OBG talks to Akinwumi Adesina, Minister of Agriculture and Rural Development

Interview: Akinwumi Adesina

How can food price inflation and supply shortages be avoided in the short and medium terms?

AKINWUMI ADESINA: Import duties on select food items are part of Nigeria’s economic diversification strategy, given the country’s comparative advantages in agriculture. Currently, Nigeria is the largest rice importer in the world, spending N350bn ($2.2bn) on rice imports annually, even though we can produce rice all over the country. We are improving efficiency by planting new varieties of rice, leading to higher yields. Additionally, in 2012 government incentives encouraged the private sector to introduce 14 new rice mills, bringing total capacity of 240,000 tonnes. Today you can find local rice sold at a lower price than imported rice.

Similarly, Nigeria spends N635bn ($4bn) on wheat imports per year, but we could replace a portion of that wheat flour with cassava flour and save N252bn ($1.6bn) on wheat imports. The Nigerian private sector has already begun producing bread made of 20% cassava flour, which comes out almost 40% cheaper than 100% wheat bread. In December 2012 the private sector even began exporting this bread to Ghana and Benin. In both examples, import substitution is bringing money back into the local economy for the benefit of the farmers, the agro-processors and the communities.

How can issues of efficiency and transparency in land registration be addressed?

ADESINA: The agriculture sector only utilises 40% of Nigeria’s 84m ha of cultivable and arable land, and no more than 10% of this land use is optimised. Expanding the amount of land in use is key for investors and for sector growth. President Goodluck Jonathan has set up a commission to review land use policy in Nigeria to make it easier for private investors to access land. We are also prioritising the titling of property and lowering the cost of its registration, in addition to collecting, recording and digitising geographic information and storing it in a land bank, making it easier for investors to know how much land is currently available and where.

In developing policies for productive and sustainable land use we are thinking not only about the role of investors, but also about the role of communities. The preferred investment model is not a land grab, but rather an out-grower scheme whereby the community owns some equity in the investment. For example, the Dominion Farms investment in Taraba State, totalling $40m in commercial rice production, will cover 30,000 ha of land, 4000 ha of which is owned by Dominion and 26,000 ha by the community. This out-grower scheme has commercial farmers linked to a rice mill and sharing in the benefits of the investment.

Within the development plans, what measures are needed to protect small-scale farmers?

ADESINA: Two kinds of structural shifts are needed to increase productivity of small-scale farms in a more industrialised agricultural sector. First, establishing an assured market for smallholder farmers is key, as these producers are motivated by a guaranteed market and price when investing in productivity-enhancing technologies, inputs and storage facilities. Second, changing the labour composition will boost small-scale farms across the country. A new class of farmers – younger commercial farmers – must evolve to replace today’s rapidly aging farmers and supply the growing population’s demand for food. We have started a major effort to launch the “Nagropreneurs” initiative and create 760,000 young commercial farmers for Nigeria. The government intends to spend N36bn ($226.8m) to nurture a farming class that is more efficient, savvy and market-focused. The money will go towards access to land, working capital for mechanisation and training on technical and business management skills.

Both measures are key to establishing agriculture as an industry, and the perception is already taking hold. In just one year the sector attracted $8bn of private investment. Agriculture leaders are having real conversations with capital market players, and small-scale farming is integral to unlocking the sector’s potential.