The Central Bank of Nigeria (CBN) and Bankers’ Committee established the Nigerian Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL) to help farmers get concessionary loans. In this interview with DANIEL ESSIET, Country Head, Solidaridad – Nigeria – an international Dutch development organisation, Alex Gbenga Akinbo, urges government to resuscitate state-owned agricultural development banks to make loans available to farmers.
Why is the financial system reform so important to agriculture?
The answer is simple. There is no farming without money. Money for farming not only means access to credit, but also access to other financial products and services. Providing credit access to farmers enables them to insure against risk, enabling them to save. Every farmer who wants to expand needs finance. It is still difficult for farmers to get credit because farming is considered a high risk activity. The importance of improving farmers’ access to financial services cannot be underestimated. Traditional financial institutions come with strings attached, taking away successful investment in small-scale sustainable farming. The rural poor have no easy access to loans and grants from commercial banks or financial structures because they lack collaterals and modern business plans. Providing sustainable financial services for agriculture continues to be a challenge in spite of millions of naira being spent to strengthen financial institutions to serve the sector. We need reforms because agriculture still receives a small share of total formal credit. We need a rollback of reforms and a return to active government’s intervention, including the resurrection of state-owned agricultural development banks and the reintroduction of interest rate ceilings on agricultural loans. No considerable success has been achieved by some microfinance institutions (MFIs) in providing sustainable microfinance services that contribute to resolving the agriculture credit problem, especially the rural poor. The banks limit their operations to areas with high population densities and farm loans usually represent a small share of their loan portfolios. The government needs to intervene in the financial market to induce financial institutions to increase the supply of and reduce the interest rates for agricultural loans. Special cheap lines of credit need to be provided to lenders, incentives given to open rural branches, and agricultural development banks created to serve the sector when banks and cooperatives fail to meet lending targets.
Financing agricultural research remains a challenge for international organisations, governments, the private sector, and other development partners. Have we made progress in these areas?
Agricultural research and development (R&D) is primarily funded by the governments and donors. Overall investment levels remain below the levels required to sustain viable agricultural R&D programmes that address current and future priorities. Mobilising domestic political support for agriculture, especially for agricultural R&D, has been difficult. One reason for this is the inherently long time lag between investing in research and attaining tangible benefits.
How do we address this?
The government should emphasise agricultural research and innovation for development.
What sort of changes have you seen during this year in the agriculture sector?
Looking at the past government’s policies in agriculture; Nigeria’s agricultural policy framework has gone through a number of evolutionary processes and fundamental changes that reflected in a historical perspective, the changing character of agricultural development problems and the roles, which different segments of the society were expected to play in tackling these problems. But in the main, the form and direction of agricultural policy were dictated by the philosophical stance of the government on the content of agricultural development and the role of the government in the development process. Succinctly put, one of the major constraints to agricultural policy effectiveness was that of policy instability. Over the years, the rate of turnover in agricultural policies had been high, with many policies formulated and scrapped in rapid succession. Again, this problem could be partly ascribed to political instability as every successive government tended to jettison most of its predecessor’s policies and programmes in the erroneous belief that a new government could only justify its existence or make its mark by adopting entirely new policies and programmes.
How has this affected cocoa?
The cocoa sector is fully liberalised and has no central coordination. Agricultural extension is very weak in most cocoa producing states. Farmers receive uncoordinated support from some states. The Nigerian Cocoa Development Committee (NCDC), populated by deputy chief executives of the 14 cocoa producing states, tried to stimulate the sector; they started well but the sector has become moribund. At the moment, the national research institutes seem to have limited resources to spread best practices in cocoa production, but this role has been augmented by Sustainable Tree Crops Programme (STCP), which has been active in Nigeria and has gained good reputation for supporting farmers to improve their yields. Aside from STCP, few other development initiatives have significant presence in the sector.
What is the way out?
