Showing posts with label wonership. Show all posts
Showing posts with label wonership. Show all posts

Wednesday, July 24, 2013

Innovative Finacing in Land Ownership for Small Holders - Lessons From Shonga Farms

Being a Paper presented by His Excellency, Senator (Dr.) Abubakar Bukola Saraki(CON) at the occasion of 6th Africa Agriculture Science Week and FARA General Assembly, Accra Ghana on the 19th of July 2013.
Small holder farmers are among the poorest and most food insecure people around the world (Nigeria inclusive), they reside in the most ecologically and climatically vulnerable regions and must draw their livelihood from these same conditions. With all these challenges, it is these small-scale farmers who feed the majority of the world, producing food for about 70% of the world population (FAO2009). For many of these farmers, scarcity scenarios of so many things are nothing new.

In Nigeria, because of the neglect of agricultural development over past decades, secure land tenure and access to safe water has remained out of reach for many people, while national agricultural sector have suffered structural deficits and low productivity.

According to (FAO right to food, 2008) "Equitable access to land and natural resources is an essential element of the right to food for rural population in general and for vulnerable and marginalized groups in particular" All these emerging scarcity scenarios have helped push agriculture to the top of the global policy agenda forcing most forward looking governments and responsible international institutions to rethink the ways in which agriculture is practiced (i.e the way food is produced and distributed).

This effect is resulting in a renewed emphasis on the potential of agriculture, and government in recent years have intensified efforts to commercialize their agricultural sectors, thereby indirectly strengthening the small holders through an effective technological transfer from the developed commercial farming ventures.

Land Ownership /Tenure are important issue for farmers as it affects fundamental factors of investment security and the consequent ability to be able to repay and also, the issue of using such security as collateral.
It is a common fact that in Africa, private ownership of land is not real. It is rare for a small holder to be able to lay claim to title to his or her land and dispose same freely. The current land tenure system as it is being operates does not guarantee or provide necessary security. This is impossible due to some social pressure as land tenure is being deemed as prerogative of authorities concerned. It is equally known that even where land tenure operates, land registration are not available and where it does, it is not perfect.

The rights, responsibilities and or obligation of smallholder farmer vary according to religion, region, ethnic group, age, social status, education and economic power. It must be noted here that women in particular often do not have their right asserted through land registration system where it exists.

It has been posited in several forum that freehold or long leases could provide basis to encourage productive term investments and to permit col-lateralization of land. Therefore, it is believed that creating a legal framework to support traditional ownership of land maybe the best method. Another school of thought are of the opinion that, registration of the security for use is the key rather than registration as ownership of land.
Therefore, from the perspective of financial institutions or donor agencies, to be able to lend will depend on the level of information available to evaluate the capacity and or capability of the lender to repay as at when due and utilize such fund wisely.

Uncertainties regarding land tenure system (insecurity of land tenure)
Inadequate and unequal access to land
Lack of mechanism to transfer rights and considerate plots
Overly subdivision of land into small and uneconomic units
Food insecurity - low productivity
Improper management of land (land degredation, erosion and loss of fertility).
Lack of collateral and or credit facility - farmers relies on many informal lenders.
High interest rates- this is one of the major challenges to smallholder productivity
Lack of influence on agricultural policies and budget-(smallholders are not part of policy making, as a result, their interest are not captured).
Poor quality of land
Reliance on basic farming equipment
Poor access to local market and extensive services
Generally, lack of capital and access to affordable credit by smallholders has been the factor behind low agricultural productivity. Most farmers could not be assisted by commercial and micro-credit banks, thereby, commercial banks support towards agriculture has been very low compared to manufacturing, trade and other sectors of the economy where they can recover their interest on time. Budgeting allocating by most African government are very low. Most government have not been implementing the Maputo declaration which is 10 percent of their yearly budget allocation.

African countries should go the way of South Africa's standard Bank which signed a million dollars deal with Alliance for a green Revolution in Africa (AGRA) in March 2000.
- Objectives - To provide financing to small holder farmers and agric business where certain percentage default guarantee are provided by the state on the loans to be given for a certain period of years
- Standard Bank identified and factored in most risk assessed and problems, for example, reduce risk on farming inputs, mitigate losses on drought-prone areas, reduce transaction costs and abolish collateral requirement and instead, mobilize large cooperatives to commit to buy the upcoming crops.
Expansion of saving groups and use of remittances to fund profitable agricultural sub-sectors.
Private sector participation, for example providing transport, logistics, credit, warehousing services, leveraging on technology to bring down cost.

Facilitating of projects that can help farmers to make money through better linkages to value chain actors.
Producer organizations - cooperatives and farmers Associations to offer support to small holders through collective action to secure land rights and better market opportunities.
Government to subsidize credit scheme (providing loan guarantee to private banks who are willing to support smallholders).

