Like other sectors of the economy, agriculture is being profoundly and negatively impacted by the Coronavirus.
Loss of revenue from agribusiness
In many countries, the disruption of supply of goods and services globally has resulted in the loss of revenue from agribusiness, reduced productivity of farms and food processors, large scale waste of perishable farm produce, and many other challenges that have far-reaching effects on the global population.
For example, the United Nations says Coronavirus disruptions could double the number of people globally without reliable access to nutritious food, to 265 million. The projections are especially grim for regions that were already grappling with food security before the pandemic. This includes Sub-Saharan Africa which the World Bank says could be moving from a health crisis to a food security crisis.
Africa’s challenges are complicated by some negative developments
The World Economic Forum puts it bluntly: “COVID-19 is set to radically exacerbate food insecurity in Africa”. The continent’s challenges are complicated by some negative developments which the pandemic has brought on: lockdown measures imposed by governments across the continent have disrupted agricultural supply chains and nations dependent on food exports are severely impacted by the reluctance of developed countries to allow food export at previous levels.
The prognosis from the Food and Agricultural Organisation is no less grim: “we expect disruptions in the food supply chains. For example, restrictions of movement, as well as basic aversion behaviour by workers, may impede farmers from farming and food processors – who handle the vast majority of agricultural products – from processing. Shortage of fertilizers, veterinary medicines and other input could affect agricultural production. Closures of restaurants and less frequent grocery shopping diminish demand for fresh produce and fisheries products, affecting producers and suppliers. Sectors in agriculture, fisheries and aquaculture are particularly affected by restrictions on tourism, closure of restaurants and café and school meals suspension”.
With regard to Nigeria, CEO of AFEX Commodity Exchange Limited, Nigeria’s first private-sector commodity exchange firm, Ayodeji Balogun, recently identified some of the challenges that face Nigerian agriculture in the wake of the pandemic and subsequent lockdown. They include price spikes, labour shortages, logistics challenges, shortage of fertilisers and other inputs and limited access to markets.
He added: “Transport restrictions and quarantine measures are likely to impede farmers’ access to markets, curbing their productive capacities and hindering them from selling their produce.”
Crops rotting in the fields
There have also been reports of Nigerian farmers complaining about crops rotting in the fields or at the depots waiting for trucks that never arrive. Other farmers also say the lockdowns are hindering farm inspections by banks, putting their financing at risk. This results in difficulty hiring tractors and other equipment which are crucial to many farming operations.
These developments and forecasts have prompted urgent action by major players in agribusiness including the Central Bank of Nigeria (CBN) and the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL Plc), a non-bank financial institution, itself a wholly-owned and incorporated entity of the CBN, established to de-risk agriculture finance and facilitate agribusiness across entire agricultural commodity value chains.
Even in normal times, NIRSAL’s role in agribusiness is crucial, being the intervention agency that provides guarantees and other incentives to encourage the financial sector to lend to agriculture. So, it comes as no surprise that the team at NIRSAL is thinking outside the box during the present crisis. As the range of its initiatives and activities demonstrate, innovation is part of NIRSAL’s DNA.
One of the most important in this range of strategic initiatives is the NIRSAL AgroGeoCooperative system of organising, structuring, risk-managing, financing and controlling smallholder-based primary production agriculture otherwise called Farming. This is an innovation that NIRSAL introduced in 2019 and which it has updated as a smart strategy to mitigate the harsh impact of the covid19 pandemic on agricultural productivity and food security at this challenging time for the nation as well formally introducing the model at scale in order to mainstream millions of smallholder farmers to formal finance and formal markets
Most critical aspect of agriculture
Crucially, the innovative model focuses on the most critical aspect of agriculture especially in a developing country like Nigeria: primary production. The central relevance of this focus is underscored by the Food and Agriculture Organisation: “Smallholder farmers represent the biggest employment sector in rural areas of the developing world, and they are also the most important contributors to global food production. More than 90% of the farms in the world are family farms; they produce 80% of the food and they operate 75% of the farmland”.
