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How Value Added Agriculture can Increase Export Competitiveness, Farmer’s Income in Nigeria

Today, it is important to build sustainable solutions to addressing food security and global environmental change. Many raw commodities have intrinsic value in their original state. The benefits of value addition in agriculture will transition to more an economically efficient, healthy, and fairer food system in Nigeria.

Agriculture employs the most people in the world. This economic sector is the main source of national income for most developing countries. Smallholder farming is crucial for producing food and sustaining millions of livelihoods in developing countries. More than 70 percent of the world’s food needs are met by small farmers, according to the Food and Agriculture Organization of the United Nations (FAO).

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The Nigeria economy depends heavily on the oil industry for its budgetary revenues, is predominantly still an agricultural society. Agriculture is broadly divided into four sectors in Nigeria crop production, fishing, livestock and forestry. The country leads in various types of agricultural production, such as palm oil, cocoa beans, pineapple, and sorghum. The National Bureau of Statistics estimates that 25% of the GDP of the Nigerian economy is composed of the agriculture sector (a total value of N4.575 trillion) and 70% of Nigeria’s labour force is employed in the agricultural sector. The country’s economic growth over the last five years has been driven by growth in agriculture, telecommunications, and services.

Agriculture Contributions to Nigerian Economy 2010 – 2020 (Q2) – Data

In Nigeria, the three major causes of foreign exchange scarcity are: declining crude oil revenue, lower foreign direct investment, FDI, and reduced remittances. The decline in crude oil prices has triggered conversations around the role of Agriculture in economic diversification in Nigeria. The agriculture sector needs to be re-mandated as an economic activity that has to generate jobs and incomes, while meeting the food and nutrition security of the country. This necessitates industrialisation of agriculture for its transformation into a mature economic segment. This can be realised by adopting secondary agriculture as it can create value, deliver value and capture value, which describe the basic tenets of any business.

Agricultural Sector Gross Domestic Product (GDP) in Nigeria Q1 2019 – Q4 2020

For more than 20 years, value-added per capita in agriculture has risen by less than 1 percent annually. It is estimated that Nigeria has lost USD 10 billion in annual export opportunity from groundnut, palm oil, cocoa and cotton alone due to a continuous decline in the production of those commodities. Food (crop) production increases have not kept pace with population growth, resulting in rising food imports and declining levels of national food self-sufficiency.

The agriculture sector is responsible for food production, which comprises of all forms of practices at the farm level, including processing, packaging, transportation, distribution and retailing. The country’s food economy requires massive investments to increase production and to create value addition across the most profitable segments of the value chain. Value chains work best when their actors cooperate to produce higher-quality products and generate more income for all participants along the chain, as opposed to the simpler kinds of value chains, in which producers and buyers exchange only price information often in an adversarial mode.

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The majority of agricultural produce in Nigeria is sold raw and at the farm. They may bring national prestige, but they require costly subsidies to survive and create little employment. The volume of manufactured and agricultural goods imported into the country accounted for 72.5 per cent of total imports into the country in 2020 while the share of manufactured goods to total exports was 7.7 per cent within the same year, according to research conducted by the Nigerian Investment Promotion Commission’s (NIPC) on investment opportunities across different sub-areas in manufacturing in the country.

Last year, Nigeria’s food processing sub-sector is responsible for at least half of all manufacturing jobs in the country and many of the jobs are in micro, small and medium-sized enterprises in the informal economy, according to the Food and Agriculture Organization of The United Nations (FAO). The emergence of the Nigerian economy from the recession in the fourth quarter of 2020, and the recent report that the economy continued to experience growth in the first quarter of 2021, were due to significant growth in the agricultural and manufacturing sectors.

Given the multiplier effects of the agricultural and manufacturing sectors, on growth, employment and wealth creation. It is important to bridge the gap between agriculture and manufacturing and by meeting the basic need of assured supply of healthy and affordable food to all people across the country via high connectivity both through the sea and air routes to reduce export costs.

While farmers put a lot of effort in their crops or livestock, they tend to get the least out of it when it comes to the market and it’s only through Value addition that this trend can be reversed. Value-added agriculture is a portfolio of agricultural practices that enable farmers to align with consumer preferences for agricultural or food products with form, space, time, identity, and quality characteristics that are not present in conventionally-produced raw agricultural commodities.Sometimes farmers get less price of a particular farm product due to its surplus production. This problem can be solved by the crop diversification, which creates an opportunity to earn more money from the different crops produce. Crop diversification and value addition are the two techniques for the profit maximization and nutritional security.

The value of a changed product is added value, such as processing wheat into flour. It is important to identify the value-added activities that will support the necessary investment in research, processing and marketing. The application of biotechnology in pre-harvest stage, the engineering of food from raw products to the consumers and the restructuring of the distribution system to and from the producer all provide opportunities for adding value.

Founder and CEO of Pricepally, Luther Lawoyin says, “The prices of food items will continue to rise until something is done at the infrastructural level.”

Lagos based Pricepally is a digital food cooperative that allows people to shop bulk items at deep discounts on the prices of food and daily needs, because it connects them directly with farmers, manufacturers and wholesalers.

“The rural to urban logistics companies have no structured information to convey goods, making intermediaries act at will with no understanding of connecting each stage smartly.”

