Experts are seeking innovative ways of financing rural and subsistence agriculture to boost food production, develop agriculture and transform rural communities, DANIEL ESSIET reports.
Farmers in the rural areas are responsible for up to 70 percent of food production in most states. In recognition of this, many programmes have been developed to enable them grow food and feed more people. While efforts have been made to enable farmers acquire skills and improve on farming skills to improve farm production, organisations involved in micro credit provision are supporting them to improve their livelihood through expansion of capital.
Several farmers have borrowed money to expand their operations and the results are good returns to raise their families and had a good life.
One of such organisations is Farmers Development Union (FADU); an Ibadan-based agric micro credit cooperative. FADUis a pro-poor financial institution committed to the empowerment of farmers through access to micro credit.
Established in 1989, the organisation has been involved in projects aimed at building capacities for wealth creation among the enterprising poor and promoting sustainable livelihoods in marginal and vulnerable populations.
The major thrust of the organisation’s activities involves financial assistance to farmers, technical training to boost their skills and improve their production.
At the beginning, its major areas of concentration were Oyo, Ogun and Osun States, but it has now expanded to 29 states of the federation.
With a loan portfolio put at N357 million, the union has recorded an encouraging repayment rate of 98 per cent.
FADU has two groups of loans- one for individuals and the other for groups. But essentially the organisation accords more priority to group loans due to the ease of administration and repayment.
The approach has been profitable, self-sustainable, and very successful. This has helped it in achieving its social mission by obtaining very good results in terms of the extent, depth and quality of reach. Its major growth in points of service has been in the rural areas.
Its Programme Coordinator, Mr Victor Olowe said FADU has mobilised and financially assisted many rural groups. In addition, the organisation has built self-financed grassroots bodies. Indeed, FADU has shown that it is possible for an agric micro-credit cooperative union to provide credit services to a significant number of farmers and to mobilise a large amount of savings.
The success of FADU model has encouraged the growth of many more microfinance organisations and cooperative societies. Over the years, FADU and other cooperatives and micro-credit unions have demonstrated that farmers are viable financial-service customers.
One of the early strategies was lending to individuals. This has gradually changed because the cost of monitoring loans and enforcing repayments was high and most loans are now made to groups because the costs are lower when they are spread among groups rather than individuals.
Despite FADU’s achievements, its Programme Co-ordinator noted that there was still a long way to go to fill the demand-supply gap, especially in rural areas where delivering financial services presents particular challenges.
At the grassroots level, microfi-nance institutions (MFIs) are not expanding their reach, while commercial banks and other formal financial institutions are not moving into rural areas to reach farmers.
For experts, with the state of the economy, the need to improve investment in rural agriculture is increasing due to a rising population and changing dietary preferences of the growing middle class in the urban areas.
According to estimates, demand for food will increase by 70 per cent by 2050. At least $80 billion annually in investments is needed to meet this demand, most of which is expected to come from the government.
While groups, such as FADU have made efforts to improve the conditions of local farmers and groups, nationwide funding sources available to farmers are limited. Whereas financial institutions are making funds to other sectors of the economy, farmers still experience higher financial exclusion and are discriminated against when they apply for loans. Because of this, most farmers are trapped in a cycle of poverty and subsistence living.
Olowe said many local rural Nigerians, who engaged in farming, live in abject poverty and remain vulnerable. Since some 70 per cent of those in rural areas, engage in small-scale farming, he was of the opinion that the government needs to empower them to become drivers of economic growth and food security.
To achieve this, he said farmers require improved financing to help them transform their farms, their lives and their communities as well as boost the future of food security.
The Project Director of CAVA II, Prof. Kola Adebayo agrees with this position.
Though credit unions and some non-governmental organisations help farmers to obtain small loans, Adebayo observed that the funding level was still poor to spearhead agricultural transformation.
He urged the government to give enough allocation in the budget for agriculture that will boost farm growth and appeal to the rural farmers.
Such budgets, according to him, should consider irrigation projects, increasing investments in rural roads to help farmers get produce to market and ensure all the country’s villages had electricity.
Kola Adebayo referred to the commitment made by the African Heads of State to allocate at least 10 per cent of their respective national budgets to agriculture (Maputo Declaration). Unfortunately, he observed that Nigeria has not respected the pledge as there has been reduction in budgetary commitments to the agricultural sector.
While provision of affordable financial services to the rural population was critical in the development strategy, Adebayo counselled that government and the financial institutions partner with farmers’ organisations when disbursing money to them to reduce risks and defaults in repayment.
He urged funding agencies to commit to a concrete, measurable target for increasing agricultural productivity and to support a system of public score cards to maximise transparency for farmers organisations they support.
He called for the establishment of local banks and institutions to provide agricultural credit at grass root level and to encourage the cooperative societies’ structure in the country.
The Provost, Federal College of Agriculture, (FECA), Dr Samson Odedina urged the government, development agencies and other donors to develop a sound and sustainable agri/rural financial sector in the country.
Odedina sought more investments in the rural areas to give farmers a sustainable means of livelihood and increase employment opportunities. The ultimate goal, he maintained, is to improve the farmers’ productivity, quality and security of their produce.
