Nigeria Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL Plc) has secured N4,910,100,000 from various sources for 3,750 maize and soybeans farmers
For this pilot project, smallholder maize and soybeans farmers will be drawn from across the three states of Benue, Niger and Ekiti to execute wet season farming this year.
Its Managing Director Aliyu AbdulHameed, made this disclosure in Abuja yesterday at NIRSAL preliminary technical session/roundtable engagement with stakeholders for the Mapping to Markets (M2M) project.
“This innovative Mapping-to-Markets strategy, is a sustainable smallholder inclusive approach towards agricultural transformation in Nigeria,” Abdulhameed.
Another reason for this innovation he said is that with “the current drive by the Central Bank of Nigeria (CBN) to limit exposures of banks to Treasury Bills window, NIRSAL is making concerted effort to create highly de-risked agri-business investment environment as an alternative for bank lending.”
“It is evident that a value chain focused and market driven approach with clearly pre-defined responsibilities, risks and benefits sharing arrangement is the way to go in redefining Nigeria’s agriculture and agribusiness,” he said.
To achieve this, he said NIRSAL has extracted significant commitments to be executed in this 2019 Wet Season under the single pilot project.
These commitments include 3,750 hectares of brown-field farmland pledged by Benue, Niger and Ekiti states; N4.5 billion pledged in available funding to smallholder farmers by Stanbic IBTC, Union Bank and Sterling Bank under the M2M initiative; while 3,750 farmers will be supported across these three states of Benue, Niger and Ekiti.
Abdulhameed added that 107.5 metric tons (Mt) of seeds valued at approximately N65.5 million will be supplied by seed companies; 2,062 Mt of fertilizer worth about N290 million will be made available by the fertilizer companies and 33,250 liters of crop protection products worth N54.6 million has been committed to the project.
In addition, 8,750 Mt of maize with a market value of N744 million and 2000 Mt of soybean worth N208 million will be produced and off taken under this pilot phase. Downstream actors have committed to off-take the maize and soybean produced.
Abdulhameed said revenues of N425,000 and N2260,000 will be generated by each farmer under the arrangement for maize and soybean respectively and the pilot scheme will save the country about N1billion via import substitution.
NIRSAL has agreed to facilitate the signing and implementation of long-term supply contracts/off-take trade agreements addressing pricing, quality, delivery and payment terms, between farmers, agro geo-cooperatives and the downstream market offtakers.
It has also agreed to facilitate the signing and implementation of long-term supply and/or fee-for-service contracts between farmers agro geo-cooperatives and input suppliers, other upstream service providers for land clearing, irrigation, equipment leasing, tractorisation, mechanised harvest, etc. as well as other service providers along the value chain.
Furthermore, NIRSAL will deploy its Credit Risk Guarantees (CRG) on the financing tickets generated to provide comfort to financiers for loan disbursement and also deploy other robust risk management instruments including the Area Yield Index Insurance to safeguard yields at harvest, boots-on-ground Project Monitoring, Reporting and Remediation Office (PMRO) personnel in Ekiti, Niger and Benue states and other risk management instruments to guarantee adequate returns on investment as and when due.
One key issue this stakeholder meeting threw up was the need to have a price hedging structure that will give comfort to all stakeholders.
Abdulhameed said: “NIRSAL is in discussion with relevant institutions such as Commodity Exchange institutions, National Collateral Registry and insurance institutions on how to craft the best option. This will involve using physically secured produce in warehouses, innovative comprehensive index insurance products to hedge and stabilise any fluctuation that pose risk to stakeholders along the chain.”
Abdulhameed said NIRSAL is “keen to roll this strategy out for 15 value chains across the nation and we are confident it would turn around the fortunes of Nigeria’s millions of smallholder farmers and indeed all related actors across sectors.”