Driving agriculture through export competitiveness

For Nigeria to diversify its economy through agriculture, its products must be competitive enough to compete with other products in the international market.

This will help accelerate the development of the agricultural sector and provide foreign exchange for the country, experts say.

Diversifying the Nigerian economy away from oil would require paying more attention to the making of agriculture and value-adding manufacturing export more competitive.

Despite the Federal Government efforts in diversifying the country’s economy and revenue away from oil, it has failed to address the issue of price competitiveness which is very vital for the success of any export business globally.

Agricultural products constitute the bulk of Nigeria’s non-oil exports. The shares of these products both processed and unprocessed in total value of non-oil exports is as high as 70 percent, according to experts.

Good market penetration and effective packaging on the part of the exporter, as well as adequate financing from banks and government among others would be vital for the nation’s quest in boosting its export volume, experts say.

Several challenges needed to be addressed in order to expand the country’s export for it to contribute to structural change and help promote agric sector growth, which are vital for sustaining economic growth and development. These challenges are:

Packaging

The world of product marketing is the world of appearance. Like the typical physicalist or materialist, the consumer believes in what he sees, feels, touches or perceives. The consumer tends to look at the physical attributes of a product first before considering whether it meets the standards or not.

“The international market is based on standard. You must meet the standard before your goods can go far, packaging is the key in export business”, according to Fidel Anyanna, programme director, Dalehan Limited said at a BusinessDay event.

“Competitiveness is being able to give a project that can beat your competitors and the capacity to cope with the standard and strenuous demand of the international market,” Anyanna added.

Nigerian exporters use to have their products rejected at the borders of almost all the countries a few years back. It was not only too expensive to repatriate products already exported but also embarrassing and discouraging.

Value Addition

For a product to be export competitive, the non-oil exporters should add value to their products, embrace innovation and technology, while ensuring that their product are desirous of competing favourably in the international market.

About 90 percent of the total Nigeria’s cashew export was exported raw according to Emmanuel Ijewere, vice president, Nigeria Agribusiness Group and chief executive officer, Best Foods Limited.

Ijewere stated that for every amount earned in export of raw cashew in 2017, Nigeria would have made five times the value of what was made.

Logistics Weakness

Apart from prices competitiveness, logistics weaknesses is also a major challenge to the success of the yam export campaign.

“We currently do not have a good cold chain infrastructure in the country. The costs of logistics are also very high. It is cheaper to transport a commodity to Europe than to transport same commodity within the country,” said Obiora Madu, former chairman, Lagos Chamber of Commerce and Industry.

After few days of heavy rainfalls most farming areas and markets becomes totally impassable and this has continued to impact negatively on the prices of food items across the country.

Samson Akwah, organising secretary-yam section, Mile 12 market said that since the collapse of the Mokwa-Jebba route which have broken down completely, their transportation cost of yam using a Mercedes Bens truck (911) from the middle belt region has increased from N350,000 to N700,000.

According to him, the customers will have to pay for the additional transportation cost, noting it as the reason for recent price increase in yams in the market.

In 2010, Nasarawa exported about 118 metric tons of yams to the United State and recorded a post-harvest loss of 40 percent. “Nasarawa state was the first to export yam out of the country in 2010 to the USA. We experienced 40 percent loss due to some logistics problems such as preservation, storage and the likes, said Muhammed Jamil Zakari, commissioner for agriculture,” Nasarawa state said during the recent yam flag-off held in Lagos.

Also see:

How are Nigeria’s manufacturing exports faring in global market

Access to Market

Good market penetration on the part of the exporter is important to export competitiveness by providing products that can beat that of other competitors.

Access to the international market is very challenging due to variety of potential differences in culture, political and economic environments and regulations between domestic market and international markets.

Taking business global can provide numerous benefits including new opportunities and increased sales.

Finance

Increasing difficulties in accessing loans among micro, small and medium scale enterprises (MSMEs) have been a major problem for those who are in the export business.

To be able to meet the standard in the international market, adequate finance is needed.

According to Anyanna, export finance is considered high risk by banks because export cut across two sovereign states and there are unrealistic assumptions by traders and the financiers.

“In export business, the need for up front fixed cost is high and incidentally, the large number of export firms in Nigeria are small sized firms”, he adds.

Why it matters

According to experts, Nigeria can only realise its export potential and diversify its revenue through agriculture when its products can compete favourably with other products in the international market.

Despite Nigeria ranking top in most crop production, the country is yet to harness its potential of export owing to export competitiveness.

This has made imported commodities cheaper and having high patronage.