Steps to self-sufficiency: The sector’s action plan aims for greater food security

Self-sufficiency is the over-arching theme of the action plan to revitalise the agricultural sector. Raising import tariffs on key staples such as rice and wheat is designed to boost domestic investment and production. Nigerian farmers and producers used to play an important role on the global stage, and Abuja hopes its new plan will put the sector on a secure footing for the future.

TOWARDS FOOD SECURITY: The government has set ambitious targets. In just four years it wants to create at least 3.5m jobs in the agribusiness sector. It expects to inject $2.2bn into the economy from efforts already under way in rice production and save a further $1.63m by promoting the substitution of cassava flour for wheat flour. The state would also like to see the efforts of farmers rewarded with up to $2bn in additional income. But food security is the ultimate goal, with domestic production of key staples to be raised by 20m tonnes per year, comprising an increase of 17m tonnes of cassava, 2m tonnes of rice and 1m tonnes of sorghum.

The first steps to fulfil this ambitious plan have already been taken. New levies were introduced that raised import duties to 100% for wheat flour and 20% for wheat grain in early July 2012. Brown rice will have a 30% import duty, while polished rice receives a 50% duty (by the end of 2012 this duty will be raised to 100%). At the same time, cassava flour production has been promoted by removing duties on imports of equipment related to cassava flour processing and blending.

DIRECT EFFORTS: Other components of the Agricultural Transformation Action Plan (ATAP), the guiding policy for the sector, include the deregulation of seeds and fertilisers, marketing reforms, improved financing methods and a new investment structure.

The state has taken itself out of the process of buying and selling fertilisers and seeds completely. Private agribusinesses will now assume this role, with the government subsidising 50% of the costs to local farmers in a 25:25 split between the federal and state authorities. Vouchers and mobile money schemes will be used for these transactions, targeting up to 5m farmers.

“Private banks will receive biometric data on the farmers in the scheme. The farmers receive free handsets and the federal/state subsidies will be deposited in any private bank. A code will be sent to the farmer’s mobile, which he will then take to the agro-dealers in seeds and fertilisers that will confirm his identity and that he has the funds,” Adetunji Adeleke Oredipe, the senior technical adviser to the minister of agriculture and rural development, told OBG. Besides the new scheme, the government is also planning to set up a Nigerian Seed Venture Capital Fund targeting an increase in hybrid seeds from a current level of around 8000 tonnes per year to 1m tonnes.

MARKETING & FINANCING: The government is also working to establish new private marketing firms to coordinate production, investment, standards and price stability on staple products. New financing methods will also be looked at under the ATAP. The Nigeria Incentive-Based Risk Management System for Agricultural Lending will disburse $500m to set up a risk-sharing mechanism, an insurance facility, technical assistance, an agricultural bank rating scheme and a bank incentive facility that encourages lending to the sector.

The final component is to establish staple crop processing zones (SCPZs) to attract private investors. The idea behind the SCPZs is to build close links between farmer cooperatives and food manufacturing plants in their local area to improve efficiency in production. Private firms will receive tax incentives to develop infrastructure in these zones, as well as further perks such as zero import tariffs on agricultural equipment.

While the ATAP provides a set of measures to bring about the self-sufficiency and food security the government seeks, significant challenges remain in providing the necessary infrastructure required to facilitate an efficient agricultural distribution network. The government acknowledges that the key to unlocking this potential lies in attracting and retaining private sector investment across the board – in seed production, marketing, financing and developing the SCPZs.

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The Report: Nigeria 2012

Agriculture chapter from The Report: Nigeria 2012

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