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UNIVERSITY OF BIRMINGHAM

DEPARTMENT OF MANAGEMENT

BIRMINGHAM BUSINESS SCHOOL

MSc International Business

DISSERTATION COVER SHEET

2014-2015

I confirm that I have read and understood the regulations on plagiarism* and acknowledged the

work of other that I have included in this dissertation.

Student’s full name: Emmanuel Anchaver

Student’s ID number: 1487053

Student’s signature:

Title of dissertation: “The Role of Private Extension Services in Developing Nigerian Agriculture.”

Date: 17th September, 2015

*Plagiarism, in this context, is the reproduction of material from books and articles without

acknowledgement. It is the act of passing off another person’s work as your own, copying a

fellow student’s work or reproducing work submitted by a past student. Such actions are seen as

a form of cheating and, as such, are penalised by examiners according to their extent and gravity.

You should not quote existing work without quotation works and appropriate reference. An attempt to

present the work of someone else as your own may lead to your dissertation being awarded a mark of

zero. You are required to state the full references of all sources that you use. If quotations are made, they

must be explicitly and fully referenced, including stating the relevant page number(s). You will be

penalised very severely if examiners find that you have presented a section of a book, an article or a paper

without appropriate referencing. If you are not sure about how to quote an existing work, please ask for

advice from your supervisor.

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The Role of Private Extension Services in Developing Nigerian Agriculture

Emmanuel A. Anchaver

Dr Pamela Robinson

MSC International Business 2015

1487053

Word Count; 11,233

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ACKNOWLEDGMENTS

I want to first of all thank God for seeing me through what has been a challenging year

away from home. I want to thank my parents, David and Jane Anchaver for all their

sacrifices and belief in me without which I would not have been able to complete my

MSc degree. I am grateful to Damilola Dokumu for being so supportive and always

lending me a listening ear throughout my time in Birmingham. I am very thankful to my

supervisor, Dr Pamela Anderson whose meticulousness and expertise have been a

great source of inspiration that I will take beyond this dissertation. I would also like to

thank my friend Samuel Onwuzurumba for his concern and help. Finally, I would like to

say thank you to my housemates Satish Gurung, Paul Mbuga and Sindiso Moyo for

being my family here in Birmingham.

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ABSTRACT

Nigerian agriculture has large unharnessed potential with over 84million hectares of

arable land, a population of 167 million and 230 billion cubic meters of water. These

endowments have sadly not translated into economic success for stakeholders. The

calls for agricultural sector reform that spurs investment and to serve as a link for

transforming the country’s abundant resources into a profitable sector that focuses on

food production and poverty reduction particularly among smallholder farmers. This

research study aims to explore the phenomena of private extension in Nigeria and its

impact on agricultural development particularly in replacing public agencies. This study

uses a case study methodology as a primary source of data and secondary data from

documents and publications of reputable agencies reporting on Nigerian agriculture. It

explores the functions of extension services, the factors determining entry into the

sector and ends with recommendation on the constraints and challenges faced by

providers.

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List of abbreviations

ADP – Agricultural Development Project

AGRA – Alliance for a Green Revolution in Africa

ATA – Agricultural Transformation Agenda

ECOWAS – Economic Community of West African States

FAO – Food and Agriculture Organization

FGN – Federal Government of Nigeria

FMARD – Federal Ministry of Agriculture and Rural Development

GAP – Good Agricultural Practices

GES – Growth Enhancement Scheme

NEPAD – New Partnership for Africa’s Development

NIRSAL – Nigerian Incentive- Based Risk Sharing System for Agricultural Lending

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TABLE OF CONTENTS

1.0 INTRODUCTION ....................................................................................................... 8

1.1 AGRICULTURE IN NIGERIA .......................................................................... 9

2.0 LITERATURE REVIEW ........................................................................................... 12

2.1 PRIVATE EXTENSION ..................................................................................... 15

2.2 PRIVATE EXTENSION IN NIGERIA ................................................................ 16

2.3 CRITICISM OF PUBLIC EXTENSION .............................................................. 18

2.4 THE ROLE OF AGRIBUSINESS ENTERPRISES ............................................ 19

2.5 LINKING AGRIBUSINESS AND PRIVATE EXTENSION ................................. 20

2.6 MANDEMAKER’S FRAMEWORK .................................................................... 21

2.7 NKONYA’S FRAMEWORK ............................................................................... 25

2.8 THE RESEARCH ISSUE AND QUESTIONS ................................................... 25

3.0 METHODOLOGY .................................................................................................... 27

3.1 RESEARCH PARADIGM .................................................................................. 27

3.2 RESEARCH METHODS ................................................................................... 28

3.3 SAMPLING STRATEGY ................................................................................... 30

3.4 ETHICAL IMPLICATIONS ................................................................................ 31

4.0 DATA ANALYSIS .................................................................................................... 33

CASE STUDY ANALYSIS: MULTI-TREX INTEGRATED FOODS PLC ................. 35

CASE STUDY ANALYSIS: FARMFORTE NIGERIA LIMITED ............................... 37

CASE STUDY ANALYSIS: TOMATO JOS ............................................................. 39

5.0 RESEARCH FINDINGS .......................................................................................... 44

BUSINESS CLIMATE ............................................................................................. 49

EXTENSION APPROACH FLEXIBILITY ................................................................ 50

CRITICAL SUCCESS FACTORS ........................................................................... 51

6.0 CONCLUSION AND RECOMMENDATIONS .......................................................... 52

6.1 LIMITATIONS OF THE STUDY AND SUGGESTIONS FOR FURTHER

RESEARCH ............................................................................................................ 54

REFERENCES .............................................................................................................. 55

APPENDIX .................................................................................................................... 63

APPENDIX A: SEMI STRUCTURED INTERVIEW PROMPTS .............................. 63

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LIST OF TABLES

TABLE 1: CHRONOLOGICAL ORDER OF EXTENSION STRATEGIES IN NIGERIA ................... 18

TABLE 2: OVERVIEW OF SELECTED COMPANY CASES ............................................................... 31

TABLE 3: PROBLEM AREAS OF FOCUS FOR MULTI-TREX SMALL FARMER COCOA

EXTENSION IN NIGERIA ....................................................................................................................... 36

TABLE 4: PROBLEM AREAS OF FOCUS FOR FARMFORTE SMALL FARMER EXTENSION IN

NIGERIA .................................................................................................................................................... 38

TABLE 5: PROBLEM AREAS OF FOCUS FOR TOMATO JOS SMALL FARMER EXTENSION IN

NIGERIA .................................................................................................................................................... 40

TABLE 6: PARTICIPATING/COLLABORATING/PARTNERING SECTORS OR AGENCIES, AND

THEIR MAIN ROLES IN THE MULTI TREX SMALL FARMER COCOA EXTENSION

PROGRAM ................................................................................................................................................ 41

TABLE 7: PARTICIPATING/COLLABORATING/PARTNERING SECTORS OR AGENCIES, AND

THEIR MAIN ROLES IN THE TOMATO JOS SMALL FARMER EXTENSION PROGRAM....... 42

TABLE 8: PARTICIPATING/COLLABORATING/PARTNERING SECTORS OR AGENCIES, AND

THEIR MAIN ROLES IN THE FARMFORTE SMALL FARMER EXTENSION PROGRAM ......... 43

TABLE 9: EXTENSION APPROACH OF THE FIRMS .......................................................................... 43

TABLE 10: MAJOR FOCUS AREAS OF PRIVATE EXTENSION PROVIDERS .............................. 48

TABLE 11: IMPACT OF GOVERNANCE INDICATORS ...................................................................... 49

TABLE 12: THEMES FROM SEMI STRUCTURED INTERVIEWS. ................................................... 52

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1.0 INTRODUCTION Agriculture in most parts of Sub Saharan Africa has long been an inexplicably

neglected sector which is in dire need of intervention. There is an opportunity for

public and private individuals to participate in order to realize production potential

and to power rural development (NEPAD, 2013). The Nigerian Government in

recognition of this has begun to implement measures aimed at boosting the

country’s agricultural industry by revamping the FMARDi and initiating agricultural

initiatives to encourage private participation in the sector (The Guardian, 2014).