The AgroGeoCoop-based farming model is a unique system that groups adjoining farmlands in geographical areas that have been identified as being suited for specific commodities. It is an improvement on the suboptimal practice of smallholder farming on small, unconnected parcels of land. Its unique Geo or farmLand-based cooperative approach facilitates the agglomeration of large parcels of farmlands which makes it possible to introduce Precision Agriculture tools (Remote Sensing, Deployment of Unmanned Aerial Systems, satellite-based Global Positioning Systems etc) resulting in the optimisation of results.
The farmland makes the farmer
The Agro Geo-Cooperative model is anchored on the fundamental theory that it is the farmland that makes the farmer, not the other way round. A basic feature of the AgroGeoCoop is the GPS-enabled Geo-tagging of each farmer to his land. This has solved the problem of identity and accountability which is a major risk element in smallholder agriculture finance around the world and particularly sub-Sahara Africa, Nigeria inclusive.
Accordingly, the model groups farmers based on the contiguity of their farmlands, with each farmer retaining what is originally theirs and becoming partakers in large, structured farming projects. The bigger and more contiguous a GeoCooperative is, the faster and easier for it to have access to structured finance, quality inputs and structured markets through NIRSAL’s facilitation.
NIRSAL has invested in technical and technological capabilities
To ensure improved outcomes, NIRSAL has invested in significant technical and technological capabilities to support and monitor this system of structured primary production. This is because understanding smallholder farmer data management requires defining from whom data is captured and the methodology of the data capture, the analytics and ultimately its distribution and usage as intelligence, information or as a decision support system This has led NIRSAL to acquire and deploy geospatial tools and platforms to enable field-mapping activities such as Know Your Leader (KYL), Know Your Customer (KYC), Know Your Farm (KYF) and Know Your Neighbour (KYN) which are critical elements in profiling the human and the geographic elements of the AgroGeoCoops.
The array of field-ready equipment includes GPS devices, drones, mobiles, GIS-enabled tablets and BVN Enrolment/Verification Machines all linked by GSM Networks, satellite and Cloud synchronisation capabilities for back-end data collection, validation and rendition. To complement and strengthen the value of these tools and platforms, NIRSAL is also leveraging its partnerships with institutions such as NiMET and Microsoft which provide both Agrometeorological and embedded data capture capabilities for decision support to further enhance farm operations.
The bottom line: through such technology-enabled, risk-controlled systems, farmers enrolled in NIRSAL’s AgroGeoCoops have higher chances of success in access to structured finance, quality inputs, extension monitoring, weather information, aggregation services, access to markets and other timely support.
AgroGeoCoops, the source of primary production, are also the centrepiece of NIRSAL’s Mapping-to-Markets strategy (M2M), an end-to-end approach to agriculture finance whereby NIRSAL ensures that all segments of agricultural value chains are linked in a logical sequence to their immediate markets, with near-zero cash transactions amongst the value chain actors.
This is feasible because of the guaranteed trade relationships that would be established between the NIRSAL AgroGeoCoops on the one hand and identified off-takers on the other hand coupled with the strategic trade linkages that would feed off the ecosystem for inputs, mechanisation, research and adaptive technologies, value-added processing and logistics services. Thus the NIRSAL AgroGeoCoop ecosystem will bring clarity, structure and cash-flow visibility and tracking to banks, investors other financiers that will enable them to lend with confidence from their balance sheets and hugely complementing government intervention financing efforts in agriculture.
Already, NIRSAL has set for itself a clear and measurable target of creating 16,000 Agro Geo-Cooperatives on 4 million hectares of farmland and enrolling about 8 million farmers across Nigeria expected to produce about 12 million metric tonnes of Grain Product Equivalent (GPE) annually, over the medium to the long-term time horizons.No tags for this post.