Exploration of government and donor backed schemes to increase provision of rural credit to small holders. For example, providing subsidies to credit scheme or loan guarantees to banks.
Pre-financing of agricultural initiatives-tractorisation scheme in Nigeria.
Business groups to ensure that credit offers made available are appropriate for smallholders operating within supply chains.

Government to re-commit to allocating 10% of their national budget to agriculture- e.g Nigeria.
In Kwara State, some of the above initiatives can already be observed where the shonga farms and their various partner cooperate with farmers, the local communities and the government in the areas of agriculture, rural development and food security.

In this regard, Kwara State government adopted initiatives to accelerate agricultural growth through both the commercialization of small holders and promotion of large-scale corporate farming, all through the Shonga Farms Holdings Nigeria Limited.
As these laudable initiatives gather pace, the situation of the small holders producers improves considerably through the constant transfer of knowledge among them other benefit

To effectively deal with low productivity and increase access to modern method of agricultural production, kwara State government set out early in 2004/2005 at promoting agricultural modernization through the commercialization of agriculture at Shonga, building its foundation on existence of vast land areas and numerous small holders farming families already in existence in the area.

A new emphasis on large-scale, commercial agriculture with these small holders also emerged, with the government providing a conducive, and an enabling environment taking the communities into confidence so as to attract these foreign joint investment in agriculture as witnessed with the Shonga farming ventures.
With this bold initiatives by the state government and having built sustainable confidence with the local communities, the most difficult aspect of land acquisition became surmontable as "easy access to land with smooth facilitation process" was achieved after series of various levels of consultation was arranged between the government, local communities, small holder formers and the investing commercial farmers on the other hand between 2004-2006.

The state government engage the service of 13No. Zimbabwe farmers who were established around Shonga Emirate in what is now known as Shonga's farms (Holding). Each of these 13 farmers were allocated 1000 hectares of land to engage in various forms of agricultural ventures. (Mixed croppers, Poultry groups and dairy groups).

In between these 13 settled commercial farmers, 200 hectares of land were earmarked and reserved for the local farmers. These initiatives became necessary because about 90% of the work forces of these commercial farmers are from the local communities who are expected to be empowered for the sustainability of the whole concept.

Each of these local farmers are then allocated with 2-5 hectares of land within this reserved 200 hectares in between the commercial farmers. The essence of this is to enable these local farmers benefit from the inflow of inputs, information, plants and machinery, off taking of proceeds and all other forms of technological transfer from the commercial farmers. It is envisaged that at the end of the day all these local farmers would have benefited immensely and became empowered to transform to commercial farmers, after which, is our intention to move them to a different location in form of Shonga Farms Holdings phase II in conjunction with grandaunts from Integrated youth farm institute in Kwara state.

Kwara state integrated youth farms was actually established to breed new generation of successive farmers, as they are adequately exposed during their training to both theoretical and practical aspects of modern agriculture.

Our intention therefore, is to bring some of these grandaunts and the local farmers that have benefited from the empowerment from the commercial farmers to work together prior to their movement to phase II. It is this particular concept which is novel that has caught the attention the Federal Government of Nigeria and the Bank of Agriculture, for financial support especially in the area of cassava production.
Against this backdrop, the experiences of Shonga farms Holdings show that with adequate support, small holder agriculture has commercial potentials that goes beyond increasing food availability in local, state, national, or even international markets.

This farms holding is a deliberate strategy designed to empower both small holders and large-scale farmers to make a commercial success of farming through partnership that works and sustainable, with governments, local communities and various business concerns.

Over time, this laudable initiative is likely to have a significant impact on small holder farmers as commercial enterprises look to invest in the state. Ensuring that those farmers have secure tenure as is done here is an important step in strengthening their position in future.

It is a fact that adopting a financing structure from one country to another maybe difficult to implement. It is suggested that a financing arrangement that can work well in peculiar cases should be designed to encourage other countries. The most important consideration here is to ensure that such structure provides practical solutions to the financing needs of smallholders.

There is also the need for African countries to contribute enough budgetary allocation to agriculture and support farming. Along this initiative, government must ensure improvement on land tenure security. This will increase food security as farmers are encouraged to invest more in their land and enable access to services as finance and prevent farmers for being displaced from their lands.

Furthermore to the above, laws that promote secure land tenure for all should be enshrined in most countries legal system. Smallholders need innovative financial services to support and encourage them in prioritizing sustainable management. The economies of African countries are developing and it is high time we brace up to the challenges of how to ensure innovative financing methods for purpose of food security.
Africa, it is time for action and enough of rhetorics, seminars and workshops. What we need now is action and commitment to eradicate hunger and poverty in the continent.