Nigerian crude oil directly accounts for around 70% of government revenue, with the

value of petroleum exports set to drop to about 52 billion dollars in 2015 down from

88 billion dollars in the previous year; the sharp decline emphasizes the need for an

economy that supports an estimated 160million people to diversify (The Economist,

2015). Hailu (2012, p, 2) succinctly describes the task facing agriculture

“As smallholder farmers provide the bulk of food produced in developing countries- up to 80 percent in Sub Saharan Africa- and agriculture employs the majority of the labour force. Real transformation in the sector will not happen without the integration of smallholders into markets. Farming must be transformed from a largely subsistence activity to one that is run as a business and generates enough incomes that smallholders can improve their livelihoods and make a greater

contribution to the national economy”

The existence of a trade deficit in agricultural products, in which demand continues

to rise, creates an interesting opportunity for those willing to invest in revitalizing a

once profitable and successful sector (Manyong et al., 2005). Smallholder farmers

play an important role in the future development of agriculture across the entire

country.

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1.1 AGRICULTURE IN NIGERIA

In terms of employment, agriculture is by far the most important sector of Nigeria's

economy, employing about 30.5% of the labour force (World Bank, 2010). Agricultural

holdings are generally small and scattered; farming is often of the subsistence variety,

characterized by simple tools and shifting cultivation. Nigeria's diverse climate, from the

tropical areas of the coast to the arid zone of the north, make it possible to produce

virtually all agricultural products that can be grown in the tropical and semi tropical

areas of the world (Yakubu and Akanegbu, 2015; World Bank, 2014).

In the NAIP1 technical report which outlines agriculture in Nigeria, the constraints of the

sector are discussed in terms of the characteristics of the sector. Firstly, more than 70

percent of the farming population in Nigeria consists of smallholder farmers, each of

whom owns or cultivates less than 5 ha of farmland (NARP,1994), but together

accounts for 90 percent of the total farm output. A more recent report states that the

country has around 14 million small farmers with average size of farms ranging from 1

to 3 hectares, this places around 33% of the country’s land as arable with 80% of the

land potentially cultivable.(Corporate Nigeria, 2010). Many such farms are fragmented

and scattered in different locations because of inadequate access to farm land under

the current land tenure system. This has serious negative implications not only with

respect to higher transaction costs but also in view of mechanization which is

difficult.(Takeshima and Salau, 2010) Secondly, though the arable land in Nigeria is

suitable for cultivating most crop types, crop yields are far below their potentials

1 National Agricultural Investment Plan tasked with implementing the Comprehensive Africa Agriculture

Development Programme (CAADP) under the auspices of New Partnership for Africa’s Development.

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(Roudier et al., 2010). Nigeria recorded in the past, on average, 4 tonnes of agricultural

product per hectare compared to 13-14 tonnes per hectare in other countries of similar

climatic pattern (NAIP, 2010). Thirdly, as a result of the first two factors, the growth of

the sector over the last ten years may be attributed mainly to acreage expansion and

favourable weather, but dealing with the uncertainty of rain-fed agriculture is

increasingly becoming a challenge (Dinar et al., 2008). This is becoming a serious

concern in view of climate change that is causing seasonal changes and making it

increasingly difficult for non-irrigated farmers to plan on the basis of past trends,

coupled with the weather related risk is the uncertainty of pest and disease outbreaks

that are capable of wiping out entire farms In addition, price instability in the harvesting

seasons is also outside the control of farmers, while crop insurance exists in Nigeria it

places an extra cost on resource-poor farmers and is only patronized when imposed by

financial institutions as a condition for formal credit ((Enete and Amusa, 2010:Aina and

Omonona, 2012).

Agricultural extension and advisory services play a major role in agricultural

development with the ability to contribute to the improved welfare of farmers and rural

areas (Waddington et al., 2010). While agricultural extension plays a leading role

among the public services through which governments have sought to promote

agricultural development, the performance of extension services provided by the public

sector in developing countries has largely been disappointing (Rivera et al.,2001).

Consequently, there has been agitation for more private sector involvement due to the

realization among stakeholders of the key role incentive structures play in the

performance of public extension agents (Anderson and Feder, 2007).

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In view of the numerous problems facing agriculture in Nigeria, the FMARD 2 through

the auspices of NIRSAL 3 has moved to develop private sector participation in Nigerian

agriculture. Privatization of extension services is one among the many mooted entry

points for private sector involvement, with the potential to act as a tool for the

development of smallholder agriculture. This research study aims to explore the factors

affecting the privatization of extension services in Nigeria and their role in the overall

development of the sector.

2 The Federal Ministry of Agriculture and Rural Development (FMARD) primarily funded by the Federal

Government superintends almost 50 parastatals operating either as key departments or agencies across the

country covering Agriculture, Fisheries, Livestock, Land Resources, Fertilizer, Food Reserve & Storage and Rural

Development. Service Departments include Finance, Human Resources, Procurement, PPAS (Planning, Policy,

Analysis and Statistics) and Co-operatives.

3 The Nigeria Incentive – Based Risk Sharing System for Agricultural Lending. Formed in conjunction with the

Alliance for Green Revolution in Africa (AGRA) to tackle agricultural value chains and the agricultural financing

value chain.

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2.0 LITERATURE REVIEW

Anderson (2007, p.6) defines the term agricultural extension as ‘the entire set of

organisations that support and facilitate people engaged in agricultural production to

solve problems and to obtain information, skills and technologies to improve their

livelihoods’. The role of agricultural extension and advisory services as a means of

increasing productivity through the provision of technology, information and skills

necessary for the increase the scale of production in a sustainable manner is well

recognized (Kidd et al., 2000) but dissatisfaction with progress of the public sector in

this role is aggravated by a misconception of what agricultural extension actually

means.

Historically, agricultural extension services are associated with the notion of transfer of

technology of top down projects of a centralised state, as opposed to the more open

definition of ‘helping people through a systematic use of communication to solve their

problems as partners both contributing their own knowledge and capabilities

(Albrecht,1995, p.66). The needs of farmers have expanded in recent times as a result

of the growing challenges: increased competitiveness, greater value chain integration

generating higher quality standards and more adverse conditions brought about by

climate change and natural resource deterioration (Feder et al., 2011) meaning that

traditional public agricultural extension cannot be realistically expected to meet all the

challenges.

This has prompted scholars nowadays to view extension in a broader sense, as

‘comprising public, private and semi-public systems that make up a multi-institutional,

multisectoral, pluristic system’ (Rivera and Sulaiman, 2009, p. 267). The expansion of

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this definition has widened the agenda traditionally covered by extension services from

just technology transfer (Feder et al., ibid) to include:

(1) Linking farmers to domestic and international markets, reducing their vulnerability

and enhancing the voice of the rural poor. (Farrington et al., 2002);

(2) Advising on and promoting environmental conservation (Alex et al., 2002);

(3) Advising on farm and small rural business enterprise development and non- farm

employment (Rivera et al., 2002);

(4) Augmenting technology transfer with services relating to both input and output

markets(Neuchatel Group, 2002); and

(5) Contributing to capacity development through training, strengthening the

innovation process, building linkages between farmers and other agencies, and

helping to strengthen farmers’ bargaining position through appropriate

institutional and organizational development (Sulaiman and Hall, 2002).

