Agriculture: Fertilisers and franchises put power in Nigerian farmers’ hands
One of the bright spots in an insipid cabinet is agriculture minister Akinwumi Adesina and his reform programme.
Formerly vice-president of the Alliance for a Green Revolution in Africa, Adesina has brought private sector thinking to meeting farmers’ basic needs.
The first strategy is to boost access to fertiliser.
A fertiliser subsidy already exists – but as with most subsidies in Nigeria, these benefits are captured by elites, and full-price fertiliser is resold onto the market.
The agriculture ministry tried a new system with privatised fertiliser company Notore in Taraba State, and 94 percent of farmers there now receive subsidised fertiliser, up from around 20 percent.
Kola Masha, who previously worked at a high-tech medical equipment manufacturer in the United States, now runs Doreo Partners, an impact investing firm that works for smallholders on several levels.
“The problem that small farmers face around the world is economies of scale,” he argues.
Masha takes inspiration from the revolution that occurred in US smallholder agriculture between 1910 and 1930, where small groups banded together.
His proposed solution is creating farm organisations using the franchise model.
“Franchising is one of the great ideas of the 20th century – it’s a business now worth $900bn around the world. It mitigates the risks involved in start up.”
Doreo Partners calls its franchising model Babban Gona (“great farmer” in Hausa). Farmers choose a leader and form a trust group, which will be the franchisee.
SEED TO MARKET
Doreo Partners gives them training, credit, seed and fertiliser then helps them to market the product.
“For example, we might structure an off-take agreement with a major processor, such as the one we have with Nestlé.
“And because we can control all inputs and techniques, the quality has impressed the Nestlé auditors,” explains Masha.
Indeed, agriculture has taken off in terms of investor interest. For the first time in a long time, there is strong leadership in government.
Central bank governor Lamido Sanusi has been a trailblazer, bringing Adesina into government and pushing through the Nigeria Incentive-Based Risk Management System for Agricultural Lending, a scheme for lenders that tries to address problems across the value chain.
“Although this does provide comfort for lenders by taking on some of their risk, it hasn’t helped bring down interest rates for farmers,” points out Jide Adedeji, managing director of Teragro, a company investing in juice concentrates.
Adesina is trying to boost local demand for produce by encouraging agro-processors like Teragro.
But, as the familiar refrain goes, manufacturing in Nigeria is hamstrung by poor infrastructure and dulling bureaucracy.
In an attempt to cut through this, the government is setting up staple-crop processing zones.
Nigeria’s cassava industry is growing after a decade of effort.
An attempt to force flour makers to include 10 percent cassava flour in all bread proved unsuccessful in 2011, as millers did not want to bear the extra costs involved in processing cassava.
Now, the government is offering companies a 12 percent tax rebate if they include cassava flour in their mix.
The incentives and higher levies on imported wheat have proved so successful that UTC, one of the biggest bakers, is now building a cassava flour plant.
In December 2012, Adesina was in Cairo to get $40m in financing from the African Export-Import Bank for a network of cassava-chip processing plants to produce feed for Chinese pig farmers.
President Goodluck Jonathan has also been engaged in cassava diplomacy.
At a banquet at Aso Rock in March 2012, Malawi’s President Joyce Banda was so impressed by the quality of the bread containing cassava flour that she arranged a special visit from Nigerian agronomists to Malawi●