Introducing commodity marketing companies

In comments defending the ministry’s 2014 budget estimates at the National Assembly, Adeshina said that the proposed companies would be private sector led, and would fill the void created by the scrapping of commodity boards in the 1980s. When established, these produce marketing firms would offer farmers of export crops in the country a platform […]

In comments defending the ministry’s 2014 budget estimates at the National Assembly, Adeshina said that the proposed companies would be private sector led, and would fill the void created by the scrapping of commodity boards in the 1980s. When established, these produce marketing firms would offer farmers of export crops in the country a platform for better management of their agro-businesses, he said, adding that the first in the line up – a cocoa marketing corporation would commence operation this month.
With the benefit of hindsight, this de facto resuscitation of marketing boards of old is a positive step, given the challenges that bedevil the nation’s agricultural sector, especially with respect to the incentives regime for the individual export crop farmer. The traditional challenges of the export crop farmer have been those of differentials in the local and export prices of such crops and the management of post-harvest surpluses.
Historically, the creation of commodity marketing boards was a strategy for developing countries to provide short-term solution to the problem of instability of prices of their main agricultural produce in the export market. The primary aim was to buy up local produce of export crops from registered farmers at an agreed price, thereby guaranteeing stable income for them, and insulating them from the vagaries of fluctuations in export prices.
The marketing boards in West Africa, including Nigeria, came to be under the West African Produce Control Board of 1942. The regional board was eventually succeeded by national boards in the West African colonies of Britain, with Nigeria having four, Ghana two, while Sierra Leone and Gambia one each respectively. In 1954, the various nation produce marketing boards, namely for cocoa, oil-palm produce, groundnuts and cotton, were reconstituted and their control devolved to the regions. When states were created the devolution of control of these boards progressed to them.
Over time, however, it was observed that the productivity of export crop farmers was declining; this was traced to the inefficiencies of the commodity boards. Several reports indicated that the boards had ceased to provide the needed incentives to farmers due to a cocktail of malfeasances replete in the bureaucratic red-tape, corruption, smuggling of produce, abuse of office and other vices.  At one end of the problem was that some state governments deployed discriminatory tax regimes to fleece the individual farmers in the name of using revenue from export crop marketing to develop their localities. This trend continued even with the series of reforms that were aimed at making the boards regain their original mission. Eventually, they were scrapped and the process ushered in an era where export crop farmers were left to handle their export marketing operations themselves.
Public opinion has consistently favoured the return of commodity export marketing buffers, a role the scrapped boards played.  Therefore the renewed effort by the government is therefore welcome.
Of particular interest is the fact that under the new arrangement, private agribusiness interests will run the marketing corporations. This is a significant departure from the previous situation in which the process was run by successive governments from the colonial times.
A major incentive is the promise it holds for restoring the agricultural sector to its pride of place as the nation’s economic mainstay, loosening dependence on oil. The agricultural sector accounts for over 90% of Nigeria’s Gross Domestic Product and employs over 60% of the workforce. In this context, the role of the export crop sub-sector cannot be overstated, given that it constitutes the channel through which Nigeria’s agriculture provides attraction for portfolio investments, which is needed for the sector.  
Beyond this however, the initiative buoys the prospects of developing a viable commodities market in which agricultural produce will feature significantly and farming could regain its pride of place among sought-after professions.