By focusing on the role of private extension services in linking farmers to domestic and

international markets, this study aims to explore the role of private extension providers

in developing agriculture in Nigeria. Private sector stakeholders, public donors and

government agencies all have different objectives for engaging in extension services, it

is understandable that each group will therefore have different challenges in reconciling

gaps in investments required by the areas they cover. Private sector investments in

developing countries are often restricted to competitive smallholders capable of

supplying a better quality product at commercial volumes (Ferris et al., 2014). Public

donors are usually focused on improved welfare for less endowed farmers, with

emphasis placed on stabilizing assets and perfecting traditional methods (Nkonya,

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2009). The support of government agencies is usually streamlined to export products

and is often political in nature (Bawa et al, 2010). Ferris et al. (2014) note that over the

past 50 years, there has been a decline in government spending on farm extension

services, with governments of developing countries generally in favour of more private-

public sector partnerships.As a result of this structural and functional changes across

the globe, traditionally public extension systems have been modified over the years to

meet the current challenges facing farmers (Saravanan, 2001). With the revision of the

concept of private extension by Saravanan and Shivalinge (1999) to involve the

rendering of services in the area of agriculture and allied aspects by extension

personnel in private agencies which requires farmers to pay a fee (or free) to act as a

supplementary or alternative to public extension services. This pluralism in extension

services developed out of the need to approach smallholder agricultural challenges with

varied systems that encompass outsourcing and privatization mentioned above

(Heemskerk and Davis, 2012) through the participation of public – private partnerships,

farmer-based and nongovernmental organizations, as well as private input suppliers.

Babu et al. (2015) in discussing the role of private extension suggest that the

practice of private fee for service extension involving no public sector involvement is

both impractical and undesirable. Their views are supported by Rivera and Alex (2004)

who assert that despite calls for privatization of extension, it is important that

government plays a continuing role due to the public goods nature of extension and

advisory services.

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2.1 PRIVATE EXTENSION

Roling (1982) maps out the three distinct developments in agricultural extension, private

extension, commercialization and privatization of extension services in the 1980s.

Rivera (1992) takes this further in his analysis on privatization, where he identifies the

privatization trends in France, the United Kingdom, the Netherlands, and New Zealand

which represent the earliest literature on private extension. This led him to classify

private extension into three models: public funding for material relevant to the public,

followed by direct payment from farmers as in France; Direct charging of users without

privatization, as seen in the United Kingdom; and an equal distribution of labor between

the public and private sectors with responsibility for coordination belonging to the public

sector, as seen in the Netherlands.

Rivera (1993) in further tracing the emergence of private extension notes that the

privatization of advisory services is widespread, he identifies that self-financing in the

sector emerged as a result of budgetary problems, with the relative share of national

resources earmarked for agriculture steadily decreasing leading to the increasing

phenomena of private services. He concludes his analysis by opining that private

extension has negative effects on smallholding farmers due to the reluctance of private

providers to service low level farmers mainly because they are unable to make

substantial profits due to the geographical disparity and small sizes of their farms. While

this view is supported by other authors, the notion of private extension is not completely

discarded (Faure et al., 2012).

Private extension is not an entirely new phenomenon, but the emergence of

agricultural input companies and the increasing participation of nongovernmental

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organizations in the area of extension has resulted in more visibility of the activities of

the private sector. (Saravanan & Babu, 2015). Saravanan and Gowda (1999) have

defined private extension in the context of developing countries, they see it as a set of

services rendered in the areas of agriculture by private workers which farmers may or

may not be expected to pay a fee for.

Contract farming is a recurring theme in private extension, though not always

identified as part of private extension, Minot (2007) makes a case for its identification as

part of private extension citing its mutual benefits for the farmer and provider. Contract

farming guarantees a market for the farmer and helps the producer ensure the quality of

produce (Ferris et al., 2014).

In recognition of the difficulties that entail extension services to small hold

farmers, pluralism in privatization has developed as a means of encouraging public –

private partnerships. Notable examples of such partnerships over the years have seen

governments provide means for farmers to pay for private extension from private

providers (Sulaiman, 2012). This is telling, as an approach it recognizes the broad

nature of extension which public bodies cannot be expected to fully cater for. A crucial

part of the public sector in this partnership is its role as certifier to ensure that the quality

of private extension providers is adequate and that farmers are not exploited for private

profit (Umali – Deininger, 1997).

2.2 PRIVATE EXTENSION IN NIGERIA

In Nigeria, agricultural extension services have been primarily provided by the public

sector , most notably the Agricultural Development Programs (ADPs) funded through

the world bank since the 1970s (Adebayo and Idowu, 2000). Prior to this period, the

extension services were thought to be lopsided and capable of only providing limited

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services to the majority of farmers in the most basic farming enterprises. This

ineffectiveness was the basis for the advent of the ADP’s and removal of extension

services from the civil service system in an attempt to revolutionize the sector (Ekpere,

1991).

Following the establishment of Agricultural Development Projects on trial basis in

certain parts of the country, the success of the trials encouraged the implementation of

ADPs in all states, leading to a revamp in the organization and management of

extension programs (Saliu and Age, 2009). Oyebanji (1994). and Idachaba (2005)

attested to the impact of these programs in improving the pattern of delivering extension

services to smallholder farmers.

Agbamu and Okagbare (2005) cite the withdrawal of external funding by the World Bank

and the subsequent difficulty of government to solely finance the sector as having a

noticeable effect on the inability of public extension bodies to perform efficiently due to

insufficient funding at state level, inadequate availability of inputs, poor logistics support

and inadequate staffing.

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S/No. Extension Strategy

1 Farm Settlement Scheme

2 National Accelerated Food Production Programme (NAFPP)

3 Operation feed the nation (OFN)

4 River Basin Development Authority (RBDA)

5 Green Revolution (GR)

6 The Pilot Agricultural Development Project (PADP)

7 Agricultural Development Projects (ADPS)

8 Unified Agricultural Extension System (UAES)

9 Women in Agriculture

10 National Agricultural Land Development Authority (NALDA)

11 National Coordinated Research Program

12 Farming System Research and Extension (FSRE)

13 Training and Visit System

14 Research – Extension – Farmer – Input linkage system (REFILS)

15 Extension Services by Non- Governmental Organisations

16 Extension through information communication technologies

17 Farmer Field Schools Table 1: Chronological Order of Extension Strategies In Nigeria

Source: Adapted from Africa in Search of extension system: Experience from Nigeria (2004)

Oladele et al., (2012) commenting on the timeline of extension strategies in Nigeria

reveal that no system has exacted operational dominance, they go on to suggest that

efforts should be geared towards an extension system that would be ‘sustainable and

responsive to the socio-cultural conditions of African farmers and economic productive

capacities.’ p 280 .

On the back of this recommendation, this study aims to explore the role of

agribusiness enterprises as private extension providers and their contribution to the

development of agriculture in Nigeria.

