Report No. 4723-UNI

NigeriaAgricultural Sector Memorandum(In Two Volumes) Volume Il: Main Report

February 25, 1985

Agriculture Division I

Projects DepartmentWestern Africa Regional Office

FOR OFFICIAL USE ONLY

Document of the World Bank

This report has a restricted distribution and may be used by recipients

only in the performance of their official duties. Its contents may not otherwise

be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

Currency Unit = Naira (N)US$1 = N 0.75Ni = US$1.33Ni Kobo 100

WEIGHTS AND MEASURES

Unless otherwise stated, all weights and

measures used in this report are metric.

1 metric ton (m ton) = 2,205 pounds (lb)I hectare (ha) = 2.47 acres (ac)1 kilometer (km) = 0.62 mile (mi)I meter (m) = 3.28 feet (ft)

FISCAL YEAR

January 1 - December 31 (Nigeria)July 1 - June 30 (Bank)

FOR OFFICIAL USE ONLYAbbreviations and Acronyms

ADA Accelerated Development Area ProgramADC Agricultural Development CorporationADP Agricultural Development ProjectAID United States Agency for International DevelopmentAIDS Agro-Industrial Development SchemeAPMEPU Agricultural Projects Monitoring, Evaluation and Planning UnitARMTI Agricultural and Rural Management Training InstituteATAP Agricultural Technical Assistance ProjectBank World BankBSP Basic Services PackageCBN Central Bank of NigeriaCPI Consumer Price IndexFACU Federal Agricultural Coordinating UnitFAO Food and Agriculture Organization of the United NationsFARA Federal Agricultural Recruitment AgencyFASU Federal Agricultural Support UnitFDA Federal Department of AgricultureFDARD Federal Department of Agriculture and Rural DevelopmentFDRD Federal Department of Rural DevelopmentFFB Fresh Fruit Bunches (Oil Palm)FIIRO Federal Institute of Industrial Research, Oshodi.FMA Federal Ministry of AgricultureFMANR Federal Ministry of Agri-cultural and Natural ResourcesFMAWR Federal Ministry of Agriculture and Water ResourcesFMWR Federal Ministry of Water ResourcesFMAWRRD Federal Ministry of Agriculture, Water Resources and Rural DevelopmentFOS Federal Office of StatisticsFSC Farm Service CenterGMP Guaranteed Minimum PriceGNP Gross National ProductIAR Institute for Agricultural ResearchIITA International Institute of Tropical Agriculture'IMF International Monetary FundLBA Licensed Buying AgentLDC Less Developed CountryLGA Local Government AuthorityMEU Monitoring and Evaluation UnitNACB National Agricultural and Cooperative BankNAFPP National Accelerated Food Production ProjectNGPC National Grains Production CompanyNIFOR Nigerian Institute for Oil Palm ResearchNISER Nigerian Institute of Social and Economic ResearchNPC National Population CommissionNRCPC National Root Crops Production CompanyNRCRI National Root Crops Research InstituteNSC National Supply CompanyNSPRI National Stored Products Research InstituteNSS National Seeds ServiceOFN Operation Feed the NationPADC Plateau Agricultural Development CorporationPCR Project Completion ReportPEP Public Expendi.ture Program (Review)PRODA Project Development InstituteRBDA River Basi.n Development AuthorityRBRDA River Basin Rural Development AuthoritySAL Structural Adjustment LoanTCPP Technical Committee on Producer PricesT&V Training and Visit Extension System

THU Tractor Hire Uni.tUSDA United States Department of Agriculture

This document has a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorization.

NIGERIA

AGRICULTURAL SECTOR MEMORANDUM

Volume II - MAIN REPORT

Contents

Page

I. THE MACRO-ECONOMIC SETTING ........................... 1

II. TRENDS IN AGRICULTURE

A. Food Crop Production. 8B. Cash Crop Production .15C. Trade .18D. Supply of Inputs

Labor .24Land . 27Capital ............................ 28Farm Inputs ......................... 30

III. INCENTIVES TO FARMING

A. New Technologies . 31B. Input Subsidies . 36C. Crop Prices .37

Food Crops .38C(ash Crops .41

D. Processing, Marketing and Storage .43E. Non-Farm Incomes .50

IV. PUBLIC INVESTMENT PROGRAMS

A. Evolution of Sector Strategies .56B. Priorities of the Federal Budget .60C. Special Programs

Research and Demonstration .65Fertilizer Distribution .66Agricultural Development Projects .67Tree Crop Programs .68State Farms .70Tractor Programs .73River Basin Development .75

Page

V. INSTITIJTIONAL DEVELOPMENT

A. Federal and State Ministries of Agriculture ........... 78B. Commodity Boards ...................................... 80C. Credit Institutions ................................... 81D. Other Institutions

Industrial Research ............................. 83Universities ............................. 83Other Educational Facilities ..................... 83Cooperatives ............................. 84AIDS ............................. 84

VI. TRANSFORMATION FROM TRADITIONAL AGRICULTURE

A. Introduction ....................... 86B. Elements of Change

Farm Size ......................................... 87Part-Time Farming ................................. 89Managers and Laborers ............................. 91Mechanization ..................................... 92Mixed and Sole Cropping ........................... 94Male and Female Farmers ........................... 96

C. Dilemma ............................................. 98

Tables

1. Production of Major Food Crops, 1961-1983 .102. Production of Major Cash Crops, 1961-1983 .163. Origin of Commodity Board Purchases, by State ! .174. Exports of Major Agricultural Commodities,

1968 and 1982 .195. Leading Categories of Imported Agricultural Products .206. Grain Imports 1970-1983 .227. Non-Farming Occupations of Farm Households .528. Federal and World Bank Allocation of Development

Funds Within the Agricultural Sector .619. Allocation of Funds Within the Agricultural

Sector, Capital Account Detail .62

Charts

1. Trends in Production

A. Sorghum, Millet, Wheat, Rice, Maize .11B. Cassava, Yam .12

1. THE MACRO-ECONOMIC SETTING

1.01 Agricultural performance in the last decade has been undermined bydisincentives created in the wake of the oil boom, an effect common tocapital-importing, oil-exporting Less Developed Countries (LDCs) and welldescribedj.n several recent World Bank (Bank) reports deali.ng with the "oilsyndrome. Nigerian oil production and exports emerged rapidly as aleading sector in the 1960s. The Civil War, 1967-70, closed most of theproducing fields, which were concentrated in the war zone. But productionrecovered and gai.ned quickly in the early 1970s, putting Nigeria in aposition in 1973 to benefit from the first oil "shock," of 1973/74, whenthe world price of oil took its initial leap upward. Within a year,Nigeria's export earnings tripled, and her public capital budgets weregreatly expanded. For a decade before 1973 the symptoms of the beginningof a major shift of resources out of agriculture had been evident:migration to cities, tightening rural labor supply i.n the southern states,and, in the later years, decline i.n the productivity of cocoa plantings andgroundnut farms, the leading export crops. The oil shock accelerated allthese trends, by greatly lowering profitability and other incentives ofinvesting and working in agriculture.

1.02 The oil syndrome as generally described has the following tenfeatures easily recognizable in Nigeria:

(1) an appreciation of the Naira, vis-a-vis foreign currencies,during the boom years, of approximately 80% between 1973 and1980;

(2) enhanced profitability of investments in infrastructure,including construction, transport, communication, and other"non-tradeable" commodities and services (wherenon-tradeable refers to domestic commodities and servicesfor which there is no international market nor the restraintthat that market exerts on domestic prices);

(3) a corresponding downgrading of investor interest in sectorsfurnishing "tradeable" goods other.than oil;

(4) a decrease in the contribution of agriculture to the GrossNational Product (GNP), i.n Nigeria's case almost exactlymatching the increased contribution of oil;

'See three Bank reports in particular: (1) "Capital-Importing OilExporters: Adjustment Issues and Policy Choices" by Alan H. Gelb, StaffWorking Paper No. 475, August 1981; (2) "A Note on the Logic of an OilEconomy" by Francis Stewart, Background Paper 7, Vol. II of Nigeri.a BasicEconomic Report, August 17, 1981; and (3) "Nigeria: Macro-EconomicPolicies for Structural Change" by Shahid A. Chaudhry, et al, Report No.4506-UNI, August 15, 1983.

(5) rapid growth in government investments and employment, basedon oil revenue;

(6) a switch by government away from traditional sources ofrevenue to taxes on oil, with a proportional decrease inattention to maintaining those older revenue bases andespecially a decrease in attention to the problems ofcommercial agriculture;

(7) budget and balance of payment deficits, despite the enormousincrease in revenue and foreign earnings, due to unbridledoptimism and galloping commitments during periods whenrevenues were expanding, and difficulties in retrenchingbudgets when revenues fell;

(8) a high rate of domestic inflation, as consumers andi.nvestors joined government in the shopping spree;

(9) a relative decline in rural, non--farm income earningopportunities, due to the sluggish performance in marketing,storage, processing and other activities associated withagriculture; and

(10) a major bias toward the urban areas, reflecting perceptionsof higher profits, better employment opportunities andpolitical power.

When oil revenues collapsed, as in 1978 and 1982, the def-icits worsened andother symptoms either persisted or reversed very slowly. The collectiveimpact of these factors in the absence of astute management of the economyhas hit Nigeria harder than most of the other "oil syndrome" countryvictims.

1.03 The last two effects - the ninth reinforcing the tenth - are themost alarming. The urban bi.as is reported, in one comparati.ve study of theoil syndrome, to be more pronounced in Nigeria than i.n any other country.It i.s reflected in the low percentage of public funds alloiated toagriculture (6.5% 1970-1980) and even less disbursed (3%). Government hasnot ignored the claims of the rural communities. A few of the programs,for example dam construction in the northern states, have been ofsubstantial size. And the new trunk road system has facilitated mobilityof rural people and products. In the aggregate, however, the rural areashave not benefited by a share of the budget commensurate with their weightin the population. That applies to state governments even more than to thefederal government. The case of one southern state, which refused toallocate funds to initiate in 1984 a major statewide rural developmentprogram even though it was spending more every month to maintain a new

2Gelb, op. cit., p. 17. These figures exclude investments by theRiver Basin Development Authorities.

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university, is representative of the difficult choices that had to be madeand the fact they were rarely made in favor of agriculture.

1.04 Disincentives of the oil boom have accelerated the shift of laborand other resources out of agriculture. As mentioned, the percentage shareof agriculture in GDP has fallen, from 45% in 1970 to 27% in 1980.Agriculture's percentage contribution to exports has nearly disappeared:it provided over 80% of total export earnings of roughly N330 million in1960, and only 2% of roughly N13,600 million in 1980. That shows up alsoin the national food balances, which have turned in the last two decadesfrom virtual self- sufficiency wi.th an exportable surplus of edible oils todomestic deficits, zero exports and growing imports.

1.05 Trade and exchange rate policies are standard instruments used insome LDCs to develop a pricing policy in support of the agriculturalsector. Since independence in 1960, Nigeria has not used them to thatpurpose. The advent of oi.l further weakened the link, and public policiesrather than supporting progressive agriculture created a hostileenvironment. Starting in 1983 there has been some improvement, as foodcrop prices increased under the influence of drought and restrictions ongrain imports. Whether the shift is permanent has yet to be tested.

1.06 On the export side, Nigeria's principal cash crops for most of theperiod when they were exported were heavily taxed through a mixtureof export duties, produce sales taxes and marketing board retentions. Onestudy showed that in the period 1948 to 1967 approximately 30% of netearnings of the cocoa, palm produce and 3groundnut boards (after operatingexpenses) was withheld from the farmer. Trading policies of the colonialand later the Nigerian government were much criti.cized then for underminingthe incentives for replanting and expansion of cropping area of theseessential exports. By the late 1970s, however, the situation reversed.Farm costs plus administrative expenses of the Commodity Boards rose aboveexport prices at existing exchange rates. Exports of all but the cocoacrop had to be subsidized. In 1981 cocoa also joined the group. But theuse of export subsidies cannot be described as an aggressive, pro-farmerpolicy. Final payments to the farmers, although above world prices, weredescribed by farmers and the Commodity Boards alike as being inadequate toinduce the rehabilitation investments which were everywhere becoming moreurgent.

1.07 On the import side, government policies in most years since 1970have strongly favored consumers, not producers, by permi.tting or bygovernment itself organizing the import and sale of cheap foreign grainsand vegetable oils at negligible duty, swamping the urban markets withhigh-quality imported wheat and rice and blends of cooking oils. Duringperiods of budget crisis, most recently in 1978 and again i.n 1982-83,

3Olatunbosun, D. and Olayide, S.O., "Effects of the NigerianMarketing Boards on the Development and Income of Primary Producers." InThe Marketing Board System, Proceedings of an International Conference,edited by H.M.A. Onitri and D. Olatunbosun. NISER, 1974.

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government acting through the Ministry of Commerce applied quantitativerestrictions via licenses, which predictably had a positive effect onfarmgate prices of same and competitive crops. But the main objective ofthese government interventions was to reduce imports and save forei.gnexchange, and the restrictions were relaxed when the balance of paymentsi.mproved. The real beneficiaries were the traders who secured the scarcelicenses. In fact, the traders had the best of both worlds. Whether theimports were restricted or not, enormous trading profits collected as thecommodities passed from the National Supply Company (NSC), which handledmost of the bulk imports, to the local shopkeeper. For example, theconsumer price of NSC American rice delivered to the shops in Bida, thecountry's premier rice producing center, was marked up three times the NSCprice and sold for 50% more than the price of local rice, enriching themi.ddlemen while capturing the upper end of the market from local producers.The problem the producer faced was not that he was competing with importedrice for the consumer, but that he was competing for the merchant, whopreferred to buy from NSC.

1.08 Disadvantages thrown up by trading policies were greatlyaggravated by shifts in the exchange rate, starting in the early 1970s whenthe value of the Naira began to appreciate following a long period ofparity with the purchasing power of the dollar. An overvalued Nairareinforced the two commodity trading problems: on the export side puttingNigeria's agricultural exports at a further disadvantage in internati.onalmarkets, and thereby widening the gap between subsidy needed and subsidygiven; and on the import side strengthening the competitive advantagealready enjoyed by imported grains.

1.09 The damaging effects on agriculture of trade and exchangepolicies, and the arguments for reform, 9re discussed at greater length ina series of Bank reports issued in 1983. They will not be elaborated onhere, beyond a few summary points. Cheap food imports, escalatingrural wages and export crop subsidies are all symptomatic of a rate ofexchange that, whatever its success i.n balancing foreign exchange earningsand payments for the economy as a whole, is overvalued with respect to therequirements of a progressive agri.cultural sector. It is not a problemspecial to Nigeria and the consequences are predictable. But the extremedependence of Nigeria's balance of payments on oil exports does create asituation rather unique among the Bank's borrowers. This is because

4See in particular the following Bank reports: Chaudhry, S.A., op.cit.; Rouis, M., Duncan, Ann, et al, Ni.geria, Agricultural PricingPoli.cy, Green Cover Draft Report No. 4945-UNI dated October 4, 1984;Robertson, J.W., An Analysi.s of Agricultural Trade and Subsidy Policiesin Nigeria, October 1983; and Norton, R.D., Pricing Policy Analyses forNigerian Agriculture, draft dated September 1983.

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aggressive programs to substitute domestic cereals for imports, and toraise crop exports, are going to have very little effect on the overallbalance of payments in the short and medium term no matter how successfulthey are.

1.10 For example, if Nigeria were to increase or restore the exportvolume of all the major cash crops to the point where each reached itsindividual historic high, the total increase in foreign exchange earningsin current 1982 Naira would equal about 2% of total earnings in 1982.Similarly, if Nigeria were to replace all 1982 imports of maize and ricewith domestic production, that would save about 2% of total payments. Ifthe government's rural development programs succeed in doing both, theimpact on the balance of payments would be completely offset by a 5%decline in oil earnings. From 1980 to 1983 these earnings fell byapproximately 20% each year. Thus exchange rate adjustment can haveimportant effects on restructuring incentives in agriculture, but theimpact through the agricultural sector back on the balance of payments willnot be significant for many years. These facts cannot be ignored, becausethey are the basis for the argument that devaluation will in the nearfuture do more harm than good to the economy as a whole.

1.11 The Bauk estimates that Nigeria's real export earnings from oilwill begin to decline in the mid-1990s. Adjustments now i.n theagricultural and industrial sectors are needed to create the foundationsupon which the non-oil export economy will expand and diversi.fy to replacethe oil. Despite the huge imbalance at present between oil and non-oilexport earnings, future prosperity depends upon diversification and thesooner that shift begins the better. That implies, for example,rehabilitation of at least part of the southern plantation economy andnorthern cash crop fields with or without exchange rate adjustments. Ifdevaluation i.s ruled out on other grounds, then government will have tofinance the rehabilitation program with subsidies, a less efficientmechanism, practically inconceivable i.n government's present fiscalposition, but not without precedent in Nigeria's trading partners.

1.12 A case can be made to provide disproportionate protection andsupport to agriculture vis-a-vis industry, even though both sectors havebeen put at a disadvantage by the oil syndrome. Agriculture has a highershare of labor in its cost structure than industry, and suffers from acontinuing outflow of labor. Both phenomena are a reflection of aremarkably low level of productivity of rural labor in Nigeria. The key isto enhance labor productivity in agriculture, which has fallen behi.nd allother sectors in that respect, while restraining wages. The lowproductivity, high wage combination must be broken.

1.13 Government has been concerned with the dangers of the collapse ofcommercial agriculture. It realizes that when the exportable oil resourceeventually is depleted, the economy will have to fall back on its directlyproductive sectors. Both the military administration whichruled till 1979, and the civilian administration whi.ch followed until early1984, voiced strong support for agricultural recovery programs as part of aplan to rebuild the absorptive capacity and long term growth rate of thenon-oil economy. The new military government has made that position evenmore emphatic.

1.14 This concern has not yet materialized as a coherent plan foragriculture. Though the role of the sector is described in a series ofNational Development Plans, there is no clear statement on the relativepriorities of the major objectives usually assigned to it - foodproduction, rural incomes, foreign exchange earnings, government revenue.Strong expressions of support for enhancing rural incomes are eroded byequal concern for the subsidies and fiscal burden they now imply. Seniorofficials in the then Federal Ministry of Agriculture (FMA) and the CentralBank of Nigeria (CBN) insisted in late 1983 that domestic farmgate priceswere already higher than prices anywhere else in Africa and could not beraised any further, even though they were not profitable for the farmers.That position in effect sacrifies incomes of the progressive farmer inorder to protect the rate of exchange and the government budget. Areordering of these priorities i.s essential to agricultural recovery.

1.15 The professed commitment of government to this recovery has beenbest tested in two periods in the last five years when oil earnings fell:first, a fairly short recession in 1978, which was soon followed by adramatic resurgence of oi.l prices; and, second, again in 1981, when thereset i.n a protracted decline in oil prices, earnings and federal revenuesthat i.s expected to continue through at least 1985. Austerity measuresimposed by the civilian administration in 1982 and 1983 and continued bythe successor administration are having a mixed effect on agriculture.Government selectively increased tariffs, substantially extended importlicensing restrictions, and imposed forward deposit requirements on allimports, including food, to help arrest the drain on foreign exchange, andthese measures have helped domestic crop producers. But government alsotightened the supply of credit and reduced distributions of funds to stategovernments, both measures which have severely reduced the availability offinance for private investors and state-run agricultural programs.Moreover, the import restriction has hit spare parts and rehabilitationequipment, undermining the agricultural recovery program. It is difficultto identify wi.thi.n the set of austerity measures any special considerationsfor the long term development of agriculture. An important exception wasthe federal support provided to the investment program of the River BasinDevelopment Authorities (RBDAs, now RBRDAs, para 4.52), aimed at expandingthe production base through irrigation. Cuts in the 1984 RBDA budgets havesignificantly curtailed their activities too.

1.16 Thus most of the farmers still struggle within the grip of oil onthe economy. Whether in times of prosperity or stress, no sustained efforthas been made to restore financial profitability to commercial farming (orto manufacturing), and a better balance with the non-tradeable sectors. Inspite of repeated references to the need to utilize oil export revenues toeffect a transition to sustainable long-term growth, the government reactsto crises with a mix of short-term management instruments that have nofundamental impact towards structural adjustment. Also, measuresintroduced in support of the farmers often have been poorly conceived andadmi.nistered and the gains taken not by the farmers but by traders andother unintended beneficiaries.

1.17 It is important to note that under present policies the farmer i.sgetting some of the support he needs. But i.t i.s through an awkward,inefficient and largely ineffective system which mixes insuffici.ent

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Commodity Board subsidies and an erratic import licensing program, the sumof which has proven to be much less than what an appropriate farmincentives pricing system would require. Devaluation to restore parity maynot be enough to correct the problems of agriculture: in an oil-driveneconomy even an equilibrium exchange rate may ultimately destroy commercialagriculture, though not as rapidly as an overvalued exchange rate. Anundervalued exchange rate is not an answer either: one cannot imbalancethe exchange rate to save agriculture. A configuration of tariffs andsubsidies may be an essential part of the package of instruments to restoreincentives to farming. But whether and to what degree subsidies will beneeded throughout the "rehabilitation" period will have to be determined ona crop by crop basis.

1.18 Tariff policy is part of current discussions on structuraladjustment. Subsidy policy deserves more attention. The Commodity Boardsystem has been criticized, but if it di.d not already exist some othermechanism for subsidizing crop production to offset the effects of the oilsyndrome would have to be invented. Correct decisions on any specificsubsidy, for example on removing the subsi.dy on fertilizer, are lessobvious in the absence of a general framework for determining input andoutput price supports.

1.19 Another alternative, available to an oil economy, is to letagriculture continue to decline. Incomes i.n the rural sector could besupported by transfers of oil earnings, a sharing of the "rents" accruingto government ownership of oil resources. Instead of subsidies on crops,the subsidies would have to be transferred by other means. But the imageof increasing numbers of rural families li.ving off coupons andlabor-intensive works programs is inconsistent with any expressi.on ofgovernment poli.cy. Rural southern Nigeria would be converted into adormitory for the cities. The productive potential and institutionalstructures of the rural economy cannot be allowed to go on shrinking, sincethe decay in institutional and human competence will be increasinglydifficult to reverse. The rural. sector must be hospitable to the emergencethere of entrepreneurial behavior to serve the whole economy, and that willnot happen with half the families living off public support, informal urbanoccupations and withered backyard gardens.

1.20 In 1981 the appreciation of the Naira was reversed, and withintwenty-four months its exchange value had fallen by 27% from the high, fromNl = US$1.83 to $1.33. It remains at that level in early 1985. Since therate of domestic inflation has also accelerated in that period, above ratesi.n Nigeria's major trading partners, the favorable effects of that drop inthe rate of exchange have by now been largely offset. One of the keypolicy debates in government at present is about further adjustment of theNaira. This could also be accompanied by a set of tari.ffs and exportsubsidies specifi.c to each of the major crops. The new military governmenthas indicated its agreement to continue discussion wi.th the InternationalMonetary Fund (IMF) and the World Bank (Bank) on policy reform. It ishoped that some substantial steps in favor of agriculture may be taken in1985.

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II. TRENDS IN AGRICULTURE

A. Food Crop Production

2.01 Annual production estimates are issued from four sources: theFederal Office of Statistics (FOS), the Research Department of the CentralBank of Nigeria, the Food and Agriculture Organization (FAO), and theForeign Agricultural Service of the U.S. Department of Agriculture (USDA).The principal data base for FOS is its Rural Economic Survey. The accuracyof FOS statistics developed with the Survey has recently been challenged.CBN uses FOS data, but adds estimated production from some large farmingenterprises which are not covered in the Survey. That adjustment would notappear to satisfy users in government of official data. Historical reportsand plans prepared by or for the Federal Ministry of Agriculture, WaterResources and Rural Development (FMAWRRD) are evidently based on othermaterial, including data supplied by federal and state agricultural fieldofficers which is not reflected in the Survey. FAO and USDA do not referto FOS series at all. They do not even refer to each other when theirestimates are first produced. They make their own calculations afterdiscussions with some of the same field officers and other assessments ofweather reports, satellite imagery, price trends, etc.

2.02 FOS estimates of production from 1970 ito 1982 show absolutedeclines in tonnage for both cereals and root crops, at an average gnnualrate over the 13-year period of 1% for seven principal commodities. Someindividual crops show slight improvements after 1976, but others, forexample, rice, yam and cocoyam, do not. In fact the aggregate declinereported by FOS for the three main root crops is phenomenal - 50% -suggesting a loss in per capital domestic calorie consumption in thesouthern states of catastrophic proportions.

2.03 FAO and USDA trend lines for individual and aggregate food cropspresent a strikingly different picture, with increases reported for allmajor crops since the early 1970s (except USDA cassava, on which the 6effects of pests in recent years reversed a steady increase since 1970).

5Sorghum, millet, maize, rice, yam, cassava and cocoyam. Beans andplantains are excluded. The 1% fi.gure is based on unweighted FOS tonnagefigures.

6The trendline in cassava production has been seriously interruptedby two serious, consecutive pest attacks. Mosaic disease was widespreadin 1976-1977, leading to production declines throughout the cassavazones. IITA and NRCRI combined forces with NAFPP to beat it. The firstmosaic- free cuttings were released in 1978 and were planted everywhereas rapidly as they could be multiplied. But in 1978/79 the zones werehit by a sudden infestation of mealybugs (and spider mites), thought tobe related to the weakened condition of the plants due to mosaic. IITAhas countered by importing predator pests. NRCRI disputes theadvisability of that strategy. Both institutes are looking for

(Footnote Continued)

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The trend is broken abruptly in 1983, when figures tumble under the impactof the drought that year. The FAO and USDA data themselves differ (forexample, FAO does not record any of the pest attacks on cassava), thoughtheir trends are usually comparable. There is a regularity to the annualincreases in production reported for some staple crops by these twosources, especially FAO, that suggests that in lieu of reliable short-termfood production indicators those agencies may have resorted systematicallyto simple projections based on an assumed fixed relationship between thegrowth of population and the growth of prduction, a demand orientedanalytical procedure which has some justification though it is completelyinconsistent with the FOS data.

2.04 Trend lines for major crops for the three primary sources (FOS,FAO and USDA - only FAO figures are shown here for 1983, the drought year)are presented in table 1 and shown in chart 1, which is included here toillustrate the chaos that exists in Nigerian production statistics. Thediscrepancy between FOS, on the one hand, and FAO and USDA, on the otherhand, is apparent. Maize is a good example. It is an important crop onmany northern rural development projects, where it gives the advantage of agenuinely "new" technical package combining fertilizer and improvedfertilizer-responsive maize varieties. Yet FOS shows a strong decline inmaize production since 1970, whereas FAO and USDA both report rapid andcontinuing annual increases. The root crop comparisons are equallystriking. Not only does FOS cassava move in the opposite direction fromFAO since 1970, but it starts in 1970 at only one half the FAO level andends in 1982 at 15% of the FAO figure - 1.8 million MT vs 11.7 million MT.Root crops are notoriously difficult to measure, and measurement problemsundoubtedly explain much of this discrepancy. What is not explained is7whythese institutions do not attempt to reconcile their production series.

(Footnote Continued)improvements in natural resistance. Gradually the insect problem isbeing brought under control. Unfortunately the initial mosaic-freecuttings were not resistant to the mealbug. Nevertheless, the 1984/85cassava crop is in good shape and the incidence of the mealybug appearsto have receded.

7There is also inconsistency between production series provided bythe same agency. A draft consultant report prepared for the Bank atnearly the same time as the early draft of this Memorandum (R.D. Norton,Pricing Policy Analysis for Nigerian Agriculture, September 1983) alsodiscusses production data. It uses sources within USDA and FAO whichprovide in some years slightly different figures than those presentedhere. Its data series from FOS, through CBN, are usually very different,though the trends are the same. Norton's conclusions, however, aresimilar to those of the Memorandum.

