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Anchor Borrower Programme as model for next agricultural revolution

Anchor Borrower Programme as model for next agricultural revolution

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When on November 17, 2015,  the Muhammadu Buhari administration launched the anchor borrower scheme targeted at making Nigeria self -sufficient in rice production, the backlash from importers of the gain was indeed quite phenomenal. 

The nationwide resentment against the ABP being implemented under the aegis of the Presidential Task Force on Rice, and Wheat Production, in conjunction with the Federal Ministry of Agriculture and Rural Development (FMARD), no doubt was vociferous enough to cow any lily-livered policy maker.

The argument against the initiative was that it cannot be done and that the country was better off importing rice from Thailand, India, Brazil and indeed the rest of the West who had been its traditional rice suppliers over the year.

It was therefore not surprising that the country’s highly connected rice merchants and importers vehemently fought back to sustain the status quo, having seen the rice revolution as a threat to their source of revenue.

But not withstanding the stiff opposition, the Godwin Emefiele -led Central Bank remained undaunted in the belief that it was better to proceed with the initiative in the interest of the larger interest of the nation’s economy and the citizens.

Indeed all these were happening at a very difficult time in the economic history of Nigeria when the crash in oil prices had drain the nation’s stock of foreign currencies.

However the Central Bank of Nigeria (CBN) in line with its developmental function established the Anchor Borrowers’ Programme (ABP) to create a linkage between anchor companies involved in the processing and small holder farmers (SHFs) of the key agricultural commodities where the country had significant comparative advantage. The programme thrust of the ABP is provision of farm inputs in kind and cash (for farm labour) to small holder farmers to boost production of these commodities, stabilise inputs supply to agro processors and address the country’s negative balance of payments on food. At harvest, the SHF supplies his/her produce to the Agro-processor (Anchor) ,who pays the cash equivalent to the farmer’s account.

The report estimates that from April to May 2018, agriculture contributed 22.86 percent  to Nigeria’s GDP, higher than the oil sectors contribution of about 8.55percentb of GDP . The report however shows that Nigeria  non-oil sector made up 91.45 per cent of its GDP.

Nigeria’s gross domestic product advanced 2.0 percent year-on-year in the first quarter of 2019, easing from a 2.4 percent expansion in the previous period and below market expectations of 2.1 percent, mainly due to a steeper contraction in the country’s oil sector. This then shows that one of the growth areas of the economy is the agricultural sector .

But in Q1 of 2019, agricultural sector expanded 3.17per cent back to its +5 year average after the crisis between farmers and herders dragged growth to below 2.0 pecent  in 2018. An in-depth look into the report showed that crop production which accounts for 85.0 per cent  of the total production in the sector during the quarter, remained the biggest growth driver in the sector, surging 3.27 per cent in the quarter, though slower when compared to the 3.45per cent  growth recorded in Q1-18.

It was an initiative that evolved from the nationwide consultations with stakeholders comprising Federal Ministry of Agriculture & Rural Development, State Governors, millers of agricultural produce, and smallholder farmers to boost agricultural production and non-oil exports in the face of unpredictable crude oil prices and its resultant effect on the revenue profile of Nigeria.

The broad objective of the ABP is to create economic linkage between smallholder farmers and reputable large-scale processors with a view to increasing agricultural output and significantly improving capacity utilization.  of processors. Other objectives include: Increase banks’ financing to the agricultural sector,  Reduce agricultural commodity importation and conserve external reserves, Increase capacity utilisation of agricultural firms. Another key objective of the programme was to create a new generation of farmers/entrepreneurs who would see farming not from the prism of subsistence traditional activity meant for school dropouts and economic rejects but from a professional and employment generating practice.

ABP also aims at deepening the cashless policy and financial inclusion of the apex bank due to its inherent attributes toward poverty reduction among smallholder farmers by lifting them to the class of big time commercial farmers.

This is so because the  N220billon credit devoted to the project is targeted at smallholder farmers engaged in the production of identified commodities across the country, who must be organised in groups/cooperative(s) of between 5 and 20 for ease of administration.

Loans granted to the SHFs shall be repaid with the harvested produce that shall be mandatorily delivered to the Anchor at designated collection center in line with the provisions of the Agreement signed. The produce to be delivered must cover the loan principal and interest. So far statistics from the apex bank and other relevant agencies of government however revealed that as at the end of 2018, the Anchor Borrowers Programme has added two million metric tons to rice supply in the country in addition to creating 500,000 jobs.

The CBN’s Director of Corporate Communication Department, Mr. Isaac Okoroafor, pointed out recently that the “The volume of rice importation into Nigeria (in metric tonnes) declined drastically in 2018, judging by figures obtained from various official sources. Indeed, figures obtained from India and Thailand, which are dominant rice exporters to Nigeria indicate that as at September, the latter had so far exported about 5,161 metric tonnes of rice to Nigeria, while the former sold a paltry 426 tonnes as at July 2018.”

Okoroafor attributed the reduction in rice importation to the concerted effort of the Federal Ministry of Agriculture and Rural Development and the interventions of CBN. He also confirmed that the apex bank had not allocated any foreign exchange for the importation of rice during the year under review.

According to the half year 2018 report of the CBN,  the bank has so far disbursed N91.90 billion, to  412,037 small-holder farmers since the inception of the programme.

CBN Governor, Godwin Emefiele,  as the Chief driver of the programme has always argued that the implementation of the ABP  had created economic linkages between smallholder farmers and reputable large-scale crop processors, with a view to increasing agricultural output and capacity utilisation of several integrated mills.

Emefiele noted that ABP had closed the gaps between local rice production and domestic consumption, while complementing the Growth Enhancement Support (GES) Scheme of FMARD by facilitating the transformation of GES-farmers from subsistence farming to commercial class.

 

 

 

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