2.3 CRITICISM OF PUBLIC EXTENSION

Public sector extension delivery has come under a lot of criticism, which has been partly

responsible for the reappraisal of the appropriate channels for delivery of agricultural

extension services. Rivera and Alex (1991) remarked that public sector extension was

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criticized for not doing enough, not doing it well and for not being relevant. They

associated the relative ineffectiveness of public extension approach to the bureaucratic

inefficiencies and poor policy formulation of the public sector. Richardson (2005)

commenting on the contribution of ADP’s in sub-Saharan Africa highlighted the failure to

address the needs of farmers, inadequate human resource capacity, weak government

commitment and the absence of a participatory role for farmers in the planning as major

impediments of public extension.

2.4 THE ROLE OF AGRIBUSINESS ENTERPRISES

Hanson and Just (2001) have argued against a universal movement towards

privatization, citing that private extension services prioritize profits over social welfare.

Rivera (1997) shares this sentiment and underlines the difficulties facing private

extension in developing countries, his assertion is primarily made on the premise of the

difficulties arising from the subsistence nature of most African (Nigerian) farming, which

necessitates the continued involvement of the public sector. Acknowledging this, Umali

–Deininger (1997) argues that experience in several developing countries show that

extension services can be delivered efficiently and profitably by the private sector. As a

result of the constraints of this study, the focus is solely on agribusiness enterprises in

the private sector excluding private consulting firms, farmer associations and non-

governmental organizations (NGO’s).

Davis and Goldberg (1957) in their pioneering work on agribusiness, group it into three

primary tri-aggregates: (i) farm supply (ii) farm production (iii) processing distribution

with the intrinsic value of synergizing agro-industrial linkage. Stone (2005) in a more

recent commentary simplifies this definition to explain agribusiness as a person or

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organization that generates income from the sale of a product and/or service which

facilitates the decision making of a farmer. Locally based agribusiness enterprises in

developing countries are typically small to medium scale operations in rural areas that

either process raw agricultural materials or provide marketing, transport and other

extension services (Kinsey, 1987). From this definition, the discourse that concerns this

study, is to explore what factors influence the dissemination of private extension

services to smallholders.

2.5 LINKING AGRIBUSINESS AND PRIVATE EXTENSION

Rhodes (1993) on the industrialization of agriculture opined that the need for better

levels of managed coordination has resulted in changes to the agricultural supply chains

by a focus on vertical integration. Kirsten and Sartorius (2002) on the same note,

highlighted that the major structural changes in the world agricultural industry in

developed countries have far reaching implications for agricultural development efforts

in developing countries.

Dannson et al., (2004) in studying farm-agribusiness links across five African countries

observed that most agribusiness companies provide a wide range of extension services

to farmers which include the provision of agricultural inputs such as seeds, fertilizers,

agro-chemicals, veterinary drugs, artificial insemination, animal feed etc. as well as field

preparation services, supply of irrigation water, produce transport etc. free of charge or

on credit, they concluded that the private sector is able to take over public extension

services to primary producers, provided the agro-business is a profitable enterprise.

Alongside its role in stimulating economic growth, agribusiness and agro industrial

development has the potential to contribute substantially to poverty reduction and

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improved social outcomes and a ‘consensus is emerging that agro-industries are a

decisive component of socially-inclusive, competitive development strategies’

(Wilkinson and Rocha, 2008 p.1).

In the report by Dannson et al.,(2004) they reveal the linking arrangements between

farmers and agro processors to range from full vertical cooperation, asset sharing

arrangements and contract farming. The linking arrangement influences service

provision, contractual agreements as well as price determination. Agribusiness firms

can enter contractual agreements with farmers and choose to operate multipartite,

nucleus state and informal models (Eaton and Shepherd, 2001). This flexibility provides

a suitable platform for agribusiness firms to provide the aforementioned services to

farmers depending on the objectives which can be for welfare, political, social and

economic reasons. Contract farming has been implemented widely in developing

countries as a means to reduce risk and ensure throughput volumes of known quality

and price (Kirsten and Sartorius, 2002) which require the provision of extension services

to maintain the volume and regularity.

2.6 MANDEMAKER’S FRAMEWORK

To establish a platform to analyze the role of private extension service providers in

developing Nigerian agriculture, this study has attempted to use two theoretical

frameworks. Firstly, using Mandemaker et al., (2011) assessment of the relationship

between agricultural production dynamics and World Bank indicators for governance.

Mandemaker attempts to show the correlation between quality of governance and

agricultural yield. This research study borrows from this theory to examine the impact

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governance indicators on agricultural development. By examining the case study firms

on each of the following governance indicators, the researcher aims to reveal what the

constraints are to such companies. The six indicators;

Voice and accountability

According to Kaufamann et al., (2005) this the extent to which citizens have political

rights and civil liberties, and are able to participate in selecting their government. Yields

were found to be significantly higher in countries with more political rights and civil

liberties (Fulginiti et al., 2004), indicating that agricultural development is related to

voice and accountability. Agricultural development requires interactions between the

rural population, e.g., labour unions and agricultural associations, and government

agencies, e.g., extension service and ministry of agriculture. Binswanger and Deininger

(1997) opine that such interactions are believed to benefit from political rights and civil

liberties. Furthermore, governance influences agricultural policies, tax levels, and the

conditions under which subsidies are granted. They are also of the opinion that extent to

which the rural population can influence governance by political votes is therefore

supposed to express itself in improved conditions for the rural population.

Government effectiveness

Thirtle et al., (2003) define government effectiveness as relating to the provision, by

government agencies of public goods and services, and quality thereof, such as

infrastructure and governmental agricultural research programs. Infrastructure plays a

key role for the agricultural potential of remote rural areas to be used; agricultural

research and development play a key role for yield increases. Therefore, whether or not

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these public goods and services can be delivered effectively by the government is

crucial to agricultural development. Moreover, government effectiveness is known to

provide an adequate measure with respect to the quality of these public goods and

services, and in particular for agricultural research and development (Thirtle and Piesse

2007).

Regulatory quality

The World Bank (2015) states that regulatory quality expresses how well private sector

development is promoted by the government. A poor promotion of private sector

development may negatively affect the performance of free market mechanisms and

investment climate, e.g., making it difficult for investors to get loans (Patt et al., 2010). In

many countries, poor regulatory quality is caused by industrial protectionism: domestic

trade policies disturbing the balance between domestic and world prices and preventing

access to international markets, thereby obstructing private sector development (Lio

and Liu, 2008). Furthermore, countries with poor regulatory quality tend to implement

policies that result in high taxation of agriculture, which also has negative effects on

private sector development and investment (Krueger et al. 1991).

Rule of law

The rule of law has different interpretations depending on the context it is used. In

agricultural circles, the World Justice Project (2015) defines rule of law in relation to the

quality of contract and law enforcement in general. Poor contract and law enforcement

hinders the protection of property and the rights of landowners and tenants. In that

24

case, advances in agricultural development, i.e., yield increase, are unlikely because

these advances strongly depend on private investments in agricultural research and

development (Thirtle et al., 2003). Such investments are not likely to be made, when

investors cannot be assured of future revenues.

Political stability and absence of violence

According to Hussain and Herens (1997) political stability measures the public

perception of the likelihood of destabilization or overthrowing of a government by

unconstitutional or violent means, leading to domestic violence and terrorism. They

state it is well known that when violent political conflicts arise in a country, food security

is compromised by failure of economic and social networks. In countries facing higher

levels of political conflict and war, yields were reported to be significantly lower during

these periods (Fulginiti et al., 2004). Therefore, violent political destabilization or

overthrowing of government would have negative effects on agriculture.

