Mechanizing Agriculture in Nigeria: Equipment Sharing Programs and Services

Justin Diamond, Student, The Elliot School of International Affairs, George Washington University
justindiamond@gwu.edu

The agricultural sector is important to the Nigerian economy, not only because it employs so many Nigerians, but also because Nigerian policy has recently shifted towards agricultural protectionism. The short-term effects on food security and production are unsurprising in the context of a globalized economy built around comparative advantage. Domestic farmers tasked with filling the sudden gap between supply and demand will need to implement yield-improving techniques to succeed. Nigerian policymakers must apply successful models of agricultural development that improve efficiency at an affordable cost. I propose that equipment sharing services and subsidies for equipment leasing enterprises would most effectively accomplish this goal.

Agricultural Outlook and Challenges in Nigeria

The Nigerian economy is largely driven by agriculture, and according to the World Bank, over one third of its working population is employed in the agricultural sector.¹After reconciling this with the fact that Nigeria has the largest population of any country on the African continent, it would seem that Nigeria ought to be the breadbasket of the African continent;² however, this is not the case. Despite having millions of workers in agriculture, Nigeria still must import food, costing billions of dollars. This is because most Nigerian farmers are still subsistence farming. In a recent poll, 85% of the farming population reported that they are either engaged in subsistence farming, or a combination of subsistence and commercial farming.³ This is characteristic of an agricultural sector which is plagued by low crop yields. Specifically, rice yields in the Ebonyi province of Nigeria typically fall between 2 and 3 metric tons per hectare.⁴

In recent years, the government of Nigeria has been taking steps to improve its agricultural industry. After entering office in 2015, President Muhammadu Buhari banned the use of foreign exchange to import dozens of food items, including rice.⁵ Furthermore, the Nigerian government has spent hundreds of millions of dollars subsidizing rice production. Despite these efforts to protect and develop domestic production, Nigerian farmers are still lagging far behind. Until their productive capacities catch up, food prices will remain unreasonably high:

Economic theory suggests that reducing the supply of something will increase the price. Therefore, it is a general belief that if domestic supply cannot immediately replace what was once imported, Nigerians will end up paying more for their food. Between 2015, when the foreign exchange restrictions for rice came into effect, and in early 2017, the price of a 50kg bag of rice went from $24 to $82 … and in June [of 2019], the price stood at $49.⁶

Since food prices remain undesirably high, rice-farming provinces across Nigeria have taken steps to increase supply. In the Ebonyi province of Nigeria, the local government has implemented a “one-man, one-hectare” program which dedicated 80,000 hectares to 80,000 rice farmers.⁷The province’s program may sound like an effective way to increase the gross metrics of rice supply and lower local food prices, however, it remains extremely inefficient. This solution fails to take advantage of economies of scale, and only includes a minimal degree of mechanization efforts. It is not a holistic solution, and even perfect implementation would be sub-optimal at best. To improve rice production and lower food costs in Nigeria, additional steps must be taken beyond import limitations and dedicated farmland. This problem cannot be solved via an ethos of multiplying inefficient inputs. Rather, the solution lies in creating efficiencies that multiply outputs. To illustrate, small-scale mechanization efforts in Nigeria have yielded six metric tons per hectare, which doubles, or triples established yields in various Ebonyi province terrains.⁸

Financial Efficacy of Equipment Sharing Programs and Services

Regrettably, there are many obstacles to mechanization. The upfront capital and education required for mass-mechanization is beyond Nigeria’s means. However, Nigeria could follow Japan’s model, which currently yields an average of seven metric tons per hectare.⁹ During Japan’s agricultural revolution, new technology was used collectively by cooperative groups of farmers, so that they all take advantage of shared equipment, stimulate economies of scale, and increase crop yields without having to buy expensive machinery for each farmer.¹⁰ To a limited extent, the Ebonyi province has already done this, but with a meager quantity of 40 general purpose tractors.¹¹ A greater effort should be made to expand these mechanization efforts through equipment sharing and leasing services. Based on field surveys of rice production and its profitability in Ebonyi, we can consider the financial situation of a rice farmer in the uplands, who yields only 2.2 MT/Ha. Moreover, with machinery the farmer can increase their yield twofold to 4.4 MT/Ha, generating USD $893.40 in revenue per hectare – not considering planting and harvesting savings.¹² In the long run, the price of food would become competitively low, shifting benefits to consumers.

Providing governmental equipment sharing services and implementing enterprise subsidies for equipment leasing would improve Nigeria’s access to mechanized farming techniques, encourage investment in capital goods, cultivate service sector jobs, stimulate economies of scale, and lower food prices by domestic production expansion. All parties involved, from farm to plate, would benefit from implementing such policies.

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