ECONOMY - 05 JUN 2020

Why agriculture is only a first step and not the final solution

Why agriculture is only a first step and not the final solution
Farmers and their crops.  Source: CIMMYT via Flickr

There isn’t a consensus on how to become a developed country. 

If there were a set plan, it would be in every president’s top drawer, and development would be as simple as applying steps A, B and C. Alas, we (and all other developing countries) have to figure it out as we go along. 

Thankfully, we can learn from other countries’ failures and successes. 

Apart from outliers (like Singapore, and small oil-rich Arab states), today’s rich countries generally transitioned from agriculture to industry, and then services. 

The most recent group of countries that made the storied leap are the ‘Asian tigers’- Hong Kong, Singapore, South Korea and Taiwan. They also transitioned through those broad sector categories.

One lesson we have learnt then is that agriculture being the backbone of a country’s economy won’t take it to the high-income status we all crave. It's just a first step. 

Knowing this highlights two possible pathways for Nigeria’s agriculture. One, we bet against history and try to be the first country since the Industrial Revolution to obtain high-income status off the strength of its agriculture sector alone. Or two, we move on from agriculture and try to industrialise as soon as possible. 

This article will discuss the latter strategy focusing on agricultural policy in Nigeria, where developing countries are shifting to industry-led economic growth.

 

A thought experiment

Getting Nigeria to an industrialised state is no easy feat, but let’s imagine it is so that we can emphasise the importance of agricultural policy.

Picture this. You wake up tomorrow in a world where the Nigerian government (and all consecutive ones) has all the knowledge, ability and the will to industrialise Nigeria. we do this by industrialisation - the process of shifting to a manufacturing society from an agrarian one. 

It will be enabled by a well thought out plan known as the industrial policy, and better yet, it works! 

Fast forward in time, and by 2040, Nigeria is finally one of the world’s largest 20 economies and probably seen as a world power in its own right. 

In this world, we invest in Nigeria’s health and education and life is genuinely better for a lot of people. This industry-led development will lead to an increase in welfare. New firms will pop up, better physical infrastructure will follow. Other firms, small and big, will be attracted to the area, and more cities and towns will be formed.

However, this increased prosperity will start from pre-existing cities and towns and reach the rural and the poorest last. 

Mainly as a result of existing or available infrastructure, such as road network, electricity, telecommunication and highly skilled workforce.

And that is the catch. A focus on industrialisation would be a disadvantage to Nigeria’s major agriculture drivers. Farmers who have built their livelihood in the rural parts will have to wait for development to trickle down to them before their lives get better.

 

Back to today

Agriculture is currently Nigeria’s second-largest employer (to services), with the sector responsible for about 35% of the country’s jobs according to the World Bank

But this is slightly misleading, because, as implied by popular commentator Feyi Fawehinmi, most of our farmers did not choose to farm, it is all they can be. 

As we’ve learnt from the National Bureau of Statistics Poverty and Inequality Report, Nigeria’s poor are disproportionately rural, Northern farmers. It is unlikely that an uprising of new industries will be able to absorb all or even most of them, given the skills gap.

Due to the nature of industrialisation, it will take a while before economic development reaches these farmers and their families. Improving their skills to a point where they have alternatives other than farming to survive is also not immediate. 

So, rather than endure a long wait, we can develop an agriculture policy- one that works towards preserving the livelihood of farmers and improving the prospects for economic growth.  

 

To mechanise or not

It would be remiss not to acknowledge that the current Nigerian administration is all in on agriculture focused at the grassroots. And so far, it hasn’t paid off as they would have liked. 

The slow take-off has led some to argue that instead of supporting smallholder farmers, agriculture in Nigeria should be mechanised. 

This argument proposes the government do what it can to facilitate the rise of huge commercial farms and stay out of their way when they can. 

A reasonable point, given that heavily mechanised agriculture is popular in most developed countries like the United States, the Netherlands and other European countries. There, agriculture is known for high productivity.

But with Nigeria, this argument for mechanised agriculture should be cautioned for two reasons.

First, agriculture in these developed countries is supported by national governments. The US and the EU protect their agrarian industries through a series of subsidies, tariffs, trade barriers. In those cases, the beneficiaries are the owners of big commercial farms and the corporations behind them. This displaces small farmers. 

Although the right choice for allocating government support depends on many other factors, what remains true is that agriculture for commercial purposes either done by big or small farmers still uses full government support. 

The second reason to be cautious of the mechanisation advocacy is that it deals Nigeria’s current smallholder farmers a two-fold setback. 

It takes their farmland and robs them of their livelihood. 

 

So what next?

Past instances of land grab in Nigeria have shown us that the poor are not compensated well in these situations, and are abandoned by authorities supposed to fight for them. 

As opposed to adopting mechanised farming methods from the West, we should take our cues from countries in the East who were at a similar phase of development not too long ago. 

Rather than let agriculture be taken over by big businesses, countries like Taiwan, South Korea, Japan, China (post-Mao) focused on yield gains by smallholder farmers.

They prioritised investments in rural infrastructure and supported farmers in whatever way they could. 

In China, storage and marketing services is an example of the support farmers got from the government. Japan gave subsidies and grants, and also assigned an agricultural extension worker to each village. 

Before China became the highly industrialised economy we see today, its policies in the late ’70s were smallholder farmer-focused. 

They ensured that the responsibility for agricultural production was at the community level. The sector, now overshadowed by other industries in the country, however, remains relevant by being the world’s largest food producer today. 

The primary benefit of smallholder agriculture over mechanised agriculture is that it kept people employed until industries could take over. It also increased their welfare in the meantime.

This would also imply that Nigeria should shift its current strategy of throwing money at the problem, to attacking the root causes. 

Providing billions of naira in low-interest loans to farmers through the Anchors Borrowers Program is an easy way out. Supplying the rural physical infrastructure is hard but more effective.

 

You can follow this Writer on Twitter @soalaislegend

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Soala Ekine

Soala Ekine

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