Agriculture: A Key to Sustainable Economic Growth in Nigeria Part III

BRIEF TRAJECTORY OF AGRICULTURAL POLICIES IN NIGERIA

In Nigeria, until the early 1970s, agriculture dominated the economy. But since then, oil has held the principal position consequently relegating agriculture to a secondary economic position. Though, considering the danger of relying on crude oil revenue to fund the economy, various policies and programmes were introduced to unleash the potentials of Nigerian agriculture which includes;

Operation Feed the Nation (OFN)

Green Revolution

National Food Acceleration Production Programme (NAFPP)

Directorate of Food, Road and Rural Infrastructure (DFRRI) among others. Obasanjo’s regime also introduced the National Cassava Initiative as an agricultural programme in 2004-2005. Similarly, Ex-President Yar Adua’s 7-point agenda also places emphasis on food security. This is in addition to Goodlucks’ Agricultural Transformation Programme. Despites these policies and programmes however, Nigeria could not effectively meet the domestic food requirements and export at quality levels to stimulate economic growth in the country. It was in view of this that a new Agriculture Promotion Policy (2016 – 2020) was developed. The declared aims of the policy are to:

• attain food security
• increase production and productivity
• generate employment and income, and
• expand exports and reduce food imports thereby freeing resources for critical infrastructure development and delivery of social services. In effect, the policy advocates and conceptualizes a transformation in agriculture that would ensure food security, the right to sustainable development for all and adaptation to the climate change challenges. The policy is also meant to stop Nigeria from food imports by boosting domestic food production.

THE ROLE OF MARKET AND NON-MARKET FORCES

Since independence, Nigeria has been well known for the significant amount of its exports of items like groundnuts, cocoa and oil palm products. A formal arrangement was made to market these exports globally. These were known as marketing boards. These boards were given charge to handle the supply chain and logistics of these items. After procuring them from the local farmers, they used to arrange for the export of these items as well as sell them domestically. It was a very well established system. Due to this, the board had become the main body as it helped fund the needs of the country significantly, through its system of revenue generation which proved to be very effective. The revenue was mostly generated by selling the procured agricultural produce domestically and through exports.

A widely accepted principle in economics states that “people respond to incentives” (Carbaugh, 2009). The existence of the marketing board acted as a chief incentive for key export commodity producers in early 1950s.

The Nigeria Cocoa Marketing Board was the first board that was setup in 1947. The other boards for crops like groundnut, seed cotton and palm produce were established two years later. Ojowu (Ode Ojowu is a Nigerian economics professor and a former Chief Executive of the National Planning Commission/ Chief Economic Adviser to the President of the Federal Republic of Nigeria between 2004 and 2005). He stated that these boards were, “nation-wide monopsonistic single-commodity marketing boards” (1987, p.253) that is only the board buys agricultural produce from the farmers. Besides the main purpose of procuring, grading, marketing arrangements and export of these crops, the board was also responsible for assisting the development of the Nigerian agricultural export industry “for the benefit and prosperity of the producers” (Ojowu, 1987, p.23).

In 1954, when Nigeria was to assume a federal status, the marketing boards were restructured into regional multi-commodity boards for the three regions; Northern, Western and Eastern. These regional boards were responsible for the procurement of major export crops within each region.

The boards were reorganized because they had become key sources of revenue for the regional governments. The boards were supervised by a central organization called the Nigerian Produce Marketing Company. The main responsibility of this board was to oversee the sales of Nigerian produce on the world market. Initially, the main aim of running these boards was “for the benefit and prosperity of the producers”, Carbaugh, (2009). But after the reorganization, the focus of these boards shifted to the regional governments (as a source of revenue generation) with greater control on crop exports restricted to each region.

The regional boards were highly criticised due to poor performance in the agricultural sector and who called? called for reforms to be made. This situation led the federal government to issue a major policy of reverting the

board back to their original purpose of operating “for the benefit and

prosperity of the producers” Ayoola, (2009). This transformation was achievable because of the increase in the price of crude oil in 1970s. The federal government redesigned the price-fixing policies to give the producer

per unit price for his agricultural produce, which was near to the price in the

world market.

In the 1960’s Nigeria’s main domestic product was agriculture. This sector provided the country with employment and foreign exchange earnings.

The agriculture sector never went away, it was just over taken by the oil boom that began in the 1970’s (National Bureau of Statistics, 2012).

Moreover, two more commodity marketing boards were setup to deal with the domestically consumed agricultural produce which at the time were grains, tuber and root crops. After two years, with the creation of more states in 1976, the marketing boards were modified to become nation-wide commodity boards. This step was taken to avoid the establishment of state

marketing boards.

The argument that Ojowu puts up is that new policies were made in haste which resulted in the benefits of the policies lasting only as long as the federal government was not caught in any financial crisis (1987).

