BusinessDay 13 Jul 2018

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Friday 13 July 2018 24 BUSINESS DAY FEATURE Stuck with ‘bad’ seeds: Nigerian farmers struggle in a cycle of poverty CALEB OJEWALE Rural farmers planting ford to purchase good seeds, as a result, resorting to the use of what was saved from their previous harvest. “It is not so much about the availability of seeds. The seed may be available but affordability is another issue. If something is available but you can’t afford it, you would want nothing to do with it,” said Hamza Ahmed Mahuta, a former key accounts manager at Syngenta, currently working as an agriculture consultant. Philip Ojo, director general of the National Agricultural Seed Council (NASC), in an exclusive interview with BusinessDay, said “Farm yield in Nigeria is dependent on numerous factors chief of which is the genetic ability of the seed as well as agronomic factors. “Furthermore, what comes to mind is how much of ‘seed’ farmers are using in Nigeria. The bulk of our crop production is still dependent use of farm saved seeds partly due to the lack of awareness on the need to use quality seeds. Over the years we have done a lot to educate our farmers on the need to drop their own saved seeds and use quality seeds purchased from reputable and approved sources. According to Ojo, NASC has also in collaboration with the National and International Agricultural Research Institutes “made effort to inject quality early generation seeds (Breeder and Foundation Seeds) to ensure that certified seeds available to farmers are of the best quality that are superior to their own saved seeds. The changes can be seen in the level of increase in the quantity of seeds produced over the years.” Rotimi Fashola, general manager, Elephant Group Plc, however posited that “improved seeds are not available in sufficient quantities because we are yet to fully change from subsistence farming to commercial farming. This is a process and it will take some time and persistence. The same for the seed quality. Therefore, more and more companies (private sector) will join seed production once its commercially viable.” “Most farmers still re-cycle their seeds,” Fashola said. It complements Mahuta’s position, when he also noted that “many farmers in Nigeria are truly peasant. If you look at their lives you will realise what they produce is hardly enough to last them two to three months. The remaining periods they have virtually nothing, not even to keep as seeds but to feed their families. And unfortunately, about 80 percent of primary production in Nigeria is in the hands of these peasants.” He further explained that “there is one thing about farmers; generally, our people resist change, particularly for something that is expensive. So, they may not leave what they are used to and go for an expensive one they don’t even know. So, the best way to get (good seeds) to the farmers is either donating to them or giving it to them at a subsidised rate. “This is because, by the time they try it and see the difference between it and what they are used to, they will certainly want to adopt it. That is how fertilizer was introduced to Nigerian farmers,” said Mahuta. Ojo, NASC’s DG, established that Nigeria officially has “about 157 seed companies already licensed with 92 others awaiting Ministerial or Board approval. An additional 63 companies are awaiting the recommendation of the National Committee on Seed Company accreditation.” Out of these, only about 10 are not indigenous companies; implying the bulk of seed companies in Nigeria are indigenous. However, the quality of seeds coming from these companies suggest their competencies, not generally, but individually, may be subject to scepticism. Getting good, quality seeds into Nigeria has not always been easy as it appeared government deemed it fit to give local companies the preference in production, however unpleasant the outcomes have been. Rutger Groot, chairman, East- West Seed Knowledge Transfer, and a member of the Supervisory Board EWS BV, said in an interview that “in the past, there were restrictions on import of seeds. It is still not very easy, but it is better now. Now we can get a few varieties of tomato into The average smallholder farmer in Nigeria is by every standard, considered poor. Their largely subsistent farming sees them toiling hard but with very little to show for it. Conversely, in other parts of the world, arduous work is complemented with innovations, particularly good seeds which ensure that farm yields are higher than average, and farmers in those places gradually break free from the cycle of poverty. As Nigeria’s agricultural development is increasingly becoming a subject of interest, it is attracting the attention of both local and foreign players who want to cash in on the renewed diversification rhetoric. However, if poor farm yield is what potential investors will either have to show for their investments, or perhaps, what limits them from getting enough raw materials for production, then the journey to agricultural development may be longer than thought. Frans Ojielu, global financial advisor, ICMG Commodities, wrote in an emailed note, that “the availability of quality seeds is critical to agricultural productivity. This is a critical input and all efforts must be on deck to ensure the availability. The yield per hectare is bolstered by the quality of seeds. The time to maturity is also affected by the types and quality of seeds used which directly affect the economics and cashflow available to agri-businesses. The importance of good seeds is important, not only for the economic wellbeing of the farmers, but also for food security. With an estimated $5 