FG Budgets N3.4bn For Rice, Cotton Value Chain

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Rice, Cotton Value Chain: The federal government is planning to spend N3.47 billion on the development of value chain of rice and cotton – the two areas government said it is determined to attain self- sufficiency.

This figure is about N200 million less than what the government budgeted last year, according to the analysis of 2018 budget proposal.

Despite series of interventions by federal government, agriculture has failed to attract adequate private investments and generate decent job opportunities.

Dwindling fortune of value chain
In 2017, the federal government budgeted N3.63 billion in value development of rice and cotton.
The key area of agricultural development with the potentials to create millions of jobs is in the various crops value chain development, which the governments at all levels are paying little attention to.

Analysis of the 2018 estimates revealed that the federal government has proposed N24.9 billion on agriculture value chain development, about 14.7 percent reduction on what it budgeted last year.
In 2017, the total budget for agricultural value chain development was N29.2 billion.

Of the N24.9 billion value chain votes this year, only N3.47 billion was earmarked for rice and cotton against last year’s N3.63 billion, despite the government’s trumpeted commitment to the development of the two crops.

This year, the federal agriculture ministry earmarked N1.47 billion for development and promotion of cotton, against last year’s N1.62 billion.
The government earmarked N2.04 billion for rice value chain, compared to the N2.01 billion provided for the crop in 2017.

Data from the Federal Ministry of Agriculture and Rural Development shows country’s demand for rice stands at 6.3 million tons, while the supply is 2.3 million.

The ministry said the cotton demand is between 1-1.5 million tons while the supply is 0.2 million tons.
As of 2015, over 101 textile industries were closed and 121,000 jobs lost across the country, according to Dr Fatai Aremu of the Development Research and Policy Centre (dRPC).

He said 60 textile firms were closed in Lagos and 66,252 jobs lost; 19 companies shut down in Kano and 16,700 jobs lost; 8 firms were closed in Kaduna which rendered 18,750 workers jobless; while 19,300 jobs were lost due to the collapse of 18 factories across other locations in the country.Rice, Cotton Value Chain

Too little to make impact
This is coming at a time of the government’s much-trumpeted determination to move away from oil to agriculture as the mainstay of the economy.
This year, the federal government is planning to spend N172.78 billion, about two percent of the total estimates of N8.6 trillion, on agriculture and rural development.

Of this figure, N118.98 billion (68.86%) is earmarked for capital votes, while N53.81 billion (31.14%) is for recurrent expenses.

The 2018 federal agriculture budget is 27.48% higher than the 2017 budget. Capital expenditure got 69.48% increase, while recurrent estimates were jerked up by 14.64%.

Of the N7.3 trillion budgets for 2017, the federal government voted only N123 billion (1.6 percent) for agriculture. Salaries and overheads get N31.7 billion while the remaining N91.6 billion was left for capital projects.

The central government budget is slightly higher than the N75.8 billion (1.26 percent) spent on agriculture and rural development in 2016.

N29.6 billion of the amount was for bureaucratic expenses, leaving N46.17 billion for agric service.
The federal government has been allocating low figures to the sector since 2010. It budgeted 1.3 percent in 2010, 1.8 percent in 2011, 1.6 percent in 2012, 1.7 percent in 2013, 1.4 percent in 2014, 0.9 percent in 2015 and 1.2 percent in 2016.

Long walk to Maputo
This year’s agriculture budget, just like last year’s, is far below the 2003 AU-Maputo Declaration on Comprehensive Africa Agriculture Development Programme (CAADP) which Nigeria is a signatory, DrAremu said.

The Maputo declaration requires African countries to allocate at least 10 percent of their annual budgets to agriculture and achieve six percent annual growth in agricultural GDP.

Other signatories to the Maputo agreement such as Malawi are investing about 27 percent, Zambia, Burundi and Mali (10 percent); Niger (13 percent); and Sierra Leone (3 percent) in agriculture.

Poor value chain, few jobs
Agriculture has been contributing generously to the GDP. In 2012, the sector contributed 23.91 percent to the GDP, 23.33 percent (2013), 22.91 percent (2014), 23.11 percent (2015), and 24.43percent (2016).

But this didn’t translate to actual paid jobs, like other sectors, Dr Aremu said. He said though agric has contributed 49.1 percent of “main jobs,” it only created 0.9 percent “paid jobs.”

This contrasted with transportation and storage, which created 3.9 percent main jobs but provided 4.6 percent paid jobs because of the value addition components in that sector, according to data from National Bureau of Statistics Unemployment Survey 2014.

Although Nigeria is a major producer of most of the crops within the West Africa sub-region, its value chain development is far below that of Ghana, Kenya, Ethiopia and South Africa who are harvesting billions of dollars in the value chain sub-sector.

The value chain has the potentials for nurturing hundreds of cottage industries, which are key to developing economy like Nigeria.

Nigeria remains a producer of primary products and has an insignificant share of the global market even in the crops that she is the world largest producer of yams, cassava, and others.

Ghana, for instance, is the largest exporter of yam to the world market but it produces less than what one state produces in Nigeria.

The bulk of what is exported from Ghana comes from Nigeria, gaining billions of dollars from what Nigeria is producing through value addition.

Sorry story of cotton
Although the federal government during the last administration set up an N100 billion for cotton, Textile and Garment Development Scheme “managed by the Bank of Industry (BOI), to revitalize the CTG Industry along the entire value chain at an interest rate of 6 percent per annum with tenor up to five years, lack of sustainable value chain or the collapse of it also led to the collapse of cotton production.”

Many farmers are now leaving cotton for other crops, a situation that calls for concern, analysts said.
Similarly, a report by International Cotton Advisory Committee (ICAC) shows that Nigeria has 51 ginning companies but only 17 are fully operational with 33 percent ginning capacity utilization and approximately only 250, 000 cotton farmers.

Nigeria does not have any national policy that protects the cotton industries – looking at the entire value chain.

National President of the National Cotton Association of Nigeria (NACOTAN) Mr. Anibe Achimugu said, “with the amendment of Procurement Act for local content to be sourced first, we hope things will change. If the uniforms of our schools, army, navy, air force, immigration, customs, etc, were all sourced locally, many of the textiles industries would not have closed.”

For director general of the Nigerian Textile Manufacturers Association (NTMA), Hamma Kwajaffa, “the problem is actually smuggling. You know our dealers can go to China- and in China anything you ask for they can do it for you, and this ends up in Nigerian markets.”

More value for rice
Dr Aremu said the federal government’s Anchor Borrowers Programme though innovative, but it is difficult for new entrants, no inclusion clause and no clear synergy with Federal Ministry of Industry, Trade and Investment.

Dr Nyam Leo, former regional director of the Agricultural Transformation Agenda (ATA), Northwest zone, said due to lack of machinery, rice farmers lose huge parts of their harvests.

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For Aliyu Samaila, director of Agricultural Productivity, MARKETS II programme of USAID, the situation is improving.

“If you look at the Anchor Borrowers’ Programme which started with the rice value chain, it has almost tripled rice production in Nigeria,” he said.
Dr Aremu said wage employment is now a matter of national security and the government must be involved.

“It is therefore encouraging to hear that the Nigeria Institute of Legislative Studies and the Dutch Knowledge Platform for Inclusive Development (INCLUDE) in collaboration with the Partnership for Africa Social and Governance Research are working towards informing national policies on inclusive growth. Growth is inclusive is it creates jobs and improves wages for ordinary people,” he said.