Nigeria’s earnings from oil keep on tumbling, with the International Monetary Fund (IMF) predicting the price could go down to $20 per barrel this year. Agriculture experts are divided on how to redress the situation. To some, more money can come in through agro exports mix. But others argue that there are impediments to using such a step to improve the nation’s balance sheet, DANIEL ESSIET reports.
The falling oil price is affecting the nation’s export revenues significantly. For the most part of last year, nothing much came from oil to reduce budget deficits, increase investments, and build foreign exchange reserves. This, to experts, signals the need for greater diversification of the exports mix.
At present, oil accounts for 70 per cent of foreign exchange earnings while agriculture and other resource sectors together account for as much as 35 percent. But this, according to experts, has to change in the face of the impending crisis in the oil market and International Monetary Fund (IMF) forecasting the price could go down to $20 per a barrel next year. Expectedly, the government and investors must heed the warning.
Despite the concerns about the effect of slide in oil price on the economy, Cassava Adding Value to Africa (CAVA) Project Director, Prof Kola Adebayo, said the government should capitalise on the opportunities the revenue shift presents, to do something to improve the economic pulse by infusing the agric sector with a new commercial vibrancy to help increase foreign earnings.
Obviously to him, the agriculture is set to become increasingly relevant and important as it plays a bigger role in addressing food security issues and diversifying the economy.
Domestically, he sees agriculture helping the economy maintain and boost its high growth rates, creating more jobs, significantly reducing poverty, and growing enough cheap, nutritious food to feed the nation and export of surplus crops.
For all these to happen, according to him, structural changes are needed that are capable of helping to fuel agricultural productivity revolution by assisting farmers and companies to accomplish greater economies of scale, increase investment, and become more competitive.
With the slide in oil earning, trends indicate that the nation’s economic prospects are not strong as such the government must take steps to address the challenges. This, Adebayo noted, would entail lifting agro exports.
While price of oil is expected to nosedive to less than $20 a barrel, next year, to its price in 1999, grain and other agro commodities will soar on rising global demand. To him, agro exports will remain a primary means for the nation to earn the hard currency, if the government is ready to pursue export-led growth.
His concern, nevertheless, is overreliance on few primary commodities to generate export revenues. Traditionally, apart from crude oil, Nigeria makes money from exporting a few agro commodities such as cocoa beans, cashew nuts and cotton. For example, however, 90 per cent of the total income from cashew and cocoa and others, calculated as the average retail price of a pound of these commodities goes to consuming countries.
This clearly underscores the fact that continued dependence on the export of unprocessed soft commodities – as opposed to a focus on increased value addition – would likely adversely affect future growth. Besides, the sluggish demand for few primary agricultural commodities and the recurring conditions of boom and slump in their exports, Adebayo said would continue to create problems for few commodity-dependent economies such as Nigeria. In his view, the overall export performance of the nation is inevitably tied to trends and fluctuations in the revenues from such commodities. Consequently, he stressed the need for having more commodities in the nation’s export basket to deal with unstable prices that generate adverse short-term effects on export earnings. According to him, there are several key agro commodities export opportunities within reach of entrepreneurs in agribusinesses rather than dependence on single or a few commodity exports.
Investment in infrastructure, he noted, would help overcome the current challenges between farm-level production and downstream activities, such as processing and marketing. This, he added, also, would open the door to increasing the production of higher agricultural value-added products while continuing to produce popular commodities such as cocoa, cotton, livestock products, fresh vegetables and fruits.
There are other challenges to increasing the agro exports volume which include climate change, fast becoming a greater inhibitor of yields, as incidents of widespread droughts and floods play an ever-increasing role in crop choices and planting decisions of farmers.
Last year, for instance, farmers underlined the damage severe weather events inflicted upon the agriculture industry. Across, the North and Southwest parts of the country, farmers witnessed an increase in extreme weather, consistent with the climate change impacts predicted by scientists. There were remarkable changes in rainfall patterns, increase in storms, gales or high winds.
In an interview, Oyo State College of Agriculture and Technology, Provost Prof Gbemiga Adewale confirmed that farmers and farm businesses in the Southwest have actually been affected by severe weather events, reflected in low rainfall. The news came as a stark reminder that agriculture is on the front line of climate change impacts.
For Farmers Development Union (FADU) Programme Coordinator, Mr Victor Olowe, the financial and emotional cost that changing weather patterns had on farmers reinforced the need for the government to address the issue squarely if agriculture is to take a front seat in rearranging the nation’s foreign exchange earnings.
Consequently, farmers had presented to government several challenges they face, which include fiscal incentives that will enable farm businesses to manage volatility and promote capital investment. Though farmers have always battled with the weather when it comes to producing food, projections on climate change projections globally, portend that the battle is going to get more challenging.
Premier Seeds Limited Managing Director, Dr Matthew Omidiji, said the government must empower farmers to enable access to water adequately so they can prepare for times of drought. The farmers, he added, need to be trained to respond to the changes in the weather and longer-term climate that they are experiencing. This means the government must work with farmers to develop an ambitious food and farming strategy with substantial production potential for an increasingly uncertain future.
Omidiji said Nigeria needs a resilient agricultural sector to ensure secure, sustainable and affordable supply of food to its citizens.
He urged the government to ensure farmers that they have the financial security they need to carry on in what can be a difficult and unpredictable industry.
At a time weather-related events, geopolitical developments and market fluctuations that impact on agriculture are likely to be ever more common, he noted that farmers need to be assured they have the appropriate support to manage risk.
According to him, the reform in the sector carried out by the government should provide an opportunity for these issues to be addressed.
In some areas of the country, post-harvest losses run from 20 to 40 per cent for cereals and are higher for perishable products due to poor storage and other farm infrastructure. This point to the need for significant investment in infrastructure.
Omidiji believes farmers and agribusinesses can help the government increase foreign exchange earnings if they have access to more capital, electricity, better technology and irrigated land to grow high-value nutritious foods.
Natural Nutrient Limited Chief Executive Sola Bunmi Adeniyi said the two areas the economy has incurred high import bills were rice and poultry businesses.
To reduce this, Adeniyi urged the government to extend a stimulus package to rice and poultry farmers to boost their production capacity, to meet the demands of the domestic market.
In view of this, he said special support should be made available to these sectors of agriculture, to increase production, drastically reduce importation of those commodities, and create sufficient jobs for people who would be engaged in their production.
He said government should be committed to building the capacity of local industries to advance their production levels, to discourage over-reliance on importation of similar products at higher costs.
According to him, the nation spends millions of dollars on the importation of rice and poultry respectively, in spite of the capacity of the country to produce such products.
