COVIDnomics: The Impact of Lockdown on Nigeria’s Agric Sector
The COVID-19 pandemic has exposed every sector to shock, including the agricultural value chain. The Food and Agriculture Organisation (FAO) has projected that the impact of COVID-19 on the agricultural sector would reach its peak in April and May 2020 as health officials and scientists still work tirelessly for coronavirus vaccine.
According to the UN agency, lockdown across the world will take toll food production, agricultural supply chains, and markets, leading to a global food crisis.
On Sunday, 29th of March, President Muhammadu Buhari ordered shut down of Lagos and capital Abuja to curb the spread of coronavirus. The government directed all citizens to stay indoor while few businesses and offices run skeletal services.
Even though the agricultural sector is exempted from the lockdown, it has to deal with other complementary issues, such as logistics and availability of staff.
Shortage in labour– As the restriction on movement of goods continues amid the lockdown, even with the fact that the agricultural sector is exempted, there will every tendency that several warehouses may face a shortage of staff. Access to farming activities will also be difficult for farmers as there is no vehicle to move them from one point to the other, safe those staying closer to farm. There will be shortage in fertilizers, veterinary medicines, and others, which could affect agricultural production.
Logistics – Coronavirus lockdown has impacted the supply chain of agricultural commodities by hindering the loading and offloading of agricultural products. Farmers will face challenges in accessing the markets to sell their products or buy essential inputs. It will also reduce demand from restaurants and hotels set in significant market changes, affecting prices and consumers at the end.
Livestock consumption – Livestocks are at risk in this pandemic as a result of misinformation on social media. This will pose a negative impact on livestock farmers. The impact also affects access to animal feed as most manufacturing companies are either closed or facing the issue of logistics and labour shortages.
There is a possibility of a disproportionately larger decline in animal protein consumption (as a result of fears – not science-based – that animals might be the host of the virus), causing price slump.
Impact on export – Following the outbreak of coronavirus, countries around the world have started plans to mitigate the impact with several policy measures aimed at avoiding the further spread of the disease.
However, such measures might affect agricultural production and trade. For instance, countries are implementing measures to control cargo vessels, with the risk of jeopardising shipping activities, and with a particular risk to perishable goods, like fresh fruits, vegetables, fish, and fish products.
According to statistics released by the National Bureau of Statistics (NBS), the most popular non-oil products, which are exported from Nigeria are cocoa, cassava, rubber, wool, cotton, palm oil, wood logs (Iroko or Mahogany), groundnut oil, cashew, garlic, and other products. Nigeria mainly exports goods to Europe and Asia. Total profit is estimated to be about N682.5 billion, this reflected in the foreign trade reports released by the National Bureau Statistics (NBS) covering the first and second quarter of 2019.With the current situation on the closure of borders, there will be loss of revenue in the agric sector, not only will farmers not be able to transport their produce to the Nigeria market, this production won’t be exported out of the country.
Border closures, quarantines, and market, supply chain, and trade disruptions could restrict people’s access to sufficient and nutritious sources of food, especially in countries hit hard by the virus or already affected by high levels of food insecurity.
Hike in prices – Problems in logistics associated with restriction in transportation and border closures will significantly affect prices.
Panic buying will also force traders to increase the price of commodities.
Conclusion
The Nigerian government has announced a credit relief of $136.6 million to support businesses affected by the coronavirus pandemic, particularly those in the agric sector. Other interventions also include reduction of interest rates for the loan from 9% to 5%.
As part of its effort to cushion the economic effects of the Coronavirus pandemic, the Federal Government has also granted a three-month repayment moratorium for all government-funded loans; this moratorium will of course cover loans that were given to farmers through the Bank of Industry, Bank of Agriculture amongst others.
Stakeholders in the agriculture sector have also said the recent proposal of N500 billion intervention fund by the leadership of the National Assembly for the revival of the nation’s economy would be necessary to lay the groundwork for a rapid rebound of the agro-economy.
The fund would boost the nation’s economy through the agric sector, and in turn, increases its contribution to the Gross Domestic Product (GDP). The government should also continue to create an enabling environment by promoting primary crop production through the Anchor Borrowers Programme, support for large scale mechanised farming. If this works out well, it will protect and help farmers mitigate risks.
