Professor Danbala Danju, Director General, Bank of Agriculture (BOA) addressed a cross-section of journalists in Kaduna, where he spoke on plans by the Bank to ensure the country achieves self-sufficiency in rice production among other issues. Abdulgafar Alabelewe was there.
THE Anchor Rice Programme is the latest programme on Bank of Agriculture (BOA’s) table. What is it about and how will it affect Nigeria’s economy?
The Anchor Rice Borrowers’ Programme is aimed at boosting domestic production of rice. The country has been importing rice but because of the focus of the new administration, the Central Bank of Nigeria in collaboration with the BOA came up with the programme. We chose Kebbi as one of the pilot programmes because some of the commercial banks did not consider this profitable. The BOA is the best place to be because it is the specialist agricultural development bank which is over 42 years old and has more than 137 branches all over the 36 states of the federation.
So, we came into the programme with the aim of supporting farmers to boost domestic production of rice. Kebbi as a whole has about 75% farmers with about 98,000 hectares of land. Each farmer has a budget of about N210,000 per hectare disbursement, which is in two forms and largely they are given inputs like seeds, fertilizer, pumps and then they’re given about N49,000 as working capital, then labour for land preparation and day to day management of the rice production.
Now, not all the 75,000 farmers we targeted collected the average amount of N210,000 per hectare because some of them had their water pumps or other inputs. But on the average, each of the farmers was targeted to receive N210,000 in estimated cost of cultivation of a hectare of paddy during the dry season. Now, having expended nearly N12billion with the average productivity per hectare of 45 you could then multiply. We targeted to have more than 300,000 metric tons of rice being produced over the dry season period and then we now have plans. Because of the success of the pilot scheme in Kebbi, the Federal Government directed that we work closely with the CBN to target about 13 states in the anchor rice programme as well as in wheat production, tomato and other staple crops.
Primarily, for now the focus is on rice to help achieve the current objective of self-sufficiency in domestic rice production in about one to two years which President Muhammadu Buhari has promised the country. The BOA is the main implementing agency.
How do you recover the loan?
Now, on the issue of recovery, the farmers are just harvesting and we have set up machinery in conjunction with the Kebbi State government, about 73 collection centres have been identified along with our staff and supporting security agencies, traditional rulers we are targeting to recover 100 percent the amount we expended during the dry season.
You made mention that the programme is meant for small scale farmers, how do you ensure that the big time farmers do not hijack it?
What we have done is that, there is a farmers’ registration. All the farmers had to register with BOA. We have to collect their biometrics and in addition to that we issued them with BVN so that we now have the identity of the farmers. The target is for the small scale farmers who are an average hectare of one to a maximum of five hectares. This is what we have been doing and this is what we are going to do. There is a private company that is partnering with BOA to properly register and identify the farmers to avoid duplication.
For the large scale famers, we’re coming up with a special facility for them under a new arrangement for funding agriculture in our country. They have a different interest structure, it is a different instrument that we are using. Under the Anchor Borrowers’ Programme we are largely targeting the small holder farmers. Like I have said, there is a rigorous identification system which requires farmers to register with our branches, and they had to have BVN before they could be given the input in terms of seeds, fertilizers as well as working capital. Thus this far it has been quite successful that’s why we’re trying to replicate it in other parts of the country.
How has the programme being received in crises prone areas like the North-East and recently the Niger-Delta area?
You remember we did not start at once in all the states of the federation, we started in Kebbi and we sat down to review the lessons we learnt in Kebbi. We’re now strategising how to target 13 states of the federation with respect to rice. So, the lessons are very clear from Kebbi we need robust farmer identification. In the past, people will collect money and then divert it for other purposes. This time around we’re disbursing mainly in kind. We give farmers high quality seeds, pesticides, fertilizers and we also give them some kind of training to make sure they adopt the correct agronomic practices in order to have the expected yields.
Traditionally they used to have one ton of paddy per hectare but with the new high seed given to them as well as better agronomic practices they now could have five tons per hectare which is quite an improvement and they’re able to make lots of money. They can now pay us back and we could recycle to reach more farmers.
So, what we’ve started with is the pilot programme which is now going to be scaled-up in all the states of the federation that have comparative advantage in rice production.
You talked about measures to avoid diversion of funds, how do you prevent diversion of produce?
I think this is a very good question, like I said, in the past people would have been given N210,000 per hectare to go and buy your inputs, do what you want to do and then come back and pay. Now, under the current programme we don’t give farmers money. Before we give farmers money, we first of all have to identify who are the farmers. And once farmers are identified, they register with the bank and there’s a committee made up of our representative, farmers representatives represented by RIFAN (Rice Farmers Association of Nigeria), and the off-takers, so that we identify who is the farmer and the inputs. We’ve got quality inputs and other seeds company that supply farmers with high quality inputs and this way, we don’t give money, we give largely 4/5 of the money in kind, we give farmers the inputs they need and the inputs are of high quality from very high quality sources.