Table 1

PRODUCTION OF MAJOR FOOD CROPS1961-1983

('000 MTons)

YAM CASSAVA MILLET SORGHUM MAIZE RICE WHEATUSDA FAO FOS USDA FAO FOS USDA FAO FOS USDA FAO FOS USDA FAO FOS USDA FAO FOS USDA FAO FOS

1961 2,600 2.600 3,966 3.966 1,000 1.000 354 119 161962 2.530 2,530 4,509 4,509 900 900 370 258 161963 2.732 2,732 4.069 4.069 1,050 1,050 304 196 161964 2.484 2,484 4,239 4.239 1,090 1.090 405 221 15

1965 2,729 2,729 4.235 4,235 1.040 1,040 355 232 151966 1,747 1,747 3.160 3,160 1,020 1,020 406 200 131967 2.590 2,590 3,389 3.389 1,000 1,000 391 386 101968 2,196 2,196 2,821 2,821 950 950 375 353 5 101969 3,298 3,298 4,080 4,080 1,426 1,426 386 325 6 10

1970 15,200 NA 8.230 11,871 9,084 5,180 3,284 3,284 3,077 4.080 4,080 4,044 1,310 1,310 1.376 427 490 193 6 7 191971 16.104 7,990 12.396 9.172 4.719 2.688 2,688 22911 3,140 3.140 5.265 931 931 1,322 462 580 179 7 7 201972 16,257 7.758 12.700 9,570 3,156 3,048 3,414 2,524 3,561 3.988 3,367 1,182 1,188 830 466 600 397 6 7 201973 16,800 6,911 13,000 9,600 2,675 2,150 2,350 2,882 2,968 2.968 2,546 1,287 441 690 514 342 459 4 4 151974 17,200 7,003 13,300 10.000 3.113 2.800 3.000 4,322 3.500 3,500 3.609 1,350 980 724 523 356 498 6 6 18

1975 17,600 7,598 13,600 10,500 3.223 2,865 3,000 4,653 3,590 3.590 4,204 1,400 1,260 769 586 515 522 7 18 181976 18,000 7.948 13,900 10,800 3,025 2,865 2,900 2,653 3,680 3,680 2.933 1,440 1,295 1,253 611 534 426 7 20 201977 18,000 6,342 14,000 10.600 1.759 2.950 2,950 2,779 3,750 3,750 3.051 1,550 1.350 943 620 647 276 8 21 211978 18.100 6,223 14,150 10,500 1.674 3.100 3,060 2,521 3,770 3.770 3,023 1,640 1,480 643 826 842 372 8 21 221979 18.100 5,588 14.600 10,500 1,581 3,130 3,130 2,171 3.785 3.785 2.719 1,670 1,500 608 871 750 235 10 21 22

1980 18,180 5,120 13,100 11.000 1.590 3,130 3,130 2,756 3,800 3.800 3,303 1,720 1.550 596 1,090 1,090 245 15 24 241981 1 ,200 17,500 5,120 11,800 11,000 1,700 3,180 3,180 2,906 3,750 3,700 3,475 1,750 1,580 602 1.165 1.125 257 20 3G 261982 18,480 18,500 5,397 11,700 11,700 1.775 3,240 3,275 3.034 3,825 3.850 3,626 1,775 1,750 628 1.380 1.376 288 25 32 271983 16,625 9,950 2,300 2,660 1,600 1,000

Source: USDA: Reports P82 (1/18/83). P8 (1/30/78) plus telephone update from Arenson's office; for root crops, Table 135 - Nigeria; for yam 1980-82, reportby R.D. Norton, Pricing Policy Analysis for Nigerian Agriculture, p. 2.2, Sept. 1983.

FAO: Production Yearbooks through 1983.FOS: Central Bank of Nigeria Worksheets, prepared for the Mission in May 1983.

Chart IA

TRENDS IN PRODUCTION

Cereal CroDs('000 M Tons)

5,000 20

'I~ ~ ~~~~~~~~1

4,000 1

3,000 * Wheat

,Sorghum 1,0_

3,000 ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~1-0

Key: -O- FAO Rice-- USDA

-o- FAO + USDA--x- FOS

4,000 1,500

3,000 1-f100o0, ,'

2,000 500

Millet Maize1960 1970 1980 1960 1970 1980

Source: Table 1

12 -

Chart IB

TRENDS IN PRODUCTION

Cassava, Yam

'000M Tons

18,000 Yam _ - USDA

A_-

16,000 _

14,000

Cassava

12,000

- F~~~~~~~~~AO

10,000 Cassava

8,000 > ~ ym X \Yam Y(.

6,000

FOS

Cassava

4,000

2,000

FOS

1970 2 4 6 8 1980 2

Source: Table 1

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2.05 Any report on food production in Nigeria faces the same weak database. Nevertheless, a consensus had emerged in government and Bankdocuments issued in the early 1980s that cereal production had increasedslightly, root crop production may have declined, and the aggregate foodcrop trend over the period 1970-82 was best described as showing eitherstagnation or slow growth. The rate of growth was thought to be less thanany of the plausible population growth rate estimates (2.5% is used in theBank's Basic Economic Report of 1981, though the most recent Bankprojection shows a higher figure), with the result that per capitaproduction would have almost certainly fallen.

2.06 The joint government - World Bank Food Strategies Mission of 1980used the figure of 1% average annual growth of food production as a basisfor projecting the growing gap in Nigeria's ability to feed itself. TheMission compared domestic production with gross supply, including imports,and called attention to an impending increase in import requirements ofhuge proportions in the absence of immediate action by government toencourage rapid increases in production and marketable surplus fromNigeria's crop lands. Taking literally the Green Revolution Programmeobjective to be self-reliant in basic foodstuff by 1985, the Missionindicated that increases in domestic production were required at rates thatexceeded the best performing countries anywhere in the world, about 6.6%per annum. The Mission settled on a more realistic target of 4% growth perannum, which at least would reverse the absolute increase in importrequirements by 1985 and lead ultimately to self- sufficiency. The 4% canbe compared with the population growth rate of 2.5%, and the Mission'sestimate for growth in food demand of 3.5%. The 4% target implies that theaverage farm would have to increase the rate at which it was alreadyincreasing its gross production by a factor of six. The Food StrategiesMission recognized that that was an ambitious target, and in its report,the Food Production Plan issued i.n May 1980, called for a majorreorientation of public priorities to reach it.

2.07 It is important not to understate the potential danger of the foodgap. But it is also important that it be properly diagnozed. While theFood Strategies Mission avoided using the alarming FOS data series,nevertheless its recommendations were consistent with the view thatNigeria's productive capability has been seriously weakened and a majorstep-up in the use of productivi.ty-improving technologies was urgent. Thefocus of the Mission's remedial program was on the supply side, implyingthat technology was more important in the cure than action on the demandside, for example, improved price incentives. The fact that in recentyears market prices for food crops have increased relative to the generalinflation in prices (para 3.26), without inducing a strong surge in themarketable surplus, has been offered as evidence to support the thesis thatthe elasticity of supply with respect to price is rather low. Thi.s viewalso holds that the increase in food imports is a result of the stagnationin domestic production, which forced Nigeria to substitute foreignfoodstuffs: the way to reduce imports was to increase local production.

2.08 That supply side position does not stand up well to generalobservations about food availabilities. The absence of any evidence ofwidespread severe malnutrition in the south since the civil war, and in thenorth since the drought of 1973, the difficulties experienced in disposing

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of occasional large surpluses of maize and cassava, the collapse of grainand root crop prices in early 1983 following an excellent grain harvestfrom the 1982/83 season, and the fact that accelerating producer costs ledprimarily by the wage bill have turned the terms of trade further againstthe farmers, all suggest that the supply argument may have been overstated.It is said that market observations - in towns and cities - show thatproduction of the traditional staples - sorghum, millet, yam and cassava -has kept up with domestic demand reasonably well, but that flaws in fieldenumeration have failed to count those increases accurately.

2.09 It would also appear that the increase in food imports is less aresponse to an emerging deficit in domestic production than a reflection ofchanges in urban diets (and to a growing extent rural diets as well), andin the demand for different foods, urged along by the low prices of theimports. The low level of substitutability - in the short term - ofdomestic products for these superior imported goods - is part of theexplanation. There has been almost no study of these substitution effects,or of changes in the pattern of food consumption during the daily eatingcycle. Imported foods - wheat and rice - are available to urban consumersin convenient forms which require less home preparation than yam, cassavaand other traditional foodstuffs. The slow response in the domesticcapacity to process fast food preparations of traditional crops - thegarifi.cation of cassava is an important exception - probably explains theloss in markets more readily than does the decline in the capacity for thefarms to produce. Another factor is the preference of the milling industryfor imported wheat and maize: the wheat for bread and the maize forpoultry. It is the combination of consumer and miller preferences whichexplains the surge in grain imports. These observations: are borne out tosome extent by the detail of the import bill, as discussed i.n a subsequentsection (para 2.22).

2.10 If there is a serious and continuing food problem in the country,the proponents of the demand thesis would argue that, apart from a fewrelatively small geographi.c areas (para 2.36), i.t is a problem ofdistribution. Some people cannot afford to buy food that is availableelsewhere. Subsidies to consumers who are poor can take care of thatproblem, not subsidies to producers. Of course i.n times of drought theremay be a serious national or regional deficit, was the case in early 1984in the north, and imports may be necessary to balance the food budget.

2.11 Work done in preparation for thi.s Sector Memorandum and for theparallel Agricultural Pricing Policy Study (para 3.24) indicates that thedemand argument is more robust than the supply argument. Also, exhaustiveanalysis of crop production figures, evaluated in terms of theirnutritional implications, persuades us that the previous growth rateestimates are somewhat too low. New calculations suggest that foodsupplies over the last decade have increased at about 3% per year. Thisincludes imports. Our new estimate of the food production growth rate is2.7% per year, perhaps slightly above zero per capita. Two successive goodharvests in the north - the 1981/82 and 1982/83 crop years - tilted thattrend further upward. The subequent drought - 1983/84 - pushed it backdown. Reports on the good harvest in 1984/85 suggest the upward trend hasbeen reestablished. Not only that, but the supply response has beenexcellent for some of the crops whose prices rose to record levels during

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1984, casting doubt on allegations about low elasticity of supply withrespect to price (para 2.07). The poor quality of the data base, however,does not permit us to present, for the purposes of this Memorandum,reconstructed data series for any individual crop.

2.12 A constant level of per capita production is better than adecline. But no one is claiming that Nigeria's farmlands have beenproducing the surpluses that have characterized agricultural successstories in other countries. All the evidence suggests that productionincreases have been slow, and that policies discriminating againstagriculture continue to suppress the countries' natural potential -generally recognized to be substantial.

2.13 This discussion bypasses the issue of whether Nigeria should beaiming for food self-sufficiency (see Volume I, para 79). The trade-offbetween producing food crops and producing cash crops is uncertain. Aspart of the Agricultural Pricing Policy Study, an analysis was made of neteffective rates of protection, which provide a basis for estimatingdomestic resource costs and the comparative advantages in domestic andworld markets of different cropping systems. There had been a few previousstudies of regional examples of domestic resource costs. However, morework i.s needed before the trade- offs are fully measured and defini.tiverecommendations can be given.

B. Cash Crop Production

2.14 Table 2 gives FAO annual production estimates for the six majorcash crops: four tree crop commodities from the south and cotton andgroundnuts from the north. FAO data on maize and rice are included forcomparative purposes. The phrase "cash crop" is a misnomer, because grainsare also grown for cash in most areas of Ni.geria. Nonetheless therestricted meaning is widely accepted. Palm kernel and palm oil aretreated as separate goods, because of their different roles in exports.These six cash crops were all formerly export crops, but three are nowentirely consumed domestically (palm oil, cotton, groundnuts). The tableshows the dramatic decline in output of most of these commodities, the onlyexception being palm oil. (The 1983 figures are further depressed by thedrought, which badly damaged the groundnut and cotton crops, as well asrice.) The contrast with the two popular food crops, maize and rice, whichduring the 1970s became important growth crops in their own right, i.sstriking. Thus the traditional cash crops suffer not only from the overallbias against agriculture but also in competiti.on with the food crops. TheCotton Board complains that the swing toward maize encouraged by thenorthern Agricultural Development Projects (ADPs - para 4.27) is animportant cause of the collapse of production of its premier cashcommodity.

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Table 2

PRODUCTION OF MAJOR CASH CROPS1961-1983

('000 MT per year)

1961-65 1969-71 1981 1982 1983(average) (average)

Cocoa (bean) 218 261 181 160 150Rubber (processed) 66 63 43 45 40Palm kernel 437 287 350 355 360Palm oil 672 528 675 700 710Cotton (seed cotton) 353 185 85 62 46Groundnuts (in shell) 1,863 1,660 608 610 450

Maize 950 1/ 1,215 1,580 1,750 1,600Rice (paddy) 189 1/ 352 1,241 1,376 1,000

1/ 1961-62 average.

Source: FAO Production Yearbooks, 1972, 1983.

2.15 The comparative FAO data on maize and rice included in the tablemust be viewed with caution, since, as discussed in the last section, theyare not universally accepted. There is more agreement on the trends incash crops, where declines are better documented and the main impact of theurban bias and oil syndrome has been felt. Even in this sub-sector,however, there are inconsistenci.es between data sources, especially forpalm oil and groundnuts which are now traded almost entirely within theprivate sector and thus outside the control and surveillance of theCommodity Boards. For example, CBN estimates show a recovery of groundnutproduction to a level of about one million MT in 1981, a reversal which isnot shown in the FAO data and which the Groundnut Board believes to be anillusion.

2.16 Table 3 shows the distribution by state of production of five ofthe cash crops, using purchases and other surrogates of producti.on data.

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Table 3

ORIGIN OF COMMODITY BOARD PURCHASES, BY STATE(Percentages)

Cocoa Rubber Palm Kernel Cotton GroundnutsPurchases Purchases Purchases No. of LBAsI/ Seed

Distribution1978-79 11/81-7/82 1977-82 1980 1981

LagosOgun 7 10 8Oyo 38 23Ondo 45 2 5Bendel 5 58 5Rivers 1 1Cross River 3 28 19Imo 23Anambra 9

Benue 7 2Plateau 6 2Gongola 4 6Kwara 1Niger 6

Sokoto 30 18Kaduna 31 15Kano 3 37Bauchi 11 10Borno 8 7

1/ Licensed Buying Agent.

Source: Miscellaneous Commodity Board publications.

The concentration of these commodities within regions and even withinnarrow belts, especially cotton, cocoa and rubber, is an importantfeature of the political economy of the traditional cash crops and theCommodity Boards. The palm kernel data, used in the absence of palm oildata, is a bit misleading. The majority of palm oil production is in theeastern states, but this fact is suppressed in the table by the practiceof some easterners of burning or wasting the kernel rather than sellingthem to the Palm Produce Commodity Board or to the local kernel crackingfactory.

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C. Trade

2.17 Reliable data on official exports and imports give firmtrendlines of the reduction of shipments of the traditional export cropsand the increases in imports of some key foodstuffs, especially thecereals. Table 4 provides estimates of export volumes and values of eachof the important cash crops, including prepared commodities, for 1968 and1982. Values for 1982 are given in 1982 and 1968 Naira. The aggregatevalue of these exports in current Naira falls from N259 million to N140million, or by 46%, i.n these 14 years. Excluding cocoa, of which exportvalues held up well, because of a rise in unit prices, the aggregatevalue falls N144 to N22 million, or by almost 85%. The table showsgroundnut and cotton disappearing altogether from the list. In volumeterms (column 5) the decline is even steeper: by 57% for all commoditiesand by 91% for all other than cocoa. The table does not pick up theprior decline of palm oil exports, which had peaked at over N25 millionin the early 1950s and dropped to N200,000 by 1968. The collapse of thisexport trade is a function of both expanding domestic requirements anddeclining production, but the latter plays the dominant role in theoverall scene with the single exception of palm oil.

2.18 As mentioned in Chapter I, in the perspective of the overallbalance of payments the collapse of agricultural exports is hardlynoticed because of the enormous increase in oil exports. These movedfrom N330 million in 1960 to N13,600 million in 1980, dwarfi.ng theagricultural contribution. Similarly, a recovery of agricultural exportswill not have much impact on the current balance of payments. Even atpeak export volumes for each cash crop, the aggregate value ofagricultural exports in current Naira would add only another N350 mi.llionto total exports. The significance of this was discussed in Chapter I.

2.19 The next two tables give trade data on agricultural i.mports.Table 5 is based on the FAQ Trade Yearbooks and shows the growth of theleading categories of imported agricultural and related products in thelast decade. For agricultural products per se, i.e., excluding fisheryand forestry products, the total dollar i.mport bill increasedthirteenfold i.n the ten years 1971 to 1981, from $192 million to $2,480million. Four of the top five categories in 1971 maintained thatdistinction in 1981, the top places going to cereals and sugar.Vegetable oil imports did not begin unti.l 1975, but since then have risendramatically also. They include some palm and groundnut oils, in directcompetition with domestic producers, but the major imported products areclose substitutes such as soya and linseed oils. The rapid expansion ofdairy products is mostly of milk, condensed and dried, for which there islittle competition from Nigeria's farms. Another growth category ofmajor significance is fishery products, whi.ch include frozen and tinnedfoods and fish compound for poultry feed. If the listing were to show aseparate category for tinned foods of all types - fish, tomato puree,etc. - its growth rate would be spectacular.

Table 4

EXPORTS OF MAJOR AGRICULTURAL COMMODITIES1965 and 1982

1 2 3 4 51968 1982

Quantity Value Quantit Value Value(MT'OOO) (m) 1/ MT'000 (1982 Nm) 2/ (1968 1m)

Groundnuts and Products

Groundnuts 687 76.0 .. .. (.)Groundnut oil 108 18.8 .. .. ( )Groundnut cake 170 9.8 .. .. (.)

Palm Produce

Palm Kernels 159 20.2 59 7.4 (7.5)Palm Oil 2 - .. .. ( )

Cocoa and Products

Cocoa Beans 203 102.4 130 100.5 (65.6)Cocoa Powder and Cake 21 12.2 4 2.3 (2.3)Cocoa Butter .. .. 6 15.5 (19-3)

Raw Cotton 14 6.6 .. .. (.)Natural Rubber 51 12.8 23 14.4 (5.8)

Total 259.0 140.1 (100.5)(Total, excluding cocoa and products) (144.4) (21.8) (13.3)

I/ Ni = N2. In millions (N represents the old Nigerian pound).2/ US$1 = N.67 (current 1982 Natra, in millions).3/ AT 1968 unit values, assuming no change in average quality. In millions.

less than 1 (quantity) or 0.1 (value).

Source: 1968 FOS; 1981 FAO.

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Table 5

LEADING CATEGORIES OF IMPORTED AGRICULTURAL PRODUCTS

1971, 1975 and 1981(US$ millions)

1971 1975 i981% of Total % of TotalMerchandise Merchandise

$ Imports $ $ Imports

Agri. ultural Products,Total 192*1/ 13 579 2,480 13

Cereals 52* 3 143 923+ 5Sugar 2/ 28* 2 123 531+ 3Dairy Products- 32* 2 92 270+ 1Fixed Vegetable Oils .. .. 4 169+ 1Live Animals 35* 2 29 141+ 1Fruits and Vegetables 25* 2 14 46Other 20 1 174 399 2

Fishery Products,Total 2 1 63 440 2

Forest Products, Total 34 2 122 230 1

Total Merchandise Imports 1,512 6,047 18,776

less than 1.

* Leading 5 categories in 1971.

+ Leading 5 categories in 1981.

1/ Agricultural Products ordered by 1981 rank'ng.

2/ Mostly milk.

Source: FAO Trade Yearbooks 1976, 1982.

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2.20 While milk and some other items on the list are not suited fordomestic production, so that import substitution is not proposed, themajority of these leading agricultural imports have corresponding actualor potential domestic substitutes. The implied displacement of localproduction has invited concern. It is clear that Nigeria has not beenforced ever to import any substantial quantity of traditional staples tocompensate for local defici.ts. Nevertheless, the scope for importsubstitution over the long term i.s relatively large - apart, that is,from the question whether it makes economic sense.

2.21 The import figures are among the principal indicators cited inevidence that public policies have ignored the productive potential ofNigeria's agriculture in the last two decades. However, the rapidincrease in food imports is part of a larger problem with imports. Theargument must be put into perspective. As also shown i.n table 5, therate of growth of non-agricultural imports was just as rapid. Therelative position of agricultural products in the structure of totalmerchandise imports remained the same, at 13% of that total. Ifgovernment were successful i.n eliminating rice and maize importsaltogether, leaving wheat imports at present levels, i.t would reduce thetotal current import bi.ll by 2%. If government were successful ineliminating vegetable oi.l i.mports altogether, it would reduce the bill by1%. Those percentages have to be adjusted to reflect any increase inimported inputs required to achieve self-sufficiency: for example, therequisite fertilizer imports would have to be incorporated in theanalysis to determine the overall impact on the balance of payments. Butthe small size of these percentages suggests that the case foreliminating grain imports in order to correct a foreign exchange defici.tis not strong, except in the sense that every little bi.t counts.

2.22 Table 6 shows the rate of growth of the volume of the threeimportant imported grains since 1970. Wheat already entered the ports i.nsignificant amounts in 1970, and though the rate of growth of wheatimports has not been as impressive as rice and maize, i.n absolute amountsthe expansion of wheat imports has about doubled the other grai.ns. Thi.si.s a key feature of the import prgblem. Nigeria is not expected tobecQtre a major producer of wheat, so that the only way to make asignifi.cant dent on wheat imports i.s to embargo it or by raising itsprice to persuade cons mers to switch to substitute flours - neither apromi.sing proposition. Prospects of replacing rice and maize importsare much better. Estimates of total domestic production for the three

8The RBRDAs in northern Nigeria are aiming at substantial increasesi.n wheat producti.on, but the targets are still only a small share oftotal consumption in 1982. There is increasing enthusiasm also for smallscale irrigated wheat, but expansion plans are similarly restricted.

9Wheats from northern Nigeria can be blended in with imported wheats,as can sorghum and other domestic grains. Government insists that there isgood potential for replacing a significant fraction of wheat imports.

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Table 6

GRAIN IMPORTS 1970-1983('000 MT)

Rice Maize Wheat (incl. flour)(FAO) (FAO) (FAO) USDA (FOS/CBN)

1970 2 9 267 (315) (259)1971 .. 4 405 (368) (359)

1972 6 2 317 (374) (297)1973 1 2 454 (361) (308)1974 5 2 325 (334) (318)

1975 7 2 408 (432) (317)1976 50 17 745 (667) (537)1977 427 37 770 (918) (720)1978 761 97 1,166 (1,160) (879)1979 488 111 1,339 (1,325) (685)

1980 400 168 1,176 (1,375) (1,183)1981 600 293 1,517 (1,475) (976)1982 651 345 1,605 (na) (na)1983 700 100 1,498 (na) (na)

(Production:)(1982) (1,400) (1,650) (25)

less than 1.

Source: FAO Trade Yearbooks 1983, 1981, 1979, 1976, 1974USDA Printouts, updated by telephone (adjustedfor calendar year).

FOS/CBN, CBN Worksheets.Production from Table 1.

- 23 -

crops are included in Table 6 to allow a compari.son with the importfigures. In 1982, according to FAO, Nigeria produced about 1,400,000 MTof rice and 1,750,000 MT of maize, which compare with imports of about530,000 MT and 345,000 MT respectively. Thus Nigeria's farms satisfied69% and 83% of its total requirements for rice and maize, but producedonly 1% of the wheat consumed. Measured against total food requirementsin 1982, the imports accounted for a share of 11%, of which wheat i Tgortsprovide 7% and maize and rice 4% (calculated in grain equivalents).Measured against total market requirements, the import share would belarger. We estimate 31% of all marketed cereal and root crops areimported goods, includini1 99%, 57% and 38% of all marketed wheat, riceand maize, respectively. The CBN has recently completed a study ofcereal imports in response to a request by government for the purpose ofrevising agricultural import policies.

2.23 It should be pointed out that imported rice is superior inquality to most domestic rice traded in the markets and sells there at apremium (even though it has been imported at prices much below marketrates). Nevertheless, imported and domestic rice compete for the humandiet. That is not the case for maize. Virtually all imported maize isyellow and is used by feed mills to produce concentrates for poultry.The majority of domestic maize sold as grain is white, is produced i.n thenorth, and is sold for human consumption as much as feed. Government hasto persuade the maize millers and poultrymen to accept concentrates basedon domestic whites, which should not be difficult since the onlyimportant difference is the carotene content.

2.24 Thi.s is an appropriate place to mention that with respect tocooking oils, Nigeria produced about 700,000 MT of palm oil in 1982 andthat figure can be compared with 1982 imports for palm oil and allvegetable oils of 153,000 and 406,000, respecti.vely. Figures are notavailable for production of groundnut oil, so an overall index ofself-sufficiency in vegetable oils cannot be derived. The importantpoint is that as late as 1971, it produced almost 100% of thoserequirements. Production has not fallen since then: consumption hasexpanded.

10These percentages derive from a comparison of i.mports of wheat,maize and rice, and production plus i.mports of those three commoditiesplus sorghum, millet, cassava and yam (all converted to grainequivalents, where the cassava coefficient is .3 and the yam coefficientis .25). The percentages must be taken to be illustrative. Productionin 1982 is marketed in 1982/83, which implies it perhaps should becompared with imports the next year, i.e., 1983. The analysis di.d notuse 1983 production figures, which were di.storted by the drought.

11Assuming 28% of all local production is marketed (taken from FoodStrategies Mission figures), and 33% of local production of rice andmaize is marketed (Mission's guesstimate).

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2.25 Table 6 was extended to include columns of figures for wheatproduction taken from USDA and FOS/CBN sources, to compare with the FAOestimates. While the trend lines are similar, there are majordiscrepancies in particular years, 1981 for example. These columns againcall attention to the poor data base - even for foreign trade.

2.26 This report is deficient in that it ignores altogether the roleand economics of sugar, shown in table 5 to be the second most importantimport category after the cereals, measured by value. Government hassupported the creation of large sugar estates at several sites to reversethe rapid rise in imports. The report also makes only occasionalreference to the livestock, forestry, and fisheries sectors, though theytoo are shown in table 5 to involve substantial imports (and someexports).

D. Supply of Inputs

2.27 No comprehensive review has been made, for the purpose of thisMemorandum, of data and reports referring to the factors of production.What follows are a few comments on the degree to which supply conditionsare commonly agreed to have had a significant impact on agriculturaloutput.

Labor

2.28 The rapid increase in the rural wage rate starting in the late1970s and lasting through 1983 may be the single most important change inthe economic environment depressing farming in the last six years,strongly reinforcing trends that had already emerged. This is arelatively new phenomenon. Statutory minimum monthly government wageswere raised five or more times between Independence in )L960 and 1979,depending on the Region. But comparison with consumer price indicesshows that these adjustments barely kept up with inflation, and that thegovernment wage earner's purchasing power in late 1978 was tsignificantly above the level in 1960, except in the north. The rangeof rural wages for different unskilled jobs is linked to the statutoryminimum wage: private plantations in the south, for example, pay wagesset in collective agreement with the Agricultural Employees Union ofNigeria, which bases its claims on changes in the official minimum wage.Unskilled farm jobs during most of the year would not earn that much inthe villages, where many farmers pay below the minimum for adult malelabor. Certai.n components of the labor force - the youth and the agedfor example - would also be pai.d at lower rates in the villages. Butwithin the recent past those gaps have been diminishing and the lower endof the range has been catching up with the official minimum at the sametime as the minimum has begun to escalate.

12Williams, Gavin, Inequalities in Rural Nigeria, DevelopmentStudies Occasional Paper No. 16, University of East Anglia, November1981.

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2.29 In 1979 the minimum wage was raised to N2.34, and thereafterthat price began to advance rapidly, reaching N4.25 in 1982 (where itstill remains). Moreover, farm labor by adult males for landcultivation, weeding and other peak season jobs now draws higher wagesthan the minimum, the reverse of the situation before the late 1970s.Figures of N5 to N8 per day are frequently quoted for arduous, unskilledfarm employment, and quotes of N10 and N12 were heard i.n Ilorin andOwerri, respectively. Translated to US dollars at current exchangerates, the Nigerian wages are from at least three to five times higherthan i.n competing LDCs. Fringe benefits have been advancing as well.Nigeria's plantation workers are said to be in a better position withrespect to these benefits than their co-workers in Southeast Asia. Evenin the villages, compensation includes two meals, which will raise theimputed costs by several Naira. The i.ncrease between 1978 and 1982 waswell above the rate of inflation of consumer prices, so that labor'spurchasing power rose significantly. The increase in wages since thatperiod was also above the increase in farmgate commodity prices, suchthat the terms of trade turned against the farmer despite the improvedearnings at the farmgate. The trend has been reversed in 1984, but thereis no good data to show how big the shift has been nor whether it.waslarge enough significantly to affect rates of recruitment.

2.30 Changes in rural minimum wages now closely parallel changes inurban mi.nimum wages. Higher income can still be earned by unskilledworkers in the citi.es, though not throughout the year. The quotedminimum daily wage for unskilled workers is better in urban jobs, becausethe statutory wages are stated at a monthly rate and the urban worker hasa shorter normal work week (5 days at 8 hours) than the rural worker (6days at 7 hours). Also, the workers employed by civil engineering firmson construction jobs usually work 12 hours a day, of which 4 hours areovertime paying a 25% increment. Those jobs only last through thesix-month dry weather construction period, however. Yet, average wages,and the expectations of securing a better job are also much higher in thecities. Thus, the continuing migration of young men to the cities is atthe same time a reflection of the differential in expected future wagesand a response to the vast differences in perceived non-pecuniaryamenities and other attractions of urban centers. The differential i,namenities is probably the deci.si,ve factor inducing rural-urban migration,and that will continue until physical facilities and cultural activi,ty inthe rural environment are si,gnificantly enhanced.

2.31 The impact of escalating wages on farm household decisions isgreater than the nominal percentage increase in the daily wage. Familylabor is abandoning the farms, so that the ratio of hired to householdlabor on small as well as large farms is climbing. Thus the total wagebill on farms whi,ch lose thei.r younger children to schools, and theirolder children to the cities, would rise steeply unless the farmerproduced less than before or shifted to less labor-intensive crops andtechnologies. The implication of the new wage economics on traditionalcrops which have a high labor content - for example cotton and groundnutsin the north, and rubber taping and wild palm harvesting in the south -is obvious.

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2.32 The government reckons that the adverse effects of UniversalPrimary Education on the labor supply in the near term are more thancompensated by the long-term advantages of a broadly educated electorate.