In 1977-1978, a surplus in the petroleum market led to a fall in the price of crude oil by four percent. This resulted in a 25 percent decline in Nigerian petroleum exports leading to a decrease in federal revenues and revenues of the state governments as well (which had financially become dependent on the federal government) Diao, Hazell, & Thurlow, (2006).

As the fiscal function of the board was no longer active, the farmers did not get investment funds for their farms. At the same time, the inflation rate increased causing the cost of living to increase as well. The financial crisis made the critical decision of Nigeria’s federal government to be perceived as futile and unsuccessful.

According to Ojowu, the initiatives taken were well intended but were ‘myopic’. He opines that a thoroughly conducted research following a gradual scientific reform of the functions of the marketing board would have been much better. Issues like the improvement needs in farms and their potential impact on entities like government revenue could have been key elements of the research (1987).

In Ojowu’s view, the abolishment of the marketing board would have created a vacuum in the Nigerian economy’s system as no other private institution existed that could have dealt with the functions of export trade as the board did. His argument was based on the fact that without an independent institutional framework that was responsible for their appropriate functioning, the concept of supply and demand would become meaningless. He believes that “a premature commercialization of an economy without a well-defined production base will lead to stunted development of the economy, especially the agricultural sector” (1987, p.49).

He also warned the government that substituting the commodity marketing boards with the Nigerian Export Promotion Council will prove to be an ineffective move as there is hardly any connection between the Council of Nigerian Farmers and the Export Promotion Council. The Council of Nigerian Farmers is responsible for dealing with issues faced by small-scale farmers who produce most of the export and “non-traded” agricultural commodities (Ojowu, 1987).

Ojiowu further emphasized that the main purpose of the Nigerian Export Promotion Council (a group of exporters) is based on manufacturing and is concerned with making higher profits rather than creating employment. Therefore, the original purpose of the marketing board was to “to operate for the benefit and prosperity of the producers and the development of the areas of production” (Ojowu, 1987, p.14).

Mukhtar (1987) and Ojowu, O. & Mensah., S.N-A (1987) studied this topic comprehensively. While Mukhtar is of the opinion that the decline in the agricultural export is due to the inappropriate policies made by the marketing board, Ojowu insists that adjourning the board will only worsen the position of the Nigerian economy.

Mukhtar believes that most of the agricultural produce that was under the board’s direct control, recorded significantly high levels of production in the mid-sixties. The production levels of the commodities then declined between the years 1970 and 1980 specifically items like groundnuts and palm oil recorded the lowest outputs. As a result, the exports reduced to such an extent that there was then a need to import to fulfil the required demand (1987).

According to historical records, this decline in output took place during the era of the oil boom. From the analysis of the data that was gathered, it was found that a considerable shift had occurred from the agricultural sector to the industrial sector and from rural areas to urban areas.

Mukhtar observed in his study that the main cause of the rise in the rural-urban migration was the boom of the construction and services industry.

The massive amount of spending on these industries, which were mostly located in urban areas, created a demand for an increased number of workers in the cities as well as an increase in wages.

Historically, from the moment the oil boom began there has been a steady decline in the market share of the economy that was held by agriculture. In the 1960’s the contribution to the gross national product was 60 percent. In the 1970’s this declined to 49 percent and by the 1980’s it had declined to 22 percent. This segment of Nigeria’s economy had been largely ignored in favour of the oil and gas industry along with mistakes in economic policies in terms of pricing and trade and exchange rates (National Bureau of Statistics, 2012).

This clearly indicates that the shift from rural to urban areas is responsible for the decrease in production. Mukhtar also showed that the main reason for international trade to turn against Nigeria was a low supply of agricultural produce with a relatively high demand. International buyers therefore, started searching elsewhere for the products. According to Mukhtar, if the policies made by the marketing board were strong enough, agriculture could have been sustained (1987), but in Ojowu’s view, elimination of the board could have worsened the situation (1987).

The marketing board and its faulty policies are largely blamed for the decline in Nigeria’s agricultural export. The board is held responsible for making the export market unprofitable and hence, seem unattractive to international buyers.

In addition, the vanishing of the groundnut crop had a significant impact on the downfall of Nigeria’s agricultural economy. The groundnut was a major cash crop of Nigeria and was cultivated mostly in the Northern areas of the country in Kano. In total, 70 percent of Nigeria’s total export earnings were attributed to the groundnut, it cake and its oil.

These pyramids disappeared, not due to a deliberate policy of the marketing board but because of an unavoidable outcome of those policies.

The board began a new kind of exploitation of excess labour. The exploitation increased to an extent that production and marketing of exports started being threatened (Mukhtar, 1987).

Source: A Webinar delivered by Mr. Anozie Christopher  0n 31st of October 2021 at Hezekiah Oluwasanmi Foundation Monthly Seminar (Part 3)

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