Control of corruption

The control of corruption refers to the extent to which public power is abused for private

goals and gain. In countries where corruption is controlled, impartial authorities are

often provided to check for corruption of conventional authorities and to hold them

accountable if necessary. This increases the likelihood that power and funds are used

for what they were intended (Beekman et al., 2013). In countries that fail to control

corruption, powerful individuals have the opportunity to abuse their influence to their

advantage, at the expense of other less powerful individuals, e.g., farmers. For

25

example, it has been suggested that large fertilizer producers persuaded African

governments to impose particular fertilization programs upon farmers through bribery

and other forms of corruption (World Bank 2010), despite the fact that farmers often

knew more about the particular deficits of their soils.

2.7 NKONYA’S FRAMEWORK

According to Nkonya (2009) there are different models of extension services defined by

the approach of service delivery (supply driven, demand driven, participatory vs top-

down), providers of extension services and funders of services. He further suggests that

most countries follow a combination of models, each constantly evolving in response to

new realities, he emphasizes that there is no one size fits all model- so far. It is on this

basis that the case study firms will be examined.

2.8 THE RESEARCH ISSUE AND QUESTIONS

The purpose of the literature review was to attempt to show the position of agribusiness

enterprises in the privatization of extension services. Following the overview on private

extension, private extension in Nigeria and the role of agribusiness enterprises, the

researcher has attempted to outline the reluctance of academics to embrace full

privatization of agribusiness services, despite this reluctance, the idea of privatization

has not been dismissed completely. Consequently, the researcher has identified

agribusiness enterprises as a tool for extension/advisory services, the issue that will

consequently be addressed is what factors affect private extension services in its

development of agriculture in Nigeria, and this will be done by attempting to answer the

following research questions:

1. What roles do private extension systems play in providing advisory services and

how they fill gaps left by public extension?

26

2. What factors determine the entry, establishment and sustainability of private

extension systems?

3. What issues, constraints and challenges do private extension providers face in

Nigeria?

27

3.0 METHODOLOGY 3.1 RESEARCH PARADIGM

The purpose of this research study is to explore the factors affecting private extension

as a tool for the development of agriculture in Nigeria. The researcher settled on

interpretivism as the research paradigm because of the nature of the topic.

Interpretivism was chosen due to its underpinning belief that social reality is not

objective but highly subjective because it is shaped by our perceptions (Collis &

Hussey, 2009). When compared with positivism, this approach is better suited to the

research topic because it allows the adoption of methods that can ‘seek to describe,

translate and otherwise come to terms with the meaning, not the frequency of certain

more or less naturally occurring phenomena in the social world’(Van Maanen,1983,

p.9). Collins and Hussey (2009) in discussing interpretivism, highlight the ontological

differences with other research paradigms mainly because of its assumption that social

reality is subjective because it is socially constructed, meaning each participant has

their own sense of reality and there are multiple realities.

Given the different approaches to private extension, interpretivism is more likely to

reflect the distinct nature of the extension phenomena in the Nigerian context. The

epistemological assumption of interpretivism is another reason for the choice of this

paradigm; epistemology is concerned with the relationship between the researcher and

that which is researched, while ‘research facts constrain beliefs in positivist paradigms,

interpretive research beliefs determine what should count as facts’ (Smith, 1983, pp.10-

11) allowing for greater flexibility.

28

3.2 RESEARCH METHODS

Case study method will be used to explore the private extension phenomena in its

natural setting to obtain in-depth knowledge. Eisenhardt (1989, p.534) on case study as

a research method cites its focus in ‘understanding the dynamics present within single

setting’ as its strength. This view is supported by Stake (1995) who observes that case

study research is concerned with the complexity and particular nature of the case in

question.

Yin (2003) identifies that a case study allows the use of a variety of methods to try to

explore certain phenomena but also to understand them within a particular context. He

also points out that the research uses multiple methods of collecting data which may be

both qualitative and quantitative. This research was initially planned to be based on

solely primary data collected through the use of semi structured interviews. A list of

SME agribusiness firms was compiled from the Corporate Affairs Commission yellow

page online service, the selected firms were then sent emails, explaining the purpose of

the study and requesting for participation. Due to a lack of time, absence of internet

facilities and a busy schedule, a good number of firms were unable to take part.

Factoring in these difficulties, it was extremely challenging to contact agribusiness

enterprises in Nigeria who were willing and able to participate in this study.

Consequently, only two sample companies participated and this number is insufficient to

make any convincing assertions on the phenomena of private extension and its

attendant difficulties. This has prompted the researcher to look to secondary data to

supplement the findings from the semi structured interviews in answering the research

questions.

29

Documentary secondary data such as books, journals, newspaper articles and reports

from the FAO, AGRA, World Bank and other organizations on private extension in Sub

Saharan Africa will be covered in an attempt to gather as much information as possible

within the constraints of time and resources. According to Saunders et al., (2007) this

approach of using secondary data has its disadvantages, chief among which is that the

initial data collection was for another purpose which will affect its interpretation in this

research. In view of this, John Scott (1990) has suggested a criteria for assessing the

quality of secondary data; authenticity, credibility, representativeness and meaning, all

of which will be adhered to when selecting documentary data to be used in this study.

Secondary data has been invaluable in this study and provided the case of Multi Trex

whose private extension model serves as the framework for this study. Its extension

program is focused on the cocoa industry in Nigeria, by analyzing the model a

comparison will be drawn with the two other case study companies(Farmforte and

Tomatoe Jos) to explore whether the issues that hinder private extension are

synonymous to the extension model in practice or general occurrences.

After collating and transcribing the semi structured interviews (see appendix), the

interviews with available employees of the participant firms were categorized in order to

identify patterns of concepts associated with the study area. Coding (Tables 11 and 12)

enabled data categorization (identified as important to the interviewees).

The analysis involved identifying category notes regarding issues considered important

by the interviewees. The resultant categories demonstrate the density of comments

related to each code. The most common negative comments related to issues of

infrastructure deficits and bureaucracy of government institutions, while the positive

30

issues reflect the critical success factors and the flexibility the extension approach of the

case study firms that have allowed them to adapt to the business environment.

The emergent codes were grouped into families based on constructs that indicate the

behavioural attitude of the agribusiness actors towards governance and how the

external environment affects the development of agriculture across their fields. The

categorization is represented in the data analysis and findings section.

3.3 SAMPLING STRATEGY

Collis and Hussey (2009) define a sample as an unbiased subset that represents the

population and a population is a body of people or collection of items under

consideration for statistical purposes. Kothari (2003) in explaining the importance of a

sampling strategy describes it as a plan for obtaining a sample for a given population.

The choice of sampling strategy is usually tied with the research paradigm, with non-

probability sampling commonly associated with the interpretivist approach. As Bryman

and Bell (2011) point out, probability sampling involves a lot of preparation, so it is

frequently avoided because of the difficulty involved.

However, the choice of convenience sampling method is not solely due to the

constraints of the study but also the prominence of convenience samples in the field of

business and management. The difficulty with this method is the limit to generalization,

since the samples collected are not completely representative of the population from

which the samples are taken.

The sample companies are two Nigerian agribusiness firms dealing in a range of a

range of commodities across the country; they are registered as limited liability

31

companies dealing in production, storage, processing and marketing of agricultural

products. The focus is on their position on the highlighted governance indicators and its

effects on the activities of their organizations. One of the firms is focused on filling the

gap in the domestic market while the other is aimed at reaching export markets.

By relying on primary data from semi structured interviews and analysing the

documentary sources, the researcher aims to answer all research questions not

exhaustively but sufficient enough to be informative about private extension systems in

Nigeria.