billion food import bill, better yields in Nigeria will imply less importation, while many industries which require agricultural raw materials, will also get the required inputs. However, the problem of seed in Nigeria is multifaceted, with two notable elements. The first borders on dubious seed dealers, who sell fake seeds, at times ordinary grains, to unsuspecting farmers as hybrid. This experience discourages many farmers who have used such seeds from making a repeat purchase. The second; most smallholder farmers (responsible for 80 percent of output) are too poor to afford good seeds. Chris Akor, an Oxford trained young Nigerian, who works in Lagos, decided to use part of his expansive compound in Sangotedo, at the outskirts of Ajah in Lagos for farming. Akor, being educated, decided to buy maize seeds from what ought to have been a reputable company, but he was soon to be disappointed. Two weeks after planting, some had germinated, others did not, and by the time the crops completed the 90 day cycle, he could only harvest about half of what he had cultivated. The quality of maize cobs was in his words, “another complete disaster”. However, unlike Akor, millions of smallholder farmers cannot even afthe country. When I was here last year, farmers were just astonished what new varieties can do instead of reusing seeds. “You see a lot of farmers in Nigeria keep seeds which they reuse; part of their last harvest saved as seed for the following year. But unknown to them, with every generation quality goes down. So if you just spend a little money on a bag of seeds, the quality will always be uniform and high level. This is something farmers have to learn,” said Groot. Lack of quality seeds which deters many farmers from making a purchase at all, sees several others falling victim to it, and losing their capital when yields are not commensurate with the investment made. Ojo, whose agency oversees monitoring seed production and distribution, said “Farmers’ productivity is greatly impacted by the sale and use of fake or adulterated seeds. Spurious seed dealers involved in the sale of adulterated seeds to unsuspecting farmers are a big challenge to the seed industry. “Their activities are a disservice to the nation, as they rob unsuspecting farmers of their increase in productivity and further make farmers to have a wrong impression of good, quality seeds.” Fashola, Elephant group’s general manager, also noted that for grains that are being repackaged and sold as seed, the industry has to be better “regulated by the National Seed Council by monitoring and policing the seed companies so that they adhere to the right process of seed production. Also, the seed certification system must be improved by committing more money and man-power to it.” The unavailability of good seeds can also be attributed in part to the Growth Enhancement Support (GES) programme introduced by the Federal Government in 2012, as part of measures to depoliticize the input sector by withdrawing the state from procurement of inputs and developing a private sector channel for input distribution. Since 2014, out of about N67 billion being owed an estimated network of 300 companies that participated in the scheme, N18 billion remained unpaid as at last month when BusinessDay spoke with Kabiru Fara, national chairman of the Agro Dealers’ Association. The impact has been felt throughout the country, and more so in the country’s northeast where farm productivity has nosedived. In the Seed Security Assessment in North Eastern States of Nigeria by the Food and Agriculture Organization (FAO) of the United Nations in 2016, it was stated that; the withdrawal of some private partners from the GES Scheme (a government farm input subsidy programme) led to reduction in quantity of certified seeds and fertilizers available at community level. Moreover, private seed companies reportedly shifted their interest to government and INGOs’ orders and not individual farmers. This was prompted by the comparatively low demand or adoption of adapted certified seeds by the individual farmers and the companies’ interest in prioritizing the few large orders from DSD providers. Some local grain markets were also disrupted, especially in the areas extensively affected by the insurgency. These markets had usually offered an alternative source of seed for poor farmers who needed to supplement their own saved seeds but couldn’t afford better yielding certified seeds. Seed Aid interventions were limited across the three states and largely targeted the internally displaced persons with access to farming land; not the poor farming households. Even before the GES scheme collapsed (more or less), the quality of seed supplies was in doubt, even though farmers ‘were still getting something’. Mahuta, formerly with Syngenta, revealed that “Once the idea of GESS was introduced, most of the senior civil servants registered seed companies.” “Seed companies are supposed to produce seeds but in actual sense what do we see, they go to the open market to buy grains, package them and supply to the areas they are meant to provide seeds to. So, that is another very big problem, in fact, that is why Syngenta had to go into rice seed production, because Syngenta had very good crop protection chemicals, but they discovered there were no good seeds available. So, for those chemicals to give desired effects, they needed to be applied on good seeds, and they discovered that not that there is no good seeds, but they are so limited in number.” Making a case for Soybean: High demand, abysmal yields “There is a small quarrel between the United States and China, soybeans and sorghum are part of items in dispute. The Chinese have a preference for the hybrid soybean Continues on page 26