2.33 Accurate population estimates are not available in Nigeria, andthere is no reliable information on the changes in size of the totalrural wage labor force. One could infer from the large drop inproduction of certain traditional cash crops - cotton, groundnuts andrubber - that wage labor must have been released in those enterprises.But it is not clear whether the wage labor input to the staple crops -yam, cassava, sorghum, etc. - has fallen, or whether in the aggregate thetotal wage labor force in agriculture has fallen. According to a leadingagricultural economist at the University of Ibadan, despite the migrationof young men the total rural population i,s increasing in the south aswell as the north and one cannot assume any su'bstantial fall in totallabor availability has occurred. The absence of demographic dataprevents a definitive answer. The only certainty is that thecontribution of family labor on the representative family farm isdeclining, and in many areas of the south declining rapidly. Reports areheard from all over the predominantly Yoruba zones that villages aredenuded of young workers during the working period in the week, whichwould suggest that neither family nor hired youth are any longeravailable in numbers common in the past. That does not mean that theyare working elsewhere, only that they are not seeking farm jobs.

2.34 The phenomenon of a labor constraint that is not defined interms of physical availability but in terms of the wage demanded is thecrux of the problem. The oil syndrome has set up expectations andsentiments that have driven rural wages higher than the opportunity costsof the rural wage earner in subsistence agriculture, and pushed up thereservation wage which the younger, adult family labor reckons it wantsto persuade it to give up leisure. This of course is a situation whichcannot last forever. But as long as government enjoys large oilrevenues, the system can afford to support a rural working force at ratesin excess of the value of its agricultural labor. With the downturn inoil revenues, the continuing austerity rules, and the increasing numberof laborers released from jobs in the modern sector, we might anticipatethat the pressure on wages would abate: the young men would return tothe villages or not set forth in the first place. How long the recessionwould have to last before a substantial decline in real rural wagesbecame apparent is not known. Perhaps longer than the present recession.However, one way or another the balance between the rural wage and theproductivity of the wage earner has to be restored.

2.35 Balance will come either as a reduction in the real wage, anincrease in productivity of traditional agriculture, or a shift intomodern, mechanized agriculture. One of the possible consequences of theoil syndrome, and the high wage structure it has imposed on the ruralsector, is that it will accelerate the shift away from small scale,traditional technologies. The only part of agriculture that mightsurvive in any reasonably economic shape may be the irrigated andmechanized farms. This would be because the increase in wages hasalready outdistanced any conceivable growth in productivity in thetraditional, dryland, small farm sector. A small farm strategy based on

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traditional systems would have to have phenomenal success to catch upwith wages, unless of course wages were driven down by continuingrecession.

Land

2.36 Writing in 1971, Nigeria's best known geographer said, "althoughNigeria i.s one of the few countries in West Africa that areself-sufficient in food producti.on, a number of ar?s in the country donot produce enough food for the local population." He went on todescribe conditions in what he identifies as the nine food deficit areas.Nigeria subsequently lost its overall self-sufficiency, but except fordrought years rural food deficits and land shortages are still limited tothe same speci.fic zones. Large areas of the country continue to enjoyrelative abundance in land and a favorable man- land ratio. In fact, ofthe nine deficit areas identified in 1971, only three were described asbeing over-populated in terms of the local resources - two in thesoutheast and the Sokoto home districts. Here the congestion has pushedpopulation densities to levels high by world standards, and average percapita holdings of cultivated land are constrained from further growthand clearly insufficient, even when well farmed, for returning a level ofcash income commensurate to expected standards i.n the country. The othersix deficit areas were explained in 1971 with other reasons -specialization in non-food commodities to the detriment of the staples (3areas), poor agricultural practices despite relatively favorable landresources (2), and the special conditions of the Niger delta, which haslow population densities but has nevertheless never been in a position tofeed itself. Although conditions everywhere have deteriorated since1971, the general position is still the same: the Ibo, Annang, andIbibio heartlands in the former eastern state, and the Sokoto districts,are in a disadvantaged position and would be expected to exhibit exactlywhat they do - disproportionately high rates of outward migrationsearching for periodic or permanent jobs elsewhere.

2.37 It is probably true to say that in many of the other ratherheavily populated districts of Nigeria there is little land available forexpansion of cultivated areas close to the traditional communities. Thusthe position facing the great majority of families who lack the capitalresources and political status to jump to the outer perimeter of thesettled areas and acquire undercultivated, arable land from its presentowner, is difficult. This is another poorly documented subject. It wouldappear that aggressive families can nevertheless acquire extra farm lotsof modest size even in the closer surrounds of their communities.Whether this opening is getting smaller as population grows depends onthe rate of outward migration and on the aging of the resident farmfamily work force (an old farmer without sons is more inclined to retreatwithin a smaller cultivated perimeter, to reject new practices, andperhaps to trade away land rights). One hears diametrically opposite

13Udo, Reuben K., "Food Deficit Areas of Nigeria," The GeographicalReview, Vol. LXI, No. 3, 1971, p. 415.

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judgements on this point. Some observers claim that expansion even on amodest scale was always severely limited by customary tenure claims andis getting increasingly difficult, particularly in the eastern areas butin much of the west as well. Other observers, and these include thesuccessful farmers, say that the acqui.sition of additional land inreasonable distance of the homestead was nowhere impossible and in someplaces very easy, particularly in the Yoruba areas, Bendel, the middlebelt and most of the north, but in much of the east as well. All of thefoodstuff trade rs interviewed in the towns of the southern states duringone of the fact-finding visits for this Memorandum clai.med that extraland was no problem for their farmer-suppliers, that the key constraintson increasing trade lay elsewhere.

2.38 Nevertheless, land acquisi.tion is influenced by land tenuresystems, and one constraint that persists in most tri.bal areas is thecommunal form of ownership. The chief, subclan head or extended family -depending on the area - has primary control of communal lands, and mustapprove any trade of cultivation rights. But, again varying betweenareas, these communal controls apparently are either giving way toindividual ownership or allowing multi- year tenancy rights. Gettingagreement on rights to annual cropping is easier than to perennials. Buteven the position on perennials is beginni.ng to shift in favor of theprogressi.ve farmer who wants to plant tree crops on communal land.Again, there is conflicting evidence on how strong this trend is. InOndo State, for example, there are mixed reports as to whether migrantworkers on cocoa farms were permitted to plant cocoa trees for themselveson land provided them originally for annual food crops. The wholesubject needs much closer review on a countrywide scale before a patternbegins to emerge to accommodate these various opinions based on isolatedcase studies.

2.39 On one point there is no disagreement, which i.s that thepossibility of amassing rights for a block of continuous plots, i.n orderto put together a large plantation, i.s getting increasingly difficult andin some zones is now out of the question.

2.40 A last point deals with apparently conflicting information onland availabilities in the middle belt. On the one hand, we hear much ofthe area described as an open frontier with cultivable land available forlarge-scale mechanized farming. On the other hand, the prolect (ADP)officers report that everywhere they turn in the middle belt they runinto more settled people than were anticipated, and that acquisition oflarge blocks for project activities is difficult. CleaLrly, somedi.splacement of people is necessary throughout the middle belt, butwhether the prevalent problem is the number of people, or the stickinessof communal ownership claims on lightly populated lands, is not clear.Both can be tough problems to solve before enclosure and mechanizationcan proceed, but they require different solutions.

Capital

2.41 Public lending in the agricultural sector is perhaps one of themost neglected aspects of Nigerian agricultural development strategy.Some figures are given i.n Section VI-C showing the tiny number of

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individual farmers who have benefited from the direct lending scheme ofthe National Agricultural and Cooperative Bank (NACB). More NACB fundshave been lent to cooperative societies, but these funds, plus statecontributions, are also a small part of estimated demand.

2.42 Commercial banks are obliged to place 12% (raised from 10% inJanuary 1985) of their loan portfolio in the agricultural sector.Interest rate ceilings, the high costs of administering small-scaleloans, and the risks involved in these loans have combined to cb4nnelmost commercial credit into safe ventures with large i.nvestors. Asdescribed in the Bank's 1979 Agricultural Sector Review:

"It is quite obvious that most, and with many banks, allof these investments are to companies or individual businessmenwith sideline agricultural, agro-industrial or agro-serviceventures. It is also apparent that banks can apply a verybroad definition of the agricultural sector and the greater thepressures on them to lend to this sector the broader theirdefinition becomes. Hence, processing ventures, forestindustries and even finance for food distribution can and havebeen slotted against this portfolio. In some cases bridgingfinance to agricultural ministries has also been included inthi.s statistic." (Vol. III, page 139).

Even the channel to agro-industry is severely restricted. Under thespecial program for promotion of small and medium scale agro-industrialdevelopment - the Agro-Industrial Development Scheme (AIDS, para 5.19) -AIDS officers have been repeatedly frustrated by the lack of fundsavailable from banks, reinforced by steep collateral requirements, tosupport projects technically prepared in collaboration with localentrepreneurs. That experience is shared by all four AIDS area offices(Ibadan, Kaduna, Jos, Enugu), and echoes the comments made to the Missionin interviews throughout the public and private sectors.

2.43 The commercial banks raise their own objections. Feasibi.li.tystudies prepared for agricultural-based projects are reputed to be farinferior in quality to those prepared for other sectors. Typically,market surveys are ignored altogether. Given the high rate of default onearlier loans, which is of primary concern to the banks, they are forcedto look for safety. That is the problem whi.ch AIDS can help solve, oncethe countrywide credit restrictions are relaxed.

2.44 Until the mid-1970s the unusually severe restraint on creditwould have had little effect on seasonal cropping operations. With theescalation of the wage bill and with the projected reduction of thesubsidy on fertilizer sales, the need for seasonal finance can be

14Nevertheless, where favorable conditions presented themselves, theprofitable alliance of the commercial banks and agri.-business has hadnotable success. The phenomenal growth of the poultry industry is a casein point.

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expected to grow. But whether that means that the supply ofinstitutional credit will become the limiting factor on expansion ofseasonal agriculture is an issue open to debate. Two schools of thoughthave emerged. One claims that progressive agriculture in the absence offormal credit is inconceivable; the other claims that profitable smallscale farming usually finds its own finance. These are not mutuallyexclusive. The lack of seasonal credit probably has not affecteddecisions by smallholders generally oriented to subsistence cropping,with supplementary cash crops. The lack of seasonal credit probably hasrestrained the growth of a "true" commercially oriented farm population.However, the main result to date of the lack of credit has been in theportfolio of longer term loans. This has operated to depress investment- to a degree that cannot be quantified - in on-farm capital formation,including mechanization and irrigation, and in the infrastructure ofprocessing and marketing. Even that effect has been moderated throughmost of the 1970s by the tariff and exchange rate policies allowingcapital equipment imports at low prices. The main problems facinginvestors i.n the past may have been less on the side of finance as i.n thediffi.culties of operating capital-intensive farms and agro-industriesunder the prevailing poor conditions of services, supplies andregulati.ons in rural Nigeria, and within the inhospitable environment ofeconomic incentives.

Farm Inputs

2.45 Consumption of inorganic fertilizer has risen rapidly fromnegligible amounts in the early 1970s. FAO data on estimated plantnutrient use shows a total of 7,000 MT in the 1970/71 fertilizer year,rising to 54,000 MT five years later and 325,000 MT in 1981 (FAO changedthe fertilizer yeayi. The level fell back in 1982 to 221,000 MT due tothe fiscal cri.sis. Nitrogen comprises around half of those annualtotals. Between 1977 and 1982 the ten northern states accounted forabout 80 percent of the total allocation, half going to Kano, Kaduna andBauchi alone. Two major reasons are cited for the greater use offertilizers in the northern states - 70 percent of the crop acreage islocated there, and the area has enjoyed greater promotional work by theextension service. Despite thi.s impressive growth, fertilizer use perhect age of arable land at 6.4 kg of nutrients i.n 1984 i.s still verylow. The Preparation Report of the Nigeria Fertilizer Import LoanProject (final report issued May 1983) provides comparative figures forother countries showing that Nigeria's nutrient consumption per hectareof arable land, during the 1979/80 cropping season, was less than halfAfrica's average "and about 0.7 percent of Japan's average" (page 25).

15Imports of fertilizer followed a parallel trend (in thousand MT):1970 30, 1977 305, 1981 1,016, 1982 521, 1983 508, 1984 763. Both seriestaken from the Final (Preparation) Report on the Nigerian FertilizerImport Loan Project (pp. 27 and 51) except for 1970, 1983 and 1984.

16World Bank, Project Brief, Nigeria: Fertilizer Loan II, Jan. 24,1985.

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III. INCENTIVES TO FARMING

A. New Technologies

3.01 Section IV A describes the differences in position taken byvarious donor and domestic agencies with respect to the adequacy of theset of new technologies presently available for extension to farmers.The Bank's 1979 Agricultural Sector Review discusses the gap betweenpresent practices and known improvements in food and non-food crops, andconcludes

"While it i.s impossible to quanti.fy the exact potential thatexists for increasing production through the adoption ofavailable improved technologies and practices, these examplesindicate that a tremendous gap exists that should be properlyexploited." (Vol. 1, p.2)

That degree of technical optimism carried forward into the planning ofsubsequent ADP food production plans, where the emphasis is on upgradingthe extension service and input delivery systems in order to get thepackages out. The optimism contrasts with the findings of a consortiumof American agricultural universities financed by the U.S. Agency forInternational Development (AID) ten years earlier, which had concluded inits 1969 final report that a period of 5 to 10 years had to be set asidefor intensive research into yield increasing and cost reducingtechnologies before the food crop campaigns were initiated.

3.02 The ten-year interval between the AID (1969) and Bank (1979)reports had not witnessed any signifiant increase i.n research activity.In fact the national program had declined in importance. Moreover,starting in 1971 at the Institute for Agricultural Research at Zaria, anew group of on-farm studies of farming systems had exposed weaknesses insome of the technical improvements already extended, showing that yieldincrements were being blocked by factors which were ignored in previousbiological research. Reports released during the 1970s by FAO and thegovernment's National Accelerated Food Production Project (NAFPP, para4.22) showed the remarkable responses that could be obtai.ned tofertilization on farmer fields, but they only underlined the fact thatfarmers in the north and south who should have been impressed by thedemonstrations and adopted the packages had not (with the importantexception of maize).

3.03 The FAQ data on root crops is stri.king. The reports showconsistently that application of fertilizer to yam would bring a farhigher yield response than to any other crop. And yet farmer performancewas highly variable: in some areas yam was heavily fertilized and inothers not. The difference is not due to the degree of nutrientdepletion from overworked soils, si.nce some of the areas with the highestapplication rates are in the newer yam producing virgin areas of themiddle belt states. The cassava experience is equally puzzling. Yieldresponse to fertilization is known to be good, yet most farmers continueto plant it last in the annual sequence of mixed crops and without anyfresh application of fertilizer. It is clear that farmers' decisions areinfluenced by factors the FAQ reports did not discuss.

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3.04 One of the pri.nci.pal authors of the AID 1969 report is co-authoralso of a 1982 reassessment of the state of technology in Sub-SaharanAfrica, and his views have not changed - in fact, the advocacy for along-term commitment to research has strengthened:

"For rainfed food crops, the technology shelf is stillbare... the number one research priority for Africa is a longterm, 10- to 20-year resealch program to develop the technologyfor rainfed agriculture."

That paper draws heavily upon the Nigerian experience.

3.05 The Sector Memorandum Mission has been concerned about thisdifference between technical optimism and pessimism. Judgments areneeded about the legitimacy of the technical coefficients themselves.Were the yield improvements forecast in preparation reports for theaverage participant farm realistic, or were they influenced byexceptional yields attributed to special advantages available on researchfarms or on controlled farmers' demonstration plots? And if the latterwere the case, were the shortfalls i.n actual performance due to theinability of large numbers of farmers to achieve the output reached by afew willing collaborators, simply because of differences in vigor, orwere the shortfalls due to cultural and systemic factors which blockfarmers from doing on their own fields what they appear willing to letextension agents do for them on designated small plots?

3.06 This technical inquiry is impossible to make on a nationalbasis. The judgment differs crop by crop and region by region. It is acontinuing preoccupation of the Bank's staff. Gradually a picture isemerging.

3.07 On the whole, it i.s reasonably clear that the coefficients usedin the recent preparation reports are not inflated with respect to whatlarge groups of farmers ought to be able to achieve with knowntechnologies, provided inputs, storage and markets are available (aproviso that is taken up in subsequent sections), and provided farmsystems constraints, risk considerati.ons and labor preferences have beenaccommodated. Those coefficients offer to the farmers improvements ofthe order of magnitude which rural development experts believe shouldinduce adoption - 100% net return to invested cash and labor is a popularrule of thumb, though the range of estimates of the threshold goes from50% to 200%. The discussion of technical coefficients and adoption ratespresented in the draft preparation reports of the southern ADPs is asgood as any we have seen in Bank-related documents. Yet experience in theongoing ADPs and other rural production programs shows that farmers aretaking up very few of these improved packages. The question is why not?

17Baker, D.C., Crawford, E.W., and Eicher, C.K., "AgriculturalTechnology in Sub-Saharan Africa: A Critical Assessment, October 25,1982.

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3.08 One ready answer is the failure of extension serviceseffectively to promote the packages and accelerate the diffusion ofinformation. But that appears to explain only a part of the problem. Animportant feature of these rural production programs is that thecomponents of the improved technologies that form the basis for the farmmodels are already widely known. This is a result, on the one hand, ofthe hard work of earlier extension services, before and afterIndependence, in hammering home the profitability of new seeds,cultivars, pesticides and fertilizer, and, on the other hand, of the goodwork of the NAFPP field experts during the 1970s. There are importantexceptions, of course, where more good extension work will have toprecede adoption. This applies especially to crops which require majorchanges in cultural practice, such as the tenera oi.l palms and irrigatedrice. Also, methods of fertilizer application - the timing andplacement, the proper mixes - are still poorly known and that reflects asmuch an extension failing as a gap in research. But for most cropsfeatured in the technical packages now available - fertilized hybridmaize, fertilized local sorgbums, superior cassava cuttings - theimproved techniques are certainly not "new" to the country and are notunfamiliar to most of its farm families.

3.09 The rate of spread of some of t'hese improvements has alreadybeen quite rapid - seed dressing of maize and other cereals, the TZBseries of maize composites developed at the International Institute ofTropical Agriculture (IITA) at Ibadan using germ plasm from the nationalresearch institute at Moor Plantation, the mosaic resistant cassavacultivars also partly developed at IITA based on prior work at the MoorPlantation and with the collaboration of the National Root Crops ResearchInsitute (NRCRI) near Umuahia. One can expect the innovations now underclose scrutiny by the researchers - for example, small yam seed setts andcassava varieties resistant to mealybug and spider mite - to be picked upvery rapidly when perfected. The use of short season sorghums that haverecently been released is expanding in the more southerly zones of thenorthern states. Diffusion is facilitated and encouraged by theextension service but not dependent upon it.

3.10 Yam is a special case, but it sheds light on the technologyissue. It is the traditional prestige crop of the southern and middlebelts of Nigeria. Seventy percent of the world's supply was produced inNigeria in 1970. Given yam's preeminent position, the farmers are saidto give it their best attention and also to be close to the productivityfrontier of available technologies. But that last allegation is disputedby the evidence in interviews collected by the Sector Memorandum Mission.As mentioned above, FAO studies suggest the yield response tofertilization is greater for yam than for any other crop. Yet inorganicfertilizer is not much applied to yam in the south. The difference mayresult from variations in natural fertility conditions. Yam istraditionally planted first and in the most fertile plots of the farmer'sfields. If it is to be planted in depleted soil, the effects offertilizer boosts should clearly improve yields. That may be the messageof the FAO trials. Yet, as also mentioned above, the explanation isobviously not complete. Many agronomists, including staff of IITA, sayyam does not warrant heavy fertilization in the humid tropics. Someother factor is blocking widespread adoption of fertilizer on yam,

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despite FAO's results. The effectivenss of staking and mounding, highlabor activities, is also i.n doubt. Farmers in the middle belt usuallydo not stake yam, and often use smaller mounds. Climatic conditionspermit those shortcuts. But some farmers in the south also take the sameshortcuts, apparently expecting that the losses in yield will beoutweighed by the savings i.n labor input and wages pai.d.

3.11 What the yam case suggests i.s that many of the "known"technologies are best suited for conditions which are beginning todisappear. The superior traditional yam growing methods will have togive way to new practices which reflect high wages, declining naturalfertility, the availability of cheaper, small setts, etc. Meanwhile yamcultivation is shifting northward. It is a boom crop in parts of KadunaState, which is shown nowhere in the agricultural atlases as a yamregion. With a breakthrough on multiplication rates, yam could becomeanother important growth crop in much wider areas of the middle andnorthern states, and perhaps regain on the national scale the positionrecently given over to cassava in the south.

3.12 Similar stories can be told about most: of the major crops, forwhich recommended or popular technologies are being undermined bychanging economic conditions. The retreat of cotton in the face of theexpansion of maize i.n zones where both are grown is a case in point. Thetraditional cotton varieties upon which the expansion of the cotton cropwas based in the 1950s are long season types whose labor requirementspeak on periods which conflict with the requirements of the moreremunerative and easier maize crop.

3.13 In short, the factual basis for technical optimism falls betweenwhat appears to be unrealistic projections of yield increments in the1979 Agricultural Sector Review and the pessimism reflected in commentsabout a "bare" shelf of research results. There have been importanttechnical breakthroughs on some of the major crops, and theseimprovements have already spread or would appear in a good position todiffuse quickly if the input/output price relationship were to improve.Also, there are good prospects for introducing better herbicides andother pesticides. However, at most one or two have the robustness of thedramatic breakthroughs associated with the grains of the Green Revolutionin Asi.a. More important, research historically has focused on developingpackages offering maximum yields, and the recommendations now in thehands of extension agents are in the majority of cases inappropri.ate toconditi.ons in which these crops are increasingly grown. For example,little work has been done under the national research program on how tooptimize on inputs to cassava when it is deliberately planted last in therotation as a lean season crop, or on how to maximize profits to yam inthe south with only half the customary labor input. This point bringsthe role of farm systems research into focus. It is clear that yield andlabor saving-improvements related to mixed cropping practices have hardlybeen investigated at all. Crop production programs must be complementedby a mixture of long-term basic research to prepare improved technologiesfor the future, applied research to turn those results to practicalapplication, on-farm adaptive research to permi.t immediate adjustments ofpackages whose take-up is much slower than expected, and a diagnosis ofthe economic and institutional restraints which are at present sending

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signals to the farmer that most of the promises to him by researcherswill not work out.

3.14 The argument for substantially increasing the research budget,including socio-economic as well as biological research, is based partlyon the astonishingly low level of the knowledge base upon which ruraldevelopment programs, including those supported by the Bank, aredesigned. Fertilizer is a fundamental factor in the government'sagricultural strategy, yet recent information collected from projectevaluation units suggests that under current farm practices the use offertilizer on some farm fields may not offer economic returns for mostcrops. The data base for these inferences is known to be weak, and onecannot push the evidence of low yield response for the average farmer inthe survey samples too far. But the fact that the results reappear inseveral projects suggests that a pervasive problem may have beenidentified: on the one hand, poor data is giving spurious results, but,on the other hand, the figures testify both to the poor practices of thefarmers, which are wasteful, and to the ignorance and bad advice of thefertilizer retailers. Or the answer could be that theextension-recommended mixes and doses themselves are wrong for theavailable crop varieti.es, implying a gap in the research program andcalling into question the FAO trial results. The problem is we do notknow at this point where the main weakness lies. The same gaps appear inour understanding of many other technical questions of central importanceto project design: how to optimize cassava yields in a mixed croprotation, how to maximi.ze aggregate yields of all crops in a mixture,what are the rotations for the south that permit continuous cultivation,and what is the potential for rice self-suffi.ciency.

3.15 The technology issue is complicated by the fact that attentionis usually focused on "technical packages" providing increments in yield,and that implies new varieties and improvements in husbandry methods.There are other sources of production increases which have to beconsidered, and these perhaps open to a more hopeful view of the shortand medium term production potential. First there is si.mply theexpansion of area based on existing technologies. Where expansionrequires bush clearing, costs may be high, especially in the south. Butfor some crops - cassava is the best example - expansion is relativelyeasy and given the low labor inputs one can antici.pate a large productionresponse to improved prices. That is reportedly what is happening atpresent, given the hike in cassava and grain prices since mid- 1983.Expansion of cassava can be anticipated even in the absence of abreakthrough on disease and insect controls, and expected advances inthese controls as well make cassava a most attractive growth crop. Maizeis another easy (low labor) crop to grow, but represents a new technologyrather than a growth crop based on a familiar technology, like cassava.

3.16 Second, the spread of effective tractor power will help breakany labor constraint that affects farmers during land preparation andreduce costs of production. Third, irrigation introduces a completelynew system of controlled cropping. Fourth, there are improved methods ofpost harvest services, including processing and storage and usuallyinvolving some forms of mechanization.

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3.17 With the exception of area expansion based on familiar crops,these other forms of technical improvements are relatively new inNigeri.a. Experience is not altogether encouraging: the records of themechanized state farms, state tractor hire units, large scale RBDAirrigation schemes and public food processing facilities have to datebeen unimpressive. But the problems have usually been attributed tomanagement failures rather than techni.cal design, and in principle theseroutes to increased productivity offer exciting possibilities that areindependent of the rate of development of new technical packages centeredon yield increases, as customarily prescribed. Put these together witharea expansion, and one indeed finds a rather strong technical base foragricultural development.

3.18 In the long run, however, the real engi.ne of development willcome from research-generated technologies: mechanization and irrigationneed to be supported by research as much as does rainfed, small farm,hand-operated agriculture.

B. Input Subsidies

3.19 Nigeria's policies with respect to the pricing of inorganicfertilizer and other chemical products have created incentives for inputuse which must exceed those in almost any other developing country. Itcan be shown that when fully costed for transport and otheradministrative charges, ferti.lizer sold to farmers, at agro-servicecenters and other official stores, was selling in 1982 at a price roughly15% of cost. Discounting for the overvaluation of the Naira lowers thefigure further. That is virtually a free fertilizer policy, and i.svulnerable to criticism of encouraging waste in usage and distortions infarm management. Those criticisms hold i.n theory but are not so relevantto present practices, which use little fertilizer (para 2.45).Nevertheless, the potential for distortion exists. Questions i.n thisrespect have been raised about claims for success of the pilot ADPs. Thepoi.nt made was that with farmgate crop prices at a level twice the importparity price, and fertilizer priced to farmers at one sixth its cost, theconversion of a dollar of fertilizer to a dollar of crop in the pilotADPs offered a multiple of 12 times the conversion rate in a project thatwas "playing it by the rules": using economic prices for inputs andoutputs. Any fertilizer strategy would work in the ADP price regime, itwas alleged, and the example proves nothing about the correctness of thatstrategy.

3.20 In fact, the multiple works out much less than 12. Shortfallsi.n fertilizer supply and exploitative practices in the distributionsystem undermined the official price. Many northern farmers pai.d up tothree times the official price to get ferti.lizer. Thus the benefits ofthe 85% subsidy are shared between the traders and the farmers.Moreover, the fertilizer subsidy i-s a partial means to offset theoverpricing of other inputs, especially labor. It is impossible todetermine from the subsidy figure whether more fertilizer is used thanought to be used. Yet the subsidy remains generous nevertheless, andshows that Nigeria set i.ts course, in the early 1970s, on a subsidizedfood production policy that gave at least one enormous advantage to theparticipating farmers.

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3.21 The subsidy has come under increasing criticism and is now beingreduced. Much of the objection is of an institutional nature: that thesubsidy takes scarce public funds, encourages corruption and misdirectionand discourages legitimate private sector activity. Proponents of thefertilizer subsidy argue that it is a relatively easy mechanism forgovernment to provide support to farmers. Action to reduce the subsidyin the absence of an attack on other subsidies, which are pervasivethroughout the economy, is said to discriminate unfairly against the farmcommunity. Also, it is one (imperfect) mechanism to offset low cropprices.

3.22 The input subsidy policy attracts attention to fertilizer, butits scope is much broader than that. With respect to official pricing ofchemical pesticides, the policy has been to charge less than full cost ofchemicals distributed under government programs or sold throughgovernment channels such as the agro-service centers. The subsidy variesby crop. For the food crops it is 50% under new federally-assistedprograms (and a range of percentages under state programs), for cashcrops it varies by the Commodity Board which distributes the materials,either 50% (tree crops) or free (cotton and groundnuts). But, unlikefertilizer, government does not monopolize the import of chemicals.Prices are not dictated to private dealers selling directly to farmers,the channel which handles most of the distribution.

3.23 The other important subsidy is provided for government-runtractor hire services. This is a state function, and the tractors belongto the states so that charges for contract services may be expected tovary substantially. On the average, i.t has been reckoned that tractorservices are hired out by the states at charges that cover from 25% to50% of actual costs. The per hectare charge is generally lower forcooperatives than for individual farmers, and lower for small farmersthan for large farmers. Both the federal and state authori.ties haveimported tractors during the last six years for direct sale toindividuals and cooperatives. It is common for these units to be soldfor 50% to 75% of full price.