The perspectives of producers and company management are used in the analysis of

Multi – Trex to understand the factors that determine entry into the private extension

domain. The semi structured interviews conducted with employees of Farm Forte have

been transcribed and analysed to discuss emerging themes on the constraints and

challenges faced in the private extension domain. Secondary data from journals,

NGO’s, FAO and AGRA where collated, with the dominant themes presented in the

findings section of this study.

Agribusiness Firm Commodity Production Storage Processing Marketing

Farmforte Sesame, Beef

Tomato Jos Tomato

Multi Trex Cocoa Beans

Table 2: Overview of Selected Company Cases

3.4 ETHICAL IMPLICATIONS

The researcher has attempted to comply with the institutional guidelines on research

ethics by obtaining permission to conduct research from the relevant authorities

concerned. The nature and purpose of the research study was explained to participants

before presenting them with an overview of issues to be covered during the semi

32

structured interview session. Consent of each participant was sought and voluntary

participation was important for the in depth accounts on the issues discussed. The

interviewees had the option of disclosing the names of their SMEs and all participants

were assured of the confidentiality and privacy of what they considered sensitive

disclosures. The interviews were made at the convenience of the participants on pre-

arranged video calls, with the conversations transcribed and subsequently analysed.

The researcher ensured that all sources of information are properly quoted in order to

avoid plagiarism.

33

4.0 DATA ANALYSIS Robson (1993) adaptation on the procedure for analysing qualitative data in a case

study will be used to analyse the data from the case study firms and secondary data

collected. His approach draws on the quasi-judicial method propagated by Bromley

(1986) whose purpose is attempt to construct a multi-perspective account of the

particular event the researcher is investigating drawn from the explanations given by the

primary participants.The underlying issue for this study is to understand what factors

affect private extension services in its development of agriculture in Nigeria, and this will

be done by attempting to answer the following research questions:

1. What roles do private extension systems play in providing advisory services and

how they fill gaps left by public extension?

2. What factors determine the entry, establishment and sustainability of private

extension systems?

3. What issues, constraints and challenges do private extension providers face in

Nigeria?

Adebayo et al., (2014) comment that as Nigeria cut its budgets for extension

services, public sector operators started providing extension services and

purchasing raw materials from the farmers to whom they provide extension services.

Multi- Trex, Farmforte and Tomotao Jos are a few of the private sector companies

providing extension to farmers, the aim of this case study is to highlight the role of

private extension systems, factors determining entry and constraints to private

34

extension providers in Nigeria. The three cases will be discussed under three

sections patterned in line with the research questions highlighted above. The

purpose is to make comparisons to the approaches used by the different companies

and then draw conclusions which will be presented in the findings section of this

study.

35

CASE STUDY ANALYSIS: MULTI-TREX INTEGRATED FOODS PLC

Multi-Trex Integrated Foods Plc, located on the Lagos–Ibadan Expressway in Warewa,

Ogun state, was registered in 1990 as a cocoa bean merchant. Leveraging the 12-year

cocoa commerce experience of its chief executive officer, the company at the outset

bought cocoa beans from a select group of local suppliers, including a cooperative

union of farmers, and processed and exported them to its customers, mainly in Europe.

In 2003, the company expanded its operations to include processing of cocoa beans

into semi-finished industrial products, namely cocoa butter and cocoa cake. Then it

exclusively hired the facility of Nigeria’s premier cocoa processing plant, Cocoa

Industries Limited (CIL), Ikeja, Lagos. The partnership arrangement with CIL afforded

the company the opportunity to retain its staff and prepare itself for the manufacturing

business.

Multi-Trex commenced cocoa processing at its current location in October 2005. The

switch from trading company to manufacturing concern demanded the restructuring of

the company’s operation.

The focus of Multi – Trex extension and advisory services for farmers is presented in

Table 3.0. It is designed to target cocoa farmers and assist them to increase their

productivity, increase the quality of cocoa supplied, increase input availability to farmers

and ensure regular supply of cocoa to the company.

36

EMPHASIS NOT AT ALL MINOR FOCUS MAJOR FOCUS

Closing Technology Gaps

X

Pest Control

X

Natural Resource Management

X

Closing management gaps

X

Providing market and input information

X

Output marketing

X

Input Supply

Seeds

X

Fertilizers

X

Crop protection products

X

Equipment/ Machinery

X

Credit (Leasing, payment structures)

X

Distribute subsidized inputs to eligible beneficiaries

X

Collecting crop and administrative data and providing associated reports

X

Certification; quality assurance

X

Table 3: Problem Areas of focus for Multi-Trex Small Farmer Cocoa Extension in Nigeria Source: Knowledge Driven Development: Private Extension and Global Lessons

37

CASE STUDY ANALYSIS: FARMFORTE NIGERIA LIMITED

Farmforte is an impact oriented company focused on creating innovative solutions to

existing problems in the African agricultural landscape and transforming them to

economic opportunities. Established in 2014 and located in Lagos, Nigeria, its model

constitutes training as well as equipping smallholder farmers with the required input to

enhance their production. The company aims to connect smallholder farmers with

requisite micro finance as well as provide them with access to basic technological inputs

that would standardize their activities. It also enters into out grower contracts with them

and buy out their produce for onward delivery to market segments. The model aims to

achieve this through

1. The use of smart and innovative mapping systems to connect farmers to real-

time on-demand logistics services that would assist in moving their produce from

farms to storage or processing facilities

2. Provision of technological implements that would enhance on-site processing

and value addition to farm produce where feasible.

3. The use of reliable alternative modes of transportation as well as harnessing of

existing unused distribution capacities to deliver produce from rural areas to

markets across the globe.

The focus of Farmforte extension and advisory services for farmers is presented in

Table 3.0. It is designed to target smallholder farmers in its value chain of oil palm, fruits

and vegetables, cassava, corn, nuts, soya-beans, sesame seed, sorghum and beef.

The table represents its services only in sesame and beef.

38

EMPHASIS NOT AT ALL MINOR FOCUS MAJOR FOCUS

Closing Technology Gaps

X

Pest Control

X

Natural Resource Management

X

Closing management gaps

X

Providing market and input information

X

Output marketing

X

Input Supply

Seeds

X

Fertilizers

X

Crop protection products

X

Equipment/ Machinery

X

Credit (Leasing, payment structures)

X

Distribute subsidized inputs to eligible beneficiaries

X

Collecting crop and administrative data and providing associated reports

X

Certification; quality assurance

X

Table 4: Problem Areas of focus for Farmforte Small farmer extension in Nigeria Source: Author’s adaptation

39

CASE STUDY ANALYSIS: TOMATO JOS

Tomato Jos is a for-profit social enterprise that is making a domestic brand of tomato

paste in Nigeria. It operates across the full tomato value chain (farming, logistics, and

processing) and sources raw material from smallholder farmers. Established in 2014, it

is located in Panda Development area of Nassarawa State, Nigeria. It aims to empower

farmers through three business lines:

1. Farm and agricultural centre with farmer education and bundled inputs to help

smallholder farmers grow and harvest crops more efficiently;

2. Logistics and supply chain support to navigate the “last mile” to smallholder

farms and safely bring produce to the processing facility; and

3. Food processing and packaging facility that prepares and brands finished goods

for distribution in the domestic market

The focus of Tomato Jos extension and advisory services for farmers is presented in

Table 3.2. It is designed to target smallholder farmers in its value chain of tomato value

chain to maintain its supply of products and improve the welfare of small farmers.

