SALVAGING THE NIGERIAN ECONOMY

THROUGH AGRI-EXPORTS

MR. TOLA FASERU SEPTEMBER 2016

In international literature ‘balance of trade’ is a relationship between a country’s imports and exports in monetary value. A country is said to be experiencing positive balance of trade or surplus if the value of its EXPORTS is higher than the value of its imports. It is therefore imperative upon governments to do as much as possible to have a positive balance of trade.

Before the discovery of crude oil, each region was noted for producing certain cash crops in commercial exportable quantities. - The Western region- Cocoa - The Northern region- Groundnut - The Eastern region- Oil Palm - The Mid- West- Rubber

Agriculture continued to be the mainstay of the economy even after independence contributing about 65 per cent to GDP and representing almost 70 per cent of our total exports. Agriculture generated so much revenue for the government, its surplus was used by government to develop the basic infrastructure needed for long term development e.g. the Western Nigerian Television (WNTV), Cocoa House Ibadan in the Western Region

The discovery of oil in commercial quantity in the mid-1950s and the Arab oil embargo on the USA in 1973 (which increased the price of oil from US$3 per barrel to nearly $12 globally) dealt a devastating blow on the Nigerian agricultural sector! Our economy became heavily dependent on oil. Oil revenue represented almost 90 per cent of foreign exchange earnings. Other non-oil exports which had hitherto funded the economy were shunned.

The resultant effect was a decline in Agricultural exports to 20 percent in 1971 and further decline to 6 percent by 1977. By 1974, Nigeria had started importing food because of its huge foreign exchange earnings The production of agricultural commodities for exports dropped drastically and became almost non existent.

Country United States

Brazil China

Canada India

Indonesia Argentina Thailand Australia Malaysia TOTAL

Value in (Billion dollars) 175.57 90.66 70.16 65.69 46.95 42.63 41.47 40.36 37.60 30.10

641.19

Top 10 Agricultural Exporting Countries 2015

It is note worthy to mention that in 2014, Nigeria’s total oil exports earnings stood at US$77 billion- which is almost at par with what China earned from agricultural exports in 2015. Alternative energy sources and the declining price of crude oil in the international market is a pointer to even reduced oil earnings for Nigeria in the coming years.

From the table showing the top 10 agricultural exports countries, we can see that from those 10 countries, their combined earnings was about US$641 billion US Dollars from agricultural exports ALONE!

BRAZIL has progressively emerged as a major agricultural powerhouse during the past few years: A net importer of agricultural products in the 1970s, the country now ranks among the world’s five largest agricultural producers and exporters RUSSIA currently unseats the US and Canada as the world biggest wheat producer and exporter with 110m metrics tons production and 22.5metric tons for exports. MALAYSIA is responsible for one third of the world's rubber export with its production level hitting 11.24 billion dollars in as far back as 2008. Malaysia is also an exporter of timber, pepper, oil palm and tobacco. Back home in Africa, COTE D’IVOIRE is the largest producer of Cocoa and cashew producing 1.4 million Metric Tons and 750,000 Metric Tons respectively. Their cocoa output accounts for 40 percent of the world’s production.

JUST A FEW THOUGHTS

- Currently Nigeria derives more than 90 per cent of its foreign exchange earnings from crude oil.

- Nigeria's oil output dropped

to 1.4m barrels per day (b/d) in May, from a recent average of 2.2m b/d, because of incessant militant attacks on pipelines and other facilities

- Nigeria’s income from oil continues to drop gradually and this spells an impending disaster!

NIGERIA IN WORST POSSIBLE TIME, SAYS FINANCE MINISTER…AS NATIONAL BUREAU OF STATISTICS CONFIRMS ECONOMIC RECESSION !- PUNCH NEWSPAPER, SEPTEMBER 1, 2016

MOST CERTAINLY NOT, IT IS HOWEVER A PAINFUL WAKE UP CALL!!!

IS THIS THE END OF THE ROAD FOR NIGERIA?

