Bankers: Wake Up and Smell the Manure! Big Opportunities Lie with Smallholders

FROM THE FARM By Dimieari Von Kemedi

Africa has more than six hundred million hectares (600 ha) of uncultivated arable (farmable) land yet there is devastating poverty and hunger. Food prices are at historic highs and hundreds of billions of painfully scarce dollars are spent annually on food imports. Along with this hard currency drain, a

brain drain afflicts our future as hundreds of thousands of our talented and energetic young people flee to Europe each year in search of opportunities, security and a better life.
As a result, the next wave of poverty and insecurity is already under incubation. And it may be more devastating than the current wave. We can already see how our inability to feed ourselves is weighing against our individual and collective dignity and security. This struggle is becoming even more difficult as we direct more of our resources and attention to fighting insecurity ranging from street crime to insurgencies and terrorism.

Many agricultural revolutions have been declared over the past decades to increase farming productivity but their outcomes, while sometimes relatively successful, have not resulted in the wholesale transformation of the sector that is urgently needed. The inherent and continual weakness lies in the absence of any private sector-led reward system to drive these revolutions with the required strength, boldness and commitment, and the dearth of competent services that would help to sustain agriculture.

In the recent past there have been concerted efforts to attract foreign investors into primary production through the allocation of thousands of hectares of land but success stories are few. Many large commercial farms are struggling to fully cover and effectively utilize the vast tracts of land handed over to them. We cannot rely on mass-scale foreign owned commercial agriculture to lift fortunes in Africa.

Nor can we reverse this situation through incremental progress. Due to our high population growth rates and the unbearable state of emergency that poverty has declared against our people, our response must be bold, energetic, swift and fundamentally transformative.

At the core of this response must be a plan to re-energize and re-define smallholder farming – the backbone of agriculture across our continent. Smallholder farmers are responsible for more than 90 percent of agricultural production in most African countries including Nigeria. But most of the millions of farmers in this country plant less than a quarter of a hectare. These farmers can barely make 20,000 naira per season – and because fewer than 10 percent of smallholder farms are irrigated, they earn this only once a year as productivity stagnates.

Simply providing irrigation – with no increase in the area under cultivation or improvements in agronomic practice – would enable around-the-year cultivation, which could double our national agricultural productivity and at least double the incomes of our farmers.

But much more can be done than this. We need to produce a cadre of higher-earning, technology-supported farmers that can supply the amount of food needed as well as demand goods and services to support a diversified rural economy. To achieve middle-income levels, each farmer should manage a minimum of five to ten hectares. This can be achieved through the consolidation of farmlands into community block farms.

By increasing the area under cultivation, doubling yields through improved techniques and by producing more frequently than an annual harvest, we can quadruple production within three years. Beyond food security, this would reduce poverty by cutting the cost of food and help to mitigate climate change through localizing production.

For any plan of this nature to be successful, it must be ambitious, scalable, simple – and led by the private sector. Entrepreneurs are missing out on the most promising economic space of our time. The scale of the problem and the gap to bridge is large, but so is the opportunity. There are almost 200 million people to feed and clothe, and then to feed still more as relative prosperity drives demand for better nutrition. And then there are the many millions more Africans to feed and clothe as the Africa Free Trade Treaty comes to effect.

The first to develop a strategy of their own – with well organized and managed smallholder support business models, the right technology and infrastructure – will gain an insurmountable advantage over their peers because of the sheer scale of the opportunity.

Banking is a vital cog in the wheel of agricultural enterprise that for now appears stuck. Banks must develop expertise in primary production and design products they understand – and not just reluctantly participate in government and central bank-driven initiatives. Individual banks, if they put their minds to it, can produce and implement better financing strategies than government.
Economies, just like nature, abhor a vacuum – and if Nigeria’s banks are not ready, investors will find a way to sidestep them. Banks will be relegated to mere vessels holding funds, taking the remnants of fees from SMS alerts and other service charges.

Organizing and enabling smallholders to increase areas under cultivation as well as yield and profitability, while bringing available funding to life, is not easy. It requires a lot of hard work and presence. The results will be astonishing – and financially and morally satisfying beyond compare.

Are we ready for this in Nigeria? Yes. We can get there – and rapidly – as long as the private sector, particularly the banking and finance industry, take up this unpassable opportunity.

My column will offer information, insights and analysis to support investment in agriculture, the development of suitable policy, and the practice within communities everywhere as we take this transformative journey for our nation.

Dimieari Von Kemedi (kemedi@yahoo.com) works with smallholder farmers