Existing knowledge and experience of voluntary standards in cocoa (and other agricultural crops) is very low, so extensive advocacy and capacity building activities will require increasing the acceptance of norms for sustainable production and trade. Multinational cocoa and indigenous exporting trading companies in Nigeria may be the best channels into the cocoa sector transformation. The new agricultural policy of the Federal Government will herald a new policy direction through new policy strategies that will lay the foundation for sustained improvement in agricultural productivity and output. For example, the Cocoa Transformation Agenda of the Federal Government addresses a holistic array of challenges confronting the cocoa sector. The agenda would help to boost cocoa quality output through strategic interventions in the production, processing, storage and marketing of the beans. This will enhance the objective of building the technical capacity of the farmers and providing basic input needs of the small scale farmers in the upstream and downstream productivity for higher income, job and wealth creation and household food security.
How far has Nigeria gone with regards to expanding cocoa production?
As regards cocoa expansion, one has to look back to memory lane after the Nigerian cocoa economy witnessed a dramatic change, which was after the dissolution of the cocoa board in 1996. The liberalisation of the cocoa sector without a regulatory body resulted in sharp decline in cocoa production and the quality of cocoa beans. One of the objectives of resuscitating the cocoa sector is increasing cocoa production and farmers’ income and divercifi-cation of foreign exchange earnings. Therefore, cocoa intensification and rehabilitation is being advocated. This would not lead to wanton destruction of the forest and environmental degradation. Currently, Nigeria is the fourth largest world producer of cocoa and much can be done to change the position.
What are the challenges the country is facing in this direction?
The Nigerian cocoa sector is characterised by three major unsatisfactory conditions: very low yield of cocoa beans, poor quality and repressive labour issues. The average yield of 300-400kg per hectare compares unfavourably with the potential of up to 1000kg under good management and well over 1,500kg in new emerging cocoa agro systems in new emerging countries. These deplorable situations have been attributed to a number of factors, dominant among which are the following. The production system is characterised by small holder producers with average holdings of less than three hectares. This makes profes-sionalisation uneconomical. In addition, the nature of cocoa production does not easily lend itself to mechanisation or technological innovations. The farmers are typically illiterate. This makes training and adoption of new farming skills difficult. They have low agronomic skills, agro-inputs and the government extension services are grossly inadequate. Most of the trees are old and poor variety. The majority of the small scale farmers have not benefitted much from recent research on higher yielding varieties. Many of the farmers are largely dependent on the cocoa economy for survival, and replacement of the old trees with the new varieties has to be slow. There is increasing concern about biodiversity and food security in the cocoa communities. Efforts to increase cocoa production through expansion will lead to increasing deforestation and poor environmental stewardship. On the other hand, the monoculture production of cocoa coupled with low yield could give rise to abandonment of cocoa farms or conversion of the farms to more profitable crops. Social issues around poor labour relation between the farm owners and farm workers, inappropriate use of children in hazardous farm work are in practice in cocoa communities. There is also the issue of discrimination against women in terms of equal pay for work done. However, sustainable production practices through certification have the potential of tackling several of the above constraints.
In spite of research and awareness creation programmes, the agriculture sector is lagging behind. What do you think is responsible for this?
Nigeria faces a lot of problems with regard to cocoa production. First is the land tenure system. Land still belongs to communities despite the Federal Government’s Land Use Act that stipulates that land belongs to the government. Many serious or genuine farmers have no land to expand their cocoa farms. There is also the problem of low productivity as a result of depletion of soil fertility orchestrated by serious soil erosion, flooding and lack of appropriate fertiliser to augment the deficiencies. Attack and infestation by pests (insects and diseases), can cause loss of about 30-70 per cent of cocoa yield. Poor rural infrastructural facilities – good roads, water, light and recreational facilities to encourage young farmers to stay on the farm, is another factor. Others include poor access to credit facilities and unavailable input and where available, not at the reach of farmers, poor regulatory bodies to control the manufacture and importation of banned chemicals. This leads to serious effect on the environment and ill-health of the users and consumers of cocoa products.
Concerns have been expressed on negative reports in the media about the use of child labour in cocoa production. What is the situation now?
Child labour, if I may be right, I think is work that exploits a child by preventing him/her from realising his future potential. Child labour may appear in different forms but what we are emphasising is the worst form of child labour – which means as the work, which by its nature or the circumstances in which it is carried out, is likely to harm the health, safety or morals of a child. It has been defined to include all forms of slavery, child trafficking, child soldiers, commercial sexual exploitation, hazardous jobs and using him for illicit activities. Although it is not well pronounced in the agricultural sector, eliminating these worst forms of child labour should be a major concern to all. Solidaridad has recorded substantial success in using the platform of certification to address some of these issues.