C. Crop Prices

3.24 The analysis of crop prices is the subject of the separate Bankreview1 gonducted in 1983/84 called the Agricultural Pricing PolicyStudy. This section draws upon the salient points of that study, plussome earlier reports that provide a wider view of price trends. Anyreporting is constrained by data problems similar to those on theproduction side, problems which are aggravated by the substantialvariation in commodity prices between the market sites themselves, eventhose in close proximity. Also, a distinction must be made betweenprices of export commodities and of food crops. Both are influenced byinternational prices. But the former are also influenced by public

Nigeria, Agricultural Pricing Policy. Op. cit. (page 4, footnote/) .

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policies on taxing or subsidizing export-crop producers, while the latterare influenced by public policies on quantitative import restrictions andtariffs, which have been kept low to support the budget of urbanconsumers. The two sets of decisions have been made independently in theinstitutional framework of the federal government. Though the long-termtrends have been similar, export prices have lagged behind food cropprices in the last six years. In this discussion, palm oil andgroundnuts, traditionally grouped with the export crops, will be treatedas food crops. The low and inoperative Producer Prices offered for themby thei.r Commodity Boards will be ignored, and reference made to actualmarket prices. This distinction between food crops and cash crops isintroduced for expositional purposes. The reader will understand thatall food crops are also traded to some degree for cash.

Food Crops

3.25 For food prices, we have had to reconcile an inconsistencybetween previous reports on their rate of increase in the period1970-1983. The Bank's Agricultural Sector Review of 1979 stated that inthe period 1970-1977 food prices rose much more rapidly than other itemsin the consumer price index (CPI) and thus were a major source ofinflation (Volume I of the Review, page 17). Two subsequent BWk staffand consultant reports arrive at rather different conclusions. The1979 Review's passage on prices is not documented and in view of theextensive work that has followed it, including a fresh analysis by theAgricultural Pricing Policy Study Mission, one must accept the laterjudgment that the deflated food prices index for the decade of the 1970sprobably ended up where it began, rising in the early years and fallingin the later years.

3.26 Since 1979, however, food prices are generally agreed to haveincreased for most crops at rates which exceed the CPI. The AgriculturalPricing Policy Study Mission has estimated that between 1979 and 1983food prices i.ncreased by about 100%, which overall compares with anincrease of the CPI of 60% (even in this period there are troublesomediscrepancies between the prices series provided by different sources).The inflation of food prices accelerated in early 1984 under the impactof the 1983 drought.

3.27 Two things seem clear from the untidy data base. First, thevarious price estimates provide little support to the FOS productionseries discussed in para 2.02. If cereal and root crop production haddeclined in the period 1970 to 1982 at anywhere near the rates shown inthe FOS data, there would have had to have been much stronger upwardpressure on prices of traded commodities (maize, rice) as well asnon-traded commodities (millet, sorghum, yam, cassava) throughout thi.s

9Southworth, V.R., and Hitchings, J.A., "Agricultural Marketing andPri.ces in Nigeria's Green Revolution, Recent Developments and PolicyIssues," May 1981, page 18; and Norton, R.D., "Pricing Poli.cy Analysesfor Nigerian Agriculture," draft July 15, 1983, para 2.38.

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period, despite the increase in grain imports. That conclusion, ifcorrect, is important, because it suggests that on the whole domesticproduction of these four non-traded commodities, the basic staples in thediets of northerners and southerners, was keeping up with demand.

3.28 Second, there is no evidence that food prices have beenmanipulated by government to serve as an incentive to farmerssubstantially to increase food production. In fact, the GuaranteedMinimum Prices for grains have been set below market rates for each crophandled by the Nigerian Grains Board for each year since the Board wasestablished in 1977. Also, the Federal Government's policy on importlicensing and quotas for maize, rice and wheat for the majority of yearssince 1975 has had a depressing effect on domestic food prices, by oneaccount reducing the relative food price increase over the past ten yearsto about three fi58hs of what it would have been in the absence of foodimport increases.

3.29 The discussion above refers mostly to market prices rather thanfarmgate prices. There is an implicit assumption that changes in marketprices generally reflect changes in prices at the farm gate, where theproducer incentives are actually established. A few recent reports thathave dealt with the subject showed that farmgate prices settle in therange 70% to 90% of (urban) market prices. They concluded that, giventhe number of intermediaries, that differeje does not represent anunreasonable mark-up for trading services. Work for the AgriculturalPricing Policy Study suggests, however, that the trading margin may havewidened in recent years, and that the relative increase in market pricesof foods was not paralleled by increases in farmgate prices. This workconcluded iMat farmgate prices indexed by the CPI actually decreased from1977-1982. The evidence is reported as "thin," but it is i.n line withall other conclusions about the continuing deprivation of farmersvis-a-vis other segments of the populati.on.

3.30 The nominal food price i.ndices can be compared with estimatesprovided on the increase in rural wage rates. As mentioned i.n para3.26,it is estimated that between 1979 and 1983 food prices increased incurrent terms by about 100%. In paras 2.28 ff, we gave figures on theincrease of peak season rural wages, which jumped in the same period byabout 200%. Given that wage labor comprises the great bulk of cash costsof the progressive small and large farmers, the relative increase ofwages vis-a-vi.s crop prices is a major cause of the cost-price squeeze onthe farmer. The situation reversed in 1984 as market prices shot up andwages held steady. That appears to be a temporary phenomenon, however.

20Norton, 1983, op. cit., p. 6.22.

21Summarized in Duncan, Alex, "Nigeria Grain Marketing Policy andthe Role of the Nigerian Grains Board," HVA - International, February1982, page 13.

22Norton, 1983, op. cit., p. 2.38.

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Under the impact of good harvests in late 1984, market prices of manycrops have already been halved.

3.31 It is important to note that the cost--price disincentive is ofrelatively recent origin, coming to the fore only in the last six years.Throughout most of the 1970s and in prior decades the trend in the termsof trade for the farmers on balance was not significantly adverse. Oneneeds other explanations for the declining production of cash crops andstagnation of food crops in that period.

3.32 The Agricultural Pricing Policy Study estimates that in 1982farmgate prices of traded grains (maize, wheat,, rice) were on average 70%above border prices (adjusted for domestic transport cost), Id ofcooking oils (palm oil and groundnut oil) 120% above parity. Thismeasure of protection of the farmer seems high, but in fact reflects aconservative response by government to the overvaluation of the Naira.It is not of any special advantage to the Nigerian producer vis-a-visoverseas producers. The important comparison is with the rest of theeconomy, and there the Nigerian farmer - the entrepreneur, the investor,the owner-operator - suffers.

3.33 One disadvantage to the Nigerian food farmer not brought outabove is the inconstancy of government import licensing policies, whichhas led to rapid changes of prices in both directions and the loss of anypredictability of profits, not only in the longer term but even within agiven season. Several consultant reports have described the rapidoscillations in government's rice import program in the period 1978-1981,which led to a tripling of the rice price in the third quarter of 1979,and an equally sudden collapse the next year. The impact is not limitedto the farmer. "Erratic trade policy not only has a dramatic effect onprice levels, sending confused price signals to producers, bg alsoincreases the risk to traders who market domestic supplies." The Bankhas recommended a shift from quantitative restrictions to tariffs as ameans to reduce the oscillations, since tariffs do not require theadministrative overhead that quantitative restrictions do.

3.34 Instability in prices is not linked exclusively to importprograms. The root crops, which are not traded, also suffer fromcyclical price behavior and associated swings from overproduction tounderproduction. Cassava is particularly prone to price swings. TheSector Memorandum Mission was told that a significant production responsewould follow any successful action to stabilize cassava prices from yearto year.

23The exceptionally large cooking oil margin may reflect ashort-term lag in the expansion of local processing capacity to make upfor the sudden disappearance of competing vegetable oil imports (para3.46).

2 4Southworth and Hitchings, op. cit., page 21.

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3.35 Another weakness in the economy that leads to price distortionsis the poor linkage between farming and processing. Actual prices forthree important crops commonly processed before they are consumed can becompared with actual prices of the processed derivatives: gari. fromcassava, polished rice from paddy, and palm oil from fresh fruit bunches(ffb) of oil palm. The record shows occasional rapid advances in pricesof processed commodities that are not reflected in the prices of theprimary crop. That is typically a sign of lumpiness in investments inprocessing capacity. In Nigeria it reflects the low priority given byinvestors to the agro-industrial sector. Profits to processors can beenormous, a point brought home to the January 1983 Sector MemorandumMission by the contrast of rotting ffb on oil palm project smallholderfields in Rivers State, with the huge bids being offered by Lagosmerchants to two nucleus estates i.n Imo and Rivers States for whateverpalm oil they could press through their limited existing factories andthe new ones about to come on stream. The problem was that the millscould not cope with demand for oil even though there was a crop surplus.The cassava price cycle is also partly a function of processing, sincecassava and its preparations are all unstable and do not store as well asgrains. Improved processing systems can help increase storage life andreduce the short term price fluctuations.

Cash Crops

3.36 Pricing policy for the other four important "cash" cropsl 2 5

three of them export crops (cocoa, rubber, palm kernel) and one no longerexported (cotton), is quite different than for the food crops. Pricesare fixed annually by the Head of State on the advice of the TechnicalCommittee on Producer Prices, an independent body chaired by the Ministerof Finance and supported by staff from the CBN. Agreement is reached onthe appropriate levels of, first, the Producer Prices (the officialfarmgate prices), and, second, the trading and other allowances that areprovided to the Licensed Buying Agents (LBAs), and to the CommodityBoards, in payment of services rendered in implementing the purchase andsales programs. The Commodity Boards are responsible for selecting theLBAs and administering the annual buying campaigns. The 1977 Decreeestablishing the Commodity Boards, which replaced the older regional andstate marketing boards, poi.nted toward a progressive set of pricingpolicies which would provide incentives to producers to rehabilitate andexpand their plantations and commercial farms, then in a serious state ofdecline.

3.37 The Producer Prices for these four commodities control markettransactions, unlike Producer Prices set for grain, palm oil, andgroundnuts which are below market prices and inoperative. But theProducer Prices are in turn controlled by international prices. Untilthe late 1970s the Producer Prices were set well below international

25Other, that is, than palm oil and groundnuts, which are usuallylisted as cash crops rather than food crops, and maize, wheat and rice,which are listed as food crops rather than cash crops.

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prices, and the marketing boards and the Commodity Boards that replacedthem either used the savings for crop development purposes or, moreoften, were compelled to transfer them to the state governments forinvestment elsewhere. The Commodity Board Decree of 1977 had beenintended to restore incentives to the producers, but by the late 1970sthe conditions for creating reserves had di.sappeared. Static and fallinginternational commodity prices, coupled with rapidly escalating wages andother farm costs, have turned the Boards' trading profits to losses. In1981, for the first time, all four commodity operations were paying morefor the crop than it could be sold for overseas. In a sense, thisreflected a positive price incentive policy for the cash crop farmers.Government was prepared to subsidize them by coverygg their cost ofproduction while absorbing losses in export trade. But the Boardsargue that those Producer Prices, while above parity prices, are in factstill below costs of progressive farming and inadequate to encouragerecovery. Hence the decline in production and replanting conti.nues. Theprojected burden on government of the four crop subsidies in 1982 iscalculated at about N100 million. Given the desperate fiscal condition,government stated in late 1983 that it did not intend to permit furtherincreases in the Producer Prices - except for a small, 7% advance in thecocoa price - for the 1983/84 buying season. This meant that farmgateprices would have fallen further behind the rate of increase of costs.Increases in the Producer Prices for the 1984/85 buying season have alsobeen modest.

3.38 The price support policies for cocoa, rubber, palm oil andcotton provide weak incentives for these cash crops. In fact the failureof government's pricing policies adequately to respond to the cost-pricesqueeze has had a more severe impact on cash crop production than on foodcrop production. The apparent advantages enjoyed by tree crop andcotton farmers - supported by subsidies averaging i.n 1982 well over 50%above world parity prices - is another illusion. The problem is thatcrop prices are at the same time too high and too low. They are too highin terms of international prices, which is what offici.als concerned withtrade and subsidy policies are worried about. They are too low i.n termsof farm costs, which is what officials concerned with agriculturaldevelopment, and farmers, are worried about.

3.39 This study is unable to present definitive cost/price analysesfor all the major crops to get a quantitative measure of the level ofprofitability of the various cropping systems. That is a piece ofresearch high on the list of required studies. A start has been madewith the analysis of effective rates of protection under the AgriculturalPrices Policy Study, and in some earlier consultant work. Until it iscompleted, there are four important questions about farming incentiveswhich cannot be answered convincingly:

26One exception may be the period 1976-1980 for cotton, for whichthe Producer Price was held constant despite the fact that cereal pricesin the cotton zone were increasing and farmers were abandoning cotton formaize.

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(1) the comparative profitability of each of these croppingenterprises when evaluated in financial and economicterms;

(2) whether any of the enterprises show absolute losses ineconomic terms, and presumably therefore should bediscouraged;

(3) the level of acceptable support programs - tariffs andsubsidies - consistent with the economic analysis; and

(4) whether financial returns to entrepreneurship andinvestment in these crops no longer compete with returnsoutside farming, as is generally believed.

D. Processing, Marketing and Storage

3.40 Processing and marketing facilities in certain importantrespects are well developed in Nigeria, and there is excess capacity forthe crops which have suffered major production declines. For thetraditional cash crops this infrastructure had been I:argely completedbefore or soon after Independence, with substantial support fromexpatriate administrators and technicians and investment from privateoverseas firms. Indigenization has resulted in some decline inengineering skills, but it would appear that as long as economi.cconditions remained the same, the level of operations was maintained. Animportant exception is the capital input - not only did foreigninvestment flows diminish but the state governments accelerated thewithdrawal of the surplus reserves of the marketing boards for otherinvestment purposes. Thus, a slight decline in administrative andtechnical capacity was paralleled by a more rapid decline in financialcapacity for maintenance, mechanization and expansion. Nevertheless, thestructure is still largely in place: marketing boards with large,trained field staffs, a functioning buying and selling apparatus, and agood record on quality control; excess capacity in cotton ginneries,sheet and crepe rubber processing plants, and cotton seed, palm kerneland groundnut mills; and domestic and overseas markets that will absorbmore than Nigeria now produces at current prices.

3.41 Some important initiatives have been taken to expand themarketability of these products. Two new plants have been constructedand equipped with government finance to process cocoa beans - the majoragricultural export - so as to increase domestic value added beforeexport. Government has helped finance additional capacity in large-scalepalm oil milling, and it also has encouraged the expansion of privatetire and textile manufacturers to absorb more of the local crops ofrubber and cotton.

3.42 On the side of food crops, there are three sources of strength.These help offset the poor performance by the Grains Marketing Board,which could not implement the Guaranteed Minimum Price Scheme because theGMPs were too low to attract sellers throughout its first six years ofexistence. First, the private rural grain marketing system is robust,

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and apparently handles well-enough the distribution of farm surpluses atlevels common in the past. As discussed in a 1981 consultant report:

"It is frequently alleged that Nigerian markets areextremely chaotic, inefficient, and uncompetitive and thatmerchants exercise excessive market power to exploit farmersand consumers alike. However, a growing body of evidencesuggests to the contrary that farmers are quite well served bygenerally competitive market outlets. In both rural and urbanmarkets the large number of buyers and sellers, who actindependently, makes the opportunities for monopolisticactivities extremely remote. Farmers are not economicinnocents who are easily victimized at the hands ofunscrupulous middlemen. They usually have access to a numberof different buyers and market outlets and know where to getinformation on prices at lgst within a limited geographicalzone when it is required."

A more recent consultant report for the Bank in processing and marketingtakes a more guarded view, claiming that there is too much variation inprices to be explained by transport costs and that the marketing systems,while on the whole effective, nevertheless suffer from the poorcommunications which are found throughout the country and even betweenmajor cities in the south. On the whole, however, this report2balsosupports the general thesis of relative marketing efficiency.

3.43 Second, a private wheat flour milling industry has been builtrapidly in the past fifteen years to process the increases in wheatimports, with a parallel development of bakery facilities. Third,comparable progress has been achieved in the private feed millingindustry, based largely on imported yellow maize and concentrates, tosupply the expanding poultry enterprise.

3.44 There are important gaps in these facilities, however. The gapscan be attributed to two factors. One is the low level of government'sinvolvement i.n promoting the modernization of the smaller scale andvillage processing systems (apart from the stimulus given to imports ofindustrial equipment by the overvalued Naira). A long period of neglectappeared to have been left behind by the Fourth Plan, where FMA and theresearch stations committed themselves to swing their support behind thecash crop rehabilitation programs, including post-harvest activities.Unfortunately, those institutions were to find themselves, due to therecent funding cutbacks, without the means to implement the new programs.

3.45 The second factor is the low priority which private investorshave given to agro-industrial projects. That assessment is in part due

27Southworth and Hitchings, op. cit., page 28.

28Lacroix, Richard L.J., "Nigeria: Processing in the ProposedADPs," May 1984.

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to a correct perception of government's disinterest. But it is more afunction of unreliable sources of smallholder supply, unattractive rurallocations, unpredictable food import policies, and a lack of bankerfinance for this subsector, all of which are perceived to be the normwith agro-industrial enterprise and put this subsector at somedisadvantage with respect to other industrial ventures and at enormousdisadvantage with respect to investments in trade, construction and otherservice infrastructure. Investors want quick profits and the bankerswant safety, and both can get what they want and get them withoutworrying about the problems specifi.c to agro-processing or about theunpredictable changes in foreign exchange availabilities and importrestrictions, which make forwgd planning for importing supplies,equipment, and spares unsafe. As one manufacturer put it to theMission, the problem with agro-industry is that there are too manyproblems to solve all at once. Poultry has been an exception. With aquick payoff period and steady cash flow, it has attractd heavyinvestment from private accounts and commercial banks. Restrictionsstarting in 1983 on feed grain imports have worn off much of that lustre,however: several poultry feed processors as well as many poultrymen wereforced to quit in 1984, and sources of venture capital are drying up.

3.46 Underinvestment in medium and large scale industrial processingfor agriculture is one of the more puzzling aspects of the sector study.The lack of support from commercial banks explains part of the problem.The other factors mentioned in the last paragraph provide other parts ofthe explanation. But, conscious of the business acumen of the Nigerianentrepreneurs, we are surprised by the apparent failure to take advantageof opportunities when they do appear. Recent activity in palm oilprocessing suggests the issue is just a matter of timing. When the studyfor the Memorandum commenced in early 1983, prices of palm oil on localmarkets had started to rise, but investor interest remained low.Government, however, had made an order for 24 small industrial mills. Bythe end of 1983, private interest too had begun to warm: in fact, thehead of the federal tree crop monitoring and evaluation unit could see onthe horizon a danger of over-building in some parts of the oil palm belt.Profits to palm oil processing are extraordinary now, so it would appearthat above some threshold of profitability private capital will move intoagro-industry. There are strong economies of scale in palm oilprocessing which give an extra inducement.

3.47 The reason for sluggish performance in industrial processing foragriculture may simply be that in most commodities the profi.t margi.n isheld down by competition with village industry or imported products belowlevels competitive with returns to investment in other sectors (which donot face competition from villages and imports). The village effectappears prominently i.n the case of gari, for whi.ch there are no

2 9This point about the hot and cold attitude of government policieswas repeated frequently in interviews. It was attributed todeci.sion-making by public officers who were reacting to short term crisisand had to do so in the absence of long-term plans.

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significant returns to increasing scale of processing given presenttechnologies (unlike palm oil) and the gari manufacturer faces villagesupplies that are cheaper to produce and of reasonable quality. Whetherindustrial gari can capture a significant quality margin - in packaging,shelf life, etc., - to justify the higher price is a question at which alot of processing research and trials are now being directed. Rice is acommodity where a substantial gap in quality exists between villagegrades and high grade imported grain, but improvements in domesticmilling is held back by the low cost of the imports. Thus, tariffs onimported rice may well induce private activity in small scale millingusing technologies of higher standards.

3.48 Except in extraordinary times, all of these industries can beexpected to suffer from uncertain supplies of raw materials if theydepend on village producers, since the latter have alternative markets i.nthe villages themselves. The fact is that village as well as industrialprocessors have had little incentive in the last decade to maintain orexpand production, since it is difficult for either to make a profi.t.Labor costs are high for both, and the output/input price squeezeprohibits them from offering attractive prices to the farmer. Thealleged processing bottleneck is not a physical limitation as such, sincethe village processing system easily can be expanded. The problem isthat present processing technologies at both village and industriallevels are high cost given prevailing output/input prices. Theresolution of this dilemma will have to come from higher output prices -as has occurred in palm oil - or cost reducing technologies, a familiartheme in this Memorandum.

3.49 Eight specific weaknesses in the historical development ofprocessing and marketing facilities are mentioned next:

(1) Slow response to rising wages by developing improvedintermediate processing technologies that could utilizefarm women and other available low wage workers in or neartheir villages, or could substitute low cost labor-savingdevices in labor-intensive operations. There are projectsunder way throughout Nigeria to develop such technologies:mechanized cassava graters, improved intermediate ricemills, 1/4 ton/hour capacity neighborhood semi-mechanizedpalm oil mills, small-scale mechanical groundnut shellers,etc. But most of these experiments are recent.

(2) Slow response to the competition of hi.gh quality importedproducts. This is not a problem general to all crops.For example, local palm oil, cotton, groundnuts, andrubber are considered by Nigerian consumers andmanufacturers to be equal or superior to importedsubstitutes. But there are important exceptions. Villageparboiling and milling methods produce a polished ricegrain that is gritty, smelly, broken, and clearly inferiorto packaged imports, even though new technologies havebecome available which could help eliminate dirt, odors

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and breakage.30 Also, the domestic feed mill i.ndustry hasbeen oriented to American yellow maize, which makes sensewhen imports are cheap and easy to get but not when it hasto absorb the white maize commonly grown in the northernmaize belt.

(3) Poorly developed gari and other cassava processing andpackaging technology. Cassava, and in particular its lessperishable preparation gari., will play an increasinglyimportant role in the staple diet, especially in thesouth. Present village gari equipment is inexpensive, butthe labor requirement especially for peeling and frying ishigh and many vi.llage women are simply refusing tocontinue to work at previous levels of activity.Experiments are bei.ng undertaken throughout the south totry to improve these systems while lowering labor inputs.Also, cassava has found a broad range of industrial usesin other countries which Nigeria has only begun to exploit(starch, livestock feed) or not started at all. (Exportswould appear ruled out, because the main market is Europewhich wants sundried raw cassava for animal feed.Conditions in the south are not favorable for drying atcosts competitive with Thailand and other exportingcountries.)

(4) A more general problem involving gari is the slow rate ofdevelopment of domestic flours based on local cereals androot crops, to compete with the increasingly popular flourmade from imported wheat. Again, in the last ten years astart has been made under government-financed industrialresearch programs (para 5.15) to perfect and popularizelocal flours - based on sorghum, maize, gari and yam. Butthese industries need more support to compete effectively,they need protecti.on from lower priced imported flours,and they need to be able to cSTpete in a sophisticated andunforgiving domestic market.

30Proper parboiling requires rice grains of similar properties,since the optimal ti.me and temperature of emersion varies depending onthe variety. Otherwise fermentation occurs. Villagers mix their ricevarieties, which makes proper control almost impossible. Villages alsoreuse the boiling water, which enhances the odors. Village consumers aresaid to be indifferent to these deficiences.

31NGPC (para 4.41) started to market a maize flour in 1982 that soldwell until NGPC tried to cut corners by utilizing a load of partlyinfested maize from one of its joint ownership farms. The consumerresponse was immediate. In late 1982 sales of maize flour collapsed, andthe mill had to shut temporarily till the reputation of the brand couldbe restored.

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(5) The flour argument is itself part of a wider problem, thelag in Nigerian agro-processing capacity to keep up withthe demands of the expanding urban sector for fast andother convenient food preparations - packaged flours,cornflakes and other foodstuffs that single working menand working wives can prepare quickly for breakfast ortake with them for lunch on the job. Ease and length ofstorage helps explain the shift. This is the most rapidlyexpanding food market in Nigeria, and explains thepopularity of bread and imported table rice. Points (2)through (5) each underline the need for additionalcompetence in food process engi.neering, one of thefundamental deficiencies in this subsector. The recentconsultant report on processing and marketing recommendsless attention on mechanical engineering, now that a largebody of innovative machinery is available from foreign anddomestic sources, and more atteiion on the chemicalproperties of food processing.

(6) With respect to marketing per se, a major weakness hasbeen revealed i.n the capacity of the private sector tocollect oil palm ffb from small-scale producers fordelivery to mills. The modern palm oil industry is basedon extraction of the nuts and oil at the mills, ratherthan on the farms as is the custom within the traditionalwild palm processing system. Attention was given in theBank-sponsored smallholder palm projects, and othersimilar projects, to extension of the improvedplantations. But not enough thought was given todeveloping a profitable collection system, and many of thenew smallholder palm areas are suffering from delays andfailures i.n pickup. The response of the private tradersto fill this gap was negligible through most of 1984(though this type of activity may also have begun to pickup (para 3.46)).

(7) Collection difficulties in oil palm are compounded by theslow growth in mi.lling capacity. About 145 older"Pioneer" oil mills installed by United Africa Companyduring the colonial period are being replaced by newermills of both large and small design. But the conversionwas not fast enough i.n the early 1980s to meet demand andreplace imports. Thus the Bank supported oil palmprojects can be criticized in retrospect for not havinggotten right the balance in implementation betweenplantations and mills, ending with surplus ffb. For theImo State Smallholder Oil Palm Project, the appraisalreport assumed that 12 Pioneers would be serviceable, but

32Lacroi.x, op. ci.t.

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only 3 or 4 were still in operation at project start-upand all outside the project area.

(8) That leads to the last example, which is the generalfailure of existing marketing systems - however efficientin the traditional context - quickly to respond toemerging surpluses of new and old crops on a scale ofdelivery to the roadside hitherto unknown. The delays inevacuating surplus maize from Funtua in the firstexcellent project harvest of 1978, and again from allalong the maize belt in the next excellent harvest of1983, suggests that the traditional systems cannot bearlarge volumes or handle thousands of scattered smallstocks of surplus. The alternative i.s not necessarilypublic intervention, but a modern marketing structure withgood communications and suited to specialized commercialfarming. This would apply to rice and cassava, as much asto maize. It must be said that the surpluses of 1978 and1983 were ultimately evacuated so that the main issue isnot whether the stocks can be handled eventually butwhether they can be removed from the farmers in a mannerthat avoids serious decline in the prices paid. Thepersons who profited from the surpluses in 1978 and 1983were mostly the larger farmers, especially those whoserved as assemblers, and middlemen.

3.50 Ways must be found to accelerate the investments in more modern,mechanized processing and marketing systems where they are appropriate.That a well designed, integrated system can work is demonstrated by thesuccess of the National Tobacco Company with its highly controlledblock-farming schemes for outgrowers. Control is not essential to afunctioning system: an example was given in Ilorin of a private merchantwho in 1981 offered guaranteed prices for all the ochra the farmers coulddeliver, an offer that was met by a huge expansion of area devoted tothis relatively new cash crop, built up of plots averaging ½-ha.

3.51 Most of the persons interviewed by the Agricultural SectorMission were worried lest the emphasis on marketing in a report shouldlead to further intervention by government and an increase in power ofthe Commodity Boards. The Nigerian Grains Board in particular came underattack for abusing the Guaranteed Minimum Price Scheme, whose purpose wasto provide a buyer of last resort but in fact has propelled the Boardinto direct competition with the private merchant. That criticism isunfair, since under GMP the Board never competed at all, let aloneeffectively, till the big surpluses of maize were produced i.n 1983.However, there is a pattern of increasing intervention. Criticism ofgovernment intervention extends to schemes to build the physicalinfrastructure of rural markets, leading to deserted facilities at theedge of town. Again, this assertion has some limited application.

3.52 It is in this context that the argument for increasing andrepairing the network of rural roads is often raised. The claim is thatgovernment should concern itself with building the infrastructure that

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the villagers cannot build, but let the private truckers, traders andmerchants do the rest.

3.53 Designated off-farm storage facilities in Nigeria are completelyinadequate to deal with large surpluses. Ad hoc provisions are made forother dry spaces, but often much of the surplus ends up stored outsideunder canvas. Since the requirements for marketable surpluses willexpand as the population continues to move out of agriculture, it isvital that this subsector be encouraged. The root crops in particularsuffer from severe limitations in storage capability. Yams must beharvested when mature but in the south can only survi.ve a maximum ofabout six months thereafter in the yam barns before they go to seed.Cassava can be left in the ground for another six months after reachingmaturity, but once dug out, if left in its raw state, must be eatenwithin three days, or, if converted to gari., within three months. Theseproperties of root crops render them poorly suited for floor priceguarantees, because the purchasing authority would not be able to storeits acquisitions. But these properties also have forced the privatetrading system to perfect what is described as a most efficient root cropmarketing mechanism. The Mission met groups of traders, organized asFoodstuff Traders Associations, in several southern cities. Reports oftheir long range market intelligence reporting system are mostimpressive. For grains, the surpluses purchased by the Nigerian GrainsBoard in 1983 were much greater than the Board's storage capacity -150,000 MT of maize purchased compared with 92,000 MT owned and rentedstorage space - so that the extra had to be stored outside under canvas.Assuming the Board's intervention in the grain market will recur at thisscale from time to time, it needs the space to accommodate. That appliesto rice as well as maize.

