Most often, the people who gain access to funding are the big farmers who in most cases do not really need the money. A series of government initiatives has still not made any impact as the farmers who need the funds are less likely to access the funds.
Also, international finance organizations that have the funds and are willing to lend out upwards of $100,000 which is outside the interest of the small holder farmers and Agric SME's who make up the large percentage of the Nigerian farmers.
How do we make funding accessible and affordable to the majority of farmers???
We will love to read your opinions and any experience you may have .
#senceagricforum #senceagricconversationsonagriculture #funding.
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Many farmers want to take loans but credit worthiness requirements like collateral and others are out of reach of such farmers & then the process and administrative bottlenecks are tiring and discouraging. Its one thing for funds to be available and an entirely different thing for them to be accessible. The funds for agriculture in Nigeria, if the bulk of farmers must be carried along must beyond available be accessible and easily so.
Agriculture and Food is very important. The Agricultural sector should b taken very serious to mostly small holders farmers especially those in the rural areas. Provision of loans, lands, equipments and building of agro-allied industries to support agriculture. This will help to enhance funding in small scale farming in Nigeria.
Nice topic. Thanks for bringing this up..
Well, it's quite true that the big farmers are the ones having access to funding but a critical look into the so called "big farmers" will tell you why they enjoy the facility. 1 they keep proper recor and data. 2 they are well structured and regulated 3. They Ave a good forecast 4. They are enlightened n risk takers 5. They are conscious of the fact that debt is cheaper than equity. Etc. All these are some of the factors the funding agencies look out for before giving it out. And these are things most peasant farmers lack. To discuss the topic at hand, I will split it into two 1. how to access it: peasant farmers can access funds primarily through cooperative. They should form a corporative society such that they can access loans at a very cheap rate. They should keep record of their day-day activities. Extension workers also have a big role to play to get this mission accomplished.(through sensitization and awareness). How can the funding be affordable? The truth of the matter is banks prefer to give farmers loan compared to those in oil n gas. CBN and BOA are trying their best .. They give out loans to farmers at a single interest rate of 9% example is the commercial Agriculture credit scheme (CACS loan) I'll like you guys to read about it, we've NIRSAL loan, BOA Loan etc. All these loans and or funding can be granted only if the peasant farmers form a corporative, keep proper record n reading the guidelines (extension workers) to knw the conditions preceedent to draw down. I believe these would help them access affordable funding to propel thir bine o the next level
Lovely ideas. I am still learning. I agree with most of what have been said.
There should be:
Price control: because it is only went profit is made, you can think of paying back loan.
Readily available market with storage facilities (infrastructures).
Proper mitigation of risk.
I want to support the idea of awareness, but specifically awareness on how they can cooperative access credit facilities.
Another thing is that the bureaucracy of the Ministries of Agriculture across the country can not help to change the status quo of inaccessibility to national credit facilities. We need agriculturist at the helms of affairs and not agro- politicians.
The issue of funding in agriculture has posed serious challenges to development of agriculture in Nigeria no doubt. But i believe if there can be an holistic approach to the problem then we may have headways. In the sense that looking at agricultural operations be it livestock or animal production majority of what is required are inputs instead of provision of capital fund to smallholder farmers i will sugest priv-govt should provide all neccessary input as grants or loan these will not only boost farmers productivity but also curb the issue of farmers diversion of loans for other purposes..
secondly financial institution should stop viewing agric investment like other form of investment e. g oil and gas,mortgage,real estate as these are investment with high ROI and can be quickly liquidated but rather agric should be seen as a social investment (with multiplying effect on the economy) that are subject to high risk and uncertainties that make agric take a while before the ROI are even made.
therefore, if financial instituition can see agric in this light, then their agricultural fund/loan/grants policies will be reviewed for the interest of the smallholder farmer whose major aim is just to get enough to feed himself and his family with some little savings..
These farmers are most times not aware of fund opportunities. Awareness is the key
Giving and receiving loans involves risk. There are factors, unexpected mostly, that leads to complications. Hence, even with the suggestions made above, there's still risk. We can only try to reduce it to the possible minimum. Since the major reason governments and investors shun small scale farmers is because of the high risk. So how do we reduce the risk?
I think more small scale farmers friendly policies should be made. Policies that focuses more on empowering the small scale farmers who make up a rather significant percentage of the nation's farmers. It could come under poverty alleviation or even national development agendas. The government must be willing to take risks.
Also, I think education of farmers is very important. Many of them don't really know how all this loans and grants stuff work. Therefore, they flounder in their returns. Agriculture extensionists should also include training on how getting and returning loans work in their programmes. The media can also be used to sensitize and motivate farmers on loans. This will encourage them to try to come for it and also, having knowledge of its workings, they would more likely ensure returns.
Finally, it is important to realize that risks cannot be totally eradicated. Human nature and psychology play an important role in these matters. And they can be unpredictable, even to the greatest shrinks. So I think risk evaluation should be given special attention. Understanding of the risks involved would open more ways to reducing or avoiding the risks, and as a result, improve the loaning culture between farmers and government/investors.
One of the major reason why access to loan facilities is difficult for small holder farmers in Nigeria is their ROI. Before giving out a loan, the financier would want to make sure that he is getting a good enough return on his investment, but small farm holders that barely break even. Unforeseen circumstances affects small holder farmers more than the established ones and this makes it difficult for them to pay back loans even when given. My suggestion is that small farm holders should come together to create a larger Enterprise, this way, their production capacity is increased and so is their return on investment. Also, adequate market should be put in place for their products before embarking on production.
Firstly, it's not advisable for any start up to go for bank loan as there is no single digit interest loan.
Secondly lack of database is one major problem in startups, investors need number to convince them on ROI with our data we know where their is problem and other challenges.
Thirdly, startups can come in clusters and setup an integrated Farms.