The Nigerian agricultural sector contributes significantly to the country’s GDP. In the first quarter of 2021, the sector has contributed 22.35 percent of the total GDP, an increase by almost one percentage point compared to the same period of 2020.
Agriculture is a major economic activity for Nigeria and Nigerians. Despite the country’s huge dependence on crude oil for revenue, agriculture continues to be a major source of employment for the country’s young population.
BizWatch One on One Executive Talk interviewed the Co-founder and Chief Executive Officer of Farmcrowdy, Mr. Akindele Phillips, to discuss some of the challenges affecting the sector and while making some recommendations on ensuring food security.
What’s your take on the CBN’s announcement of its restriction of forex to importers of sugar and wheat?
Mr. Akindele: Usually, when similar tax policies are put in place, it is to encourage production within the country. At the policy level, some of the ways to encourage local production or discourage importation is when a restriction is imposed or the import duty is raised.
So, what I see is, because I am not in government, I am looking at the good side to this kind of policy. What is going to happen is, it is going to encourage local production. So even, if scarcity arises at the initial moment, the farmers that can actually produce these commodities are encouraged to do so to earn more revenue.
On the bright side it is going to encourage the production of these commodities internally.
With this situation, do you think local farmers or the local agricultural sector across board is adequately equipped to handle the surge that will arise from this development?
Mr. Akindele: What usually happens with these policies is, it’s not usually done in silos or isolation, so before the policy is in place, probably at some time there has been some intentional government expenditure.
Case in point, maybe fertilizer that will be required or partnership with the private sector that will bring the inputs that will be required to scale the production of these commodities.
I am rest assured that there are different structures and processes put in place that will complement these efforts such that at the end of the day the increase in demand will be able to meet the capacity to supply internally.
Inflation has been rising for more than a year and food prices is one of the key contributory factors. What can be done to address the rising food prices?
Mr. Akindele: If we can solve the security problems, it should drop. So, I will give an example, last year, with the lockdown some of the core agricultural activities were involved in corporate options, some of the farmers could not go to the farm, and we all understand that significantly cultivation happens along the time we have the rain, which means, naturally, rainfall should start in a certain month during the course of the year, and the farmer has not prepared the land, causing the farmer to miss that season till the next year.
We do not have adequate irrigational farming landscape opportunities as much as we should as a country. Also, one of the major things then was the COVID-19 pandemic, which was beyond anyone’s control, which led to the lockdown. Now that the COVID-19 situation is being brought under control, insecurity is hindering farmers from going to their farms.
So, if the security issue can be solved then we will be able to address the availability of food, which informs the price at which the few ones available are being sold, which informs why we say there is inflation.
So, if we are looking at what I believe are low-hanging fruits, would be to solve the insecurity issues. Once we can solve that, a lot of people can go back to their farms and our youths can be encouraged to get more involved in the agriculture space.
With that which you just said, from your platform we see you have about 420,000 farmers. Do your partner farmers experience the same insecurity challenge? How is the insecurity situation impacting farmers on the Farmcrowdy platform and how is it affecting your business bottom line?
Mr. Akindele: Farmers on the Farmcrowdy platform are not isolated from it, unfortunately, in 2017, 2018, was our first experience, there was a particular farm up north, just at the time we concluded harvest the herdsmen issues and some of the farmers that worked with us were killed.
It affected our ability to meet the demands of our major offtakers, what this meant was, we started buying this scarce commodity at a higher price, informing how much the processors would, in turn, sell the final goods to the end consumers.
So, they are exposed to the current situation that we have found ourselves in the country.
What are the opportunities for Nigerian farmers can find in the AfCFTA?
Mr. Akindele: Most definitely, there are certain commodities, crops that are best planted in Nigeria, all we need to do is identify these few ones and focus on them, create more and produce more of them, and sell. The immediate place to be able to sell would be Africa because it will be easier to sell across the continent before exporting outside of the continent. The opportunities are huge across the continent. I will believe there are more benefits with the agreement that we have in place across the continent than against.
You have spoken of the benefits in terms of exporting to other African countries, but of course, there are no benefits without threats. So locally, it means countries signed to the agreement will definitely send their products down here. How do you think this would impact the earnings of farmers?
Mr. Akindele: If we can identify the commodities that are best grown in Nigeria, for the other commodities, it might bring out a glut, because we are producing here. There is also this lowered wall whereby producers from the neighbouring countries can bring in the same commodities. In a country of over 200 million people, we still have food problems, right? So, I think this kind of issue will come up further over the years, but, as of now, we have a major food problem. We are not producing enough to feed us.