3.54 The deficiency in off-farm storage throws the problem back onthe farmer, who faces falling prices at harvest time and must store forhimself. If this physical problem, and the uncertai.nty that it engenders,could be removed, it is clear that one could expect a more vigorousresponse by the farmers to incentives provided through prices and otherpolicy instruments. Part of the solution must be the development of cheaptechnology for drying and storing grains on the farms, especially in thehumid south. With the dryer conditions in the north, the difficulty i.nretaining grain between rainy seasons is less severe. One way oranother, the farmer must be enouraged to make his decisions aboutplanting and harvesting without worrying that the price after harvestwill be much lower than he had anticipated.

E. Non-Farm Incomes

3.55 Despite its increasing importance in the economy of Nigeria,rural-urban migration has neither been measured nor made the subject ofany comprehensive study. The Migration Unit of the Natural PopulationCommission (NPC) recognizes the weakness, and is currently planning toexpand the inquiry on internal mi.gration in future survey work. Tillrecently, this Unit has given priority to the analysis of internationalmigration and to the problems of resident aliens. The data gap is partof a larger failing to update population estimates since the last censusin 1963.

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3.56 Nevertheless, some excellent case studies of rural-urbanmigration and its effect on both the rural and urban communities havebeen produced in the last decade at the universities. There is also agood countrywide analysis of rural-rural migration dated 1971, explainingfor example the depopulation of villages in certain eastern states as thefamilies moved either to the relati.vely open lands on the Niger river orjumped beyond to the cocoa belt of Yorubaland - first to work as paidlaborers and then as sharecroppers. Two collections of articles appearedin 1976 dealing with all aspects of migration, and, in 1983, the NPCsponsored a national seminar i.n Zaria on "Nigeria Population Dynamics,"for which many papers on migration were commissioned.

3.57 All of these works add to the overall picture, but leave usshort of being able to speak with any authority about therepresentativeness of the figures and anecdotes. For example, a visitorto a traditional village in Ondo may have noticed the absence of youngmen and been persuaded to comment on the loss of the labor force. But ifthe visit had been paid to one of the newer, satellite villages occupiedentirely by migrant workers, the ratios of age groups would have beenvery different. What is clear is that migration has substantiallychanged the character of farming and farm labor throughout the south, andits effects are expanding in many zones of the north.

3.58 Moreover, migration is just one component of a movement offamily members to off-farm employment and of a shift of the household topart-time farming. Occupation at the homestead with crafts and servicesother than farming is nothi.ng new. Decisions by the household withrespect to farming have always been influenced by the requirements ofthese other activities. However, the weight of non-farm acti.vities inthese decisi.ons is growing rapidly. Sample baseline data from variousexisting and proposed ADPs is presented in table 7 to show the percentageof adult males living on farms but reporting primary or secondaryinterests in non-farm activities. For all 11 areas sampled, spread overthe northern, mi.ddle and southern states, 60% of the adult males i.n thesample households reported non-farming occupations of either primary(36%) or secondary (24%) importance (i..e., more or less important thanfarmi.ng). In the two states surveyed in the southern heartland (Imo andBendel), 60% of the adults named non-farm occupati.ons as their primaryjob.

3.59 This data supports the village studies and other less rigorousreports about the importance of incomes from non-farm sources and theincreasing number of fami.ly members who have taken jobs elsewhere. Inmost of Iboland, Yorubaland, and parts of Bendel State, it is commonlyrecognized that most households have at least one member working away.As mentioned above, visi.tors to tradi.tional villages throughoutYorubaland talk about the apparent absence of young men and about the oldage of the farmers they met. In the north, migration is a much lesscommon phenomenon, except in the vicinity of state capitals and otherurban centers where construction is expanding. Moslem fathers have

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Table 7

NON-FARMING OCCUPATIONS OF FARM HOUSEHOLDS

Adult Males Percentage of Adult MalesHouseholds Available With Non-Farming Occupationsin Area For Work Main Secondary Total

('000) ('000) (%) (%) (%)

SouthBendel Northeast 323 496 57 13 70

Imo State ADA 297 757 61 13 74

Ogoja 127 338 40 8 48

MiddleLafia ADP 48 125 6 14 20

Ayangba ADP 75 210 52 18 70Ilorin ADP 65 151 28 22 50Bida ADP 62 207 37 54 91

NorthBorno 199 618 23 31 54Bauchi, E. Zone 203 584 25 20 45

Gusau Zone 123 364 14 55 69

Funtua ADP 127 313 16 33 49

Average (weighted) 36 24 60

Source: APMEPU print-outs.

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greater control over the movement of sons than is the case in the south.However, mass movement is not limited to the south. The General Managerof a northern state Agricultural Development Corporation (ADC) told theMission that in a recent visit to his own village, he found only one manyounger than himself (fortyish) still around.

3.60 The reasons for migration mix two motives which are in principleseparable. One motive is simply the preference to get away from thearduous work of farming. With universal education at primary levels,increasing enrollment of secondary school age children, and evidence fromall directions of the attractions of urban life, the young men and womenare throwing off the traditional commitments to help the parents to runthe farm and ultimately to take it over. They would prefer to takechances with petty trading in town, selling ballpoint pens andcigarettes, for example, and gradually to build a respectable trade fromthat base, to work for a civil engineering firm in construction, if theycan secure that kind of job, or simply to live with relatives and othermigrants from the same village (who tend to cluster by neighborhood inthe cities) and wait for a similar opportunity while doing odd jobs forthe relative ("six people washing one shirt").

3.61 A second motive is economic, the desire to secure higher cashincomes and the perception that that is best achieved off the farm.These two motives must be tangled in the minds of many potentialmigrants, such that the promise of reliable cash returns to farmi.ng willdeter some, but not all of them. The government's stated purpose underthe Green Revolution Programme is to increase the renumeration to farmingso as to stem, if not reverse, the flow of sons to town. There have beenno studies to date of the success of that program, or of the threshholdlevel of farm income which might keep a youth on the farm or bring oneback from the cities.

3.62 Some of the dimensions of the decision to migrate are becomingclear. First, in both the north and south it appears the migrants arenot the heads of household, but rather their sons and, in a movement thatis just beginning, daughters. This presents a different problem back onthe farm from that found, for example, in Zimbabwe, another country withhigh migration, where the male heads of household are the principalmigrants and decisions on farming are turned over to the wives. InNigeria the male head of household remains in charge of the farm where hewas born, but as he ages, and without his sons, he must adjust hishusbandry system or his labor policy. Second, it is clear that farmprosperity does not guarantee low migration rates. One of the importantresults of the cocoa boom, and the amassing of cash savings by Yorubacocoa farmers, was that many of the best of these farmers used thosesavings to invest in town enterprise and recruited rural migrants to workthe cocoa plantations while releasing family labor (in this case the headof household as well as the sons) to pursue the new enterprise. Cocoahas helped finance the diversification of the household economy. InYorubaland this shift does not necessarily imply relocation of the mai.nresidence. Most Yorubas live in towns to begi.n with. The point is thatdepending on the nature of the crop, and cultural habits, successful cashcropping may ultimately accelerate the flow of resources out of farming.A separate case study in western Bendel State revealed that the majority

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of migrants came from the upper half of the households on the villageincome scale.

3.63 Third, the decision may be to work in both places, fitting in anurban construction job during the dry season when construction isaccelerated and demands on farm labor taper off. This is a familiarfeature in the rubber and oil palm belts, which embrace also thepetroleum fields.

3.64 Research has been proposed by the Bank to investigate theseaspects of fami.ly labor supply. In particular it is useful to determinewhether there are any clear economic choices confronting an able-bodiedson vis-a-vis investing his labor in certain crop enterprises or inoff-farm employment. The schedule of labor inputs varies by crop:perennial tree crops demand a labor profile substantially different thanannual food crops; the labor requirements of some annuals (cassava forinstance) are much lower than others (yams); and all of these solecropping schedules are compounded in different ways under differentintercropping systems. The imputed returns to labor investedalternatively in off-farm work or in different regimes of on-farmemployment needs to be analyzed. It is anticipated that cropping systemscan be designated which will optimize the income from both sources. Thatis what many farmers are probably now doing, and it is a subject aboutwhich we know very little and have not yet reflected i.n our small farmproject designs.

3.65 We should expect that in most circumstances the higher theproportion of non-farm earnings in total income, the more limited will bethe response to agricultural incentives, especially the relatively smallincrements offered in small farm dryland programs.

3.66 One of the driving factors behind migration is the high nominalwage paid in construction and urban jobs. Most potential migrants haveit in the back of their minds, though they realize that they may not geta job immediately and wi.ll depend on the vagaries of earnings frominformal employment. Given the usual amount of overtime associated withconstruction jobs maintained at full throttle during the dry seasonmonths in the oil belt (November thru May), a common laborer can earnN1,000 gross in that period. By comparison, a composite of the cropmodels for one cultivated hectare for the proposed Bendel State ADP showsan incremental gross annual income of about N700, and a net o03half thatfigure. One hectare of tenera oil palm also should net N550. But thecomparatively high urban wage is not a complete explanation, becauseplantati.on wages are also high and yet farm sons are opting for thecities. Again, this area of inquiry is unexplored.

3.67 It is important to understand what is likely to happen todecisions on migration if and when the number of off-farm jobs begins to

33This comparative analysis was made in early 1984. A year later therelative profitability of oil palm would be higher.

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fall, as has been the case during the last year. The degree to which thelabor market has contracted is uncertain. Some observers believe theNigerian industrial economy is not goi.ng to freeze to the point ofaffecting in any significant way the rate of rural-urban migration.Also, the process by which informal jobs are created in rapidly expandinglow income suburbs is poorly understood, but appears to have a dynamic ofits own in part unrelated to the robustness of the formal-sector economy.Further, the farm family will want to maintain the non-working migrant inthe city in the hopes he can eventually reacquire a paying job and keepthe opening for the family in the "modern" world. Thus a recession maynot deter the migrant who wants to get out of farming at whatever thecost. But it will obviously have some measurable impact on perceptionsabout the relative advantages of cash cropping. And the longer therecession lasts, the longer the lines of unsatisfied applicants will growand the more the rural-urban flow will dry up. Most observers doubtwhether real urban wages will fall enough to turn substantial numbers ofyoung men back to farming, but that is another debatable position. Thesubject is taken up again in para 6.43.

3.68 In the absence of results from a formal investigation of thecomparative economics of migration, we must fall back on the strongempirical evidence to date that farming incentives are inferior to thosepresented by the opportunities of non-farm, off-farm, and in particularmigrant incomes. The balances can be restored only through continuedrecession in the oil related industries, or higher farm incomes. Neitheris going to stop migration altogether: that is a well known fact.

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IV. PUBLIC INVESTMENT PROGRAMS

A. Evolution of Sector Strategies

4.01 Government's policies for the agricultural sector most recentlyare revealed in the targets and activities of "The Green RevolutionProgramme," presented by the new civilian administrati.on in 1979 andreaffirmed in the Fourth National DevelopmentPlan 1981-85, issued by theNational Planning Office in January 1981. The new government has not yetmade a comprehensive statement, but that purpose will be served by theFifth National Development Plan, which should be ready by late 1985. Nomajor changes in emphases between the two Plans can be predicted. Twoproduction targets are highlighted in the Green Revolution, foodself-sufficiency and recovery of major exports. Food policies have beengiven the emphasis, a position which was anticipated in May 1980 in thetitle of the report of the special joint Food Strategies Mission wherethe Green Revolution is practically equated with food self-sufficiency("The Green Revolution: A Food Production Plan for Nigeria"). TheMission report described the growing domestic food gap and rising importbill. Referring to a "national aspiration" of zero food imports by 1985,the end of the Fourth Plan, the Mission report set out an operationalprogram for increasing food production through the adoption of ADP-typeprojects in all states. The World Bank provided some of the Missionmembers, and is closely associated with the ADP model and with the foodpolicy strategy.

4.02 During the early 1970s the previous military government had alsobegun to attach great importance to establishing food promotion programs,to offset the transfer of resources out of agriculture. In the short runthe deficits in the eastern states after the civil war had to beeliminated quickly, and in the long run the trend toward rapidurbanization and increasing pressure on fallow had to be moderated. TheNational Accelerated Food Production Project (1973 to the present),Operation Feed the Nation (OFN, 1976-1979), the fertilizer importprogram, the state farms and the RBDAs were all strong responses to thegap. Thus the attention given by the civilian government to food policywas rooted in the actions of the previous government.

4.03 What was without precedence was the substantial decline in therelative importance attached to export crops, not in the language of theGreen Revolution Programme but in the investment deci.sions taken since1980. There would appear to have been a spontaneous shift in governmentpriorities, reflecting its growing concern for food policy and inparticular for food self-sufficiency. The Bank, government's majordonor, supported that shift but does not appear to have promptedgovernment's initiative. Certainly the all-out support for foodproduction that characterizes present activities of the RBRDAs has nodirect relation to the Bank, which had nothing to do with them. Ofcourse, government is not "responsible" for the shift in a strict sense,since the decisions to move out of tree cropping were taken by individualfarmers. But government is responsible by omission or commission forcreating the economic environment in which those decisions were taken.

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4.04 It is only when one reaches the offices of the Commodity Boards,which in the north have seen their cash crops give way on farmers fieldsto maize and other cereals, and their rehabilitation grants fromgovernment dry up, that one hears strong objection to the degree to whichthe food first policy has swamped all other agricultural targets.

4.05 Previous donor strategies have given prominence to export crops.That was the recommendation of the most ambitious donor-sponsored sectorstudy undertaken in Nigeria, the AID financed three-year study(1966-1969) by a group of U.S. land grant colleges known as theConsortium for the Study of Nigerian Rural Development. The Consortium'sfinal report (CSNRD No. 33) entitled Strategies and Recommendations forNigerian Rural Development, supports in the near term a major emphasis onproduction campaigns for expansion of exports of cocoa, rubber, oil palmand groundnuts. The Consortium was terminated prematurely by the civilwar, and its recommendations were never offi.cially accepted. However, i.n1971 the World Bank's first agricultural mission to Ni.geria, the sectorsurvey mission of 1971 (Report issued January 1973), also focusedprimarily on export crop promoti.on. The Bank's first loan to the sectorwas approved in May 1971 for Cocoa I, and the three original southern oilpalm projects were identified in November of the same year and appraisedin late 1973, about the same time the first three ADP projects wereappraised for the northern states (see Annex 1 of Volume I for a list ofBank agricultural projects in Nigeria). Thus, the Bank's involvement inthe tree crop programs of the south has a longer history than in anyother agricultural subsector. The Bank's second agricultural sectormission, the Sector Review of March 1978 (Report issued June 1979), gaveprominence to the food crop programs, but it also advocated continuingemphasis on the export tree crops of the south. It accepted that thatarea's comparative advantage compelled government to increase producerprices of the traditional export crops "so that they compete moreeffectively with food crops for the farmers' scarce resources in the treecrop zone."

4.06 The Bank organized an oi.l palm subsector review mission toNigeria in February 1981 and its report urged changes in tariff andpricing policies to help the subsector recover. But management andfinance problems were undermining progress in all four of the Bank's oilpalm projects in 1981. Within a year two of these loans had beencancelled and smallholder components of the other two were imperilled.These swift changes in the oil palm portfolio together with a stop to allfurther action on appraising Cocoa III has led to a situation of apparentimbalance - a substantial decline of the Bank's activities in the treecrop subsector, because of implementation problems, simultaneous with amajor buildup of the pipeline of food crop projects, on policy grounds.There is an economic argument behind that shift: at the existingexchange rate and tariff regime, the historic comparative advantage ofthe tree crops had given way to food crops. That conclusion is not wellenough researched, however, and, in any case proposed changes in exchangerate and trade policy could reverse the alignment again. In fact, theBank has recently begun a new dialogue with the Government on expandingits support to tree crop programs.

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4.07 One of the issues recently under discussion was whether the ADPprojects currently being prepared for southern states in the tree cropzone should include any significant tree crop activity,. The thinking inFMA in late 1983 was that in general tree crop programs were best handledoutside the administrative perimeter of the ADPs. Opinion within thestate governments on that point appeared to be mixed. At present, treecrops are excluded from the project proposals.

4.08 Thus the strategy of balance between food crop and tree cropinvestments, which can be traced in government/Bank decisions from thefirst Bank agricultural projects in 1971, is less evident ten yearslater. Government and Bank officials correctly state that that is not anintentional policy shift. Indeed, the Fourth Plan gives strong vocalsupport to the government's cash crop rehabilitation project. But theseries of decisions on ADPs, fertilizer imports, and tree crop proposalsin the last three years has had that effect. A.nd for political reasonsgovernment must take an aggressive position toward eliminating foodshortages.

4.09 Another trend in sector planning discernible in the proposals ofdonor and government agencies during the last decade is a shift inemphasis from research and on-farm experimentation in the major food andcash crops to extension and input delivery systems. The Consortium hadrecommended in 1969 as the second part of its phased program (the firstbeing the recovery and expansion of export crops) a major investment inthe next decade in research on cost reducing technologies, to put Nigeriain a position to initi.ate effective campaigns for food and "industrial"crops ten years hence. AID's last policy initiative in Nigerianagriculture in the early 1970s, before U.S. concessional aid to Nigeriawas terminated due to the expansion in oil earnings, was to financetechnical assistance components of phases one (1973) and two (1977) ofthe NAFPP, components which contracted IITA to provide planning andmanagement of the countrywide research and demonstration activities thatcomprised the crop development side of the NAFPP program. In fact AIDhad grown disillusioned with the slow rate of farmer adoption in arice/maize extension project it had been financing i.n the former WesternState, and made a deliberate effort to shift resources back towardresearch and bring competent research institutions into the middle of thesmall farmer programs.

4.10 The ADP program reflected a different set of assumptions aboutthe adequacy of existing technologies for an all-out extension/inputdelivery program. NAFPP on-farm activity was not continued in the ADPenclaves, and from 1975 through 1980 the ADPs in their first six yearswere conspicuous for the absence of research. There has been a strongreaction to this omission since 1981. The joint Project CompletionReport (PCR) of the first three northern ADPs was critical of the poorfit of supposedly "known" technologies to small farm circumstances andrecommended a strong on-farm research element be introduced into ADPdesign. The ADPs were asked to establish a relationship with thenational research institutes and IITA in support of on- farm, systemsresearch. Nevertheless, the ongoing ADPs remain basically an extension-input program and they are driven by a degree of technical optimism about

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ready packages that contrasts strongly with the cautious, expsimentalproposals of the AID teams in the late 1960s and early 1970s.

4.11 A third shift in emphasis in sector strategy is associated withthe 1979 change in administrations in Nigeria and the reduced attentionthereafter given to the program for establishing mechanized state farmson newly cleared land, a program that had been more aggressively pushedby the military government than any of its programs intended for smallfarms. The budgetary commitment to state farms, and the large scale landclearing activity in the RBDA program, in fact now attracts even moreresources than before. But the Food Strategies Mission Report recommendsthat the supreme importance of small farm producers be recognized andthat the emphasis on large mechanized farming that was a prominent partof the strategy of the 1970s be downgraded in favor of the ADP approach.The rhetoric of the Green Revolution Programme is clearly small farmoriented, and this orientation appears to have genuine support in thepresent federal leadership and in some if not most of the stateministries of agriculture.

4.12 To summarize, an important shift in the sector strategy isdiscernible from committee reports and investment decisions within thelast four years, that provides a clear contrast with policies of thepast. The shift has three major elements: a commanding lead taken byfood crops over cash crops; concentration of resources on deliverysystems, on the assumption that the technical packages and marketingsystems were adequate to support substantial production increases; andthe increased importance of small farm focused policies, vis-a-vismechanized state farms. The paragraphs of Section C below provide detailon most of the major components. It is useful to point out that thesimple distinction between masses of small farms and a few largemechanized state farms is misleadi.ng: the attentions of this Study wereattracted by the progressive farmer that was emerging from the small farmsector and from the "medium" size category which is overlooked by thesimple dichotomy. It is also useful to point out that several productionstrategies which provide other implementation alternatives have receivedmuch less attention throughout the period. Examples which have alreadybeen alluded to or which feature in subsequent discussion in this paperare (1) market oriented development strategies, emphasizing appropriatepricing, and favorable trade policies, along with investments in theinfrastructure of processing, storage, markets, and transport; (2)mechanization of small and intermedi.ate scale land clearing, tillage,harvest and post harvest operati.ons; (3) credit; (4) cooperati.ves; and(5) agricultural education and technical training.

34That is not a fai.r characterization of the project proposals for thesouthern ADPs, which offer more modest technical packages and include aprominent on-farm research component.

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B. Priorities of the Federal Budget

4.13 Before proceeding to the specifics, it is necessary to place thecomments on "emphases" in the last section in the context of demonstrablegovernment priorities as revealed in the investment proposals of theFourth Plan and subsequent annual capital budgets. There a somewhatdifferent ranking of operational priorities emerges than the ones whichhave featured in discussions between government and the Bank.

4.14 Table 8 shows a summary breakdown of federal capital investmentsproposed for agriculture and related sectors in the Fourth Plan and inthe annual Budget Estimates for 1982 and 1983,, and compares these withBank commitments over two intervals of years. The table is based on adetail breakdown given in table 9, where the grouping in the summary isexplained and where state proposals in the Fourth Plan are also given. Acomparison of federal and Bank allocations does not imply that either oneis incorrect. The federal budget is so large as to dwarf the Bank'scontributions, and must cover a broader set of commitments andobjectives. The Bank, with federal advice, selects certain high priorityinvestments, within the total. The usefulness of the comparison then isto put the Bank's portfolio in the perspective of the larger expenditureprogram, and to demonstrate that where the Bank allocates its funds isnot necessarily where the Federal Government also puts its marginalNaira. Table 9 shows that state and local government allocations have adifferent profile, reflecting in part different constitutionalobligations. This, of course, influences the federal budget too.

4.15 The summary table lumps together all programs aiming directly ormostly at the small farmers, including the pro ams controlle 6by theformer Federal Department of Rural Development (ADPs, ADAs, etc.) andthe many fi?ld crop services supported by the Federal Department ofAgriculture (including soil conservation, seeds, pest control,fertilizer, etc.). Small farm tree crop programs have been removed andincluded in the next major grouping, which lumps together a number ofoperational programs involving mainly the growing, marketing andprocessing of crops without any significant small farmer bias, except forthe small farm tree crop share. This category is an artificial one thatsimply gives identity to a set of activities in which the Bank has notbeen involved in the early 1980s. The artificiality is underlined by thefact that components of activities lumped in the second group do appearin other groups - some ADPs had some credit, irrigation, etc. Despitethe overlap, the table will reveal any substantial difference inallocational plan.

35Recently merged into the Federal Department of Agriculture andRural Development.

36Accelerated Development Area Programs, a compact form of ADPoriginally designed to be financed exclusively from Nigerian sources.

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Table 8

FEDERAL AND WORLD BANK ALLOCATION OF DEVELOPMENT FUNDSWITHIN THE AGRICULTURAL SECTOR

(Percentages)

Federal Allocations World Bank CommitmentsActuals

Fourth Plan Budget Estimates and Pipeline Actuals

1980-85 1982 1983 1980-85 1971-82

Small farm - 28 22 17 91 80

field crops

Large farms, 22 16 16 0 13

tractors, treecrops, marketing,credit, etc.

Livestock, fisheries, 8 8 6 8 5

forestry

Irrigation (formal) 35 47 57 0 0

Research 7 6 5 0 0

Agric. Education .. .. .. 1 1

Total 100 100 100 100 100

Note: .. less than 1

1/ Excludes investments by the state and local government authorities. Together

these equalled 62% of federal allocations in the Fourth Plan. See Table 9

for detail.

Source: Table 9

Table 9

ALLOCATION OF FUNDS WITHIN THE AGRICULTURAL SECTOR, CAPITAL ACCOUNT PETAIL

Federal. State and World Rank(Millions)

Fourth National Development Plan 1980-85 1982 1983 World bank Comitisents5 Year Totals 1 Year Average Budget Estimates Budget Estimates, Amended 1980-85 1971-82

State (+Local) Federal Federal Federal (excl. cut) Federal (excl. cut) Actuals and ActualsConsoli- Consoli- Consoli- Consoli- Planned

Detail dated Detail dated Detail dated Detail dated $ Z S

N Z 2 N 5 N %

Rural Development(ADP, ADA, ATAP, APlEP,3ARMTI, FDRD) 1.141.1 32 43 724.9 150.0 13 28 67.0 6 22 90.9 7 17 1,002.5 ; 91 709.5 80

Agriculture (Crops)Field Crops, Small Farms 103.9 3 99.3 19.9 2 37.5 3 25.5 2 17.5Extension, NAFPP, Ad An. 46.7 1 47.7 9.5 1 4.3 5.2 1Seeds and Pest Control 23.6 1 17.4 3.5 6.1 1 3.0Fertilizer, itil. Storage 124.2 3 369.9 74.0 6 131.9 11 85.0 6 250.0Agro Service Centers 56.3 2 100.4 20.1 2 3.0 I

Soil Conservation 20.7 1 250.6 50.1 4 15.1 1 20.0 1

Tractors and Other Heavy Equip. 245.2 7 115.9 23.2 2 13.9 10.8 I

Field Crops, Large Farms 229.7 6 71.3 14.3 1 35.5 3 40.9 3

Tree Crops. Estates 99.9 3 26 66.4 13.3 1 22 17.7 2 16 10.4 1 16 0 47.5 13 0oTree Crops, Small Fares 142.6 4 219.1 43.8 4 21.2 2 5.8 75.2

(incl. Nlurseries) I

Credit and Cooperatives 98.7 3 411.1 82.2 7 38.7 3 103.7 8

Other 39.0MEarketing. Storage, Processing 56.1 2 40. 81.6 7 J60.8 5 J47.6 3_J

Livestock 419.0 12 252.8 50.6 4 72.4 6 41.1 3 80.0? 21.0

Fisheries 194.7 5 19 97.2 19.4 2 8 13.6 8 28.1 2 > 6 8 5

Forestry 83.7 2 87.3 17.4 2) 15.7 1 - 10.5 1 31 .OJ 31.0

Irrigation 255.5 7 7 1,993.5 398.7 35 35 562.3 47 47 775.1 57 57 0 0

Research .4 390.0 78.0 7 7 70.5 6 6 65.4 5 5 0 0(Agric., Livestock. Fish., Forestry)

Agricultural Education 199.1 6 6 .3 .3 9.0 1 9.0 _

Totals 3.580.4 (100) 100 5,722.7 1,149.6 (100) 1,187.5 (100) (100) 1,369.3 (100) (100) 1,372.5 (100) 910.7 (100)

Source: Fourth National Development Plsn, 1980-85, relevant sections; Amendments to 1983 Draft Capital Estimates (1983);

Blank Statetment of Loans, Statement of Credits; BankNigeria CPP 1983.

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4.16 The role of "irrigation" dominates the table. Not only dofederal allocations to "irrigation" exceed those to any other category,but the share increases markedly from the earliest observation (1980 -the Plan), to the latest (1983), reaching 57% of total appropriations in1983. The "irrigation" category must be italicized. A tiny component ismade up of small scale irrigation activities itemized under the headingof FMA. The great majority, however, is attributed to the 11 RBDAs whichreported to the Federal Ministry of Water Resources (FMWR) until that wasunited with the Federal Ministry of Agriculture in January 1984. TheRBDA were expected to concentrate their activities on water control anduse for agricultural purposes, but they have invested also in recentyears on dryland farming (within perimeters ultimately planned to beirrigated), and two of the large dams being built will provide water, forconsumption and industrial uses, and power, as well. Thus the"irrigation" category i.s not clean. Nevertheless, it reveals anintention by the federal government to orient the further development ofNigeria's agriculture around its water resources. It also reveals afederal decision to put the majority of its own funds for agriculturaldevelopment in the hand of the RBDAs. By contrast, the institutionalmechanism which the Bank supports for rural development, and to which ithas committed 80% of its funds to date and intends to commit over 90% ofits funds in the first half of the 1980s, draws only a small share - 6% -of federal funds. The share has dropped since the Fourth Plan wasissued, and so has the actual Naira allocation (table 9 gives the detailfor the "Department of Rural Development" (FDRD) program). In 1983 it isonly 12% of the size of the irrigation allocation (N91 million vs N775million). About N440 million of the irrigation allocation for 1983relied on foreign funding, and very little or none of this was ultimatelysecured. Thus, the allocations reveal intentions but not performance.Also, in the Bank supported rural development portfolio, the agreedfederal share is less than the state share. The latter includes theanticipated Bank disbursements. So total allocations - federal and state- to rural development are greater than the tallied figures and closer tothe irri.gation totals. The comparison in the tables is neverthelessarresting (but, see para 4.18).

4.17 Other comparisons are worth remark. The field crop programslumped together in the second category are allocated almost as many fundsin 1983 as the specific small farm field crop programs that comprise thefirst category - 16% and 17% respectively - whereas the Bank's shares inthe 1980s are (by definition) completely skewed - 0% and 90%. As wi.thall other remarks in this section, that comparison carries no criticism.The federal government clearly was balancing the allocation of funds tothe various channels and programs in FMA, while the Bank has the freedomto concentrate on preferred activities. Still, the dimunition of theNaira allocation to "rural development" from 1980 to 1983 is of concernto the Bank because that category has suffered disproportionately i.n theface of the mounting claims of the RBDAs, a fact that has drawn criticismfrom the ADPs and FDRD. If one expects the federal government'scommitment to the ADP program to be expanding in parallel with the growthi.n the Bank's commitments, the table suggests otherwise.

