Post by Ismail AbdulAzeez on Dec 2, 2020 4:29:35 GMT 1
In recent years, young and old Nigerians have taken a stronger interest in agriculture and knowing where their food comes from. However, many of them have discovered that making the farm dream a reality is a lot more challenging than anticipated, especially when it comes to finding funding without acquiring a farmland, DANIEL ESSIET reports.
Given the capital-intensive nature of agriculture, new farmers struggle to access enough capital to operate at a size sufficient to earn a profit. While capital needs vary by farming system, they are in nearly all cases staggeringly high.
Opeyemi Lamson is a Lagos State- based agricultural landlord and a computer scientist. In the Southwest where he grew up, turkey meat is a delicacy eaten mostly by the rich. Perhaps that was what caught the attention of Opeyemi, who saw the near exclusivity in the consumption of turkey as a good investment opportunity.
He seized the rare opportunity to venture into the business, apparently to earn income from meeting the culinary needs of the rich, most of whom prefer turkey meat to chicken.
However, setting out for the business was not easy for Opeyemi. As a beginning farmer, he estimated start-up costs. In addition to start-up costs, he requires significant capital for annual operating costs, even for a small produce operations.
For instance, the average start-up cost for the business, besides structures, is N478,000. Also, acquiring a 200 day-old turkey, known as poults, at N350 each, translates to about N70,000. The cost of feeding each poultry to maturity is put at N2,040 X 200 for 26 weeks (182 days) is N408,000.
At the outset, it was difficult for him to generate capital. He couldn’t get any bank support. However, Opeyemi was not deterred. He had to raise money to start the business.
Consequently, he resorted to bootstrapping, saving money to start small.
He was able to recoup his investments within six months, even making profit, particularly after Christmas and New Year sales when demand is usually high.
Youths between 15 and 25 years are expected to constitute 70 per cent of the population by 2050 going by various studies.
With increasing population and surging demand for food, analysts consider the role of youths critical in economic growth when given the right opportunities and support for farming.
According to International Fund for Agricultural Development (IFAD), while small farmers lack access to adequate finance services, youths are even more disadvantaged than their adult peers; with 40 per cent of them less likely to save and 60 per cent less likely to borrow from banks in comparison with adults.
This means that they have fewer opportunities to invest in asset development, education and building enterprises, the report added.
At present, according to analysts, agriculture is decidedly unwelcoming for youths and stringent agri loans conditions puts new farmers at a disadvantage, especially those who cannot provide land as collateral.
The President, Federation of Agricultural Commodity Associations of Nigeria (FACAN), Dr Victor Iyama, feels that way about the agric finance system.
Speaking with The Nation, Iyama said the association had been flooded with inquiries from aspiring farmers looking to start operations. He added that he admired such courageous people for choosing an impactful profession and would want to encourage them. But, unfortunately, he said the lack of access deck was stacked against their success.
Iyama said new entry farmers were at a significant disadvantage in accessing capital, which exemplifies the old saying “it takes money to make money’’.
Even if a beginning farmer finds a land opportunity, Iyama noted that it was a struggle to run a profitable farm business.
Responding to Central Bank of Nigeria (CBN) launch of its Accelerated Agriculture Development Scheme, he said empowering youths to embrace agriculture was among the most urgently needed campaign, as the nation faced economic crisis.
He continued, however, that it was not in the interest of the sector that CBN demanded that beginning farmers, provide land before they could be granted loans. Rather than put obstacles on the way of new farmers, Iyama urged the CBN to collaborate with farmers’ associations on a workable formula.
His words: “ CBN should just provide land for beginning youth farmers. Unemployed youths don’t have the capacity to acquire land and use as collateral to get loans.”
He said the CBN should provide them land and work with the associations to ensure beginning farmers were achieving success.
He said there were opportunities in agriculture for youths but the funding was still lacking.
FACAN is driving the development of viable rural farm enterprises to provide sustainable sources of income to youths.
The youths will be trained to grow everything, including cucumbers, tomatoes, pepper plants, and sesame seeds, among others.
The agriculture sector, the FACAN boss noted, was an important source of income for various groups in the society, and this is why the association sought to implement the project to link youths with decent work opportunities with improved infrastructure.
Across the country, the dynamic winds of agriculture are driving young producers in divergent directions in a single-minded pursuit of growing opportunities. Some into soybeans, corn and many farmers experiment with double-crop field peas and cover crops.
Yet, the greatest challenge for agriculture today, according to the Chief Executive, Peniel Gerar International Limited, Prince Enahoro Martins, is access to capital for operating equipment that poses significant headwinds.
