Despite trillions in intervention funds, the agriculture sector’s GDP is declining.
Nigeria’s Agricultural sector GDP shrunk in the latest GDP data shared by the National Bureau of Statistics despite trillions spent on intervention funds over the years.
This is as Nigerians continue to grapple with higher food prices, and food shortages in most last of the country. The performance of the agricultural sector in the first quarter of the year reflects the current situation with food security across the country.
According to the Nigerian Bureau of Statistics (NBS), the agricultural sector contributed 21.07% to GDP in Q1.
In Q1, 2023, agriculture’s contribution to GDP stood at 21.66%, this rose to 26.11% in the last three months of the year. However, in the first quarter, the sector recorded a decline of 5.04% in its contribution to GDP.
The decline in the contribution of agriculture to GDP compounds the food inflation woes currently bedevilling the country.
In April, food inflation touched 40.5% as around 31 million Nigerians were projected to be food insecure during the lean season from June to August.
The sector’s real growth declined quarter-on-quarter from 2.10% in the fourth quarter to 0.18% in Q1, 2024.
The shrinking contribution of agriculture to GDP comes amidst trillions spent on intervention in the sector by the Central Bank of Nigeria in the past ten years. The apex bank in the past years initiated about eight agricultural intervention programs. They include;
- Accelerated Agricultural Development Scheme (AADS)
- Private Sector-Led Accelerated Agricultural Development Scheme (PAADS)
- Anchor Borrowers’ Program (ABP)
- Commercial Agriculture Credit Scheme (CACS)
- Maize Aggregation Scheme (MAS)
- National Food Security Program (NFSP)
- Paddy Aggregation Scheme (PAS)
- Rice Distribution Facility (RDF).
Under these programs, the CBN disbursed around N2.07 trillion to farmers and agricultural aggregators with the Anchor Borrowers Program consuming the largest at N1.12 trillion. However, around N737.33 billion remains unpaid in outstanding fees and total due and unpaid principal and interest reaching the staggering sum of N380.97 billion.
The CBN under the leadership of Mr. Yemi Cardoso halted intervention finance stating that it could not carry out such activities while lamenting the over N10 trillion spent on diverse interventions.
Expert’s opinion
Speaking on the decline, the President of the All Farmers Association of Nigeria (AFAN), Arc. Kabir Ibrahim stated that the decline could be attributed to the dry season farming not taking off as it should be due to insecurity, high cost of inputs and other challenges faced by farmers noting significant activities only took place with wheat crop that thrives in temperate climate.
He stated, “Nigerian farming is highly rain-dependent, so the dry season farming did not really take place in earnest except for wheat farming. This is due to insecurity, high cost of inputs due to inflation and other challenges facing farmers”
When quizzed further on whether the decline in agriculture’s contribution to GDP is responsible for the current level of food inflation in the country, he disagreed stating that inflation is a global phenomenon referencing economic developments in Japan, Europe and the United States which are battling similar fate.
Food imports unlike to reduce food prices
On the proposed plans by the federal government to import food, especially rice, to stem the inflationary trend, Arc. Kabir stated that he is uncertain if such plans would work as food imports would require FX.
According to him, “Any solution to food inflation is allowable but can import really work? To me, it is not a well-thought-out policy. Take the bread industry for example, the major inputs such as wheat flour, sugar and others are all imported but have bread prices dropped?”
“For paddy rice, if you import it with a high FX rate and the miller has to calculate his power cost, staff, and profit, it might even be more expensive. The cheapest place to import rice from is India and they have a ban on rice exports for some time now”
Actions of the President to stem food inflation
President Tinubu declared a state of emergency on food insecurity weeks into his administration promising to direct savings from the fuel subsidy removal into the purchase of agricultural inputs as part of the immediate solution to the food crisis.
The administration also launched wheat farming where it supported farmers with critical inputs such as fertiliser and released grain from the national reserve to curb the shortfall. In the face of rising food prices, the Tinubu administration opened the grain reserve and is currently distributing rice and wheat across states in the country.
Furthermore, in the long term, the federal government has secured an agreement with a tractor manufacturer, John Deere to produce 2000 tractors annually in the next five years. This coupled with the distribution of about N100 billion worth of fertilisers to farmers is among the many efforts of the President Tinubu-led federal government in combating food insecurity.
The President had earlier ruled out food imports but considered it as a short-term solution to the food crisis.
Source: https://nairametrics.com/2024/06/07/despite-trillions-in-intervention-funds-agriculture-sector-gdp-is-shrinking/