Ensuring Family Farmers Benefit From CBN Agricultural Loans

By Isaac Asabor
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According to the Food and Agricultural Organization (FAO), an affiliate of the United Nations (UN), Family farming is “A means of organizing agricultural, forestry, fisheries, pastoral and aquaculture production which is managed and operated by a family and predominantly reliant on family capital and labor, including both women’s and men’s. The family and the farm are linked, co-evolve and combine economic, environmental, social and cultural functions.”

In a similar vein, the organization also defined a family farm as an agricultural holding which is managed and operated by a household and where farm labor is largely supplied by that household. Without any iota of exaggeration, the world, particularly when seen through the eyes of Nigeria, is been fed by farmers in the rural areas whose method of farming is basically hinged on family farming system.

However, with increasing growth in population, and the deepening apathy been demonstrated against family farming by the millennials, it is not an exaggeration to say that Nigeria may not be able to feed its citizens in years to come if the way family farmers, or rather peasant farmers are been shortchanged in agricultural loans offered by the Central Bank of Nigeria (CBN) is anything to go by. The threatening situation, if not nipped in the bud, will jeopardized the philosophy behind the need to develop Nigeria’s agricultural sector of the economy.

Regrettably, despite the fact that Nigeria’s smallholder family farmers produce most of the foods that are daily consumed in urban cities and towns, they are by each passing day faced with excruciatingly biting poverty. Most of them depend on small family farms for their income and sustenance. Paradoxically, they are the people that grow the food that feeds everyone in towns and cities, but they are also disproportionately poor as a huge percentage of the population of rural farmers in the country consists of the women, children and men, mostly in rural live in extreme poverty.

At this juncture, it would be recalled that the Governor, Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, has for the umpteenth time reiteratively assured that the apex bank remains committed to development of agriculture and other allied products in the country. His assurance cannot in any way be faulted as the CBN has been at the forefront of ensuring that the agriculture sector of the economy is well funded and minded. For instance, right from April 1978 when the Agricultural Credit Guarantee Scheme Fund (ACGSF) was established by decree No. 20 of 1977, the apex bank has not looked back. With its original share capital and paid-up capital that stood at N100 million and N85.6 million, respectively, and with Federal Government holding 60% of the shares and the Central Bank of Nigeria, 40% of the shares, not few observers of the sector would erroneously opine that family farmers have no fund challenges. The erroneous thought is further reinforced as the capital base of the Scheme was increased to N3 billion in March, 2001. The Fund guarantees credit facilities extended to farmers by banks up to 75% of the amount in default net of any security realized. The Fund is managed by the CBN, which handles the day-to-day operations of the Scheme. The guidelines stipulate the eligible enterprises for which guarantees could be issued under the Scheme.

It is germane to note that since 2001 down the line to recent years that similar Schemes have being inaugurated by the CBN.

Worthy of mention among the Schemes are the Agricultural Credit Support Scheme (ACSS) which is an initiative of the Federal Government and the Central Bank of Nigeria with the active support and participation of the Bankers Committee. The Scheme has a prescribed fund of N50.0billion. ACSS was introduced to enable farmers exploit the untapped potentials of Nigeria’s agricultural sector, reduce inflation, lower the cost of agricultural production (i. e. food items), generate surplus for export, and increase Nigeria’s foreign earnings as well as diversify its revenue base. In the same vein, Commercial Agriculture Credit Scheme (CACS) was also launched for the benefits of farmers across Nigeria.

Unfortunately, there has been concealed agitations by peasant farmers against how they have been from year in year out shortchanged from having access to the loan schemes. Rather, not few Nigerians who know next to nothing about farming, were seen usually carrying portfolios and clad in suits and dark sunshades have access to the loans that are meant to support farmers.

Against the foregoing backdrop, there is need for policymakers at the CBN to take effective measures in ensuring that agricultural loans that are meant to improve the lots of farmers are extended to them as a way of motivating them, and upcoming young farmers across the country. Therefore, the leadership of the CBN should recognize who participates in formal and informal credit, how much loans they acquire, what prevents farmers from using the credit that were extended to them primarily for the development of the agricultural sector of the economy. Again, it is incumbent on the leadership at the CBN to generate policy-relevant insights for the expansion of effective, sustainable, and inclusive financial institutions for farmers in Nigeria as it is essential to know the factors affecting participation in credit, the amount of credit obtained, and the credit constraints.

It would be recalled that governments; both at federal and states levels were once actively involved in agricultural finance in Nigeria. However, it appears the governments of today are no more concerned; even if most political leaders leveraged on the promises of assisting farmers to drive their campaign ahead of the elections that paved the way for the present positions they occupy across the country. There is no denying the fact that they have failed to make positive impact because of many factors, including corruption, and inefficiency.

It would not in any way be misleading for this writer to advocate that there should be return of governments and CBN to agricultural finance. It would not be a return to direct lending but it would stimulate commercial banks to become involved in the agricultural sector. Today, there are examples in some African countries of how Central Banks have succeeded in involving themselves in agricultural financing. This could be replicated in Nigeria.

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