He has worked with a cross-section of farmers.
He reinforced that lack of capital remained a real barrier, adding that those who start farming without start-up capital were vulnerable to economic downdrafts.
“So many attempts by farmers to access Federal Government support loan through commercial banks proved abortive. Some were advised to form cooperatives and clusters and yet nothing to show. Some farmers complained to us that some of their members even contributed money as equity and yet they couldn’t access the loan even with verified land available.”
He was worried about the future of the rural community as more youths seeking to become farmers gave up.
The Vice Chairman, All Farmers Association Of Nigeria (AFAN), Otunba Oke Babafemi, agrees with him on new farmers’ plight.
While agriculture has great potential for development, Babafemi noted that the biggest impediment was lack of access to finance and the resources and services needed by young people to engage in productive activities.
He said there was a need for a comprehensive repositioning of agriculture among the youth, including making it easier for them to obtain funding for agriculture.
According to him, agricultural industry actors face issues with accessing credit facilities from traditional financial institutions, including beginning farmers.
He wondered how it would be possible for youths without land to be able to access finance when the existing ones were not favoured.
“It is difficult for existing farmers to meet CBN conditions not to talk about beginning young farmers.”
The founder, Agropreneur Zone, Kasim Farinde, highlighted the need for expanding agricultural finance in such a manner that will support new farmers. In spite of reported credit growth, Farinde said funds were still not accessible for beginning farmers, especially start-ups.
Added to this, he said Bank of Agriculture (BOA) was charging beginning farmers high application fees which was not encouraging.
CBN’s Accelerated Agriculture Development Scheme
CBN has launched guidelines for the regulation of the Private sector-led Accelerated Agriculture Development Scheme (P-AADS). The apex bank in a circular endorsed by the Director, Development Finance Department, Yusuf Philip, said 370,000 youths would be engaged in agricultural production, in collaboration with state governments.
However, it noted that P-AADS was developed to complement Accelerated Agriculture Development Scheme (AADS) by exploring private sector partnership to facilitate more rapid land clearing for production of key agricultural commodities.
“The broad objective of the P-AADS is to facilitate increased private sector agricultural production of staple foods and industrial raw materials, as well as support food security, job creation and economic diversification,” the CBN said.
The guidelines noted that the maximum loan accessible under the Scheme shall be N2 billion per obligor, while the facility shall be repaid from the Economics of Production (EOP) for cultivating on the cleared farmland.
The guidelines stated that interest rate under the intervention shall be 5.0 per cent per annum (all-inclusive) up to February 28, 2021, while the interest on the facility from March 1, 2021 shall be nine per cent p.a. (all-inclusive).
According to the guidelines, the Private Sector-Led Accelerated Agriculture Development Scheme shall be funded from the Anchor Borrowers’ Programme (ABP).
Farmers captured under this programme include those cultivating cereals (rice, maize, wheat etc.) cotton, roots and tubers, sugarcane, tree crops, legumes, tomato and livestock.
The loans are disbursed through any of the Deposit Money Banks (DMBs), Development Finance Institutions (DFIs) and Microfinance Banks (MFBs), all of which the programme recognises as Participating Financial Institutions (PFIs).
According to the guidelines of the programme, upon harvest, benefiting farmers are expected to repay their loans with harvested produce (which must cover the loan principal and interest) to an ‘anchor’ who pays the cash equivalent to the farmer’s account.
The guidelines stated that the collateral to be pledged by participants under the scheme shall be the title of the cleared land and other acceptable collateral prescribed under the ABP.
According to the guidelines, the CBN shall provide the fund, act as managing agent, issue and review modalities and operating guidelines from time to time and as well provide regulatory and supervisory oversight among others.
The Central Bank said prospective P-AADS participants must be existing or new firms engaged in agricultural production with proven capacity and bankable proposal, possess an acceptable title for contiguous lands of not less than 20 hectares and must have a good credit record.
Also, the CBN said a participant must be able to provide the required collateral for participation and provide evidence of the capacity to cultivate a focal commodity directly or engagement of farmers, including youths as in-growers or out-growers to cultivate on the land after clearing.
Meanwhile, the agricultural commodities eligible for consideration under the scheme include rice, maize, cassava, cotton, wheat, tomato, poultry, fish, sorghum, oil palm, cocoa, livestock/dairy, and any other commodities as may be listed by the CBN from time to time, the guidelines stated.
