Nigeria's Farming Reforms Still Face Hurdles

ABUJA —  Nigeria is reforming its farming sector to bolster production and draw investment but companies this week said more needs to be done to tackle entrenched corruption, poor infrastructure and rogue government agencies.

Nigeria's annual economic summit focused on agriculture for the first time, in line with President Goodluck Jonathan's commitment to fixing Nigeria's biggest employer.

Agriculture Minister Akinwumi Adesina, who has been praised by donors and businesses for his efforts, was keen to stress the success of reforms began two years ago.

He said subsidies used to reduced the cost of fertilizer for farmers were not longer managed by corrupt politicians but instead were given directly to farmers.

He said food imports had fallen by 850 billion naira ($5.2 billion) and food production was up by 8 million tons, helping to create 2.2 million new jobs.

The government wants to add 20 million tons of domestic food production by 2020 and rice, corn, sorghum, palm oil and cocoa have already increased, Adesina said.

The world's second-largest importer of rice, Nigeria aims to become self-sufficient by 2015 after introducing a 100 percent tax on polished rice imports this year, likely to mostly affect countries like India, Thailand and Brazil.

Security sources and farmers have said one backlash has been a rise in smuggling of rice and sugar from neighboring countries and into ports.

Higher cassava output has been used to make flour, reducing wheat imports mostly from the United States by almost 9 percent, Adesina said, who noted bank lending to agriculture had risen to 25 billion naira this year from just 3.5 billion in 2012.

Duties on agricultural equipment have been scrapped and tax breaks given to companies willing to invest in both farming and industrial processes, as well.

The country's reforms have drawn new foreign investors such food giant Cargill, seed company Syngenta and brewer SABMiller, while Dangote Sugar and others are investing more.

However, many companies asked to speak at the summit gave a less rosy picture, saying state and local governments still extort unofficial payments, while officials at ports and customs either worked around government policies or outright ignored them.

Confusing laws on land, much of which is owned or claimed by government officials, also mean it is difficult to expand. That has left 60 percent of Nigeria's arable land fallow, farmers say.

Rhetoric vs. action

“We're still battling with the basics; visa processing times, port delays, access to credit, transport systems. Rhetoric is all we are getting. It's time to walk the walk,” said Alan Jack, managing director of Shonga Farms, a mainly poultry and milk farming group which supplies the Lagos branch of Kentucky Fried Chicken, owned by Yum! Brands.

Jack said imported chicken from Brazil cost 135 naira per kilo, while a chick in Nigeria cost 180 naira, making government plans to emulate its South American rival unrealistic.

“Ports would scare the life out of anyone. It's the worst thing about your system,” said Calvin Burgess, chief executive of Dominion Farms, a U.S.-owned firm looking to farm rice in Taraba state.

He said $10 million of agriculture equipment was delayed for almost a year because customs and other agencies sought bribes and noted Dominion had operated in Kenya for 10 years “without anything like these problems”.

The government says port reform is a key policy, but investors say progress is slow.

Industry players were also critical of Nigeria's dilapidated road network and troubled power supply noting it is often more profitable to ship produce to the U.K. rather than transport it from Lagos in the south to the biggest northern city, Kano.

“We don't benefit from any infrastructure put in place. We have to build our own roads and provide our own electricity,” said Gbenga Oyebode, chairman of palm oil firm Okomu Palm, said.

Africa's most populous country is privatizing much of its power sector, which should help improve electricity shortages that hurt the agriculture sector.

Nigeria's reforms are needed to reduce reliance on a struggling oil sector and cut a $11 billion food import bill.

“We see efforts but do we know these policies will be long term?” said Paul Gbededo, chief executive of FlourMills of Nigeria, one of the country's largest agriculture firms.

“Every level of government must be committed.”