As farmers continue to grapple with challenge of availability, accessibility and affordability of farm inputs for food production in Nigeria, two agribusiness firms, AFEX Commodities Exchange and African Fertilizer and Agribusiness Partnership, AFAP, weekend, signed a Memorandum of Understanding, MoU, to boost fertiliser production and availability for smallholder farmers’ accessibility.
The move by the two firms is to collaborate on sufficient financing of hub-agro dealers aimed at facilitating and supporting Nigerian smallholder farmers’ access to fertilizers in the market. The Managing Director, AFEX Fair Trade, Kamalden Raji, signed on behalf of AFEX Commodities Exchange, while Country Manager, AFAP, Matthew Adetunji, signed for AFAP, which signaled take-off of partnership to ensure enough fertiliser for farmers’ usage.
Raji said: “This is a kick-off event for partnership between AFEX Commodities Exchange and AFAP, both organisations are aligned with the mission to improve fertiliser usage by smallholder farmers, and by increasing that you have to increase their yields, productivity, and financial rewards they will get at harvest. “The soonest we can get to market the better, and we are pushing as fast we can for farmers to access the fertiliser within the next two to three weeks I foresee farmers being able to access fertilisers in their locations.
“We are not going to subsidize the fertlisers directly but we hope that by making this commercial venture subsidy of decrease in price for fertilisers can take place and the increase of fertilisers in the market that should eventually bring the prices down as well as drive agro-dealers to try and do more and sell more.” He also pointed out that, “AFEX is not churning out fertiliser but we are running after blenders.
What we are doing is to have access to finance and credit facilities to enable blenders to go out and source raw materials. We are ready to do business with other blenders in the industry. On financing blenders, he explained that “We don’t have a limit in the amount of money we are putting in, I anticipate us doing close to N10 billion worth of funding annually, at least, at the low end, the potential to scale, AFAP as an organisation has already put in N1 billion for this pilot phase as well with potential to increase with success nature.
“We are looking at the range of five to 10 blenders for this first season with whom to grow as we increase. The N10 billion is for the 10 fertiliser blenders we anticipate. “We are working through every bottleneck that comes up and also to make sure that both organisations are aligned, and between AFEX and AFAP we are on the same page, and we are both focused on the same goal which is to increase fertiliser usage.
The problem that would come is with anybody that is not on the same page. “If any agro-dealer would want to be deviant that could create an obstacle. We don’t envisage that because incentives are aligned with pushing our products and getting a return on our investment.” According to him, there are two levels on what APEX Commodities Exchange will do as part of the process to increase fertiliser production and availability to farmers, which on the first level, AFEX alone will do an input distribution programme where it will provide farmers fertilisers, inputs, and seeds on credit as loan.
“We work with them throughout the season, and then at harvest, they pay back those loans in the form of credit. This is going to be done in areas and locations and production zones across the country. “The second level with this agreement is with AFAB we are looking at how do we support the distribution of fertiliser through regular channel. We have hub-agro dealers located across the country and see how we are going to provide finance and credit guarantees so they can buy more fertilisers from blenders and onward distribute around the locations.
“This will help to access to fertilisers by smallholder farmers if we can get it to where they are based.” Meanwhile, the Country Manager, AFAP, Matthew Adetunji, pointed out that there is scarcity and hoarding of fertiliser that has slowed down farmers’ productivity and food availability. “We are looking at the fertiliser sector in Nigeria, we realised that there is huge scarcity for farmers.
For farmers to produce enough crops on the field, they require adequate fertilisers on their farms and that is relevant in improving food security in Nigeria. “AFAP as an NGO is committed to alleviating poverty and improving food security in Nigeria, and luckily we were able to get our facility from African Development Bank, AfDB, less we are a broker to AfDB when it comes to issuing trade credit guarantee under a programme called African Fertiliser Financing Mechanism. “So looking at this agreement, there is the problem of fertiliser scarcity, and the government is trying hard to solve this problem.
The next issue is blenders don’t have access to finance in order to procure sufficient raw materials, and we solve the problem at the source and not from the farmers’ end. “In order to solve the problem blenders have access to adequate raw materials through financing, and once the problem is solved there will be enough fertiliser going down the rural level as a result farmers will have access to fertilisers.
“Why this agreement is important is because we have been able to mobilise more commercial funding. We as an NGO we will be able to leverage our own facility to mobilise N10 billion and N20 billion from AFEX Commodities Exchange. So that is the reason we are entering into this agreement for blenders to get raw materials. “We are very optimistic because last year the total production of fertiliser in Nigeria was 1.4 million metric tonnes, we want to ensure we support all stakeholders, government and fertiliser businesses to increase this volume this year. “The production last year was absorbed and there was scarcity.
Nigeria has not gotten to the level of meeting the local demand for fertiliser production. I believe if Nigeria produces 10 million metric tonnes and it won’t be enough. “We believe that when we make fertiliser sufficient and available in the market there won’t be any room for somebody to hoard it and that will encourage people to go into farming, and the price of the commodity will reduce, and also the government will roll out subsidy to that effect”, Adetunji stated.