Don’t you think with Africa’s heavy dependence on importation, other countries outside the AfCFTA like China, France might exploit the gaps to smuggle their products into the Nigerian market, thereby harming local producers.
Mr. Akindele: What the government is already doing from the information I have is, there are certain commodities that the government is actively providing the support system, inputs, whether funding or direct inputs to increase production I will give you an example,
I know of maize and some other commodities, at the end of the day, the government ensures that once the farmers produce, they also key into offtakers readily waiting. At the end of the day, those producing are getting better financial returns for their produce, the government would through the existing arrangement with offtakers secure a ready market for the local producers, thereby eliminating the risk of product smuggling from foreign countries outside the AfCFTA.
Policies don’t operate in isolation; I know the government is actively ensuring that the impact that is being targeted is achieved.
In your assessment, do you think that the Nigerian government has been providing adequate support for the agricultural sector in ways that can ensure food security for the country?
Mr. Akindele: Adequate is a big word. Are they (government) supporting? Yes. I will also say, no matter how much the government put in place last year, COVID-19 happened and there was nothing anyone could do.
Even international bodies gave money, but you can only go to the farm when you know you won’t contract the virus.
So, last year was bad. This year, no matter how much the government is also providing, there is a security issue. So, there are structures, schemes, whether by the Central bank or the Ministry of Agriculture that we are aware of that are tailored with good intention and should actually help solve the food problem. Adequacy is a broad word, but, I know the government is really working hard to solve this food deficiency problem.
From the available data collected, could you share the farm produce that is most sought after on your platform?
Mr. Akindele: Soya beans and maize. We have huge demand for those. It is used as poultry feed.
Also, in terms of farming, what location(s) has the most activities on your platform?
Mr. Akindele: The north has more farming activities, that is because we do more of grains, our locations are Kano, Kaduna, Kebbi, and also in Ogun state, but we work more with farmers up north.
Farcrowdy provides opportunities for farmers and for investors, looking at your activities, how has the journey been since you started to where you are presently? Also, what is your projection in terms of opportunities that exist in the sector that Farmcrowdy can fill in order to enhance value creation?
Mr. Akinjide: I will start from the investors’ side, when we started, we started with solving the food problem. At the time we were birthing the idea, we started in 2016, the executive chairman had the idea from 2015.
Also, the government was saying, there is this potential food deficiency problem we need to start solving.
The way to solving it when we started brainstorming were four things. We have more farmers than any class of industry, more individuals are involved in agriculture one way or the other, agriculture is the biggest employer of labour, both in the formal and informal sectors.
So, to increase food production, we started giving access to funding so they can produce more, access to viable inputs, modern farming knowledge, or good agronomical practices, and finally, reduce post-harvest losses by helping farmers have access to superior markets.
When we started, the low-hanging fruit was the funding gap and because many farmers do not have the required collateral nor did they financial historical record to approach a bank to apply for a loan.
Farmcrowdy reached out to the public to assist farmers, hence the crowdfunding which we did for three years, and then we had all the learnings, then got involved with cooperatives.
Now, what we have done is this, in those three years, we were only able to work at the maximum point with 50,000 farmers because we were very involved in it from end to end, especially the core production.
So, we asked how can we really solve the food problem, you can only solve it when you work with more participants along the food value chain, hence why we pivoted from focusing on only providing funds, we still do that but through HNIs, agencies ad governments.
We partner with governments to get funds available to the right farmers. We have the opportunity to work with more people, so it is either you want funding or you want to buy input from us, we can help farmers source at a discounted price because we have the numbers. If you produce through us and you want to sell, you can sell through us to the processing organization and offtakers.
That made us jump from about 50,000 value chain participants last year to the ability to work with over 420,000 participants as of 2021. Our plan is to fulfill this calling to be able to work with more next year, we have a target of 1.5 million food value chain participants.
So, whether you are an input producer or farming (core production) or a middle man or processor, we can work with a gamut of individuals that play along the entire food value chain. It is exciting for us because we can actually fulfill what we are called to do while also obviously ensuring that we are a sustainable business and making some money across this food value chain.
Would you consider attaining food security in Nigeria, a myth, a reality, or a work in progress? And for whichever one how can food security be possible in Nigeria?
Mr. Akinjide: I believe it is work in progress, we still have a long way to go. If i would suggest to the authorities,
I know there was a policy years ago where everyone was encouraged to produce something they eat. So, I can imagine you probably have a small garden in your backyard.
The space can be used to produce vegetables such as bitter leaf that once in a while the lunch you prepare is made, thereby eliminating the need to buy from the market.