilo said, with the revenue generated helping to create an estimated 3800 jobs in local communities.

As a result, officials are now expanding the VCDP to all 36 states and the Federal Capital Territory, while they are also looking to deploy the programme to additional crops beyond rice and cassava.

TRIMING project seeks to improve irrigation

In addition to inputs and processing and storage infrastructure, the authorities are continuing to focus on another key constraint facing the agriculture sector – irrigation.

Only 1% of cropland in Nigeria is irrigated, according to the UN Food and Agriculture Organisation’s estimates. To increase that figure, the authorities, with the assistance of the World Bank, have launched the Transforming Irrigation Management in Nigeria (TRIMING) project.

The $560m initiative, which started in 2015 and closes in April 2022, is being rolled out in five states in the country’s north: Zamfara, Sokoto, Kano, Jigawa and Gombe.

In addition to improving irrigation and drainage services to boost crop yields, the project could allow for a steadier delivery of crops to downstream processors, reducing losses and maintaining a more even flow of supply to agri-business operators.

Given that much of Nigeria’s agriculture relies on rain-fed watering, rather than irrigation, the downstream sector can at times be overwhelmed by seasonal harvests coming in all at once, with raw product supply exceeding processing capacity.

The project also aims to add value by establishing a Farmers’ Management and Service Delivery Centre (FMSDCs) in each newly irrigated region.

The FMSDCs will equip farmers with the skills necessary to access market opportunities by providing technical assistance in the areas of accounting and financial management, and facilitating access to technologies, inputs and financial support.

Infrastructure, power among challenges for farmers

By focusing efforts up and down the production chain, and improving market linkages, the VCDP and TRIMING projects go some way to addressing key challenges inhibiting agricultural growth.

However, farmers also face other challenges, particularly from weak links along the agri-business logistics chain.

While the federal government has stepped up transport infrastructure investment in recent times – announcing a $41bn railway expansion plan in August 2017 and committing some N20bn ($55m) annually to boost highways, regional road links and multi-modal transport hubs – some growers in remote areas are still restricted by the poor standard of subsidiary roads.

With some transporters unwilling to risk damage to their vehicles from substandard roads, growers can experience difficulties in bringing their crops to market, weakening the supply-chain links to processors, and subsequently leading to produce losses.

To improve the situation, the government’s Economic Recovery and Growth Plan estimates the country will need $3trn in infrastructure investment over the next 30 years. To reach this target, the government is seeking to increase private sector investment in the transportation sector through public-private partnerships, infrastructure bonds, diaspora bonds and value-capture financing.

Another hurdle for the agri-business sector is the unreliable power supply in the country, which poses significant challenges for operators in terms of production and storage.

As a result of the limited grid supply, most processors install their own generational capacity, though input costs such as fuel add to overheads, which are then passed on to consumers. The Manufacturers Association of Nigeria last year estimated that manufacturers spent N126bn ($346.6m) annually generating their own power, a number that would have been much higher if the price of diesel had not been reduced by about 42% following deregulation.

Source Oxford Business Group

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