Friday 13 July 2018 C002D5556 BUSINESS DAY 25 INTERVIEW ‘We have cases where landlords have asked tenants to stop paying rents’ Up to the end of the first half of this year, the real estate sector was still passing through challenging times. In this interview, FEMI AKINTUNDE, GMD, Alpha Mead Group, reviews activities and situations in the sector since the last quarter of 2017, noting that with falling demand, rising vacancy rate, especially in retail malls and high end residential houses, landlords and mall owners have been compelled to drop rents and offer concessions to maintain reasonable occupancy level. He also speaks on the impact of the 2018 budget on real estate sector. He speaks with CHUKA UROKO, Property Editor. Excerpts Despite the positive outlook that was predicted at the beginning of this year by analysts, the first half of the year has come and gone but the sector remains in recession even with the improvement in the wider economy. What is responsible for this? Real estate generally lags behind the key indicators of the economy and that is why it is called a laggard. There are slight indications that things are gradually coming back indirectly but we are not yet feeling it in real estate. The reason for this could be viewed from two angles, but primarily from finance angle. Real estate is a capital intensive venture. It is not recurrent or transactional as such. Decision on real estate is not short term. If you want to own a home, build an office complex or a retail mall, the decision is not one you just wake up and say you want to do. It cannot be conceived within the short period we have experienced recovery in the economy. Even if you have started planning or already on site, it takes a while for you to come up with the financial involvement and capital deployment. Real estate lifecycle comes in different phases— from conceptualization to planning, design, procurement and construction before you finally come to the ownership phase. That cycle, depending on where you were before the recession, to restart it takes a long time. You have to re-establish your position before the recession; that this was where you was and, based on the recovery, you have to determine if the impact of the recession has not shifted you backwards. If it has, then you have to recalibrate and find your way back to where you were before recession. So, I would say that for those reasons, it is not yet Uhuru for the real estate sector even after we have seen recovery. You have just said that real estate is not transactional; what do you mean by that? This does not mean you are buying something and reselling it. By this I mean something that is short term. Development plan is there. Bits and pieces of this are transactional. But in any development, you have to define the scope and review the design. Real estate is a unique asset class and we must recognize that. It is like an elephant; waking it up is a huge task. To move it forward from where you were before a stop requires a huge amount of effort. It is like restarting a manufacturing plant after you stopped operation for some time. Femi Akintunde This can take a week or two to check all the components, clean them up and get the machine running again. But, in spite of what you have just said, the property market is still running. Demand and supply are still happening. In measurable terms, what can you say about market transactions? I will speak on this from two angles—as a service provider and as a developer. From the beginning of the year till now, a couple of things have happened. First is that the economic impact of recession on the financial capabilities of customers is well pronounced. A lot of people have struggled to meet up with their service charge payment. Again, a lot of contracts have been renegotiated and this has negative impact. A lot of people have lost their jobs. Clients are now reducing the scope of what they are supposed to do because of lack of resources. Also the income generating capacity of a lot of individuals and corporate organizations have reduced. A key driver of service demand is traffic or usage. So, if one was receiving 100-200 customers before now and it is now reduced to 40, it follows that one won’t have enough resources to continue to maintain the facilities at the level where demand was placed originally. Let us look at market situation in terms of falling demand and rising vacancy level in residential houses Vacancy rate has gone up significantly because a lot of people have moved out of where they were living before the recession. They have adjusted their lifestyle. In terms of where we were before recession, the vacancy rate is about 20 percent. This 20 percent is just the average because occupancy level in some houses have reduced by 40-50 percent while some have not changed at all. Some of our corporate clients have changed office location. Some that were in two to three floors have now scaled down to one floor because they have sent away a good number of their staff due to reduced business activities. For retail, some retailers have had to move out of the malls completely. Some landlords have reduced rents. We have cases where landlords have asked tenants to stop paying rents altogether. Just pay the service charge to enable us maintain the mall. This is because there is a minimum level of occupancy you must be able to maintain to keep the anchor tenants and the mall active. There are all sorts of adjustments taking place. Where landlords used to ask for annual rents, they are now asking for quarterly payment. Even service charge has been affected. Cost of fund and cash flow to support businesses have also