Steve Agbota [email protected] 08033302331
Agriculture remains the main source of income among the rural poor, especially the smallholder farmers. Relative to other sectors, agricultural growth can reduce rural poverty rates faster and more effectively.
In Nigeria today, smallholder farmers are still facing numerous challenges in the agricultural space, which include lack of access to finance, technology, storage, aggregation, farm inputs and selling of their products, among others.
Poverty is particularly severe in rural areas, at 44.9 per cent among smallholder farmers. Young people lack economic opportunities and sporadic civil unrest worsens poverty and malnutrition.
Poor rural women and men depend on agriculture: 70 per cent of rural people are subsistence smallholder farmers, who produce some 80 per cent of Nigeria’s food on un-irrigated plots wholly dependent on rainfall.
Only 46 per cent of arable land is cultivated. In addition, farmers have no title to 95 per cent of agricultural land, and are impeded from obtaining finance or investing in improvements. Poor rural roads undermine farm profitability, increase waste, and impede access to markets, inputs, equipment and new technology.
Farmers’ decisions to invest and produce are closely influenced by access to financial instruments. If appropriate risk mitigation products are lacking, or if available financial instruments do not match farmers’ needs, farmers may be discouraged to adopt better technologies, to purchase agricultural inputs, or to make other decisions that can improve the efficiency of their businesses.
Recently, AFEX Commodities Exchange, the only private commodity exchange in Nigeria, recognised these challenges facing smallholder farmers and launched #CodeCashCrop to boost agriculture finance and technology where several local and international delegates came together to deliberate on the obstacles confronting the agriculture sector in Nigeria.
According to AFEX, #CodeCashCrop will not only help partakers get practical insights into developing or investing in agriculture, but will also have the invaluable social impact of putting smallholder farmers, who form over 90 per cent of the exchange’s aggregation transactions and produce over 80 per cent of our national food supply, in the spotlight as an addressable market segment.
AFEX has been a functional exchange for over four years and has created access to markets that boosted the incomes of over 40,000 farmers by up to 40 per cent over the period. There is so much potential to do a lot more when all elements of the economic ecosystem are able to find valuable use cases in the agriculture value chain with facilitation of cross-sectoral pollination of best practices.
Country Manager, AFEX Commodities Exchange Limited, Mr. Ayodeji Balogun, said that application of technology and easy access to finance will boost agricultural production in the country, adding that the non-application of technology in agriculture in the country has been a major hurdle in the sector.
According to him, if properly harnessed, technology could help create wealth across all value chains in the agriculture sector. He said technology is a strong enabler to bring marriage between finance and agriculture to fruition.
Speaking on how AFEX’s contribution to agriculture sector will help, he said, “we invested very heavily in technology and we have a trading platform running live now where traders, buyers and financiers can connect from wherever they are, within or outside the country, and then transact. AFEX has created an asset class for investors to enable them invest in agriculture as well as reach more smallholder farmers, improving their livelihoods and sustaining their production.
“We are building a lasting institution on Nigeria’s agricultural potential to achieve our vision of food security and supporting smallholder farmers to increase their earning capacity as well as provide a more efficient price discovery system.”
He hinted that the organisation had been able to organise rural farmers into bankable groups, provide finance for farmers and construct storage facilities as well as invested in technology through the provision of a trading platform for farmers to sell off their goods at reasonable prices.
However, a Partner at Choiseul Africa, Adeline Fabre, said agriculture is the next big thing in Nigeria and Africa, not because of fall in oil prices but because of the potential in the sector.
She explained that the application of technology in agriculture could enable the value chains to work efficiently, adding that with more data on the sector, the value chain could work transparently and trust would be engendered, thereby linking farmers to investors. According to her, agriculture could not be sustainable without subsidies.