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4.18 Tables 8 and 9 were prepared in 1983, and fail to pick up animportant swing in federal allocations that has appeared in the 1984 and(new) 1985 budgets. The RBRDAs have seen their relative positiondecline, even as the total agricultural budget was being cut under theausterity program. Allocations to the Federal Department of WaterResources have fallen to 50% (1984) and now 37% (1985) of the total. Bycontrast, allocations to Bank supported rural development projects, aftersevere cuts in 1984, have been substantially inicreased in the 1985estimates. However, irrigation still clearly dominates the subsectoraldistribution. Other trends from 1983 to 1985 are less significant in theallocations.

4.19 Tractors, state farms and large tree crop plantations absorb 4%of the Plan's funds and 5% of the 1983 Estimates (again, refer to table9). So that sub-grouping, which is oriented (though not exclusively) tolarge scale commercial farming, improves its position but is still fairlysmall. Marketing, storage and processing absorb 7% in the Plan and 3% in1983, substantial slippage which reflects much reduced allocations to theCommodity Boards and to the two federal production corporations (paras4.41, 4.42), institutions which have absorbed heavy losses in the recentbudget cutbacks. Tree crop activities probably absorbed the largestproportional losses. They are affected by the decline in allocations toCommodity Boards for marketing, processing and storage. More important,the direct allocation for large and small plantation agricultureshrivelled. The average annual allocation in the Plan was N57 million.This falls to N16 million in 1983. Small farms' tree crop allocationsalmost disappear, falling from N44 million to N6 million. Thus thepositions of the federal government and the Bank with respect to thisprogram both have deteriorated. There is an initial commitment to smallfarm tree crops which succumbs to budget cuts in government. The "smallfarmer" focus of policy is revealed in practice to be limited to fieldcrops.

4.20 Research institutions, falling under the head of the previousgovernment's Ministry of Science and Technology, lose ground as well butit is worth noting that even at 5%, their share in 1983, they ostensiblycontrol proportionately more funds than is common for the research sideof agriculture in most LDCs. That point seems inconsistent with thepoverty of resources visi.ble at the stations visited by Bank staff,though the explanation may be that there is a large salaried staff withlittle money to spread on research. A review of research requirements,resources and uses would seem imperative. The three secondary productivesubsectors - livestock, fisheries and forestry - hold their own from 1980to 1983 and receive about as much commitment from the Bank as from thefederal government. Finally, the federal allocation to education in theagricultural sciences , including secondary as well as advanced andtechnical training, and channelled under the heads of the Ministries of

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Education 59d Agriculture; fails to reach 1% in any of the budgetdocuments.

C. Special Programs

Research and Demonstration

4.21 In 1977 responsibility for running the institutes thatconstitute the national system for agricultural research was removed fromFMA and placed under the Director for Agricultural Reseach in the newlycreated Ministry of Science and Technology. Among the 19 researchinstitutes now dealing wholly or partly with agriculture and relatedsubsectors, the three dealing with export tree crops - the Cocoa ResearchInstitute near Ibadan, and the Nigerian Institute for Oil Palm Research(NIFOR) and the Rubber Research Institute, both near Benin City, have anestablished international reputation and a close relation to estate andsmall farmer programs in their subsectors. They share with otherinstitutes a common poverty of operational funds, i.e. other thansalaries, and a difficulty in holding qualified staff at civil servicesalary scales.

4.22 Three other research institutes play important roles in theNational Accelerated Food Production Project, a ten year old collectionof countrywide, research-based promotional campaigns for seven key foodcrops (cassava, maize, rice, cowpeas, sorghum, millet, wheat). NAFPP hasbeen funded through FMA and FDA (see para 5.02 for discussion of the 1984reorganization and the new names), and NAFPP Coordinators representingFDA are located at the three research institutes and in each stateministry. The three research institutes support campaigns for the cropsof their specialization (cassava at the National Root Crops ResearchInstitute near Umuahia; rice, maize and cowpea at the National CerealsResearch Institute on the old Moor Plantation near Ibadan; and sorghum,millet and wheat at the Institute for Agricultural Research near Zaria).NAFPP is a mechanism for developing and extending crop campaigns fromresearch centers. State extension officers execute much of the on-farmdemonstration work. They operate through crop trials, demonstrationplots and kits which progress in three stages from the on-farmexperiments to widespread adoption (100 square meter "mini kits," tenthof a hectare "production" kits, and "mass adoption kits"). Much of theprogram now lies dormant because of budget cuts. In fact, government hasapparently decided to phase the program out in 1985. NAFPP started inthe early 1970s in a small set of states, and gradually expanded. It hasa stronger associ.ati.on with some of the earlier states than the lateradditions.

4.23 NAFPP has had another operational activity: support to stategovernments in constructing agro-service centers. Both the

3 7As shown in table 9, the states allocated 6% of their funds1980-1985 to agricultural education. Lumping together the two levels ofgovernment gives 2% of the combined budget.

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research/demonstration and agro-service center components were developedat IITA under AID contract. IITA is no longer involved; the contract wasnot renewed at the conclusion of NAFPP's phase two in 1979. Constructionof agro-service centers by the states under the NAFPP title effectivelyhalted in the same year, when federal subventions were terminated. Datacollection by state ministry field staff from the demonstration plots hassuffered as well. A familiar complaint at the annual NAFPP Workshop heldin Ibadan in January 1983 was the absence of funds to finance therequisite plot visits to record demonstration results. Problems offunding familiar to most of the ADPs have been even more severe withNAFPP. The agro-service centers received a federal allocation in theFourth Plan of about N20 million per year. But the item was cut to N3million in the 1982 federal budget and eliminated in 1983. Some stateshave continued promoting agro-service centers (Oyo State's programhandled by the Agricultural Inputs and Services Unit is an outstandingexample), others have stopped financing further expansion.

4.24 The enclave ADPs have had no formal relation with NAFPP. SomeNAFPP agro-service centers were taken over by the ADP commercialsections. Older NAFPP research/demontration activities that predatedADPs in a few enclaves were shut down at start-up of the ADPs. The NAFPPmanagement team at IITA saw the ADPs as a competitor, and vice versa.This is one explanation for the weak linkage between the ADPs and thenational research system. NAFPP nevertheless retains a fair image withinNigeria for having successfully introduced new research results,especially for cassava.

4.25 The research organization in Nigeria includes IITA, one of thenetwork of international centers and devoted to cropping systems of thehumid tropics. IITA's activities are of importance throughout Nigeria,not just the south, because of its work on maize and rice. IITA hasdeveloped a direct relationship with several ADPs, but its links to thenational research centers are not as strong as they should be and itsdirect involvement in national rural development projects has been undercriticism that is only gradually being overcome. Nevertheless, IITA mustbe urged to play an aggressive role in Nigerian agriculture, workingthrough the national centers.

Fertilizer Distribution

4.26 One activity promoting agriculture which has continued toattract widespread political support at both federal and state levels isthe massive, subsidized fertilizer import program. Fertilizer importsprocured by individual states began to grow rapidly in the early 1970s,reflecting a deliberate decision to use the cumulating oil revenues forthe purpose of promoting agriculture. In 1977 the federal governmenttook over, from private as well as state trading organizations, allprocurement operations, a responsibility it still retains. As alreadymentioned, subsidy has been an important part of the fertilizer policysince the federal takeover. Farmgate fertilizer prices weresubstantially reduced in 1977. The subsidy has attracted mountingcriticism from the Bank, and from economists inside Nigeria. Removal ofthe subsidy is a key component of the policy changes agreed in thecurrent Fertilizer Import Loan. The set of policies which underpin the

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fertili.zer program - the decision substantially to increase imports, thedecision to promote fertilizer take-up by small farmers through a massivesubsidy, and the creation of sales centers (the agro-service centers) tofocus the distribution of fertilizer - can all be linked to NAFPP. Thepilot ADPs were just getting under way when the fertilizer program gainedmomentum, but of course the ADPs were to be a major beneficiary of theprogram. Due to the mounting financi.al problems of NAFPP, whichundermined the states' plans for constructing agro-service centers andfor fielding fertilizer distribution staff, the advent of the ADPs proveda crucial factor in implementing the fertilizer program. It should bepointed out that the farmers' receptivity to fertilizer was already high,especially in the north where the extension services had before and afterIndependence in 1960 made great strides in introducing the concept ofusing fertilizers to the dryland farm communities.

Agricultural Development Projects

4.27 The Nigerian Agricultural Development Projects are a specialclass of integrated rural development project which concentrate resourceson a few key activities in direct support of small farm production. Thethree components which have come to be identified as the Basic ServicesPackage (BSP) are (1) extension, (2) input delivery3lystems based oncommercially oriented "farm service centers (FSC)," and (3)construction and/or repair of rural roads. The input delivery systembrought in seeds as well as fertilizer, and seed farms were a commonfeature in all ADPs. ADP management units included special staff forhelping larger farmers by providing through an Advanced Services Packagefarm plans, tractor services and credit, but these activities wereinvariably of secondary importance to the main thrust through BSP towardssmall farm families. Enclave ADPs added other components to BSP -village water supply, fish ponds, etc. - and with the expansion tostatewide operation in the north the programs have taken on even broaderresponsibilities. Nevertheless there is a unique simplicity to the ADPdesign and it allows compari.son with other rural development strategies.The fundamental assumption of the ADPs that have been implemented to dateis that remunerative technical packages are available but need to bedisseminated by improved extension and delivery mechanisms. The newproposals for ADPs for the southern states follow the same general lines,although they have: (1) given prominence for the first time to theimportance of on-farm research; (2) reduced the role of large FSC andadopted a mixed system using FSCs and private traders; and (3) downgradedthe importance of new road construction.

4.28 It should be added that the extension component of the ADPs hastaken an increasingly important role within the design of the more recentADP projects, including those prepared for the southern states.Extension is highlighted in the Food Strategies Mission Report of 1980

38The FSCs are much the same as NAFPP's agro-service centers, andindeed as earlier full service facilities which had been constructed inspecial area development programs i.n the 1960s.

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and the guideli.nes for preparing the new ADPs offers a common structuremodelled on the popular Training and Visit (T&V) operation. The PCRwhich reported in 1982 on the three pilot ADPs criticized theeffectiveness of the projects' extension services, claiming that thestrong production response registered in maize and sorghum in thenorthern ADPs had happened in spite of the absence of a decisivecontribution from extension under the mantle of the projects. Extensionhas been catapulted into the lead position within the Basic ServicesPackage not because of exceptional performance in the ADPs but preciselybecause its potential has not been exploited: T&V is expected to providethe necessary discipline to make it work.

4.29 The ADPs have been subjected to criticism, particularly in termsof expatriate leadership in semi-autonomous management units and poorcontinuity with indigenous institutions. The PCR showed thatnevertheless the simple fertilizer-cereal packages worked well in most ofthe three northern areas. Corresponding information from the PCRs on thenext two oldest ADPs - Ayangba and Lafia in the middle belt - suggeststhat the ADP design has had more mixed results with root crops. One ofthe primary concerns during appraisal of the southern ADPs will be tospecify profitable new technologies for ADPs in a root crop economy.

4.30 An outstanding feature of the ADPs has been the importanceattached to monitoring and evaluation. A special coordinating unit wasestablished in Kaduna - the Agricultural Projects Monitoring, Evaluationand Planning Unit (APMEPU) - which helped guide the field evaluationwork, on individual ADPs, run by ADP staff. APMEPU has had manyproblems, which are described in the PCR on the three northern ADPs andin a special mid-term review report. APMEPU has not yet been able tocomment on lessons of experience from the whole complex of ongoing ADPs,and has played a very small role in formulating projects for the southernstates.

Tree Crop Programs

4.31 The Bank helped finance a similar monitoring and evaluation unit(MEU) to report on performance of the government's tree crop projects,some of which were Bank supported. The tree crop MEU was established in1975 i.n Benin City under the then FMA, corresponding with APMEPU whichwas established in the same year to report to FMA on performance of theADP food crop projects (MEU and APMEPU will be merged under the ongoingreorganization). Government has sponsored some tree crop projects in theabsence of Bank support, and those too fall withi.n MEU's brief. Thus,MEU's i.nterests extend beyond the perimeter of the Bank's portfolio,though, like the Bank, MEU's involvement with rubber is minimal. Also,MEU has continued to assist the oil palm projects from which the Bank haswi.thdrawn. MEU no longer receives Bank finance.

4.32 Government's tree crop programs aim at the rehabilitation,replanting and expansion of estate and smallholder plantations of cocoa,oil palm and rubber. The Bank-supported tree crop programs commenced inthe early 1970s in an attempt to reverse the rapid decline in productionof cocoa and oil palm products. For both crops the emphasis was placedon replanting wi.th new cultivars and to that purpose the breeding and

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multiplication programs at the Cocoa Research Institute and NIFOR werebasic parts of the project strategy. In addition to the two cocoaprojects and four oil palm projects supported by the Bank, the federalgovernment has sponsored oil palm nucleus estate complexes in foursouthern states and a huge smallholder oil palm scheme in Cross RiverState. The government's initial contributions have been absorbed in amore extensive set of rehabilitation programs which started in the late1970s and addressed the problems of cotton and groundnuts as well as thetree crops.

4.33 By 1983 around 50,000 ha of oil palm and 100,000 ha of cocoa hadbeen planted by smallholders in the felgrally-sponsored programs,including those supported by the Bank. These use high-yielding hybridsto replace traditional varieties (and, in the case of oil palm,substituting plantations of tenera for the wild growth of old durapalms). The planting figures are both small compared with thetraditional areas already under harvest (about 2 million ha of wild oilpalm under occasional harvest and over 600,000 ha of cocoa). With theexception of a few of the oil palm estates, none of these replantingprograms has done well, a result of inadequate state fundi.ng, low exportprices, mismanagement of the project units and poor smallholder response.The same set of constraints has undermined the government's rubberprojects. Government interest in promoting these projects remains strong,but, as mentioned in para 4.19, federal contributi.ons have fallenprecipitously from Plan levels, despite the importance attached to exportrecovery in the documents of the Green Revolution Programme and the Planitself.

4.34 The case for vigorous support to the tree crop subsector is thesum of the cases for each of the crops - cocoa, oil palm, rubber, and therest - since the economic potenti.al and labor requirements varysubstantially. These perennials all suffer by comparison with food cropsbecause of the gestation periods: rubber permits tapping in about sixyears, cocoa can be picked in four, tenera oil palm in three. Given thequick payoff objectives of Ni.gerian investors, including the smallfarmers, this is a serious constraint. However, there are compensatoryadvantages: tree crops are suited to intercrop with food crops,especially in the first years of establishment, once established theplantation requires less attention than do food crops, the permanency ofthe crop establishes a tenancy claim, and they provide a reliable sourceof cash income. Planting and replanti.ng are expensive - the NigerianRubber Board estimated in 1983 N2,000 per ha for rubber replanting, sothat the rehabilitation program will not work for many small farmswithout some form of credit or grant aid.

4.35 Many farmers in the cocoa, rubber and oil palm belts (see thedistribution statewise in table 3) refuse to harvest, because thefinancial returns are not seen to be worth the effort of tapping,

39There was very little additional planting i.n 1984, due to budgetproblems.

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climbing trees, etc. Also, replanting has virtually ended in cocoa andrubber even though the majority of the plantations of these two crops arecoming to the end of their economic life. The main explanation for thisdecline is the poor price. Although the farmers receive a subsidy on topof world price, the total is inadequate to offset the disincentives.With the current recession, some young men who might otherwise have leftthe farm are forced to remain or return to the farm. This has a positiveimpact on the harvest, on tapping for example. With the spectacularincrease in palm oil prices in the last year, wages paid to palm treeharvestors have moved sharply upward. These changes are not thought tohave yet induced any increase in the rate of replanting.

4.36 The Agricultural Pricing Policy Report makes a case foradditional support for the major tree crops, an improvement that can beaccomplished by a combination of exchange rate adjustments, tariffs onedible oil imports and direct export subsidies for cocoa and rubber.With these changes, oil palm products, at least in site-specificprojects, are now shown to be viable, cocoa would appear to be viabletoo, and rubber may be profitable in certain limited conditions. Sincereplanting is essential for the last two, finance is an essential part ofthe package. The technical components of the package need improvementtoo. For example, the Bank once argued against letting oil palmsmallholders intercrop, but this practice i.s now known to be not onlywidespread but appropriate. In fact, the tree crop/food croprelati.onshi.p is the basis for the entire farming system on small holdingsthroughout most of the south, that is, where the harvest of the treecrops has not yet been abandoned. The oil palm-cassava combination ispopular, provided the oil palm extensionists can persuade the farmers notto sacrifice the palm canopy in order to provide sunlight for the rootcrop.

4.37 Whether the tree crops are grown sole or in mixes,rehabilitation and new plantings only make sense if the economics ofthese trees can be reestablished. The alleged comparative advantage ofNigeria's southern states in tree crops has nearly disappeared at presentprice ratios. Unless there were significant changes in prices, theprospects for Nigeria to compete effectively inside or outside herborders leaves the observer "profoundly pessimistic," the phrase used inthe Bank's Oil.] Palm Subsector Mission report dated July 1981.

State Farms

4.38 Large scale mechanized farming has had an enormous appeal toofficials of both the military and civilian governments. The appeal hasa popular base - the image of the modernizing nation - but it reflectsalso a recognition that large tracts of cultivable land in the middlebelt are lightly occupied, accessible through the Local GovernmentAuthorities (LGAs), and can be brought into production with machinery.The Agricultural Sector Review of 1979 discussed the unprofitable historyof state farm enterprises i.n Nigeria through 1978 and recommended that nonew, large scale, public sector farming projects or land clearingprograms be initiated. Nevertheless, despite a new commitment to thepri.macy of a small farm strategy, the older federal and state commitmentto large farm development survives, especially for the states.

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Allocations to large farms by both federal and state authorities hadjumped up from the Second to the Third Plan, and were increased again forthe Fourth Plan. There the state allocations to large farm activi.tyabsorbed 6% of the total state agricultural budget (vs 1% for the federalgovernment, see table 9).

4.39 The preferred form of enterprise for running the state farms haschanged, however. Whereas in the 1970s the assumption was that the farmought to be run by Nigerian parastatals, the majority of plans now indraft call for joint ownership with private commercial firms, with thelatter supplying technical and administrative leadership. The importanceof commercial profits is emphasized much more than before. Most of theplans remain plans, because the responsible state and parastatalorganizations have had little success thus far in inducing overseasinvestors to collaborate. Thus the number of state farms currently inoperation is less than the number talked about.

4.40 The state farms are mostly just that - they are controlled bythe states rather than the federal government. These large scale,state-run, "state" farm enterprises were primarily developed in the lasttwo decades. FMAWRRD has no direct relation with these farms exceptthrough the National Seeds Service centers which provide plantingmaterial to many of them for multiplication. There is no single registerof these state farms, nor any comprehensive study of thei.r activiti.es.The individual states do not know much about each other's programs. Theyare aware the history is said to be uniformly unimpressive, but, as onestate authority told the Mission, that history has never been welldocumented and it is impossible to sort out truth from prejudice. Thefirst "experimental" farms were started in the old Western State, and theconcept survives that the existing farms are still basicallyexperimental. The farms are administered in most states by a body calledan Agricultural Development Corporation, though some states still runthem out of the Ministry of Agriculture and a few states have no farms atall. The commitment to these enterprises thus varies. Some states havebeen selling them off to cooperative associations, other states have beenexpanding their number. The Plateau ADC, for example, was establishedfour years ago with the objective of going into food production in largecommercial quantities. It took over three farms already belonging toPlateau State (a 30 ha poultry/feed-mill complex, a 1,600 ha maize farmand a 1,000 ha rice farm) and has since added four more (maize and rice),all of them less than 1,000 ha but with plans for expansion to 4,000 ha.That figure 4,000 ha is a popular target in Nigeria. Plateau State wouldultimately like to establish a 4,000 ha farm in each LGA, though PADCrealizes that that is impractical in congested LGAs, and in some otherLGAs PADC would not be able to justify such an investment on economicgrounds. Where it does establish a farm, PADC intends that that farmserve ultimately as a nucleus estate providing seed and bulking servicesto neighboring farmers' associations.

4.41 The federal government is involved in direct productionactivities: first, through two companies incorporated in 1975 and inoperation by the end of that decade, the National Grain ProductionCompany Ltd. (NGPC, in Kaduna) and the National Root Crops ProductionCompany Ltd. (NRCPC, in Enugu); and, second, to a small extent through

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the Commodity Boards. ° NGPC controls three operating farms and fourmore expected soon to commence operations, and is planning projects inall 19 states. NGPC also sets a target of 4,000 ha for each farm. It iswhole owner of Niger Mechanized Farm Inc. at Mokwa, the successor to theoldest and best known state farm experiment, that failed (the originalMokwa farm was established 1948, abandoned in 1954). The General Managerof NGPC is convinced that profitable operations for the Company dependupon an integration of production, processing and marketing operations.His farm plans sometimes call for associated mills: there is a feed millrecently completed at Mokwa. A new industrial complex with its ownmarketing organization owned by NGPC is also moving to completion atKaduna, comprising a flour mill for maize and sorghum, feed mill, ricemill and cornflake plant, all in association with a large automated grainsilo. NGPC is discussing joint ventures with foreign firms andgovernments (e.g. Bulgaria), but has not had much success. The Companymust keep close relationships with the states, and their ADCs, because itdepends on the state governments to identify and secure land for thecommercial farms, usually with the collaboration of the ADCs. Federalfunds will be mingled with state and foreign capital for these ventures.

4.42 The National Root Crops Production Company has concentrated oncassava, and owns several plantations of up to 1,000 ha as well as 6 garifactories. NRCPC also multiplies cassava and yam planting materials. Ithad intended that its estates form the nucleus for, and depend upon,smallholder cassava deliveries. But it found this supply unreliable andhas fallen back on its (expanded) estates. Though the smallholders wereunder contract, NRCPC found the contract unenforceable. It could notensure the farmers would not sell to private traders at higher prices.NRCPC absorbed several of the remnants of the Nigerian Root Crops Boardwhen it was abolished in 1979 (it had been created in 1977). The mainreason the Board was terminated was because of the difficulties ofcontrolling prices in the root crop market.

4.43 Commodity Board participation in direct large scale productionis limited to rubber plantations, though the Cotton and Groundnut Boardsare now actively negotiating with state and foreign bodies to secure4,000 ha properties for their own joint operation. All six of theCommodity Boards are building processing facilities, to be partly orwholly owned by them. It should be mentioned that the southern stategovernments also own and operate, or contract out, rubber and oil palmplantations, many of them acquired from the private sector.

4.44 In summary, there is increasing activity by governmentauthorities in large scale parastatal farming and their plans run wellahead of present operations. The Agriculture Sector Review in 1979pointed out that the totality of their enterprises would not in theforeseeable future occupy more than a tiny part of cultivated land inNigeria. Nevertheless, if the projects succeed they could play an

4 0The River Basin Development Authorities in principle are notinvolved in direct production (para 4.55).

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important role in the supply of commercial crops to the food deficitareas and cities. Success would appear to depend at a minimum onimproved management, involving private enterprise and freedom frombureaucratic and political influence. The Mission visited in Bendel.State a successful state farm managed and partly owned by a German firm,and heard of one or two others (a tiny percentage of all state farms).Outside of government, the prevailing opi.nion among Nigerians is thatstates can never properly manage these farms and ought to sell them off.

Tractor Programs

4.45 The Agricultural Sector Review also discussed the rapid buildupof tractor imports into Nigeria during the early 1970s, from a combinedfigure for all tracked and wheeled units of 480 imported in 1968 to 4,980in 1976. FAO trade data indicate 1976 was a high point, with annualimports running at about 4,300 in the late 1970s and 3,300 in the early1980s. Mechanization is an even more important part of the self-image ofa modernizing Nigeria than large scale farms, and has a broader sweep.In fact, the bulk of the tractors brought in since 1979 has been sharedbetween individual large private farmers and associations of smallfarmers.

4.46 The federal government financed i.n the last five years annualblock orders of tractors to be distributed freely and equally to thestates - 15 each in 1982 - where normal distribution will be controlledby the state-level Green Revolution Coordinating Committees inassociation with the state governments and LGAs. This federal program isdwarfed by batch orders by individual northern and middle belt states.The size of these orders expanded greatly during the civilian government.According to one tractor import firm, the orders often exceed anyreasonable estimate of current demand in farming activity, and models aresometimes inappropriate (especially over-sized) for the job, with theresult that many of the units are either badly used, broken, idled oremployed exclusively in hauling and other non-farm activity. SokotoState ordered about 650 in 1982/83; Plateau State brought in 600 in early1983. Tractor imports were put under Speci.fic License in early 1982, andthe level of imports fell. There are two assembly plants (Kano, Bauchi)and others have been approved. So far no machines are wholly fabri.catedin the country. The shortage of spare parts is a continuing problem, forlocally assembled as well as i.mported units.

4.47 Onward distribution of state-ordered tractors is made to ADCs,ADPs, the ministry, tractor hire units, farmer associations and pri.vateindividuals. The share of these state imports that end up in privatehands i.s said to be much larger than the share of federally importedunits that are taken over by individual farmers. The tractors that aresold to private farmers are financed either on credit or cash, thoughpoor performance in the tractor loan program has persuaded the stateauthorities to shift to a mi.xture of cash payment and subsidy, with asubsidy figure of 50X often quoted. Over 90% of tractors purchased byi.ndividuals are now channelled through these state orders, rather than bydirect delivery.

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4.48 All states operate tractor hire units (THU), a program thatdates back before the 1960s. As discussed in the Agricultural SectorReview the Nigerian experience with THU has been poor, and there is noevidence of improvement in the ministerial services since that Review wasmade in 1978. They are alleged to be everywhere uneconomic, heavilysubsidized, and suffering from work rulet,and red tape common to civilservices and fatal to contract services. As is the case with the statefarms, the federal government does not control these operations and isnot informed about total numbers of units in operation, the percentageout of operation, average tractor hours, average plot size, etc.; nor canit comment on the relative efficiency of different state services. The1979 Review estimated there were an average of 80 units in each of the 19state services, for a total of 1,500 (60X in olperating condition). Aconsultant agricultural engineer did visit five state THU in a tripthrough southern Nigeria for the Bank in late 1983, and found a commoncondWion of inactivity and an "operating" percentage much lower than60%. The level of mechanical repair services is appalling, though, asthe tractors go out of service the ratio of mechanics to operatingtractors improves. For example, when Bendel obtained about 50 tractorsin the late 1970s, few mechanics were recruited to service them. In 1984the state had 40 capable mechanics, and only 4 of the tractors are stillrunning.

4.49 Some of the ADPs have run reasonably efficient tractor hireoperations, and in the new statewide ADP operations the ADP managementunits have assumed control of the ministerial THU service. In Kano Statethe ADP intends gradually to dismantle its fleet and encourage insteadthe growth of private contract services, whi.ch it is presently promotingby leasing out the erstwhile ministry units. Bauchi State and Bidaenclave ADPs are also moving to private contract services.

4.50 Elsewhere in this report the point is made that formulas for thesuccessful operat49n of contract services must be found, by eitherprivate or public agency, since development of small scale farming inNigeria will otherwise be constrained and medium scale farming otherwiseblocked. The consultant report on mechanization spells out tho4conditions for success for both land clearing and cultivation. Small,four-wheeled tractors may play a role in those formulas, but for familiar

41For example, in Plateau State the THU cannot use its earnings topay for essential spare parts, which it must request under another vote.

42Skromme, Lawrence H., "Agricultural Mechanization in Nigeria,"June 1, 1984.

43The possibility of an efficient public operation cannot bedismissed, although it is viewed with much skepticism. PADC has its owncontract services for small farmers. The General Manager says he is freeenough from public pressure to make it work.

44Skromme, op. cit.

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reasons they are not popular in dryland areas, where most of the farmersare located. One paradox i.s that despite the latent demand for THUservices, very few private hire operators have appeared. There areperhaps five to ten who rent tractors in Oyo State, which took an earlylead in mechanization. But in large regions elsewhere in the south thereare literally none. Under correct crop pricing policies, one shouldexpect an expansion of this private enterprise.

4.51 The development of consortia of urban business interestsprepared to secure title, clear, and plant large holdings under tractorpower is a relatively new phenomenon. There are reports of increasingactivity of this sort in the virgin areas of Ogun State near Lagos, butquestions by the Sector Memorandum Mission about how many of theseexamples could be found around Oyo, Ibadan, Benin City, Enugu, Lafia andother cities in the southern and middle belts drew answers that alwaysseemed to be limited to under ten. The only area where there are rapidlygrowing numbers of active large scale farms and applicants for moretitles to large holdings is in Kaduna and Bauchi, a movement that seemsassociated with the recent popularity of maize. It may be thatelsewhere, in the absence of private entrepreneurial action in bothmechanized farming and tractor hire, the state farm and THU approachretains its popularity among politicians and chiefs who want visiblesigns of progress. The tractor and bulldozer profiles are even featuredon letterheads and logos of some of the ADPs, testimony to the closeidentification of rural progress with heavy equipment even when theprojects do not emphasize them in the farmer programs. It is widelybelieved that mechanized farming will ultimately prevail in commercialcereal cropping - that point is made even by ADP advocates in governmentwho look at the ADPs as a transitional stage to modern, progressivefarming.