You worked with the Cocoa Producers Alliance (COPAL) to spearhead a campaign for increased cocoa consumption in the sub-region. What have you achieved?
In the cocoa value-chain, we are involved in building the capacity of farmers through improved agronomical practices and to attain sustainable cocoa production, so that processors can have access to certified cocoa beans. This we achieved by encouraging processors to bring their cocoa producers together as farmer groups and we can help train them on sustainable production. Solidaridad had just trained over 62 Multi-trex (cocoa processor) staff, lead farmers and youths from Oyo, Ogun and Ondo states on sustainable practices and certification. Similar support would be extended to other cocoa processors in the country.
Due to growth limitations in cocoa supply in West Africa, the world market has diversified cocoa origins, considering logical sourcing alternatives. What does it portend for the sub region?
Of course other emerging cocoa producing countries such as Indonesia and Malaysia that are doing cocoa intensification would push West Africa back, unless there is serious intervention that would transform the cocoa sector.
The keys to food security are climate stabilisation, population stabilisation, dramatic rises in water productivity, soil conservation and afforestation. Are these issues going to determine our future?
Food security is a concept that sees the sustenance of food for man. The survival of man on earth depends solely on continuous food production with adequate security measures. But the ranging ecological fires such as massive erosion, deforestation, burning, leaching, pollution, increasing population pressure and desert encroachment with resultant low food production has drawn more attention to food security. In an environment where the system of food supply is not organised, hunger and famine will be rampant and frequent, leading to social, economic and political unrest. Take for example, the fall of General Niemeri of former Sudan – “the bread riot’’ led to his fall and attendant crises. For future stability, food supply throughout the year is a necessity for all groups of human beings. Therefore, there is need for the government’s intervention in terms of suitable policy measures and financing of research organisations for innovations on new production systems and minimising ecological disasters that would guarantee continuous food production without side effects on the producers, consumers and the environment.
People are migrating from one agricultural field to another. How adversely does it affect our agricultural field? What do you think is the reason behind it?
People see agriculture today as not sustainable because of the dwindling income from it and because it cannot meet their livelihood needs. The teeming youths are not interested in agriculture due to the absence of most social amenities, such as electricity, roads, pipe borne water, recreational facilities, health facilities, etc. These amenities, if available in rural communities, will induce unemployed younger ones to be engaged in agriculture and remain in farming communities. Price fluctuations in agricultural commodities, especially in cocoa which is major export earning, is a major factor that discourages the youth from cocoa farming. Lack of intra-family succession is gradually leading to a decline in cocoa production, as this leads to farm fragmentation after the death of family head and focus is given to pursuit of ‘better professions.’ The resultant effect is low crop production that cannot meet the need of the populace and food security problems.
What is the mission of Solidaridad in Nigeria?
Solidaridad is a Dutch international development organisation with over 30 years experience in sustainable value chain development. Solidaridad West Africa, has its regional expertise centre in Accra, Ghana and head office in Utrecht, Netherlands. The Nigeria office was opened in December 2010, but became operational in January 2011. Solidaridad’s mission is to support the sustainable and economic development of farmers and workers in West Africa and indeed Nigeria, and the sustainable environmental development of their production systems and the trade channels.
Solidaridad has been using the dynamics of voluntary standards to achieve these goals in Nigeria. With a strategic alliance with Utz Certified, Solidaridad has become the leading development organisation promoting and supported farmer to achieve certification in Nigeria. Solidaridad is also in the forefront of the Certification Capacity Enhancement, a project for the development of a common curricula for the multi-certification of farmers across three voluntary standards; Fair Trade, Utz Certified and Rainforest Alliance. In the coming years, Solidarida West Africa will focus on the scaling up of this curriculum, the embodiment of sustainable practices in the sector of economies of the major cocoa producing countries of the region. Look, the current global demands on cocoa trade place emphasis on the production and handling processes as well as emphasises on good agricultural, environmental and social practices. In order to ascertain the conformation to acceptable production standards, especially with relation to quality, companies are signing up to buying only cocoa, which comply with known standards, otherwise known as certified cocoa.