been affected. Last year, the federal government funded the budget about 80 percent from domestic debt. What that did was to crowd out the private sector. Banks were not lending to service providers and customers were not paying; many of them were defaulting. What happened was that service quality was affected in terms of response and the trickle-down effect on value chain. Service providers were joggling projects and rationing cash. Some customers were feeling the pain more than others because the sub-contractors under us were being owed and not all of them have the financial capacity to withstand that pressure. As it is now, it is a question of financial dynamism for various organizations to be able to cope and keep their head above water. Not long ago, the 2018 budget was signed into law by the president. The executive alleged that allocations to various items including infrastructure the national housing programme (NHP) were cut. How is this going to affect the housing sector? Mind you, we are dealing with a big economy. When we are analyzing a budget, we have to be very careful not to be sucked into a narrow perspective, otherwise we lose the main substance and the bigger impact of the compensations for different items. That the allocation of N35.4 billion to NHP has been reduced to N26 billion is not a big issue. This is not where the grey issue facing the housing sector is. Housing is at the tail end of the built environment. Housing cannot exist on its own. So, rather than looking at the NHP in isolation, let us look at the broad perspective. Let’s look at the capital expenditure which is about 31 percent of the budget for this year. This represents N2. 87 trillion in a budget of N9.1trillion. This is about 22 percent higher than N2.34 trillion of last year. Let us bring it further home to what affects housing. The budget for power, works and housing went up from N529 billion last year to N555 billion this year. This shows a marginal increase of about 6 percent. This is the biggest allocation in the various components of the budget. Let us take a critical look at housing. Should government really look away from housing? When you look at housing, you see that it is not something that government can look away from because it is very important for various reasons. You look at the effect of real estate on GDP which is about 7 percent; you also look at its effect on job creation and quality of life of citizens. Of the basic needs of human beings, after food, the next thing is shelter. A man that does not have a home cannot be productive because his heart/mind is not at rest. Housing also impacts on security because a man that does not have a house lives on the street and becomes a security risk to every other person. He is vulnerable to attack and is also ready to attack other people out of anger and idleness. The commitment to the development of infrastructure is very key and it has to be the kind of infrastructure that can impact housing. If you want to develop a place, you just put electricity and good road network to connect the towns and villages. Another thing that can impact housing and bring development is mass transportation system. So, rail transportation is key. If you go to a place like UK, you see the tube working all over the place. The train system is working and you can travel a distance of 200 kilomretres in just one hour. If you look at roads infrastructure like Lagos Ibadan Expressway and Lekki-Epe Expressway, you see the kind of developments taking place there because the roads are good. Once there is good road network, you see developments taking place from individuals and organizations or companies. So, the provision of infrastructure that relate to housing is critical. We need about N56 trillion to deal with the 17 million housing deficit in the country. The government does not have that kind of money. But efforts have been made in the 2018 budget to put in place those things that can make housing development by individuals and organizations to provide their own housing needs. There is no benefit in building a beautiful house where there is no access road and no electricity. Nigerians need just those basic things that will make them survive but not much is being done. For instance, where America is doing 3,300 kilowatts of electricity per 1000 people, Nigeria is doing just 35 kilowatts per 1000 people. UK is doing about 1,500 kilowatts per 1000 people, Ghana is doing 62 kilowatts which is very low, but still higher than ours. At 35 kilowatts, it means we still have a long way to go. Provision of that critical infrastructure improves quality of life which, in turn, affects life expectancy that, in Nigeria today is as low as 52 years on the average. The government we have may not be the best we need but it could be seen that they are putting their efforts in the right direction. How far they will go is still a matter of conjecture. But a government that has 30 percent of its annual budget on capital expenditure, in my view, means well. However, 68 percent of the budget on recurrent expenditure tells you that the size of the civil service, political office holders and the legislature is too big for the economy to cope with. This is why most state governments are struggling to pay salary. The next best thing to do is to downsize, but where is the political capacity to do that? Government sees itself as the direct provider of employment and that should not be. Its duty should be to provide the enabling environment for ease of doing business for the private sector to provide jobs. Private sector can work faster and deliver more, all to the credit of the government.
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