In January 2015, the Federal Ministry of Trade and Investment earmarked 13 export products (National Strategic Export Products (NSEPs))as replacement for oil. This is was part of moves by the Federal Government to diversify the Nigerian economy away from oil

Agro-industrial - Palm oil - Cocoa - Cashew - Sugar - Rice

Mining related - Cement, - Iron ore/metals - Auto

parts/cars - Aluminum

Other oil &gas Industrial products

-Petroleum products - Fertilizer/urea - Petrochemical and methanol

These 13 National Strategic Export Products, are divided into three categories to include:

Since then, concerted efforts have been made to increase the production of the agro- industrial products and in exportable quantities too!

LIST OF SOME AGRICULTURAL COMMODITIES

- Banana and Plantain - Tea &Coffee - Honey - Cassava - Soya beans - Shea Nuts - Ginger - Cowpea - Hibiscus Apart from these identified commodities, there are many more that are not listed here!

- Hides and Skins - Potato - Cotton - Groundnut - Gum Arabic - Rubber - Sesame seed

NSEPs - Cocoa - Cashew - Palm oil - Sugar - Rice

- This is not far fetched as Vietnam cashew exports was put at $3billion US Dollars as at 2015.

- This will be a massive boost for our economy which had a

total earnings of $2.5 billion US dollars from non- oil exports in 2015.

- Imagine if Nigeria can earn a conservative US$1 billion dollars from at least 19 commodities e.g. Cocoa, Cashew, Sesame seed etc. that is US$19billion annually from agricultural commodities alone.

Revenue in billions

Top 10 agri

exporters

Nigeria

Our projection of US$19billion dollars is a minute fraction of the US$641billion dollars currently earned by the top 10 Agri-Exporting nations in the world; the market exists!

THE PROJECTED INDUSTRY SIZE

THE AGRI- EXPORTS VALUE CHAIN AND OPPORTUNITIES

- Researchers - Farmers - Local buying agents - Merchants - Processors - Exporters

THE AGRI- EXPORTS SOLUTION

-Revamping of existing agricultural research institutes across the federation for improved effectiveness in the provision of high yielding and hybrid crop species. - In the same token as above, research and development

efforts that are agri related should be encouraged in our Universities/ Polytechnics. Increasing production of agricultural commodities in line with good agricultural practices and minimizing post harvest handling losses.

THE AGRI- EXPORTS SOLUTION

-Value addition through processing of agricultural commodities for exports by setting up agricultural industrial processing zones in producing areas.

- Market linkage opportunities - Standardization for quality assurance

AGRI- EXPORTS- THE OTHER OPPORTUNITIES

- it is stipulated as the most preferred bags for packaging in most agro- commodities contract yet no company produces it locally!

JUTE BAGS PRODUCTION

Increased commodities production will lead to an

increased need for warehousing

WAREHOUSING

Increased volumes will lead to a higher demand for

transportation and logistics services.

TRANSPORTATION AND LOGISTICS

Processing converts single goods into multi products

and multiplies income exponentially .

PROCESSING AND VALUE ADDITION

Every one across the value chain needs finance

which provides opportunities for financial solution providers. Huge volume of capital needs to flow into

the agri exports sector.

FINANCE AND FUNDING

• JOB CREATION

• FOOD SECURITY

• REVENUE GENERATION

• INCREASED FOREIGN EXCHANGE EARNINGS

• IMPROVED LIVELIHOODS

• INDUSTRIALISATION

• Let’s make Nigeria great again

• Let’s boost our non-oil exports earnings

• Let’s promote the Nigerian Agri-exports industry.

FOR LISTENING!!!

Mr. Babatola Olutoba Faseru is the National President, National Cashew Association Of Nigeria (NCAN) and Vice President of the African Cashew Alliance (ACA). He is the Vice President, Federation of Agricultural Commodities Association of Nigeria (FACAN). He is also the Executive Chairman of Colossus Investments Limited. Tola Faseru has continued to contribute immensely to the cashew and indeed agro commodities landscape in Nigeria & Africa. He is a major advocate of maximizing and harnessing the full potentials of the African commodity sector.

PROFILE OF MR. TOLA FASERU