Nigeria Loses Three Trillion Naira Annually To Four Potential Agricultural Exports

Nigeria’s long era of boasts in an oil sector that accounts for over 70 percent of its total revenue has finally come to an end. Recent indicators show a country under immense financial duress due to an acute decline in its oil revenues in the face of an absurd population upsurge, coupled with a protracted debilitating debt condition.

The handlers of the federal economy are forced to revert to agriculture which unarguably remains the main source of livelihood for the majority of its people without access to the easy oil money misappropriated by political appointees, public servants and their private agents. 

The agricultural sector in Nigeria, in spite of its mainly menial manpower, obsolete methods and small business models still provide the main source of livelihood for most of the underserved Nigerians. The sector in its most underdeveloped form still holds the second-largest contribution of 21 percent to Nigeria’s GDP annually, trailing 25 percent from the industry sector.

However, in spite of this impressive agricultural output, especially against all the odds, the Food and Agriculture Organization of the United Nations (FAO) has stated that Nigeria as a country loses an estimated USD10 billion (over N3 Trillion) to export opportunities of groundnut, cocoa, cotton and palm oil every year.

While USD10 billion is only a fraction of the latest loan the federal government is soliciting and a very low bar for the various state governments to cross in their wild unbridled race for loans, it reveals Nigeria’s capacity for financial independence, food sufficiency, viable exports and positive balance of payment position.

While the FAO report estimates the country’s losses for only four cash crops, the conditions that devalue the economic potentials of these four crops typify the prevailing climate of misgovernance in the entire agricultural ecosystem and its consequences for a discounted national wealth.

Groundnut

Groundnut or peanut is an important oilseed and food crop. This plant is native to South America and has never been found uncultivated. The botanical name for groundnut, Arachis hypogaea Linn, is derived from two Greek words, Arachis meaning a legume and hypogaea meaning below ground, referring to the formation of pods in the soil. It is generally distributed in the tropical, sub-tropical and warm temperate zones. 

Among African countries, Egypt currently is the most efficient producer of groundnuts, with a yield of 2.7 tonnes per hectare (2.7t/ha), while Nigeria’s yield is 1.1t/ha. Nigeria, perhaps, owing to geographical size, cultivates the largest hectarage of groundnuts with 1,798 hectares.

Table 1: Groundnut (in-shell) area, yield and production in various developing countries in Africa

Source: FAOSTAT Database

The output of groundnut in the country has continued to fluctuate as seen in the chart below (2006 to 2017). This has inarguably affected the revenue generated from the export of the product in Nigeria.

Cocoa

Nigeria is the fourth leading exporter of cocoa in the world, after Côte d’Ivoire, Indonesia and Ghana. However, investments in the oil sector in the 1970s and 1980s saw a constant economic downturn and decline in cocoa production in the country. Cocoa production is still primarily managed by stallholders with low use of both inputs and product enhancing agricultural techniques. 

The decline in cocoa production in Nigeria is due mainly to inconsistencies in its cultivation by farmers, disease incidence, pest attack and poor agricultural mechanization. Furthermore, the ageing of cocoa trees also plays a role in the decrease in productivity. 60 percent of cocoa farms are over 40 years old, thus hampering productivity

Oil Palm and Cotton

Figures from 2006 to 2017 show that the output of Oil Palm and Cotton has declined considerably, especially for cotton production. That of oil palm(see charts below).

Although agriculture still remains the largest sector of the Nigerian economy, employing two-thirds of the entire labour force, the production hurdles have significantly stifled the performance of the sector. Over the past 20 years, value-added per capita in agriculture has risen by less than 1 percent annually. The chart below shows the value-added growth in US Dollars of agriculture in Nigeria.

Also, the chart below shows a negative GDP per capita growth rate in US Dollars. Generally, agricultural production increases have not kept pace with population growth, resulting in rising food imports and declining levels of national food self-sufficiency. The main factors undermining production include reliance on rainfed agriculture, small land holding, low quality agricultural inputs such as seedlings, fertilizer,  inefficient farming practices, weak agricultural extension system amongst others.

The potential contribution of these selected cash crops to the country’s declining revenues cannot be overemphasized. These (and other agricultural products in Nigeria) can assuredly serve as financial channels to reduce poverty, improve livelihoods of rural households and provide food security. Yet it is challenged by an uncertain policy environment and poor infrastructural development that limit market access, increase post-harvest losses and raise the cost of trade.

Strategic investment by both the public and private sector has the ability to further improve the output. Abundant interest from both foreign and domestic investors has at times been hampered by incoherent policies and weak implementation of the same. 

Thus, while public investments in infrastructure, research and provision of extension services is critical for the agricultural sector, the institution of an enabling macroeconomic environment for private investors in the farm and off-farm components of the sector will drive job creation faster as well turnover the stable financial dividends needed for the smooth economic transformation of a country with undoubted potential.