The concern of stakeholders was the ability of new and beginning farmers, especially youths to acquire 20 hectares required to participate in the programme.
Source: thenationonlineng.net/stringent-agric-loan-conditions-discouraging-young-farmers/
Given the capital-intensive nature of agriculture, new farmers struggle to access enough capital to operate at a size sufficient to earn a profit. While capital needs vary by farming system, they are in nearly all cases staggeringly high.
Opeyemi Lamson is a Lagos State- based agricultural landlord and a computer scientist. In the Southwest where he grew up, turkey meat is a delicacy eaten mostly by the rich. Perhaps that was what caught the attention of Opeyemi, who saw the near exclusivity in the consumption of turkey as a good investment opportunity.
He seized the rare opportunity to venture into the business, apparently to earn income from meeting the culinary needs of the rich, most of whom prefer turkey meat to chicken.
However, setting out for the business was not easy for Opeyemi. As a beginning farmer, he estimated start-up costs. In addition to start-up costs, he requires significant capital for annual operating costs, even for a small produce operations.
For instance, the average start-up cost for the business, besides structures, is N478,000. Also, acquiring a 200 day-old turkey, known as poults, at N350 each, translates to about N70,000. The cost of feeding each poultry to maturity is put at N2,040 X 200 for 26 weeks (182 days) is N408,000.
At the outset, it was difficult for him to generate capital. He couldn’t get any bank support. However, Opeyemi was not deterred. He had to raise money to start the business.
Consequently, he resorted to bootstrapping, saving money to start small.
He was able to recoup his investments within six months, even making profit, particularly after Christmas and New Year sales when demand is usually high.
Youths between 15 and 25 years are expected to constitute 70 per cent of the population by 2050 going by various studies.
With increasing population and surging demand for food, analysts consider the role of youths critical in economic growth when given the right opportunities and support for farming.
According to International Fund for Agricultural Development (IFAD), while small farmers lack access to adequate finance services, youths are even more disadvantaged than their adult peers; with 40 per cent of them less likely to save and 60 per cent less likely to borrow from banks in comparison with adults.
This means that they have fewer opportunities to invest in asset development, education and building enterprises, the report added.
At present, according to analysts, agriculture is decidedly unwelcoming for youths and stringent agri loans conditions puts new farmers at a disadvantage, especially those who cannot provide land as collateral.
The President, Federation of Agricultural Commodity Associations of Nigeria (FACAN), Dr Victor Iyama, feels that way about the agric finance system.
Speaking with The Nation, Iyama said the association had been flooded with inquiries from aspiring farmers looking to start operations. He added that he admired such courageous people for choosing an impactful profession and would want to encourage them. But, unfortunately, he said the lack of access deck was stacked against their success.
Iyama said new entry farmers were at a significant disadvantage in accessing capital, which exemplifies the old saying “it takes money to make money’’.
Even if a beginning farmer finds a land opportunity, Iyama noted that it was a struggle to run a profitable farm business.
Responding to Central Bank of Nigeria (CBN) launch of its Accelerated Agriculture Development Scheme, he said empowering youths to embrace agriculture was among the most urgently needed campaign, as the nation faced economic crisis.
He continued, however, that it was not in the interest of the sector that CBN demanded that beginning farmers, provide land before they could be granted loans. Rather than put obstacles on the way of new farmers, Iyama urged the CBN to collaborate with farmers’ associations on a workable formula.
His words: “ CBN should just provide land for beginning youth farmers. Unemployed youths don’t have the capacity to acquire land and use as collateral to get loans.”
He said the CBN should provide them land and work with the associations to ensure beginning farmers were achieving success.
He said there were opportunities in agriculture for youths but the funding was still lacking.
FACAN is driving the development of viable rural farm enterprises to provide sustainable sources of income to youths.
The youths will be trained to grow everything, including cucumbers, tomatoes, pepper plants, and sesame seeds, among others.
The agriculture sector, the FACAN boss noted, was an important source of income for various groups in the society, and this is why the association sought to implement the project to link youths with decent work opportunities with improved infrastructure.
Across the country, the dynamic winds of agriculture are driving young producers in divergent directions in a single-minded pursuit of growing opportunities. Some into soybeans, corn and many farmers experiment with double-crop field peas and cover crops.
Yet, the greatest challenge for agriculture today, according to the Chief Executive, Peniel Gerar International Limited, Prince Enahoro Martins, is access to capital for operating equipment that poses significant headwinds.
He has worked with a cross-section of farmers.