The only money we give them is largely about 1/5 of the amount, which is for land clearing, preparation, weeding and transport. And that amount of money is being given, the money is also trenched we don’t give all at a go. There are all kinds of stages. The land preparation stage and planting stage. Even the inputs we don’t give them all at a go. For instance, fertilizers or pesticides all of these are given at different stages in the production process. So, it’s a kind of controlled process we don’t simply distribute the money and inputs and so on. No, we kind of identify the different stages which are about three to four that we release the inputs to farmers.
How you curb diversion of produce?
The farmers are in clusters, and each of the clusters are attached to a particular off-taker. Now, whatever they produce they deliver to the off-takers, the off-takers will pay the farmers through us and on the basis of that, we take out the inputs cost that we expended to the farmer. Nonetheless, it is not watertight we’ve had report of side-selling where some of the farmers deliver a portion of the paddy to off-takers but they tried to sell to other buyers.
Now, that’s a small amount compared to others, and we should expect that because one of the issues in this kind of programme is that other buyers pay higher than the off-taker’s price. Because of the ban on importation of rice which is good for the farmers, it has created a lucrative opportunity for farmers now to have higher price for their paddy. Now that could also force tension between the off-takers and other buyers who may want to offer higher price than the off-takers.
But most of the off-takers have generally tried to increase the prices they offer to farmers in this way then you could see that the opportunities created by the Anchor Borrowers’ Pogramme should be sustained. We have heard like the Kebbi state government for instance the collection centres 73 in all allows farmers to sell at a much higher prices thereby eliminating some of the opportunities created by the gap between the off-takers price and what is being offered by other off-takers who buy the paddy from the farmers.
So, essentially we have in place a structure that is workable, but we also employ the services of security like the police as well as traditional rulers to ensure that farmers deliver the produce at the collection centres. We would want some enactment of laws probably to make sure that side selling is reduced to the barest minimum because with side selling, revenue to the government is also being undermined and if you like, the profitability of the programme is also being undermined. We better have a structured production system whereby farmers have guaranteed market and off-takers are guaranteed the produce so that the lending capacity is optimised.
Do you think this programme is sustainable?
Like I said, the sustainability of this programme first of all is in the module. For a programme to be sustainable it has to be financially profitable. Farmers in the past had no guaranteed source of credit, now if you’re registered with the BOA you’ll have the credit to produce your paddy. In the past, they had no guaranteed market, no off-takers. Now you’re registered, you have already made market and now, the ban on importation of rice makes it very lucrative for farmers.
We would hope that the Federal Government would sustain the ban on importation of rice because if you now open the gate to importation of cheaper subsidised rice from other economies that will undermine the profitability of existing rice mills and in turn the profitability of the out-growers. So, we hope that the issue of ban on importation of rice would be sustained and also the issue of exchange rate, curiously an overvalued exchange rate makes it cheaper to import rice but if we now allow for a more realistic pricing of foreign currency or I mean a more appropriate value for the Naira, it is good for farmers because instead of importing you will now be encouraged to produce more.
Besides, I think there is a question of infrastructure. As we’re producing rice currently the productivity must be enhanced, in this case more research in terms of output of the seeds that we need high yielding seed varieties of rice and we also need to provide the irrigation, transport infrastructure, especially the capacity existing rice mills need to be expanded and new ones established. If we are able to implement all these measures, I think not only will we be able to achieve domestic self-sufficiency but we will also be able to export rice to other countries in less than two years.
Assuming I approach your bank as a rice farmer, and at the end of the day you give me the loan and I refuse to go to farm and refuse to repay the loan, what will happen?
All the measures we’re taking require partnership with state governments and security agencies. It’s unlikely that a farmer that is given the inputs, that we know the land, we know they’re farmers would default. Put simply, the money is not given to them directly, we give the seeds and we don’t give them all of these at the same time. In other words, we’re assured that you’re farmer, you have a farmland and we’ve given you seeds. We’re giving you all of these inputs, in that case we know we can monitor where you are, therefore you can’t default. Besides, the possibility of default here is virtually negligible. What is most likely you can do is to sell and not to deliver to the off-takers. In which case we have your BVN, we have means to track all your activities and which means the bank will get its values from the farmers.
But more importantly, and this is what I think we’ll need your support this is the question of land bank which we’re trying to do. What we’re trying to say is that if we give you credit, give you these inputs, your land will be issued a title and BOA will collect as collateral the land title. We’re asking state governments to issue title to the farmers. That’s why this GPS partnership is not only do we give you BVN but also we get the GPS position of your land. Now, we’re asking state governors to give the farmers titles now these titles we’ll collect the certificates, and keep with the BOA such that if for any reason you try to default we can now say we have the collateral at hand. That way I think the bank asset will expand, but also we’ll kick-start another process which other countries like China, Thailand have gone far ahead of Nigeria, the issue of security for the credit you’re advanced.
Lastly, we believe millions of farmers in Nigeria are sitting on capital. If state governors and local government could issue land titles to them, we think this will go a long way in kick-starting the agriculture revolution in Nigeria.