Agric. production shortfalls drag down sector’s contribution to economic development

Onome Amuge

Once the glittering jewel of the Nigerian economy, the agricultural sector has been in a state of decline, threatening the livelihoods of many. Despite its vast potential, the sector has faced numerous challenges that have made it less attractive to investors and farmers alike as seen in recent performance data presented by the National Bureau of Statistic (NBS).

According to data from the NBS, investment in Nigeria’s agricultural sector declined by a staggering 94 per cent in the fourth quarter of 2023, marking the lowest level in eight years. The data from the NBS capital importation report shows that agriculture-related investments dropped to $42 million in the fourth quarter of 2023, compared to $7 billion in the same period of 2022.

The fourth quarter of 2023 witnessed a significant 90.9 percent decline in investment into the agricultural sector on a quarter-on-quarter basis. This was in stark contrast to the previous quarter, which saw $4.64 million invested in the sector.

The most recent GDP data presented by the NBS also indicated a plunge in the contribution of agriculture to the overall economy, which stood at 25.18 percent in 2023, down from 25.58 percent in 2022.

The NBS report partly read: “Four sub-activities make up the Agricultural sector: Crop Production, Livestock, Forestry and Fishing. The sector grew by 14.94% year-on-year in nominal terms in Q4 2023, showing a decrease of 3.74% points from the same quarter of 2022.

Looking at the preceding quarter’s growth rate of 11.06%, there was an increase of 3.88% points. Crop Production remained the major driver of the sector. This is evident as it accounts for 90.03% of the overall nominal value of the sector in the fourth quarter of 2023.

Quarter-on-quarter growth stood at 1.62% in the fourth quarter of 2023. Agriculture contributed 24.65% to nominal GDP in the fourth quarter of 2023. This figure was lower than the rate recorded in the fourth quarter of 2022 and lower than the third quarter of 2023 which recorded 24.90% and 26.36% respectively.”

The decline in GDP contribution further highlights the ongoing stagnation of the agric sector and its decreasing contribution to the overall economy. The declining performance has been attributed to various challenges facing the sector, including inadequate infrastructure, poor access to credit,low levels of investment, low adoption of technology and innovation, insecurity,environmental degradation, climate change, among others.

According to analysts, while the agriculture sector remains a vital source of income, employment for millions of Nigerians and the second largest contributor to the country’s aggregate GDP after the Services sector, its declining contribution to GDP is a cause for concern.

Jude Obi, president of the Association of Organic Agriculture Practitioners of Nigeria (AOAPN),stated that low production levels are a major concern for the agricultural sector. He noted that many farmers have left the industry due to a lack of support and incentives, causing production levels to decline. Obi also pointed out that the ongoing brain drain is exacerbating the problem, as many skilled workers in the sector have emigrated to other countries.

Obi emphasised the critical role played by smallholder farmers in the agricultural sector, noting that they are responsible for a significant portion of agricultural output. However, he outlined the challenges faced by smallholders, including a lack of access to inputs, credit, and appropriate technology. These challenges, according to Obi, are compounded by the rising costs of production inputs and low returns on investment.

The AOAPN president also noted that the heavy use of synthetic fertilisers has led to declining soil productivity, which has a negative impact on crop yields. He highlighted that the excessive use of synthetic fertilisers can cause a depletion of nutrients in the soil, leading to a decline in soil quality and fertility.

“Technically, production is declining, and output from production is not increasing. So even the people that are patient to produce because they don’t have an option, are not getting commensurate yield,” he explained.

Fisayo Kayode, a senior manager at Sahel Consulting Agriculture and Nutrition Limited, emphasised the long-standing nature of Nigeria’s slump in agricultural productivity and the lack of a sense of urgency in addressing the issue.

Kayode highlighted the alarming rate of food waste in Nigeria, which she attributed to poor logistics and infrastructure, such as a lack of proper aggregation, storage, and processing facilities. She argued that simply distributing fertilisers and seeds, as proposed in President Bola Tinubu’s policy initiatives, is not enough to solve the complex problems facing the agricultural sector.

“We need to think outside of the conventional ways that we have addressed food security in the past.

 We need to develop solutions that will create efficiency,” she said.

Kayode noted that SMEs and large businesses are making efforts to add value to raw materials sourced from local farmers, but they face a number of economic challenges. These challenges

include the high cost of infrastructure for aggregation and processing, as well as inadequate policies to support business growth. She also highlighted the issue of currency devaluation, which makes it difficult for businesses to access the funding they need to import the machinery and equipment required to add value to local produce. Kayode stressed the need for policy reforms and investments in infrastructure to support the growth of the agricultural sector and ensure that value addition takes place.

“If we want to address food security, we need to tackle these limitations head-on and support the local food producers through catalytic initiatives,” she added.

While some analysts have expressed optimism about the impact of policy initiatives such as the introduction of loans for farmers and the provision of farm inputs, others have expressed skepticism about their effectiveness. According to latter, previous administrations have introduced similar initiatives without producing significant results. They argue that this approach of introducing multiple initiatives without adequate evaluation and realignment is unlikely to produce significant changes. They also raised concerns about the potential  for these new initiatives to yield results similar to those of previous administrations, with big-ticket issues such as food security and farmer poverty remain unaddressed.

Razaq Fatai, Africa Policy Manager at the ONE Campaign, acknowledged the positive step taken by the government in declaring a state of emergency on food security. However, he emphasised the need for this declaration to be followed by tangible actions with clear timelines for implementation. He noted that the agricultural sector is plagued by many challenges, including insecurity, corruption, lack of access to finance, and a lack of access to technology. Fatai argued that the government needs to take a holistic approach to addressing these challenges if the state of emergency is to have any real impact.

Fatai noted that the immediate release of fertiliser and grains is a starting point and that most of the other proposed interventions in the action plan are existing solutions already known to Nigerians. He said the real challenge lies in the political will to translate the president’s objectives into actionable steps.

“We urgently need the federal government to outline a comprehensive approach and provide a timeline for delivering on its promises. Every passing day without concrete action leaves more people trapped in the vicious cycle of hunger and poverty,” he said.

To improve Nigeria’s agricultural productivity, stakeholders have called for a comprehensive sector model that addresses the multiple challenges facing the agricultural sector. This model would need to provide security for farmers and their lands while also providing access to technology-driven information and semi-automated farm equipment that can improve productivity per farmer and per hectare of farmland. The disbursement of funds,they advised, should be carried out through retail banking channels with robust systems for tracking and verifying the identities and

activity of both the lenders and the farmers. Stakeholders also called for increased accountability and transparency from all parties involved in the agricultural sector, including banks, monitoring institutions, and farmers.