Millions of smallholder farmers in Nigeria are trapped in a cycle of debt as falling food prices squeeze their profits, making it harder for them to repay loans taken during the 2025 planting season.
Farmers’ profits are harmed by rising input costs following a severe crash in food prices, thus casting a cloud over farmers’ ability to recover their investments.
Several agricultural cooperatives have reported high rates of defaults in key agricultural-producing states, a situation that experts say signals increased risk in the agriculture sector.
Lots of farmers are in debt and are unable to pay back the loans extended to them by cooperatives and money deposit banks, Shehu Bello, national publicity secretary of the All Farmers Association of Nigeria (AFAN), said in a telephone response to questions.
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“About 500 of our members in Niger got loans under the Niger Foods initiative in the form of inputs last year, and none of them have been able to pay back,” Bello said, explaining that the situation will negatively impact food production this year, especially for grains.
Data from the National Bureau of Statistics (NBS) on the recent banking sector credit to the private sector shows that between 2023 and 2024, agriculture received an average of 2.13 percent of total credit.
Agriculture got 2.15 percent of bank credit in 2023, and in 2024, decreased to 2.11 percent. Still, these facilities mostly go to the ‘big corporate entities’ while the millions of smallholder farmers are left grappling for funds to survive.
The argument that agriculture is too risky has often been given by banks that avoid lending to primary producers. Not just smallholder farmers, but even those with sizable land holdings have difficulty getting finance from the banks.
Efforts to get comments from commercial banks on the issues did not bear fruit.
However, farmers have attributed the drop in food prices as the primary reason they are unable to repay the loans.
“The market prices of the produce crashed, and I couldn’t even recoup the money I invested, which is the reason I am unable to pay back the loan,” Musa Mohammed, a maize farmer in Kaduna, told BusinessDay.
With an average yield of 45 bags of 100kg per hectare, Mohammed said each bag needed to sell for about N44,578 for him to break even, considering the N2 million he invested to cultivate a hectare.
He noted that the market price of a 100kg bag of maize crashed to N22,000, resulting in a loss of N22, 577 per bag and cumulatively N1 million.
“How do I repay the N2 million?” he asked, noting that he has exhausted the loan money and has no means of paying back.
Mohammed Mogaji, a farmer in Niger State, noted that some cooperatives have resorted to using security operatives to forcibly recover loans from farmers, saying he is one of the farmers facing such threats.
“I have found myself in deep trouble, and I regretted taking the inputs,” he said.
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Food output seen dropping
The country is likely to see a drop in food production in 2026 and increased imports this year, as farmers battle rising input costs amid falling prices.
“Lots of farmers are not planting at the moment because most of them do not have the capital to do so. The market prices are not attractive either,” said Abiodun Olorundenro, managing partner of Prasinos Farms, from his Abeokuta Farm.
“The poverty rate in the rural areas is rising owing to these issues, as most of the population relies on agriculture for survival,” Olorundenro said.
He also noted that there might not be much credit extended to the sector in 2026, owing to the high rate of defaults recorded last year.
