Talking Realistically About Agriculture

We do like our booms. We fondly remember how we came upon sudden wealth in
the 1970s. So when we talk about Agriculture being the next big thing, we have
visions of an agriculture boom catapulting us to instant wealth like during the
70s.
Reality check: it doesnt work that way.
Rudimentary subsistence farming is the quickest guaranteed way to long-term
poverty (please ask Okada riders who leave their farms in millions to seek work
in towns like Lagos, Port Harcourt etc.). Modern agriculture, on the other hand, is
a capital intensive activity that requires a portfolio of deep skills like agronomy,
project management, agricultural economics and financing, mechanical and
chemical engineering, food processing etc. Modern agriculture also requires a lot
of critical infrastructure which we do not presently have.
Modern agriculture is like modern industrial activity, and if a nation is not ready
for modern industrial activity, it is not ready for modern agriculture.
When the British came to Nigeria, they came with the intention of running a cash
crop economy, so they spent the first few decades building the railway network
and ports required to evacuate agricultural products. There is a lot of wishful
thinking around an instantaneous switch to agriculture in the wake of an oil
glut, but a lot of the critical infrastructure does not exist and will not conjure
itself by magic.
The easiest way to understand the challenges in agriculture is by looking at the
value chain, from the input providers, to the producers (farmers), to the
aggregators, to the processors, to the marketers and distributors.
Farming inputs like high quality seeds, farm mechanization and agricultural
extension services are extremely important. Inputs determine the quality of
harvest and farm revenues (low quality produce will be rejected by processors
who will opt for higher quality imports, e.g. fruit juice producers). Farm
mechanization results in significant productivity gains, but it is scandalous that
while a vibrant market for commercial tractors existed in the 1970s, it no longer
exists today.
The producer (or farmer) is the most important node in the agricultural value
chain. The small holder, with a few hectares under cultivation, rudimentary
cultivation practices, poor record keeping and access to finance, poor storage
and very cyclical cash flows, basically feeds Nigeria. More than 90% of all
agricultural production is from small holders.
If we want small holders to improve productivity and adopt more modern
agricultural methods, we need to understand their unique challenges. They need
financing for inputs and they do not have cash inflows till harvest period. Since
they lack proper storage facilities, they quickly have to sell off their produce,
usually at a discount to aggregators (who sometimes provide financing during
lean periods and often take advantage of them). For example, tomato farmers
have to sell off their produce within a few days or lose the entire harvest.
Commercial banks generally do not lend to smallholders because the risks are
high (what collateral can a vegetable farmer present to a bank and does he have

title deeds to his land?). Even if commercial banks were willing to lend to small
holders, the relatively high interest rates will make it almost impossible for most
to repay loans.
Emerging large and medium scale farmers make news headlines, but we must
remember that large scale commercial agriculture is relatively new and new
players have a learning curve to overcome before they settle on a sustainable
business model. Having said that, this class of players (they often process their
produce) has the potential to upgrade smallholder farmers through out grower
schemes.
The greatest value add along the agricultural value chain is in processing, but
processing is the most technology intensive activity in agriculture. It requires the
same inputs as modern industry such as electricity, machines, skills and fuel.
And these are currently in short supply.
Tomatoes rot within a few days, but processed tomato paste can last for several
months. For a tomato processor to be in business, he/she needs a steady supply
of fresh tomatoes of guaranteed quality, a sterile processing facility with access
to purified water, access to electricity or diesel etc. Since this is not easy to come
by in Nigeria, we end up importing most of our tomato paste.
There are other topics for discussion like enabling legislation, public or private
sector market boards, weather insurance and roads/rural infrastructure. These
cannot be covered in a single article, but the important learning point is that
agriculture will not fall on us like a boom from Heaven. It will require decades
of planning, investment and implementation.
Thankfully, the previous administration (anchored by Dr. Adesina, the Minister of
Agriculture) went a long way in articulating the way forward for agriculture in
Nigeria. I think we should build on that administrations vision.