Stakeholders are canvassing for government’s extension of low interest loans to farmers as a replacement for the current dysfunctional fertiliser subsidy scheme to increase Agriculture productivity.
The removal of fertiliser subsidy, according to several stakeholders who spoke with BusinessDay, will consolidate on the sector’s growth, as crop production will see a significant boost.
“I support it, but they should mitigate it through interest on loans to (about) 5 percent. Then they can remove all other subsidies because most of these monies don’t get to the farmers,” Segun Adewumi, national president of Nigeria Cassava Growers Association (NCGA) tells BusinessDay.
The backlog of unpaid farm input subsidy debts which include fertilisers have been put at over N72 billion, a situation which has already constituted a threat to food security in Nigeria owing to the reluctance of many companies to continue supplying the product.
BusinessDay reported earlier that under the Growth Enhancement Support Scheme (GES) initiated by the previous administration of President Goodluck Jonathan, agro-allied contractors supplied fertilisers and seeds to farmers, Federal and State Government paid 25 percent each of the input subsidies operated under the agreement, while farmers bore the remaining 50 percent of the cost.
Adeola Elliot, chairman of the Agric Group at Lagos Chamber of Commerce and Industry, says, “The subsidy thing is corruption; that is the problem. For instance, if the price is reasonable; if the loan (being provided) is also reasonable; and the fertiliser is getting to you, why do you need subsidy?”
Removal of subsidy on fertilisers is projected to make the product more available to millions of farmers who have had to contend with corruption, bottlenecks in distribution, as well as supplies of fertiliser types that may not be compatible with their farm operations, thereby limiting productivity and profit margins.
Kayode Oyeleye, special adviser to the Minister of Agriculture and Rural Development, told BusinessDay that the removal of fertiliser subsidy is expected to be a gradual process, subject to the government providing an enabling environment for fertiliser companies to thrive, while farmers are more buoyant to purchase on their own.
Regardless the position of a not-so-immediate removal by the government, stakeholders in agriculture such as the All Farmers Association of Nigeria (AFAN), Nigeria Cassava Growers Association (NCGA), and the Agric Group at Lagos Chamber of Commerce and Industry (LCCI), to mention a few, have declared subsidy removal on fertiliser, describing it as long overdue and a potential catalyst for increased productivity if single digit interest rates are offered as palliatives.
“We are really in support,” says Femi Oke, chairman, All Farmers Association of Nigeria (AFAN). According to Oke, “the government does not need to subsidise everything. As farmers, let us fight for ourselves too, so we see what we can even generate locally for our crops to grow.”
While Nigeria’s GDP declined by 0.036 percent in Q1 2016, Agriculture was one of the performing sectors.
Data from the Nigerian Bureau of Statistics showed that in nominal terms, the sector grew by 14.15 percent year-on-year in Q1 2016.
This was higher than growth rates recorded in the corresponding quarter of 2015 and Q4 2015 by 6.71 percent and 4.65 percent respectively.
Growth in the sector was driven by output in Crop Production accounting for 83.67 percent of overall growth of the sector.
Agriculture contributed 19.17 percent to nominal GDP during the quarter under review.
Elliot Chairman of the Agric Group at LCCI expressed the view that government should ensure that the fertilisers get to the end users (farmers) and also facilitate the provision of loans at single digit interest rates.
Other stakeholders in Agriculture also share this view.
Bambo Ademiluyi, CEO of Quaint Agencies Limited which cultivates farmlands in Ife, Osun state, expressed scepticism that the removal of fertiliser subsidies may not augur well for farmers.
“But again, we want to look it at from the point of view that the subsidy has been grossly abused by politicians in the past, so, if you provide something and it’s not getting to the people that are supposed to get it, then you start thinking of removing it and providing that succour through other means,” Ademiluyi adds.
He further explains that the decision can potentially be of immense benefit to farmers “If government provides the succour through other means, other than the current scenario where the subsidy will go to people who are not agriculturists, to even start with.”
“People collect the fertilisers and now sell to the farmers; the real farmer is not really benefiting. So, while removal of subsidy is not desirable because it will increase the costs of inputs to the farmer, in this case it may be justifiable because in the past, we all know that the subsidy never got to the farmers, or hardly ever got to the farmers,” Ademiluyi said.
