If Agriculture Is to Supplant Crude Oil as the Economy’s Engine, By Uddin Ifeanyi
The case for agriculture along these lines starts to break down, however, when you consider that the sector uses up so much labour only because its management, techniques, and tools are antediluvian — rain-fed, subsistence (hoe-and-cutlass, etc.).
Arguably more interesting than the current state of the Nigerian economy are the conversations that have arisen on the back of its vicissitudes. One such especially insightful argument is the one that puts out agriculture as the solution to the economy’s current dependence on oil export earnings for much of its financing. By the way, this platform is also a natural extension of the “diversification as solution to the economy’s sundry vulnerabilities argument”. In one incarnation of this argument, the point is made (and without irony at that) that palm oil could be the new crude, if only the federal government was minded to pay heed to the sector’s needs.
To the point that by promoting agriculture, this way, we may simply be substituting an old dependence for a new one, supporters of this position indicate how much of domestic employment agriculture currently accounts for — about two-thirds! Thus, the argument continues, any investment in the agriculture sector that is able to drive up both capacity and productivity should result in net welfare gains across the economy. It should, in addition, strengthen domestic terms of trade in favour of our rural communities.
How much does it matters to this perspective that commodities’ prices move in lock-step? Accordingly, whether it is oil (palm or of the extractive variety), cocoa, or sesame seeds, exporters of primary produce are never going to sell more than there is a global appetite for their respective commodities. True, the pro-agriculture argument readily concedes. But isn’t the whole point of the planned reforms to the sector about boosting rural infrastructure (better inputs and roads to farm gates, better post-harvest processing, better storage, etc.)? Post-agriculture reform, therefore, considerable domestic “value addition” should help break the domestic industry’s link to the commodity cycle.
All well up to this point. Indeed, the latter focus on domestic economic linkages is essential if we are to break away from the current fixation with managing the naira’s external price (especially at some expense to its internal one). The case for agriculture along these lines starts to break down, however, when you consider that the sector uses up so much labour only because its management, techniques, and tools are antediluvian — rain-fed, subsistence (hoe-and-cutlass, etc.). If you consider that in those places where agriculture plays important roles (food-sufficient, and provider of key input into the domestic value chains) in the economy, a very small number of the population is engaged in the sector, then we clearly confront a different task order in any planned reforms to the sector.
If the goal of a more efficient agriculture sector would result in three percent of the working age population producing all of the sector’s output post-reforms, then we would have to deal with the challenge of finding useful employment for close to 67 percent of our current workforce.
Mechanisation on a very large scale, use of improved crop varieties, and advanced soil management techniques (all of which are essential to improving both capacity and efficiency in the sector), would all require changes to the way the economy as a whole is structured. At the very least, mechanics must be educated to levels where they can keep tractors (combine harvesters?) running optimally across the country. Local research institutes must be able to improve seedlings for local use, across the broad range of domestic farm produce. And agriculture extension facilities must be up to scratch.
But by far the bigger change must be to rural-urban terms of trade. If the goal of a more efficient agriculture sector would result in three percent of the working age population producing all of the sector’s output post-reforms, then we would have to deal with the challenge of finding useful employment for close to 67 percent of our current workforce. Now, this is a lot of hands to be left idle. And as both Boko Haram, the restiveness in the Niger Delta region, and a resurgence of separatists’ sentiments in the South-East show, if the economy is loth to find gainful employment for any number of our youth, a less benevolent employer would lend them a helping hand.
If it is to be of any use, much of the new employment should open in urban areas. It thus matters that the current bias against “rural-urban migration” amongst our policy wonks must be addressed for the harmful fiction that it represents. Beyond that, though, urban industry and services will have to endure reforms as thorough-going as in the agriculture sector, if they are to soak up the excess labour released from the newly-reformed rural areas. In a roundabout way, then, we do not just return to the now familiar refrain that government must bring down business costs across the economy if it is to see significant appreciation in output growth. We are also invited to re-emphasise the relative importance of social investment in leveraging any such reforms.