Luther Lawoyin

Lawoyin said the end consumer also has “no idea” where the food they buy is coming from or who farmed it.“Overall, there is a lack of data, information and collaborations that can make this food value chain a lot more efficient than it currently is,” he added.

Most farm products lie in waste in remote areas and this is mostly because farmers encounter difficulty in transporting their farm produce to the available market to sell as there are no storage facilities to help preserve perishable produce from rotting. Inadequate market facilities and poor government regulations poses serious threats to farmers, where after harvesting they are unable to sell off their produce at good prices. Thereby, leading to massive post-harvest losses and food wastage which is entirely another challenging issue facing the agricultural economy.Accordingly, the provision of necessary facilities which include storage facility, and large markets will boost agriculture in Nigeria. For marketing to be efficient, transportation for moving the produce from the rural areas where they are produced to the urban areas must be in good shape.

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According to the Q1 2021 Report on Nigeria’s Gross Domestic Product, by the National Bureau of Statistics (NBS) report noted that in terms of contribution to aggregate GDP, the oil sector accounted for 9.25 per cent of aggregate real GDP in Q1 2021, while the non-oil sector accounted for 90.75 per cent of aggregate GDP in the first quarter of 2021. The growth in the non-oil sector was driven mainly by the Information and Communication Technology sector, while other drivers include Agriculture (Crop Production); Manufacturing (Food, Beverage and Tobacco); Real Estate; Construction and Human Health and Social Services.

However, technology has an important role to play in the agricultural sector. Especially since technologies are getting cheaper. Major technology innovations have emerged in the agricultural industry, including vertical farming, automation and robotics, precision agriculture and artificial intelligence, blockchain, cloud farming and so on. The use of modern technologies will improve logistics and strategies to curb losses at the post – harvest stage and fulfilling customers need will help generate better income for the Nigerian farmers and employment opportunities for all, as technology and logistics will not work in isolation without humans and investments.

The Founder and Chief Executive Officer of FarmKonnect Agribusiness Plc, Mr. Azeez Oluwole, stated that, “We need to develop agriculture sector. If we fail to do so, foreigners will come and do it, but they won’t create jobs for our children. To make agriculture very profitable for everyone, we must teach our people how to do agriculture in modern way.”

FarmKonnect is an Agribusiness Company that connects Stakeholders (Investors, Farmers, Consumers and Agro-Allied Producers) in agriculture, with a view to improving agricultural practices towards enhancement of food security.

Azeez said, the age long primitive approach to farming in Africa must give way progressively to a modern system because the primitive practice was no longer sustainable.

“Smart agriculture is simply using technology. You see, the human will always make mistakes and errors. When it comes to Agriculture, you need machines that will take all your instruction, you need censors, you need to use drones, satellite, to monitor your farm to have accurate information of what’s happening on the field right in your room, you can have good information of what’s happening on the field and you can take any decision and of course, you can always protect your farm.”

Azeez Oluwole

Azeez also identified the lack of agricultural data as a major bane of agriculture in Africa, which poses a serious challenge to food security on the continent.

“Policy makers and other stakeholders in the agricultural sector to adopt electronic data for the development of agriculture with a view to overcoming the palpable fear of food insecurity in Nigeria and the entire continent,” he added.

The key to success in value-added agriculture is developing a unique product that is demanded by consumers. Because many consumers increasingly have less time for preparing meals at home, many demand food products that are at least somewhat processed. However, many others are searching for fresh, local ingredients that they can include in their prepared dishes. The main point is that there are many consumers with many different preferences. Farmers will succeed if they are able to identify their preferences and provide products that meet their desires.

The country’s small farms produce 80 percent of the total food and 33 percent of this Nigerian land is under cultivation for this purpose. This is the leading African country in farming because it has the highest levels of productivity and profitability in this particular sector. The African Continental Free (AfCFTA) Trade Area aims to promote agricultural transformation and growth in Africa and contribute to food security, as well as improve competitiveness through regional agricultural value chains development and incentivize critical investments in production and marketing infrastructure. Nigeria should unleash its economic potential for inclusive growth and sustainable development through AfCFTA with a combined GDP of U$2. 5 trillion, the agreement will create a single African market of more than a billion consumers.

In Nigeria, crops and livestock have their ideal weather and seasons. Most farmers are still practicing rain fed agriculture, which renders her vulnerable to the adverse effects of climate change. There is variation in the trend pattern of rainfall in Nigeria. Temperature is not relatively constant either. Climate change can disrupt food availability, reduce access to food, and affect food quality. For instance, projected increases in temperatures, changes in precipitation patterns, changes in extreme weather events, and reductions in water availability may all result in reduced agricultural productivity.

For Olaniyan Abdulahi, a local farmer from Ibadan, says the late onset of rains and dry spells, rises in temperatures, heavy downpours and other unseasonable weather events  all potential consequences of climate change.

Meanwhile, in 2017, Nigeria government validated the Paris Agreement and has pledged to reduce its greenhouse gas emissions by 20% by 2030 with the condition of 45% of international support.Placing disincentives like a carbon tax on emission beyond the limits agreed at the Lima 2014 climate summit, deemphasizing the importance of crude oil in the Nigerian economy.


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