40

EMPHASIS NOT AT ALL MINOR FOCUS MAJOR FOCUS

Closing Technology Gaps

X

Pest Control

X

Natural Resource Management

X

Closing management gaps

X

Providing market and input information

X

Output marketing

X

Input Supply

Seeds

X

Fertilizers

X

Crop protection products

X

Equipment/ Machinery

X

Credit (Leasing, payment structures)

X

Distribute subsidized inputs to eligible beneficiaries

X

Collecting crop and administrative data and providing associated reports

X

Certification; quality assurance

X

Table 5: Problem Areas of focus for Tomato Jos Small farmer extension in Nigeria Source: Author’s adaptation

41

Partners Main roles

CENTRAL PUBLIC SECTOR: FEDERAL MINISTRY OF AGRICULTURE AND RURAL DEVELOPMENT, ABUJA. RESEARCH INSTITUTIONS: CRIN, IBADAN FARMER ORGANIZATIONS: COOPERATIVE UNION OF FARMERS PRIVATE COMPANIES: INPUT PRODUCERS, AGRO – INDUSTRY AND INPUT DEALERS NGO’S: SUSTAINABLE TRADE INITIATIVE (IDH) OTHERS: UTZ: FAIR TRADE INTERNATIONAL; RAINFOREST INITIATIVE.

Helps in accessing inputs through GES: mainly makes fertilizer available to smallholder farmers Supplies improved seedlings to contract farmers and provides information on new varieties of cocoa Supports the organization of farmers into cooperatives in collaboration with Multi – Trex Inputs are supplied through credit arrangements with local banks, which provide credit to the farmers to purchase inputs, which helps them to use high-quality inputs:input dealers are also able to connect with farmers to provide inputs on credit arrangements Support in the cocoa certification process

Support in the cocoa certification process

Table 6: Participating/Collaborating/Partnering sectors or agencies, and their main roles in the Multi Trex

Small Farmer Cocoa Extension Program

42

Partners Main roles

CENTRAL PUBLIC SECTOR: FEDERAL MINISTRY OF AGRICULTURE AND RURAL DEVELOPMENT, ABUJA AND NAFDAC (NATIONAL AGENCY FOR FOOD AND DRUG ADMINISTRATION AND CONTROL) RESEARCH INSTITUTIONS: NOT AVAILABLE FARMER ORGANIZATIONS: LOCAL FARM COOPERATIVE GROUPS IN HOUSE OPERATIONS: INPUT PRODUCERS, AGRO – INDUSTRY AND INPUT DEALERS NGO’S: NOT AVAILABLE OTHERS: MANUFACTURERS ASSOCIATION OF NIGERIA.

Helps in accessing inputs, mainly fertilizer available to smallholder farmers Safe guarding public health by monitoring the quality of food and drugs. Not Available To spread the news of extension services, participating farmers are screened and selected individually by the company Tomato Jos categorizes its extension service beneficiaries into two groups; High Touch and Low Touch farmers. High touch farmers receive a bouquet of extension services while low touch farmers are provided with only improved seed variations. Not available Linking industry, government and general public stakeholders.

Table 7: Participating/Collaborating/Partnering sectors or agencies, and their main roles in the Tomato Jos

Small Farmer Extension Program

43

Partners Main roles CENTRAL PUBLIC SECTOR: FEDERAL MINISTRY OF AGRICULTURE AND RURAL DEVELOPMENT, ABUJA AND NAFDAC (NATIONAL AGENCY FOR FOOD AND DRUG ADMINISTRATION AND CONTROL) RESEARCH INSTITUTIONS: NOT AVAILABLE FARMER ORGANIZATIONS: LOCAL FARM COOPERATIVE GROUPS IN HOUSE OPERATIONS: INPUT PRODUCERS, AGRO – INDUSTRY AND INPUT DEALERS NGO’S: NOT AVAILABLE OTHERS: NETHERLANDS AFRICA BUSINESS COUNCIL

Helps in accessing inputs, mainly fertilizer available to smallholder farmers

Safe guarding public health by monitoring the quality of food and drugs. To channel local farmer needs and suggestions for infrastructural investment.

With inadequate value adding services, the approach takes advantage of the high demand for Nigerian sesame by focusing on export

Linking farmers with market information and modern farming techniques and machinery.

Table 8: Participating/Collaborating/Partnering sectors or agencies, and their main roles in the Farmforte Small Farmer Extension Program

Agribusiness Firm Approach Providers Funders

1. Multi Trex Supply Driven CRIN, Multi-Trex Multiple Sources

2. Farmforte Demand Driven In house In house

3. Tomato Jos Top Down In house In house

Table 9:Extension Approach of the firms

Source: Author’s adaptation of Nkonya’s Framework

44

5.0 RESEARCH FINDINGS

The major focus areas for the private extension enterprises analysed were closing

technology gaps; pest control; output marketing; seeds and fertilizer distribution; and

crop protection.

Technical assistance is expected to close the gap between actual and potential

agricultural production and increases inter annual stability. The role of private extension

providers in educating smallholder farmers is crucial to their development in the

mutually beneficial relationship which allows providers to be certain of the quality of the

raw materials they receive and farmers benefitting by getting value for high quality farm

products. By investing in closing the technological gap, productivity and stability is

improved.

Output marketing and crop protection services assist smallholder farmers by the

simplification of a process that involves grading, packaging, transport, storage, agro and

food processing, distribution, advertising and sale. The difficulty in accessing these

services is bridged by private extension providers who are invested in the value chain.

Seeds and fertilizer distribution services remain a difficulty for private extension

providers due to the highly regulated nature of the industry by public agencies. By

collaborating with NGOs and agricultural research development programs, extension

providers are able import seed varieties, partner with research institutions to develop

better strains. The bureaucracy of public agencies often hinder the efforts of extension

providers in accessing and redistributing such supply inputs.

As highlighted by a manager at Tomato Jos

45

‘…the major things for us that require government intervention or interaction are importing

seeds, which we have to work with the National Seed Council, a subcommittee of the Ministry of

Agriculture, as well as Customs because we are importing, we applied for permission to import 5kg

sample of tomato seeds from France on June 1st [2015] and it is August 15th [2015] and we still haven’t

gotten the permission letter…’

There was less focus on credit leasing and quality certification, both areas were

dependent on the scale of the operations and target markets of the extension providers

respectively. The firms that focused on quality certification are involved in value

addition; by focusing on the quality of produce from their smallholder partners,

processing facilities operate to maximum capabilities due to a constant supply of quality

raw materials. Credit leasing for smallholder farmers is a capital intensive operation that

involves huge expenditure and economic clout to liaise with lending houses and farmer

societies.

Based on the objective to identify problem policies and assess the extent to which they

may be limiting investment in local SME agribusiness and the consequent impact on

smallholders’ access to inputs and market, AGRA’s (2014) report on Nigeria has

provided an overview of the policy gaps in areas of trade and suggestions for

consideration:

AGRA recognizing the policies adopted by the FGN to achieve the objective of food

self-sufficiency, marks the government expenditure policy of Growth Enhancement

Scheme (GES) under the Agricultural Transformation Agenda as the most robust. This

is supported by other policy measures such as the fiscal policy of import substitution

and the use of tariffs and duties to protect domestic production. GES focuses on

increasing use of improved farm inputs of fertilizer and seed to leverage productivity.

46

Boosting productivity is seen as the first step in promoting household food security and

incomes and supplying raw materials for processing zones identified for job creation

along the value chain of the most important staples as defined in the GES. Within the

GES framework, the FMARD seeks to abolish direct government involvement in the

procurement of fertilizer and seed but rather encourages use the electronic voucher

system (E-wallet) to make fertilizer available to farmers. While this approach seems to

have considerably reduced corruption in the procurement and distribution of fertilizer,

many questions have been raised in terms of the credit facilities for the agro-dealers,

the use of mobile devices for notifying and processing allocations to farmers in a

country where connectivity is a problem, and the subsequent late payment to agro-

dealers which invariably affects the timeliness in the availability and application of

fertilizer at farm levels.

