Despite 2018 being a year that witnessed increase in financial interventions available to Nigerian farming community through the Anchors Borrowers Programme (ABP), there has not been a significant focus on bridging the mechanisation gap in agricultural processes, Taiwo Oyaniran, an associate director at PricewatersCooper (PwC), says.
The country’s mechanisation rate has been stagnant around 0.3 hp/ha compared to 2.6 or 8 in India or China, while the number of tractors in the country hovers around an estimated 22 million.
Ramping up of local production capacity has largely been hinged on expansion of cultivated areas, aiding a decline in the sector’s growth to 1.91 percent from 3.07 percent in Q3’17, but Oyaniran sees better results being achieved in terms of raising productivity, paring post-harvest loss, and scaling up farmer’s income through import substitution with mechanisation.
Government, he says has to find effective mechanisms to incentivise mechanisation for investors locally if Nigeria must lead a revolution against food importation.
“The government has to be able to say to investors that if you continue in business, you have my back and guarantee that you would be able to sell 1,000 of your tractors in a year. If an investor comes into that business and doesn’t sell more than five hundred he knows that he has recourse with the government. Those kinds of arrangement can make people to commit their investment,” Oyaniran said.
Speaking of discouraging industrial demand for agricultural produce while local harvest rot to lack of off-taking and uncompetitive pricing, the associate director canvasses for an enabling environment that reduces cost of production both for fixed overhead and indirect overhead costs, noting that issues around logistics and storage need to be addressed to limit impact on the unit cost of produce in Nigeria.
Although the tomato market currently appears a win-win for both consumers and producers, Sanni Yadakwari, secretary, Tomato Growers Association of Nigeria, said the industry continued to lose demand to importation, as major processors were inoperative.
Tomato and tomato paste is among the 41 items banned by Central Bank of Nigeria from accessing foreign exchange, but available data indicate industrial users still preferred importation of tomato concentrates to purchase of locally grown tomatoes for processing.
With production scale of 2.3 million tons as of 2016, Nigeria the 14th and 2nd largest producer in the world and Africa, was also the 13 and 3 largest importer of tomato paste. Processed tomato serves as an alternative to preservation and has been a major export commodity pushed in from the US, Italy and China, among others. Commercial users find it cheaper to processing local tomato fruits.
To minimise the trend, Oyaniran suggests that investors be encouraged towards backward integration. “It means that some things in the value chain needs to change and one of it is how do we preserve tomato output from the farmers up on to the manufacturing line and is converted to paste. The industrial users need to find a way of doing a bit of backward integration around making investments in large tomato plantation to feed their production,” he suggests.