He reinforced that lack of capital remained a real barrier, adding that those who start farming without start-up capital were vulnerable to economic downdrafts.
“So many attempts by farmers to access Federal Government support loan through commercial banks proved abortive. Some were advised to form cooperatives and clusters and yet nothing to show. Some farmers complained to us that some of their members even contributed money as equity and yet they couldn’t access the loan even with verified land available.”
He was worried about the future of the rural community as more youths seeking to become farmers gave up.
The Vice Chairman, All Farmers Association Of Nigeria (AFAN), Otunba Oke Babafemi, agrees with him on new farmers’ plight.
While agriculture has great potential for development, Babafemi noted that the biggest impediment was lack of access to finance and the resources and services needed by young people to engage in productive activities.
He said there was a need for a comprehensive repositioning of agriculture among the youth, including making it easier for them to obtain funding for agriculture.
According to him, agricultural industry actors face issues with accessing credit facilities from traditional financial institutions, including beginning farmers.
He wondered how it would be possible for youths without land to be able to access finance when the existing ones were not favoured.
“It is difficult for existing farmers to meet CBN conditions not to talk about beginning young farmers.”
The founder, Agropreneur Zone, Kasim Farinde, highlighted the need for expanding agricultural finance in such a manner that will support new farmers. In spite of reported credit growth, Farinde said funds were still not accessible for beginning farmers, especially start-ups.
Added to this, he said Bank of Agriculture (BOA) was charging beginning farmers high application fees which was not encouraging.
CBN’s Accelerated Agriculture Development Scheme
CBN has launched guidelines for the regulation of the Private sector-led Accelerated Agriculture Development Scheme (P-AADS). The apex bank in a circular endorsed by the Director, Development Finance Department, Yusuf Philip, said 370,000 youths would be engaged in agricultural production, in collaboration with state governments.
However, it noted that P-AADS was developed to complement Accelerated Agriculture Development Scheme (AADS) by exploring private sector partnership to facilitate more rapid land clearing for production of key agricultural commodities.
“The broad objective of the P-AADS is to facilitate increased private sector agricultural production of staple foods and industrial raw materials, as well as support food security, job creation and economic diversification,” the CBN said.
The guidelines noted that the maximum loan accessible under the Scheme shall be N2 billion per obligor, while the facility shall be repaid from the Economics of Production (EOP) for cultivating on the cleared farmland.
The guidelines stated that interest rate under the intervention shall be 5.0 per cent per annum (all-inclusive) up to February 28, 2021, while the interest on the facility from March 1, 2021 shall be nine per cent p.a. (all-inclusive).
According to the guidelines, the Private Sector-Led Accelerated Agriculture Development Scheme shall be funded from the Anchor Borrowers’ Programme (ABP).
Farmers captured under this programme include those cultivating cereals (rice, maize, wheat etc.) cotton, roots and tubers, sugarcane, tree crops, legumes, tomato and livestock.
The loans are disbursed through any of the Deposit Money Banks (DMBs), Development Finance Institutions (DFIs) and Microfinance Banks (MFBs), all of which the programme recognises as Participating Financial Institutions (PFIs).
According to the guidelines of the programme, upon harvest, benefiting farmers are expected to repay their loans with harvested produce (which must cover the loan principal and interest) to an ‘anchor’ who pays the cash equivalent to the farmer’s account.
The guidelines stated that the collateral to be pledged by participants under the scheme shall be the title of the cleared land and other acceptable collateral prescribed under the ABP.
According to the guidelines, the CBN shall provide the fund, act as managing agent, issue and review modalities and operating guidelines from time to time and as well provide regulatory and supervisory oversight among others.
The Central Bank said prospective P-AADS participants must be existing or new firms engaged in agricultural production with proven capacity and bankable proposal, possess an acceptable title for contiguous lands of not less than 20 hectares and must have a good credit record.
Also, the CBN said a participant must be able to provide the required collateral for participation and provide evidence of the capacity to cultivate a focal commodity directly or engagement of farmers, including youths as in-growers or out-growers to cultivate on the land after clearing.
Meanwhile, the agricultural commodities eligible for consideration under the scheme include rice, maize, cassava, cotton, wheat, tomato, poultry, fish, sorghum, oil palm, cocoa, livestock/dairy, and any other commodities as may be listed by the CBN from time to time, the guidelines stated.
The concern of stakeholders was the ability of new and beginning farmers, especially youths to acquire 20 hectares required to participate in the programme.
Source: thenationonlineng.net/stringent-agric-loan-conditions-discouraging-young-farmers/
