It’s now clear that the Nigerian government is in love with banning things even when it barely understands the objectives and the possible impact of the ban. It was little surprise when on Wednesday, the Federal Government announced they were banning the direct purchase of farm produce by foreign traders from Nigerian farmers.
“The World Bank estimates that Nigeria loses 40% of its food production to waste. 40%! These are the issues our government has failed to solve over the last decades. These are the issues we should solve now instead of empowering a new cabal to stand between buyers and actual producers”.
Speaking on the new policy, the Minister of Trade and Investment, Niyi Adebayo said the foreign traders would now have to go through “accredited” local agents to buy farm produce. In his words, the policy is part of the “mechanisms to ensure competitive prices for commodities of indigenous farmers in a bid to protect them from exploitation and also ensure that they have the appropriate incentives to guarantee their continued participation in their trade.”
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It is interesting that the minister is blaming foreign traders for the exploitation of local traders without sharing any evidence to back up his claim. While analysts and farmers have long complained about the cutthroat approach of middlemen to agro purchase, there has been no attempt, until now, to blame foreign traders for this. Local middlemen that the government is now making the farmers’ only choice have rarely been shown to act in the best interest of farmers and there is no logical reason to believe that they would now become ethical saints. It is important for the minister to share the evidence and data that have informed this new policy, especially as it is one with a xenophobic hue.
What do available data tell us about Nigerian agro-produce? Nigeria barely produces any significant agro-produce that is cost-competitive internationally which is one of the reasons why we are not a major exporter of agro-produce.
In 2019, both local and foreign traders exported around $750m (N270B) worth of Nigerian agro-produce. In comparison, Ghana did $3.6B of agro-produce export that same year. Ivory Coast did $8B in 2020. The implication is that the foreign traders we are blaming for the exploitation of farmers have little business to do in Nigeria, and their conduct in the market is not likely to blame for whatever problems farmers are facing.
Needless to add that farmers are in a business and they are likely to sell to the highest bidder in the market not the lowest ones as the new policy assumes. If farmers prefer to sell to the few foreign traders in the market, that’s likely because they are offered a better deal than what local buyers are offering. Limiting the farmers’ options to these local buyers is a curious way of “helping” the farmers. In fact, it seems like a way to help local buyers who are struggling to compete with foreign traders for the same export market. By making the foreign traders go through local buyers, the FG is likely ensuring business for the local buyers at the expense of the farmers and foreign traders. This will also likely lead to an increase in the prices of Nigerian agro-produce, making us less competitive.
If the government is really interested in helping the farmers, it must invest in improving farm productivity, thereby bringing down the cost of production. While Nigerian farmers are currently producing 1.7tonnes per hectare, farmers in other countries like South Africa are doing 5 tonnes. Nigeria’s rice yield per hectare is half of what our Asian competitors produce. What this means is that the N100 a Nigerian farmer spends to produce a kilogram of grain could have been spent to produce two or three kilograms, reducing the farmers’ cost of production by more than half. The Nigerian farmer is doomed by poor seeds, outdated farm practices, among other production challenges. Lack of storage facilities also means the farmers are forced to sell all their produce as soon as they are harvested, or they go bad. The World Bank estimates that Nigeria loses 40% of its food production to waste. 40%! These are the issues our government has failed to solve over the last decades. These are the issues we should solve now instead of empowering a new cabal to stand between buyers and actual producers.