River Basin Development

4.52 The River Basin Development Authorities report to the newlycombined Federal Ministry of Agriculture, Water Resources and RuralDevelopment and depend on federal and foreign finance. In 1984 the RBDAswere renamed River Basin Rural Development Authorities (RBRDA), withadded responsibilities. In this section we will use the earlierdesignation since the discussion focuses on the original set ofactivities. The RBDAs have been oriented to large scale formalirrigation schemes, and are criticized for bypassing and sometimeswounding the small scale, village level, traditional irrigationoperations which have themselves been expanding everywhere. Support forthese small scale operations was historically provided by FMA and thestate governments, but that support was dwarfed by the RBDA alloctions.In fact, in the period 1980-83 those allocations far exceeded every othercategory in the federal budget pertaining to agriculture, as discussed inSection IV C.

4.53 Until 1984 there were 11 RBDAs, and the whole of Nigeria hadbeen divided into 11 areas of operation. Under the reorganization, anadditi.onal 7 Authorities have been establi.shed, to provide one for eachstate (Lagos and Ogun will be combined). The decree which establishedthe RBDAs in 1977 gave them a primary mandate to develop the countrv's

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water resources with an emphasis on irrigation but including other wateruses. Each RBDA necessarily covers dryland communities and politicalpressures have compelled them to set up dryland schemes, mostlylivestock. The distinction between what they do in dryland areas andwhat, for example, ADPs do is blurred in the middle and southern RBDAs,which are newer (the northern dams and irrigation works were startedbefore 1977), have less water under command and yet were expected toparticipate in delivering food for the Green Revolution and successorProgrammes. The focus of all the RBDAs is on cereal production. Wheatpredominates in the cropping sequence in the northern RBDAs, ricepredominates elsewhere. A casual observation of the federal budgetsuggests that at least until 1984 the RBDAs were the primary instrumentchosen by the federal government to promote the food self-sufficiencygoals of the Green Revolution Programme. (The new government has reducedthe RBDA budget estimates, while giving them additionalresponsibilities.) Although the state is represented on the commissionsof each RBDA, the latter are seen nevertheless as an arm of federalpolicies.

4.54 By early 1983, 66,000 ha had been cleared, 80% of that by thethree northern RBDAs. Problems have been encountered with villagers andfarmers' groups such that areas that already have been cleared and forwhich stored water is available have not yet been irrigated. These aresocial issues that are gradually being overcome. Projections of the rateof growth of RBDA investments, irrigated area, participating farmers andexpected production have been extraordinarily ambitious. They implied alevel of efficiency in construction and operation which has rarely beenin evidence in the past. Expatriates occupied technical positions in all11 headquarters and, in the northern RBDAs, they occupied up to 80% ofall engineering posts. Those ratios have fallen significantly beginningin 1984 due partly to changes in remi.ttance allowances., Also, the RBDAbudgets have been drastically curtailed and the ambitious projectionsdropped, a turnabout dating since thi.s Memorandum was originally drafted.

4.55 RBDAs project an image of large scale mechanized farmi.ng, butthat is because the farmers are not yet playing the role intended forthem. The RBDAs are supposed to clear the land and provide improvedplots for the farmers of the area, whom the RBDAs will continue tosupport with seeds and other inputs, mechanized tillage and harvestingservices wherever possible, and processing and marketing. In the rush toget operational, the field units have moved ahead of the farmers;nevertheless, except for the seed farm the plots are all allocated andeventually are expected to be taken up. Few farmers have beendispossessed, except in the areas appropriated for new reservoirs. Thelevel of sophistication of the production services is such that someobservers have concluded that the organization will have to retain theseresponsibilities on behalf of the farmers, and the farms will remainindistinguishable from mechanized state farms. But in the northerni.rrigation perimeters increasing numbers of farmers are making their owndecisions now as to how to sell their surplus, so the skepticism may beunwarranted. And the general manager of one of the middle belt RBDAstold the Mission the large-farm/tractor image was in any case overworkedand he had far fewer power units than he needed (which he said was nottrue of the state farms).

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4.56 Two other problems of the RBDAs are the low level ofcoordination between them, ADPs and other public programs, and evenbetween neighboring authorities, and the absence of any long-termintegrating planning capability at the national level. The weakness incoordination and planning explains one of the perceived injustices of theRBDA system, which is that activities of farmers and graziers in theupstream valleys and downstream floodplains have often been sacrificed,without regard to whether these losses offset the benefits to theirrigated farmers. Among other features of the 1984 reorganization, thepolicy bodies of the RBDAs and ADPs are intended to be more closelyintegrated, partly to reduce the problems of poor coordination andduplication.

4.57 The real challenge to the RBDA program was mentioned above.Small scale irrigation is claimed to offer superior cost effectivenessthan these large works, both the operations under way and the plans forfuture operations. Of course, for RBDA investments already made andtreated as sunk costs, additional expenditures may have a pay off thatcan compete with this alternative. The primary concern of the FederalDepartment of Water Resources is how best to use already impounded water.The comparison with small scale alternatives in any case needs furtherstudy. It is not certain how large an area can be covered by those typesof small scale operations which match the model. Also, the RBDAsthemselves are shifting priorities toward small, formal irrigationschemes - midway between the large northern operations and the trulysmall scale on-farm works promoted by the ADPs and other entities forindividual farmers. Clearly the RBDAs will in any case have a major rolein future development plans.

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V. INSTITUTIONAL DEVELOPMENT

A. Federal and State Ministries of Agriculture

5.01 The Federal Ministry of Agriculture before the integration withthe Federal Ministry of Water Resources in early 1984 had eightdepartments organized on subsectoral lines (agriculture, livestock,forestry, fisheries, cooperatives, land resources, pest control and ruraldevelopment) and four departments and other staffs organized onfunctional lines (planning, parastatals, finance and administration).The structure and responsibilities of federal operations in agriculturehave expanded significantly since the 1960s. The Constitution of theFirst Federal Republic decreed that agriculture was a function of thethen Regional Governments: it was excluded from the ExecutiveLegislature list of federal responsibilities with the exception ofresearch. During the 1960s what few federal operations there were weredivided between five federal departments - fisheries, agriculture andnatural resources, forestry research, agricultural research andveterinary research. In 1975 legislative action resulted in the creationof the Federal Ministry of Agriculture and National Resources (FMANR)through the merging of the Departments of Fisheries and Agriculture andNatural Resources. At that time the irrigation division was separatedout as the nucleus of a new Federal Ministry of Water Resources, and theresearch units were separated ultimately to become part of the newMinistry of Science and Technology. In 1976, with the creation of 19separate states, FMANR was strengthened and the promotion of agriculturebecame by decree a shared responsibility of the federal as well as stateauthorities. Thus, by the end of the 1970s FMA had acquired importantfunctions with respect to development activities that had not beenanticipated in the original Constitution, but at the same time had givenup the research responsibilities it had earlier been granted and also theirrigation activities that were about to assume a massive profile in,thefederal budget. Under the new military government, Agriculture and WaterResources have once again been integrated (and Science and Technology hasbeen combined with Education).

5.02 The process by which functions originally performed by the coreunit - the Federal Department of Agriculture - have matured and movedaway has continued. The relatively new FMA departments of cooperatives,land resources and pest control are all graduates of FDA. Thereorganization of importance to the Bank's program was the creation in1979 of the Federal Department of Rural Development out of a division bythat name in FDA set up two years earlier. FDRD was set up specificallyto deal with the Bank's ADP/APMEPU portfolio (and the correspondingADAs), and the subsequent initia5tves taken jointly with the Bank to formARMTI, ATAP, FACU, FASU and FARA have been taken in support of FDRD.

45ARMTI is the Agricultural and Rural Management Traini.ng Institute;ATAP is the Agricultural Technical Assistance Project, which financesFACU, FASU, AIDS and APMEPU; FACU is the Federal Agricultural

(Footnote Continued)

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FDRD had certain other responsibilities, in particular home economics andrural agro-industries (para 5.19). There have been important changes inthe structure in the first half of 1984, the full implications of whichhave not yet been clarified. FDRD has been reintegrated with FDA as theFederal Department of Agriculture and Rural Development (FDARD). It willshift more to a planning and monitoring role (incorporating the combinedAPMEPIT/MEU operation), while its earlier operational tasks are in theprocess of being shifted to a recreated field authority - the River BasinRural Development Authority. The latter combines federal functions atthe state level for RBDAs and ADPs. The ministry also was renamed - theFederal Ministry of Agriculture, Water Resources and Rural Development.

5.03 In the system which operated through 1983, FMA was representedat the state level by a coordinator, who reported to the Office of thePermanent Secretary in Lagos, and who was reported to i.n turn by fieldofficers representing each of the operating departments of FMA. FDA andFDRD each had field officers at the state level. There used to be anintermediate layer, four zonal offices, but these were abolished in 1982under pressure from the states which wanted direct access to Lagos. Howthis operational system will be affected by the changes instituted by themilitary government is not yet settled. The slow motion by which theinstitutional reforms are being put into effect has had a paralyzingeffect on federal functionaries in field offices.

5.04 Since under the earlier scheme FDRD was concerned with the ADPs,which were state agencies rather than federal, its programs were distinctfrom those of FDA. These institutional relationships never receivedenough attention in Bank design of ADPs, especially in the enclaveprojects. There you might have found in 1983 FDRD, FDA, ADP and thestate ministry staff all working in parallel without adequatecoordination, and an RBDA could have further complicated the scene. Thegovernment has the opportunity now to eliminate many of these problems,though it is proceeding with extraordinary caution. It would appearessential soon to resolve the real and potential conflicts betweenfederal and state authority over implementation of rural developmentprojects.

5.05 Each state has a Ministry of Agriculture, by that or anothername, which have "commissioners" as ministers and permanent secretariesin charge of the civil services. These ministries carry out all thetraditional functions of agriculture, with a large extension field staffcomprising one of the core technical cadre. Extension work in Nigeria isin principle a state responsibili.ty. Di.rect relations with the smallfarmers remain a state prerogative and any influence of the federaldepartments is exerted through the medium of state authorities andspecial parastatals like the Commodity Boards, with the exception, thatis, of the RBDAs. These recruited their own, self-contained, extension

(Footnote Continued)Coordinating Unit; FASU is the Federal Agricultural Support Unit, ofwhich there are 3 (with a fourth planned), reporting to FACU; FARA is theFederal Agricultural Recruitment Agency, headquarterd in London.

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staff, giving the federal government direct contact with farm levelactivities and an opening for a major role in production programs. Otherpartial exceptions are programs like NAFPP, the Bank- supportedAnambra-Imo Rice Project, and the Bank-supported smallholder tree cropprograms. These gave FDA a role in field operations. But, unlike theRBDA, which are entirely federally financed, the other projects dependultimately on state decisions and state finance. Under the previousgovernment, FDA did not have the authority in periods of financialretrenchment to get the states to maintain operations at previouslyagreed levels. An important part of the recent discussions between theBank and government concerns measures to ensure that state as well asfederal commitments to projects are honored.

5.06 Both federal and state civi.l services are said to emphasize theregulatory rather than developmental functions of agriculturaladministrations. Career paths are not attractive for otherwise qualifiedcandidates, and with low salary scales compared with the private sector,the ministries cannot recruit the sort of strong team required to plan,organize and execute effective rural development strategies, individualexceptions notwithstanding. These institutional problems will have to besolved along with the agronomic constraints. Weaknesses in the civilservices were the main reason prompting the establishment of thesemi-autonomous ADPs and RBDAs. In fact, the transfer of operationalauthority to parastatals is a commmon practice throughout thegovernmental system.

B. Commodity Boards

5.07 The trading and development activities of the Commodity Boardsare described4,n a special report prepared for the Agricultural PricingPolicy Study. There are six Boards, created by decree in 1977, four ofwhich took over from marketing boards with a 30-year history in Nigeri.a(cocoa, palm produce, cotton, groundnuts) and two of which took on cropsthat had previously not been scheduled (rubber, grains). The Boardsreceive technical supervision from FDA (FDARD) and fall under theadministrative umbrella of the unit in FMAWRRD dealing with parastatals.These are the channels for rehabilitation and development grants andother special funds in the FMAWRRD vote. However, most of the costs ofthe Boards' trading accounts are funded by CBN under instruction of the(then) Head of State. Thus, the Boards respond to two separate sourcesof control.

5.08 Because of distinctive developments in each major crop, thetrading roles of the individual Boards differ substantially. Becausetheir official scheduled prices are lower than market pri.ces theGroundnut Board buys only a small amount of groundnut, the Palm ProduceBoard buys only a trickle of the palm oil, and the Grain Board until 1984

4 6Rice, E.B., "Pricing Policies and Activities of the CommodityBoards," draft dated June 9, 1983.

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bought no grains at all, at the Producer Price.47 By contrast, theCotton Board buys 100% of the seed cotton crop, now entirely consumed bydomestic manufacturers, the Cocoa and Palm Produce Boards buy nearly 100%of the cocoa and palm kernel crops, for export, and the Rubber Board buysabout 60% of the rubber crop, also for export.

5.09 The Boards have been criticized for inefficiency, andunnecessary intervention in a marketing system where the private tradersare alleged to offer better services. The legitimacy of that criticismdiffers from Board to Board, and also with respect to whether the Boardsdeal with the export trade (cocoa, rubber, palm kernel), with cotton,with grain, or with cooking oil crops. For each set of commodities, itcan be argued that some type of government intervention in trade makessense, ranging from regulation to direct procurement, and from continuousprocurement to occasional interventions in crises as a buyer of lastresort. Whether any of the Boards have the right balance, and whetherone or two could be abolished, is a subject of controversy. The Bank hasproposed that a study of the role and performance of the Boards be madeto determine which Commodity Board services should continue to besupported.

C. Credit Institutions

5.10 The credit subsector has not been treated in this review, andup-to-date figures are not available on the level of formal creditextended for seasonal needs, farm development, processing and marketing(a study has recently been initiated by CBN. It will examine a widerange of credit issues). As mentioned in Section II D, the levels arelow in all categories. There are no national small farmer creditprograms with funds especially earmarked for that purpose. The NigerianAgricultural and Cooperative Bank, Ltd. is a parastatal created in 1972with branches in each state responsible for lending to farmers andagro-industry on behalf of the federal government. With respect to thenumber of NACB loans, the m ajority have been made under a Direct-LendingScheme to individual enterprises. A total of 241 enterprises wereassisted in the seven year period 1974-1980, for an average of only 27per year at a value each of about N500,000 approved and N250,000disbursed. With respect to the amount of loans, the majority, or 73% ofcumulative approvals through 1980, were lent under an On-Lending Schemeeither to cooperative societies for on-lending to their members, or tostate agencies for on-lending also to small farmers. NACB has beencriticized for its cumbersome procedures and tough conditions,disincentives which help to explain the low volume and small number ofloans. But NACB argues that its criteria are not stringent, especially

4 7The Grains Board has another purchasing mechanism, the StrategicGrain Reserve Scheme, under which it has been making some purchases ofsorghum, maize and other grains annually at market prices, for sale tospecial customers. These purchases are small compared with the totalprivate grain trade, except in 1983 when special compaigns wereauthorized for maize and rice.

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for small farmers, and that the key constraint all along has been theshortage of loanable funds. Nevertheless, it has taken the initiative inthe last several years to begin pilot operations on a new small scaleloan scheme for each state. The rate of lending has accelerated since1980. Cumulative disbursements for the decade through 1983 total 1587million approved and N423 million disbursed. These cover 3,200 projectsof all types, at an average disbursement figure of N132,000 (a loan to acooperative is one project).

5.11 Commercial banks, of which there are 18 operating in one or morestates, were expected to help fill the gap. Since 1976 government hasheld majority shareholding of all these banks. CBN supervises andregulates the commercial banki.ng system. Prescribed lending ratios forloans and advances to different activity sectors are circulated at thebeginning of each fiscal year, and performance is monitored by means ofmonthly returns submitted by the head offices of each bank. Agricultureis categorized by the Central Bank as a preferred sector and theguideline ratios are interpreted as a minimum allocation. The operativeminimum now is 12%. By decree dated 1977 government established anAgricultural Credit Guarantee Fund for the purpose of providing guaranteeof up to 75% of the value of principal and interest for loans granted byany bank for agricultural purposes. The liability was limited to amaximum of N50,000 for loans to individuals and N1 million in the case ofloans to cooperative societies or corporate bodies. Legislation wasbefore the government in late 1983 to expand those provisions. Themanaging agent for the fund is CBN through its Department of AgriculturalFinance. The impact of the Fund in accelerating the rate of lendi.ng issaid to have been slight. The Fund has not been given the requisiteresources to carry out its mandate and claims against defaults have intheir majority not yet been honored. The Fund is criticized for havingmade many arable crop loans in the initial years without close scrutiny.

5.12 Small farmers use credit, but practically all of it is borrowedfrom the informal sector - friends, relatives, traders and neighborhoodthrift societies. As in other African countries the percentage ofinformal borrowings applied directly to farm activities is small,although given the fungibility of funds i.t is difficult clearly toseparate uses for farm activity and uses for the farm family. There is along history of cooperative credit programs and cooperative banksorganized in Nigeria at the regional and state levels. But aggregateflows are small, partly due to poor repayment performances.

5.13 As suggested above the volume of formal credit to small as wellas large farmers is certain to increase substantially. Credit for treecrop replanting, as for other forms of on-farm capital formation, may befor many farmers a prerequisite. Credi.t for seasonal inputs in the pasthas not been critical given the large subsidies offered. Whether areduction of the fertilizer subsidy implies that fertilizer sales willfall unless credit is available is a subject of debate. In the long run,however, there is little dispute that an efficient credit system isessential to a modern agricultural sector.

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D. Other Institutions

5.14 A few comments are warranted on several other institutions, tocomplement discussion in different parts of this report.

Industrial Research

5.15 In addition to research centers dealing with production ofspecific crops, livestock, forestry and fisheries, the erstwhile Ministryof Science and Technology administered several centers devotedexclusively to post harvest activities, including: (a) the FederalInstitute of Industrial Research, at Oshodi (FIIRO), concerned withtechnologies for industrial processing of local foodsWffs, nutritionalvalues, new foods, quality control and preservatives; (2) the NigeriaStored Products Research Institute (NSPRI), charged with investigation ofimproved storage methods for grains, root crops, fruits and vegetables,oil seeds and their products, meat and fish; and (3) the Leather ResearchInstitute of Ni.geria, concerned with the use of raw hides and skins,tanning materials and all leather products.

Universities

5.16 Scientific agricultural research is not associated withuniversities in Nigeria with the important exception of the Institute forAgricultural Research (!AR) at Ahmadu Bello University near Zaria. TheUniversity of Ife sponsors the Institute of Agricultural Research andTraining, whose work is scattered at several stations in Ondo State.There is a group of academic centers with strong departments inagricultural economics and sociology. The leaders are the University ofIbadan, including its Department of Agricultural Economics and theNigerian Institute of Social and Economic Research (NISER), and IAR, withits Department of Agricultural Economics and Rural Society. Other activefaculties are the University of Lagos, University of Nigeria at Nsuka,University of Ife, and University of Benin. There are four otherfederally supported universities, and a group of new state universities,which have not yet established prominence in these social sciencedisciplines.

Other Educational Facilities

5.17 This report does not examine the programs and deficiencies ofthe overall agricultural education and training systems. A plausiblestrategy for development of the sector is to concentrate on developingthe human capital available to agriculture - the farmers, teachers,extensionists, officials, etc. By its omission this option i.s not givenfair representation in the recommendations in Volume I. A description of

48The Ministry also funds the Project Development Institute (PRODA,at Enugu), which does research on, among other things, agro-processingmachinery (including cassava and palm oil processing equipment).

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the eduwtion and training systems is available in a recent Bankreport.

Cooperatives

5.18 Some important subsectors - livestock, forestry and fisheries -were deliberately left out of this review because they were relativelyindependent and the omiggion would not undermine the analysis of themajor cropping systems. There are other omissions for which that isnot true - credit and agricultural education are examples. Another gapin the analysis which appears in retrospect to be unfortunate is thecooperative. The cooperative movement in Nigeria has a long history andan extensive institutional framework. In Bauchi State, for example,there are approximately 400 agricultural cooperatives, mainly credit andmarketing societies organized at the village level, plus 16 credit andmarketing unions organized at the level of the local governmentauthority, and 3 apex state organizations, including a cooperativefinance agency. The reputation of the cooperative movement in Nigeria isas unimpressive as it is in most other African countries. However, itcan be argued that the success of small scale farming in the future willdepend in part upon success in grouping input and output services so asto take advantage of economies of scale. This is particularly true withrespect to credit. A well functioning cooperati.ve can also strengthenthe smallholder's positi.on vi.s-a-vis the merchants of inputs and crops.The trouble with those promises is that they are rarely realized.Improper accounting, delinquency, privileges grabbed by the strongermembers, etc., have led to the decline in prestige and scope of thecooperative movement throughout the LDCs. A study is needed to identifythe cooperatives in Nigeria that are working well and to develop fromthat experience a formula that may have countrywide application. Theproposed study of credit intends to incorporate cooperative issues.

AIDS

5.19 The Agro-Industrial Development Scheme, created in 1981, isadministered by FDRD (FDARD). Its objective is to promote small andmedium scale industrial processing, and the manufacture of processingmachinery. Headquartered in Ibadan, with four zonal offices (Ibadan, Jos,Kaduna, Enugu), AIDS is too small to carry out its brief effectively.Also because it is basically a technical assistance agency, without aline of development finance, its work has been frustrated by the lack ofcommercial credit made available to finance the schemes prepared by AIDSfor its clients. In addition to offering technical advice on request,AIDS has initiated on i.ts own some demonstration projects using FDRDfinance, for example, a medium scale gari factory i.n Bendel. AIDS

49'Agricultural Manpower Training Subsector Memorandum," Report No.3902-UNI, dated June 17, 1982 (Green Cover).

50With the exception of the important symbiotic relationship in thenorth between the pastoral and sedentary systems.

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largest impact work would appear to be with its programs to encourageadoption by village associations of new processing equipment scaled foroperation just above the household enterprise. The Bank has helpedsupport AIDS. The new government recently has instructed AIDS to prepareto split to allow merger into the RBRDAs, though without losing itsidentity at state level.

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VI. THE TRANSFORMATION OF TRADITIONAL AGRICULTURE

A. Introduction

6.01 Changes in farm family behavior in rural Nigeria may call for thedesign of additional models used for predicting farmer response totechnical innovations in agriculture. The present formulas representing a"small" family farm depict a family on a smallholding of stable size,relying mostly on its own labor and income from crops and livestock, butshifting gradually from subsistence to marketed commodities under theinfluence of price incentives and public programs that offer modestincrements in cash income. These formulas are losing their wide utility.Full-time farmers are increasingly hard to find in the south, and those inthe north are moving in the same direction. Also, when observing thefamilies we often find sons who do not want to remain farmers, fathers whocannot afford to hire laborers to maintain their farms and are getting tooold to do so themselves, and daughters and mothers who can help increasefarm cash incomes in ways that are largely ignored in the models (and bythe government's field services).

6.02 These changes have been accelerated in the last decade bydisincentives to agriculture created in the wake of the oil boom, asdiscussed in the first chapter. Together the wage and price effects by theearly 1980s had discouraged most investor interest in progressivecommercial agriculture except for a few new crops, like grain maize. Byprogressive commercial agriculture we refer to those fields growing cropsmostly for the market and to those farmers committed to good management andimproved practices. But the beginnings of a major shift of resources outof agriculture were evident even in the decade before 1973: migration tocities, tightening rural labor supply i.n the southern states, and, in thelater years, declines in the harvest from southern cocoa and oil palmplantations and northern cotton and groundnut farms, which produced theleading export crops. Parts of rural southern Nigeria are being convertedfrom an agricultural economy to a dormitory for the cities.

6.03 The World Bank estimates that Nigeria's supply of oil for exportwill begi.n an irreversible decline in the mid-1990s. The results to theeconomy have been previewed in the oil market crisis of the early 1980s andthe consequent recession in industrial activity and enforced austerity inpublic programs. Job retrenchment in industry, construction work, and theservice sector have caused some of the urban migrants to return to therural areas and has persuaded their younger brothers to put off plansthemselves to go to the cities. Since 1983 money wages have not changedand real wages throughout the economy have fallen. The rural work forceavailable at these lower wages is expanding. This shift comes togetherwith an increase in food prices attributable to stiffer quotas in importedgrain and to recent drought. Together these changes have partly restoredthe profitability of commercial agriculture and full-time farming. Infact, a group of commercially-oriented medium to large scale farmers havemade their appearance.

6.04 An important question is whether this favorable reversal in therural economy will substantially alter the elements of the transformationprocess alluded to above. In the next section, six related elements of

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this process are discussed: the emergence of a class of progressivefarmers with larger or expanding farms; the shift of most other householdsto part-time farming, where incenti.ves to good farming have less impact;the shift also from family to wage labor; increasing mechanization;increasing importance of sole instead of mixed cropping practices incommercial fields; and the advance of cash cropping by women farmers.These features help define new modes of farm behavior which our modelswould have to capture. If the process stalls, the wider utility of theexisting set of models is preserved.

6.05 Experience in other countries with free rural markets andavailable land would indicate that the main features of transformation arecommon and irresistible. Sooner or later the elements just described willassert themselves. In the last section we ask whether this scenario isdesirable, and consistent with populations and conditions anticipated inNigeria in the next 50 years. One thing is certain, however. There mustbe improvements in the policies and projects for rural areas. Adjustmentsnow in the agricultural sector are needed to help create the foundationsupon which the non-oil export and domestic economies will expand anddiversify to replace the oil and the imports it now finances. Theproductive potential and institutional structures of the rural economycannot be allowed to go on shrinking, since the decline in institutionaland human competence will be increasingly difficult to reverse. The ruralsector must provide opportunities for farm entrepreneurs of all sizes -full-time and part-time.

B. Elements of Change

Farm Size

6.06 Nigeria is truly a country of small holdings. Average farm sizefor the 9 million farm households in Nigeria is about 2 1/2 ha, a mixtureof 3 ha in the northern states and 2 ha in the southern states. Almostninety percent of the farms are under 5 ha. This system differs from someother sub-saharan Afri.can countries - Kenya and the Sudan are examples -where a substantial group of large commercial farmers plays an importantrole in producing surplus grains, even though they are not numerous enoughto raise significantly the low average farm size shown in nationalstatistics. The number of comparable "large" farms in Nigeria - say, over500 cultivated hectares - is tiny. A more important group are the mediumsize farms, the bulk of which fall in the range 10 to 100 cultivatedhectares.

51The source of the maize and sorghum surplus in the northern states,for example in the good harvest of 1982/83, is not known now. This is amissing gap in ex-post analysis of the pilot ADP experience. Opinionsdiffer widely. Somewhat less than half of those i.nterviewed on the subjectsaid the surplus derived mostly from accumulations of many smalldeliveries; somewhat more than half said it can be mostly accounted for bymedium and large farms. A quick study in the eastern zone of Bauchi State

(Footnote Continued)

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6.07 An order of magnitude of the numbers of medium and large sizefarms is given in data collected from an informal survey by the stategovernment in Kaduna. This survey indicated that the number of holdingsover 20 hectares in the state was about 3,000, with the concentration inthe middle and southern zones. There, it was reckoned, this category offarms would occupy 5% to 7% of all cultivable land. Most of them weremedium size. In the maize belt between Zaria and Funtua, which was theleading surplus region of the three pilot ADPs, one only could countperhaps a dozen large commercial farms of over 200 ha. This included theso-called "chief of maize," who had put over 10,000 ha under that crop in1984. All these farmers are mostly under indigenous ownership, although afew involve foreign partners. This is an aggressive group. In the lesspopulated area south of Kaduna, prospective buyers have applied forvirtually all the land fronting on the main road to Abuja, and someinterior properties. On this frontier, foreign partners are somewhat morepromi.nent. Kaduna State offers the most prominent medium and large farmclass. Bauchi. State has a similar character. Further south, the number ofsuch properties falls rapidly. In Imo State it i.s reckoned there are nomore than six private farmers running cropping enterpri.ses of over 100hectares.

6.08 Many of the medium and large farm owners are disinterested, theland either inherited by traditional leaders and landlords or acquired bycommercial families which desire rural property for portfolio and prestigepurposes. Few of the holdings can be counted as commercial enterprises andmuch of the arable property remains in long fallow, or is farmedextensively and poorly.

