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Food crisis: CBN N50b intervention in commodity exchange offers ray of hope`

Food security is a product consistency and deliberate intervention in agricultural chain value.

Not long ago, the Food and Agriculture Organization (FAO) warned that the food crisis was looming in Africa and particularly in Nigeria due to the ravaging effect of COVID-19. Statistics depict that the agricultural sector in Nigeria has not been able to fulfill its traditional roles of feeding the population, meeting the raw material needs of industries, as well as providing substantial export earnings for the economy.

However, the steps were taken by the government through the Central Bank of Nigeria (CBN) offer opportunities for rebirth. When the money spent on the importation of food and drinks went up to an embarrassing level, President Muhammadu Buhari directed the CBN to block food importers’ requests for foreign currency to boost local agriculture in the country. This was in continuation of his policy when he came to office in 2015. This singular act combined with the closure of the country’s border with all manner of importations of food, particularly rice, helped to re-focus agriculture towards a recovery path, according to an agronomist, Dr. Iremi Alade

The CBN is injecting N50 billion into the commodity exchange to mop up produce from farmers and aggregators has been seen as a welcome idea both for the farmers and agricultural experts. The President approved that the CBN, as a majority shareholder in Nigerian Commodity Exchange (NCX), should collaborate with the Nigeria Sovereign Investment Authority (NSIA) and Africa Finance Corporation (AFC), under the Infraco Structure, to develop and implement a strategic repositioning plan for the Exchange which has remained comatose for several years.

CBN Governor Godwin Emefiele said despite huge gains made by the apex bank in the agriculture sector, there remained significant challenges, particularly within the Nigerian agricultural commodity value chain which needed to be tackled to accelerate investment and productivity.

According to him, some of those challenges include poor infrastructure and logistics which impede the movement of produce from farm to market and/or processing centers, resulting in massive revenue losses to farmers; limited storage and preservation facilities; and lack of adequate liquidity to support off-take of agricultural goods.

The CBN boss argued that the critical role that an effective and efficient commodity exchange ecosystem should play in providing an organized platform for farmers to trade products in a transparent and efficient market cannot be underemphasized but lamented that the NCX, the Federal Government’s premier commodity exchange, set up in 2001, has failed to catalyze agricultural production.

He explained that the president also approved “the formation of a Steering Committee chaired by the CBN governor and including representatives from NSIA and AFC as well as the federal ministries responsible for finance, budget, and national planning; industry, trade, and investment, as well as agriculture and rural development, to oversee the implementation of this strategic plan”.

Speaking to The Nation on the prospect of the policy against the backdrop of dwindling fortune of oil revenue in the country, Mr. John Okechukwu, an agricultural economist, noted that the hallmark of any policy, particularly agriculture is that it must be domesticated to the last farmer on the field which at the long run will provide food security to the nation.

Okechukwu pointed out that the establishment of 20 Commodity Exchange licensed warehouses in the six geopolitical zones in the country will go a long way for the farmers to have access to it.

He explained that some of the crops which include rice paddles, maize, cocoa, groundnut, beans, cashew nuts, sesame seeds, soya beans, and sorghum are stored at the point of harvest,  which will reduce a lot of waste and encouraged even distribution during the time of need.

He regretted that a lot of infrastructural amenities were scattered all over the country, but the farmers cannot access it, adding that one of such facility is silos which is very germane to agricultural storage, yet it was underutilised.

Dr. Ademola Adeyemo, an agriculturist, explained that the policy is long overdue. He  said that all over the world all these are put in place to make sure that farmers were assisted in the period of surplus harvest and save for a raining day without losing anything.

He argued that ordinarily it may be difficult for each farmer to embark on this exercise individually, which has made them to  be suffering in silence for many years, adding that if the policy could be implemented to the letter, it will reduced drastically all the wastage being experienced by farmers during the peak of their harvest.

According to him, this will also give the farmers the opportunity to have good price bargaining on their produce when they are ready to dispose it, unlike when they are at the mercy of the customers during the harvesting period which may crash the price.

“The good side of it is that the farmers may not be in a hurry to dispose its crop during the time of plenty when the market will be jam-packed with more goods than could be consumed, which may force the farmer to sell at a giveaway price for fear of being destroyed, but if there is a good storage facilities, all the excess produced can be mopped up and store till the need to consume it arise.”

Admonishing the youths to embrace agriculture as a business venture which can turn around their economic fortune, Mr. Oluwole Azeez, the founder of Farmkonnect Ltd, noted that 2021 might pose a serious threat to food production in Nigeria as a result of COVID-19 which has adversely affected farmers. He, however, proffered that the only way to tackle the looming food crisis was for the government at various levels to intervene.

He lamented that  the adverse effect of the pandemic  gave a deadly blow to farmers adding that the intervention of government, along this line had salvaged a lot of farmers, adding that this type of a policy should be domesticated to the last farmer on the field so that the looming danger of food crisis can be averted.

To Gbenga Adewale, a cocoa farmer and exporter in Ondo State, the new intervention by the CBN is long overdue.  “This is a step we ought to have taken longest time, but all the same it will assist us a lot to combat the challenges which storage facilities has imposed on us.”

Adewale lamented that grain farmers have suffered a lot because of this problem because they were being forced to dispose their produce because of lack of financial enablement to store it during the period of massive harvest

He pointed out that the government should make sure that the policy should not be a mere paperwork, but an action plan that will reposition the country to solve the looming danger of food crisis in the soonest future.

The cocoa expert argued that the synergy between NCX and African Continental Free Trade Agreement (AfGFTA) will go a long way to open a new market opportunity for the farmers to collectively export their produce in order to earn foreign exchange. “Both will put their expertise together to get the best out of the local farmer which can be exported with easy.”

The Managing Director of AfCFTA, Mrs. Zaheera Baba-Ari, noted that “The establishment of the continental trade bloc will be beneficial to African countries if properly managed”.

According to her, the exchange had established a network of 20 licensed delivery warehouses across major production areas in the six geopolitical zones of the country for efficient receipt and storage of agro-commodities to be traded on the exchange.

The warehouses, located in Zamfara, Kano, Kaduna, Nassarawa, Benue, Bauchi, Sokoto, Plateau, Ebonyi, Ekiti and Kogi have combined capacity to store 50 trillion tonnes of goods, she said. Baba-Ari added that other warehouses located in Adamawa, Gombe, Taraba, Jigawa, Edo, Cross River and the Ondo states would be ready within the year.

On standards and quality of commodities, Baba-Ari said that the NCX Quality Control department was headed by a professional certified by the Institute of Public Analysts of Nigeria. She added that the exchange’s laboratory was being rigorously upgraded for ISO22000 certification, which combines ISO 9001 with Food Safety Management and Hazard Analysis, including Critical Control Point System (HACCP).

“The HACCP identifies specific hazards and proffers measures for the control of identified impurities in the food processing sector,’’ adding  that Nigerian farmers and manufacturers would likely face the challenges of global competitiveness as a result of the high cost of production, poor yields, low capacity utilization and high prices.


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