6.09 Even for those farm owners who try to make a go at farming theresults are often unhappy, due to a combination of factors, including areluctance to pay adequate salaries to attract good managerial talent, andpreoccupation with the urban investments of these gentlemen farmers. Thefigure of 50 ha was quoted i.n several interviews by persons who favored a"large farm strategy" but limited that vote to farms in the 10 to 50 harange on the grounds that experience in Nigeria would seem to condemnanything bigger to failure. A really large farm requires superb managerialtalent, which few owners recognize or feel they should pay for. Theythemselves might be able to invest their time fully in the enterprise, butthe competing attractions of their other investments rule that out. It isthe rare rich indivi.dual who throws himself fully into farming, because heis almost certain to do less well than on his other investments. Onebusiness-farmer met in Kaduna said that the smart farmer, if he had lots ofmoney, would do better at prevailing prices selling the farm and using allhis resources to go into trade - and then buy, store and sell the produce

(Footnote Continued)showed that the bottom 50% of the farms measured by size of holding,produced almost none of the large maize crop in the good year 1982. Thatfinding, i.f confirmed, would be surprising, since the assumption has beenthat many small farmers contributed, but only their aggregate share has notbeen documented. A maize-specific promotional scheme has to anticipatethese distinctions.

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of his fellow farmers. Nothing can be done substantially to encourage thegrowth of commercial large farms as long as these comparisons with otherinvestment opportunities prevai.l. The improvement in crop prices in 1984has begun to change these perceptions.

6.10 Nevertheless, there are two characteristics of farming in Nigeriawhich relate to size that are beginning to assert themselves. First, thenumber of investors who have made a commitment to medium and large scalecommercial agriculture, though a minority of units in both categories, isexpandi H rapidly, especially in the main grain belt centered on Kaduna andBauchi. Second, a common feature of the progressive cash crop farmers isa relentless drive to expand their cultated area. Thi.s applies as muchto the dedicated 2 to 5 ha smallholders as to the 50 and 500 hacommercial entrepreneurs. Much of the arable area north of the tropicalforests is still relatively underpopulated. Land tenure systems generallyaccommodate the committed investor. The drive to add new fields totraditional holdings is common among the dedicated farmers of the tropicalzone as well, though there is less virgin land and the expansion has to beat the expense of either farmers who are dropping out or of overworked landwhich should be left fallow. Many of the Nigerians who argue in favor of asmall farm strategy when discussing the farm size issue essentially areasking that progressive smallholders have opportunity to expand. Thissense in Nigeria of an available, open frontier is one of the dynamicforces behind the very recent resurgence of annual cash cropping.

Part-Time Farming

6.11 As in many rural societies, once having accepted that the vastmajority of farms are small, closer scrutiny reveals importantstratification within that community based on size, progressivity andsocial position. For planning purposes it is essential to break down the

5 2One group of extraordinary interest would appear to be the civilservants and military officers who have returned recently to farmingbringing with them capital and information, including knowledge of how tomake use of existing institutions and regulations. In interview afterinterview this group was singled out for comment, by well-wishers anddetractors, as having contributed at the same time a whole new set ofvigorous entrepreneurs and community leaders, and a more familiar group ofindifferent, absentee landlords.

5 3Neither the PCR nor the Balcet-Candler study of the pilot ADPsdeveloped a typology of farmers of the north to see which categories wereproducing a disproportionate share of the surpluses delivered in previousyears. Both pieces of research deliberately excluded the "large" farmersfrom the sample studies. Nevertheless, the 31 "small" farmers included inBalcet's special interview program had one dominating characteristic, whichis that their cultivated holdings grew rapidly during the project period,on the average by a factor of three. Balcet was looking at a group ofgrowing "small" farms. That would appear to be another target ofextraordinary interest to rural development planners.

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"small farm" sector into, let us make it simple, small (1-2 ha), and large(3-10 ha) size categories, where it is understood that a breakdown in thesouth would have lower dividing lines than in the north. The majority offarmers in the south and north are in the small "small" category, and thatis the fact of analytical significance. It creates a situation inmodernizing Nigeria where the land resource endowment of most ruralhouseholds is too small to provide an average yearly farm income that cancompete with expected off-farm incomes, except under the most skillful useof husbandry methods, by taking advantage of proximity to large urbancenters for market gardening or poultry farming or by participating in anirrigation scheme. These families, driven partly by the arousedexpectations of children in school, are bound to end up seeking to increasethe size of off-farm incomes either to supplement farm income or to replaceit. The farm will be looked at mostly as a source of family food supplyand an insurance policy for old age or periods of recession, but thefarmer's financial strategy aims elsewhere for at least part of his income.The terminology is a bit misleading because in this case we mean to includeamong off-farm opportunities rural wages for farm members who hirethemselves to commercial f tmers and plantations either in the vicinity orin other parts of Nigeria.

6.12 These last comments are aimed much more at the south, wherecompact settlement fosters the integration of labor markets andpossibilities for off-farm employment are wider spread. The north ismoving in this direction. But most of it is not yet affected by highoutward migration rates and, though non-farm occupations have increasingimportance they are still largely performed on the farm. In the south, alarge proportion of small "small" farm households are necessarilycandidates for part-time farming, and many of the large "small" farmhouseholds as well will lose members who want to get out of farming.

6.13 The phenomenon of part-time farming is not limited to subsistencefarming - to provide minimum family food requirements. All farms enter themarket, and most commit parts of certain fields as well as the householdcompound to vegetables and other crops intended primarily for the market.Often the family invests earnings from off-farm activity back into thefarm, a powerful source of improvements for part-time farm families whoremain dedicated to farming. But family decisions about investing incapital improvements are nevertheless framed by the context of non-farmopportunities. And the trend for most small farms, at least in the south,would appear to be to plant not much more than the family requires.

6.14 Successful rural development programs aiming at the small farmerswill be those which either fit the special income-optimizing decision rulesof part-time farmers, or aim specifically at farm families which haveaccess to land and labor or mechanical power to make a commitment to

54There is also the opportunity for a share cropping arrangement,which is the dominant form of contract in some areas of ruralin-migration in the south (though less so since the civil war, since theIbos supplied part of those migrant streams).

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full-time commercial production. Programs that do not allow fordistinctions among farmers - treating them as a homogeneous group ofsmall-scale, full-time farmers each searching for ways to expand cashcropping without breaking far from traditional husbandry systems - willmiss one of the important dynamics of the sector.

Managers and Laborers

6.15 An effective rural development program also needs to account forthe fact that the modernization of farming in Nigeria is being accompaniedby a gradual differentiation among labor and managers comparable to thespecialization that is and has been the basis for growth in the othersectors. The use of hired labor for certain farming operations is commoneven in traditional systems. Several regions in Nigeria are famous assources of seasonal and often specialized migrant farm workers. But withthe departure of young males to urban areas, farm families are driven tohiring additional wage workers. Also, it is increasingly common for ruralwives from better-off families to recruit female labor to attend to thewife's routine farming obligations, freeing the wife to concentrate on cashcrops or non-farm tasks. More significant, the phenomenon of expandingfarm size associated with the progressive farmers is invariably associatedwith the build-up of a recruited wage force alongside resident familymembers.

6.16 Not all the young males who leave their farms head for the cities.Rural-rural labor movement historically has accounted for the major shareof domestic migration, and the share, though falling, is still thought toexceed 50%. Maps have been made showing the main flow of tribal groups toother areas, for seasonal or longer term employment (cocoa workers, forexample). The historic preference of Ibos to move was cut back by theci.vil war and subsequent tribal violence, but Ibo farm hands still do move.Labor from middle belt states flowing into southern farm jobs, and men fromthe Sokoto home divisions heading south, are also important.

6.17 Where year-round agricultural work for wages can be found, itoffers the laborer an attractive source of reasonably high income and, forsome young men entering the labor market, can be expected to continue tocompete with urban jobs. One important example is the oil palm subsector.Despite their reputation for difficult, heavy work, oil palm estates havenot had a problem finding workers during the main harvesting season (thewet season in the oil palm belt, which i.s the period when civilconstruction jobs in the southern cities always fall off). The huge jumpin palm oil prices i.n 1983 has resulted as well in a surge of renewedinterest in harvesting the wild palm groves. Most of this work is managedunder contract using men who climb the tall, old trees on a piece-workbasis and whose real income has more than doubled in the last year. Withbetter price policies and improved profits, farm and plantation enterprisesdependent on recruited labor will expand. Thus the differentiation oflabor and management in Nigerian agriculture can be expected to continue todevelop.

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Mechanization

6.18 The commercialization of farming and the expansion of farm sizein both northern and southern Nigeria are increasingly tied to mechanicalpower. The shift, however, is still very recent. The number of tractorsin use in Nigeria is small relative to the area planted to crops, comparedwith LDCs of equal level of per capita income. In some parts of the north,draft animal power provides an important alternative to hoes and tractorson small and medium size farms. In the south, the density of trees andstumps, and the often undulating terrain help prevent widespreadmechanization. But in both zones the demand for support for mechanizedclearing and cultivation has become one of the strongest pressures by thefarmers on federal and state authorities.

6.19 The failure of private sales of this equipment to expand rapidly,and for private custom-hire bulldozer and tractor services to develop inresponse to this pressure, are two striking anomalies in the agriculturalsector. The overvalued exchange rate has lowered the cost of machinery,and together with the subsidies on tractor sales by government and on fuel,price incentives to the private sector have been substantial. The absenceof services cannot be attributed to any general deficit in mechanicalaptitude: the rapid expansion in motorcycle and taxi fleets and relatedback-up services throughout rural Nigeria shows that. The explanation isfound in a number of factors - government's attempt to control all tractorimports since 1979, licensing difficulties, lack of credit for privatelytraded tractors, competition from the subsidized, state-run tractor-hireunits, etc. The low levels of tractor imports and of tractor services aremutually reinforcing. The demand for tractor power has until recently notbeen large enough to justify a tractor fleet of the size that would inducethe creation of a network of independent private service facilities, and,until they develop, farmers will be reluctant to buy tractors for their ownuse and for custom-hire work and put themselves at the mercy of notoriouslyinefficient state-run repair yards.

6.20 The demand factor also reflects the inadequate incentives tocommercial cropping, which for many farmers who otherwise would haverequired tractor power have opted not to pay for that equipment orservices. With improved crop prices the economics of tractor use wouldalso improve. If crops and tractors were both priced according to realcosts, we can expect that some crops and cropping activities would beprofitable under tractors and others not.

6.21 Indeed, the low level of mechanization in Nigeria of all forms ofagricultural tasks is remarkable. Improved hand instruments such asseeders, weeders, fertilizer applicators, groundnut lifters, and maizedryers are uncommon, and threshing technology is particularlyunsophisticated - it was better developed in some ancient cultures. Thelack of machinery explains, and is explained, by the primitive conditionsof village fabrication and repair facilities, by the scarcity of machinetool shops and small iron foundries, and by the medieval apprentice systemsfor training artisans and mechanics, which are ill-equipped to support therapid introduction of machine-based technologies.

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6.22 The low level of mechanization also reflects the absence orfailure of a wi.de range of policies and programs that encourage thecapitalization of agriculture. This includes investments not only inequipment but in land development (irrigation, terracing, etc.). Thefamiliar criticism that Nigeria's policymakers have neglected her farmersduring the recent decades of industrial growth has three aspects: afailure to ensure stable remunerati.ve prices and the efficiency of privatemarketing channels that would induce farmers to produce a surplus; afailure to create a viable credit system able to finance capital formationin profitable farming, farm services, and processing enterprises for morethan a small number of loan applicants; and a failure to create theinfrastructure and environment to support private services i,n machinerymaintenance, repair, spares and training. For tractor services, forexample, an essential reform is the elimination of the highly competitivesubsidies offered by the state-run tractor hire units. To date, thepressure for tractor services, and for licenses and credits to purchasetractors, has been directed almost exclusively at government rather thanprivate dealers. But it i.s building up quickly. It is reflected in thelong lists of applications, and in the rising percentage of state budgetsallocated to financing tractor imports and custom-hire services.

6.23 There are three reasons why the introduction of mechanized powerin farming has to be carefully managed. First, the popularity of largemachines may lead to the neglect of perfecting technologies forintermediate forms of power, for example, draft animals on small farms inthe north and smaller tractors and even tillers in the south. Theseintermediate technologies have not proven popular so far. In the north,much greater use can be made of bulls and oxen for cultivation. Comparedwith other countries in the Sahelian zone and elsewhere among thedeveloping countries with similar per capita cattle populations, draftanimals are little used. The federal government has a small program forintroducing work bulls, but i.t i.s not enough. For small scale farms, draftanimals usually offer a cheaper source of power than tractor servi.cescharged at full costs. Unfortunately, the adoption of draft animalhusbandry practices is ruled out of most of middle and southern Nigeria(because of tse-tse). In the south, trees and stumps often prevent optimaluse of large tractors. A case can be made for encouraging the take-up ofsmaller, 15 to 30 horsepower units and, where conditions permit, forexample in swampy areas, two-wheel tillers. But again, these intermediatetechnologies have not proven to be popular.

6.24 The second reason for urging caution i.n the introduction oftractor mechanization is that in southern Nigeria it poses a threat to thefragi.le soils and ecology of the humid tropics. Careless clearing andcultivation techniques by bulldozers and tractors on government schemeshave already destroyed large tracts of land in all the states. Theseconsequences are predictable, and have led IITA and other observers tocaution against any form of mechanical clearing and cultivation, with thelimited exception of shear blade action on level fi.elds where stumps areleft behind.

6.25 The responsibility is on the engineers and agronomists, who so farhave not worked out correct methods and rotations, A distinction has to bemade between land clearing with bulldozers and heavy tractors, and

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cultivation with tractors of various sizes. On already cleared land,assuming the slope and soils meet accepted criteria, the threat is nottractor cultivation per se but the continuous cultivation that is commonlypracticed on mechanized farms. That can be controlled with properrotations and periodic mulching. Much of the cultivable area in the southdoes not reach those criteria, and thus should not be subjected to themachines. But much of it does, and it i.s esserntial for government toestablish the controls to enforce the distinction.

6.26 The more important issue involves land clearing, which is wheremechanization is at once most dangerous and most needed. Clearing underpublic and private contract has frequently been done by drivers andmachines from road building units, and these cannot be expected toappreciate guidelines about slopes, soil types, preservation of top soil,stump removal and bypassing occasional trees. Bad technique can ruin forages even suitable, level fields, and that is widely perceived to be themost lely outcome. There are examples, described in a consultant'sreport of land clearing operations in the south which worked wi.thi.ntolerable limits. He accepts that a cautious approach to land clearing isneeded, but gives hope that this activity can be brought under control.Progress will be slow in any case, because the bulldozer fleet available toagricultural activities is still tiny.

6.27 The third reason to urge care in the promotion of tractorizationis that the main institutional mechanism for providing tractor services hasbeen the state-run tractor hire units. As mentioned above, theirperformance has been miserable. Any expansion of these units would requireradical change i.n the management systems. Alternatively, conditions haveto be created favorable to the emergence of private tractor hire services,a route most observers prefer. One way or another, however, thedevelopment of efficient forms of contract work, and the repair andmaintenance services and training programs that that in turn requires, isimperative.

6.28 But it is equally essential for the government to establishcontrols to enforce the conservation program addressing the problems ofclearing and continuous cultivation. This is a requirement where time i.sof the essence, since the pace of land clearing by machine in the south isaccelerating.

Mixed and Sole Cropping

6.29 The pilot ADPs have been criticized for promoting sole croppingin ignorance and indifference to the reasons for the strong tradition ofmixed cropping. Mixed cropping is widely practiced, both in the cerealfields of the north and the root crop fields of the south. Mixed croppingincludes different patterns of row or irregular intercropping with somevertical stacking, as well as relay cropping and other forms of sequencing.It can have two advantages over sole cropping. One is where the total net

55Skromme, op. cit.

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value per hectare exceeds the value of the sole crop. That advantage maybe demonstrated season after season - legume/maize mixes offer an example -or it may be revealed over a period of years in dryland environments withvariable rainfall where sole crops may do better in some years but on theaverage they do worse. The second is where the total net value isconsistently lower for mixed cropping, but t4g mixing is thought to protectthe farmer against the risk of total failure and the sequencing allowshim to adjust the final cropping pa 5ern to the available labor supply andto the seasons' unfoldi.ng rainfall.

6.30 Where the first advantage obtains, and the mixed field outyieldsthe sole crop, there is no sense in switching to sole cropping. This isthe case with some of the more important "consortia" of northern crops -sorghum/millet, and sorghum/maize are the best examples - assuming goodhusbandry standards. Field measurements show that both these consortia canoutyield either sole crop by 25% to 50%. Maize combines well with manycrops - with cowpeas or another legume the maize takes advantage in laterseasons of the nitrogen fixed by the legume, with cassava whateverfertilizers are applied to the maize have a resi.dual effect on the tubers,which remain in the ground after the maize harvest. And for most consortiathe farmer conserves on hand weeding by treating both crops together (or,by taking advantage of the ground cover provided by one of the intercrops,as in the cowpea/maize consortium). Thus, in both the north and souththere are many examples where mixed cropping makes sense in terms of totalyields.

6.31 Nevertheless, farmers who dedicate fields to cereal crops theyintend to sell are beginning to plant some crops singly, especially in thelarger fields. This practice is dramatized by the recent expansion offertilized maize. Fertilized maize uses a relatively new technology, whichhas been adopted most readily by market-oriented farmers who have dedicatedfields to commercial maize. In the south, cassava is beginning to beproduced in the same way. Though the great majority of cassava producedstill comes from mixed crop fields, the shift into cassava in 1984 i.nresponse to high prices tended to favor sole crops on the larger fields.This is a radically different strategy than the expansion of either theman's traditional yam-based fields (which include cassava), or the wife'straditional cassava-based fields (which usually do not include yam). Thelatter strategy is associated more with the south; the sole cropping withnew farmers in the middle belt.

6.32 The reasons for planting sole are sometimes linked to thecharacteristics of the plant. The high-yielding maize rapidly develops acanopy which precludes growth of other crops in the inter-rows. More often

56This is not a good argument i.n most situations, since fields can bebroken into sole crop plots in order to avoid the risks of concentration.

57Balcet, J.-C., and Candler, W., Farm Technology Adoption in NorthernNigeria, Volumes I and II, World Bank, February 1982.

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it is linked to management factors. Mixed crops require closer attendanceto the performance of recruited labor.

6.33 There i.s a close association of sole cropping, tractors and largefield size though they are not necessary to one another. The typical,larger commercial cereal farmer has easy access to land and therefore triesto maximize returns not to land, i.e., by concentrating on high yields perhectare, but to his management and labor input. High wages and difficultlabor relations persuade him both to mechanize and plant sole. Those areindependent decisions. Tractors are employed in their majority for landpreparation, building ridges, and transporting commodities, none of whichnecessarily favors sole cropping. If mechanized harvesting was prevalenton these farms, it would force the owner to plant sole crops. But this isnot the case except on an insignificant minority of mechanized farms.

6.34 In short, the pilot ADPs can be criticized for advocating solecropping not because sole cropping did not fit the system, but because theprojects had not bothered to work out the conditions under which solecropping made sense, to provide alternative methods to reduce the risks ofsole cropping, and to offer mixed crop packages in the maiority ofconditions where those other approaches clearly were not optimal. We arereally dealing with three types of farm technologies: the traditionalsmall farm with crops mixed in conventional ways in order to reduce therisk of food shortage while producing some surplus; the commercial farmdedicated to sale with crops mixed to maximize revenue; and the commercialsole crop farm, The second technology i.s not prominent, probably becauseit demands a higher management input than sole crop regimes. For thefuture, a market-oriented strategy should take account of sensiblesole-crop formulas as well as mixed-crop formulas. Medium and large farms,with mechanical power, can be expected to produce marketable surplusesalmost exclusively from crops planted singly.

Male and Female FarmLers

6.35 Important distinctions have to be made not only between small andlarge farms but also between farm operations associated with women andthose associated with men. These gender distinctions are beginning tobreak down, but they will continue to influence the success of ruraldevelopment projects for ages. Two examples make the point. In Iboland,men are customarily associated with yams and take most of the income fromsale of yams. This is despite the fact that the wives help with some ofthe operations in the man's yam-based fields, both on the yam itself and onthe i ntercrops, The women, by contrasts are associated with most of theintercrops and other crops, which were traditionally used for subsistencefood rather than sale. That -means women are associated with cassava, eventhe cassava that is interplanted with yam in the husband's yam-basedfields. Among the obligations of the wives to thei.r husbands are thetimely provision of labor for his yam. His yam takes precedence, not onlyclaiming the more fertile fields (which yam needs more than cassava needs)but also with respect to the calendar. W4ork on 'her cassava, in otherwords, gives way to work on his yam, whenever competition for her laborarises. Actually, the pattern of labor allocation is taken for granted andcompetition as such should never mlaterialize: that is, until a program

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comes along which offers increases in both yam and cassava productionthrough changes in both husbandry systems.

6.36 Ongoing projects are deficient in farm systems research that mighthave indicated how best to go about promoting yam and cassava in the samefields simultaneously. One of the complicating factors is that husbandstraditionally also have been expected to control decisions on newcommercial crops. That is true for swamp and irrigated rice, for example.It also poses problems for commercial cassava. It is unclear in Ibolandwhether the women's traditional association with cassava-based fields willgive her any right to shift fallow land to sole crop cassava without herhusband taking control of the income. Some Ibos say stereotypes aremisleading and the problem will sort itself out. But a female demographerat the University of Benin cast that comment aside as "just men's talk,"and it is true that all of our other informers were men. The solution forIboland will have less relevance in Yorubaland, where wives work in thefields but not so much in the husband's fields, and no relevance inNupeland and some other areas of the north where the women hardly work inthe fields at all, or where cassava is not a woman's crop.

6.37 The other example is taken from the doctoral research of a Germansociologist in Yoruba villages just east of Ibadan. Among other things hedetailed the total household cash income from farm and off-farm sources.His sample area is in the cocoa belt. Cocoa is mostly a man's crop. Butwhat is astonishing is the large share of average household income thatderives from non-cocoa sources, including other tree crops and cassava,maize and horticulture crops grown by the wives in their private gardens ofthe family compound. He concludes that the "average" farmer "does notexist," and that "the distinction still being drawn between cash crops andsubsistence crops has to be revised and is not sugi.cient for the analysisof agricultural production in peasant societies." In one of the samplevillages, he noted that the most important cash crop was black pepper, moreimportant even than cocoa, and he found no fewer than 50 other crops whichwere important to agricultural production, including "at least 30 differentvarieties of vegetables, 6 types of local cassava and 3 types of localmaize." The peppers, vegetables, cassava and maize are mostly associatedwith women, and are typically produced in small surplus and enter themarket. The point to make here i.s that there is ample room for a wives-oriented research-extension-marketing program that would have nothing to dowith a cocoa campaign (except in recognizing the inter-dependencies in thefarming system, and the fact that wives also own and cultivate cocoatrees).

6.38 The study of gender differentiation and decision-making on smallfarms has hardly begun. One of the important considerations i.s that as theyounger men take off-farm jobs, the influence of women's crops willincrease. Any attempt to anti.cipate rural household behavior in thetransformation of traditional Nigerian agriculture must be concerned with

58Ay, Peter, "Differences in the Effects of Agricultural DevelopmentProgrammes" Africa Spectrum, 78/2, p. 187.

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the types of crops and operations that women know best, and are prepared tocontinue with.

6.39 There are many examples of "progressive" innovations thatthreaten to reduce women's traditional sources of income, includinggroundnut decorticators, modern oil palm mills which collect the fruitfresh from the fields, and modern parboiling methods carried out at therice mill, rather than at home. Wives may differ with their husbands as towhether the raw commodities should be processed at home or in the newfactories. The possibility that gender arguments of this sort may upsetotherwise harmonious "household" decisions is smaller in Moslem areas,where women have traditionally lacked their own economic base. Elsewhere,especially where wives must build up their own cash crop base to help themand their children survive in case of a husband's death, any plan to"improve" household farming and processing activities must consider whetherthe wife will gain or lose. Mechanization policies must be formulatedaccordingly.

6.40 The previous point is not intended to deny the farm wife'spotential for really aggressive cash cropping. Many women, at least in thesouth, are raring to get access to land and credit. With capital they canrecruit other female labor to perform under their supervision theobligations for the husbands' fields, freeing themselves for theirvegetables and other preferred cash crops. Even in the family compound,where the women grow their vegetables and fruit trees, improvements can bemade in reducing the clutter and making better use of organic fertilizersupply from the farm and family. Women everywhere would embrace support ifit offered promise of increasing the surplus of vegetables for sale at thevillage markets. The near absence of extension and credit servicesdesigned for female clientele is holding back a movement that wouldotherwise be much stronger.

C. Dilemma

6.41 The process of transformation described here leads toward an erawhen medium and larger scale farms, dedicated to commercial agriculture,replace the traditional smallholdings as the principal source of growth ofthe marketable surplus to supply the cities and export industries. This isnot a contest between large and small scale farming, indeed, the dominantcommercial enterprise of th future may average 20 ha rather than 2,000 or2 ha. But the typical commercial farm would be characterized bymechanization of certain key cropping activities, especially landpreparation, and wage labor rather than or in addition to family labor.The larger ones would also be characterized by continuing efforts tomechanize other activities and reduce the need for a large labor force.

59In parts of the south, when a husband dies his parental family can(and sometimes does) claim all of his material possessions, and his wife'sas well except for her income base.

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6.42 The majority of small farms would be used to feed a family whichis basically oriented to earning cash incomes elsewhere. Others wouldinvest in improving the productivity of their fields and intensifyingcultivation practices as a commercial venture, especially where water isavailable and can be brought under control. In terms of total productionthese two types of smallholders would continue for decades to contributethe major share. But their role in supplying the cities would beincreasingly overshadowed, and in the very long run a large part of thisgroup would move out of agriculture altogether.

6.43 This is a scenario which fits the self-perceptions and incomeexpectations of an increasing number of rural adults. But is it realistic,or desirable? For many of these adults thei.r expectations were engenderedduring a period of industrialization and job creation outside agriculture,based mainly on oil exports. The present recession has revealed, if notthe fragility, at least the vulnerability, of the oil-based economy. Withurban job retrenchment and new entrants to the rural labor market findingno other place to go, Nigerian agricultural economy may have to turn awayfrom the path just described. The availability of a large underemployedrural farm labor force seeking work would reduce the real rural wage andslow down all of the elements of the transformation process discussedabove. The low wage would discourage mechanizati.on and favor stability offarm size at the present small scale. This alternative solution would bemore consistent with "factor proportions," though inconsistent with presentjob expectations. It would also be consistent with demographic parameters,which give projections of massive increases in the rural population ofworking age over the next five decades.

6.44 Setting up this discussion as a contest between the two scenariosis a mistake. The elements of transformation described in the last sectionare real phenomena in contemporary Nigeria, are common to the histories ofmore developed countries, and ultimately can be expected to assertthemselves. However, the phenomenon of surplus rural labor, in the shortterm due to the recession and in the long term due to population growth,must also be anticipated. The avai.lability of underutilized cultivableland gi.ves Nigeria an important option, partly compensating for the declinein opportunities in urban employment. But the land frontier is adisappearing resource, much as is the oil revenue.

6.45 That is the real dilemma - the potential conflict between, on theone hand, the present path of transformation away from subsistenceagriculture and from the use of hand labor and the hoe, and, on the otherhand, the need to lay the basis for a reasonably equitable but rising ruralincomes pol]icy, based on increases in labor productivity, when the frontieris closed and most of rural Nigeria is crowded. By intelligent regulationof mechanization, and perhaps with restrictions on the accumulation of landholdings in some zones, government should be able to harness thetransformation process and still accommodate substantial increases in theagricultural labor force. What is needed is a range of programs thataddress the needs of all committed farmers - full-time and part-time -expanding and intensifying. Long-run plans that support to the exclusionof the other either of the two extremes - large scale mechanized farming orcheap hand labor are formulas for social unrest or despai.r.

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6.46 Part of the answer to problems posed by the the rural populationexplosion in any case does not lie in agriculture, but in the growth ofjobs in allied industries and services and in other formal and informalrural occupations. That is a process about which much more must belearned, especially about institutions, services, incentives, and othermeasures to encourage it.

6.47 These considerations lead back to the assertion at the start ofthis paper that the traditional farm models were no longer enough inthemselves. The main deficiency is that they are based primarily on asingle growth factor - the adoption of high-yielding crops - that isexpected to provide adequate incentives for smallholders. The strategy isto enhance the productivity of land by improved application of seasonalinputs. They may or may not increase the productivity of labor, dependingon the crop package. That strategy is not enough. Two other formulas forfarm development need to be added alongside, one emphasizing capitalinvestments in the land of existing farms - in leveling, terracing, andother forms of water and erosion control for example - and the otheremphasizing expansion of area under partial mechanization. These two offera direct impact on raising the productivity and hence the incomes of labor.That should be the principal long-run objective of any program - to enhancethe income opportunities in agriculture and hence its attraction vis-a-visoff-farm occupations.

6.48 It would be inappropriate to try to force development along oneor another path, to push the pace of mechanization or to block it.Policies should be designed to support farmers and investors whichever paththey choose to follow. If government can ensure that changes in laborsupply are reflected in real wages, and that machinery is available andserviceable at prices based on real costs to the economy, then the privatesector can be expected to shift between technologies efficiently.

6.49 Nigeria offers a fascinating case study of how the anticipatedsurge in rural population in sub-saharan Africa will be absorbed into theeconomy. Given the underlying strength of the Nigerian farm community,which has demonstrated a capacity to respond despite the adverse conditionsof the oil boom, there is good reason for optimism.