The policy of concentrating foundation seed production in the hands of the National

Seed Council and the undue privilege enjoyed by the Agricultural Development Projects

(ADP) continue to undermine active involvement of the private sector, which could

leverage Nigeria’s seed production and distribution. Except for a few crops, most

varieties being planted are from informal farmer-to-farmer transfer or farmer-saved

seeds. Supporting the informal seed sector to establish standards and some form of

certification process may be one way to improve seed quality from this source that

currently supplies more than 90% of the seed.

Another reason for the gross under-performance of the seed industry is the absence of

functional national seed laws and non-harmonization of regional laws and regulations

that could allow seed trade among ECOWAS countries. Now that the ministers of

47

agriculture from the ECOWAS region have ratified and gazetted the harmonized laws,

the Member States need to comply with these rules and allow cross-border trade

among countries. Capacity building and raising awareness will be crucial for the

successful implementation of the seed harmonization scheme.

Use of tariffs to promote domestic production, particularly of maize, is not only

protectionist in approach but distortionary, without adding value along the value chain of

local staples. The focus is on driving import substitution by accelerating the production

of local staples, to reduce dependence on food imports and turn Nigeria into a net

exporter of food. The use of tariffs and duties creates inherent uncertainties in the

business environment and has been criticized as a bane to private sector development.

Frequent tariff changes tend to destabilize the production plan of entrepreneurs and

make output regularization and holding inventories very risky. Business prefers a stable,

predictable environment for long-term projection and investment.

Import substitution and high tariff rates for wheat and wheat flour appear to be the most

controversial policies as they affect traditional international trading partners, like the US,

that export wheat to Nigeria. In addition, industrial users of cassava, like the starch

industry, have raised concerns about higher prices of this raw material due to the

increase in demand without corresponding short-term increase in production.

The government of Nigeria has embarked on an elaborate plan to revive the agricultural

sector and restore the sector to its pre-independence glory. This plan is driven mainly

by the Agricultural Transformation Agenda of the FMARD. The government has laid out

a comprehensive ambitious path to achieve this agenda through fiscal policy and

institutional reforms. Aside from import tariffs, the government is also introducing other

48

policy reforms and changes in laws and regulations that include the deregulation of

seed and fertilizer sectors. Others involve marketing reforms that would promote the

setup of private market corporations to help coordinate the market, set grades and

standards, and develop innovative financing mechanisms for supplying credit.

Additionally, interstate barriers to paddy trade, such as interstate taxes, are expected to

be eliminated to reduce market transaction costs and increase free movement of

staples from areas of relative surplus to deficit zones. However, these policies and

reforms have created additional burdens that might limit the success of the ATA

process. It is suggested that the government undertake empirical analysis to

comprehensively identify—and if possible quantify—some policy gaps identified herein

to minimize hidden costs and risks that could jeopardize ATA’s success.

S/N Activity Multi- Trex Farm Forte Tomato Jos

1 Closing Technology Gaps

2 Pest Control

3 Output marketing

4 Seeds

5 Fertilizers

6 Crop protection Table 10: Major focus areas of Private Extension Providers

Source: Author’s Compilation

By using governance indicators as a basis for constructing the semi structured

interview, the experiences of private extension providers were gathered and analysed

with the following themes emerging as the by the positive or negative impact of each of

the requirements that determinants for entry, establishment and sustainability of the

extension models by private providers. (See Table 5)

49

Code identity

High – level code

Level one code families

Group of codes

PO ID PI

Business Climate

Policy Obstacles Infrastructure Deficit Political Instability

Quality Certification; Government Inefficiency; Poor Electricity; Poor Road Conditions; Policy Discontinuation; Civil Disorder

BM GS FA

Governance Flexibility

Business Model, Governance Structure, Feedback and Accountability

Social Entrepreneurship; Risk Diversification; Buyer Driven Value Chain; Interference of Intermediaries; Customer Satisfaction; Smallholder Trust; Smallholder Education

FP LO SI

Critical Success Factors

Foreign Partnership, Land Ownership, Smallholder Inclusion

Opportunity to Expand; Land Ownership Rights; Attitude to Agric; Staff Shortage,

Table 11: Impact of Governance Indicators

Source: Author’s Compilation

Business Climate

The researcher found that the business climate in which the selected firms operate is

influenced by the actions of public institutions and government policies at a Federal

level. Quality certification is controlled by Federal agencies that are prone to

government inefficiency. Agricultural polices also affect the commodities firms choose to

deal in, with non-staple products at the risk of losing government support for political

reasons despite their economic potential.

[…] Our firm intended to go into cassava production because of the immediate

past government’s cassava flour inclusion policy that would require flour mills to include 10- 20% of cassava or wheat flour for wheat production which was an idea that would help small farmers due to the ease of growing cassava across the country. We had to pause when we became unsure whether the subsequent administration would carry on the policy. So far, there has been no follow up and there is a glut in the market because other firms moved to capitalize. (Operations Manager Farmforte)

50

Commenting on the business climate, one of the proprietors of the firms stated

[…] On the one hand, it is easy to get incorporated, but on the other hand the day to day interactions with government agencies are where you find that the business climate is not very conducive. (Co-Founder, Tomatoe Jos)

As most of the agrarian land is located rurally, the absence of stable electricity and

insufficient road networks increases the cost of production for firms, with sporadic cases

of unrest between farmers and herders also incurring added costs.

Extension Approach Flexibility

The case study firms recognized the complex business climate as an important variable

that is crucial to establishing any extension model in the region. The researcher

discovered that despite the relatively high cost of production, the domestic demand is

sufficient incentive for firms choosing to operate. The erratic nature of doing business

can be a hindrance necessitating the need for adopting a model that is able to

effectively provide adequate services while micromanaging the manual smallholders.

The firms operate as flexible buyer driven chains, concentrating on specific commodities

with public and private safety focused standards. A shared characteristic of the firms is

the diversification of risk by sourcing from different areas, while one of the firms has

adopted a model which excludes middlemen, the other is faced with extra quality

checks and price mark ups from middlemen still in the value chain.

The extension model also influences stakeholder engagement through open channels

of feedback and accountability that are important in encouraging the participation of

smallholders, an approach which makes them more willing to accept better yielding

practices. The participation of smallholder farmers is important as it provides a constant

51

source of raw material that can be tailored to meet the standards of processing facilities

without the cost of running the farming operations.

Critical Success Factors

Private participation in the agribusiness industry is in its infancy and requires

collaboration with public agencies. Participants revealed a history of distrust between

local smallholders and government initiatives; this makes disseminating better practice

inputs difficult, with farmers sceptical about the commitment behind such initiatives.

Cooperating with foreign bodies has granted access to improved seeds, subsidized

extension services and buyer markets for processed/raw products.

The land ownership system can pose a problem in certain areas; this is remedied by

engaging with smallholder farmers without incurring rent charges but increasing seed

inputs appropriately to scale up production when necessary. However, this requires

more supervision which is affected by the shortage of skilled staff owing to attitudes

towards agriculture and added costs.

52

6.0 CONCLUSION AND RECOMMENDATIONS By consulting secondary data and interactions with the participant enterprises, the

conclusions drawn from this study on the impact of private extension in developing

agriculture in Nigeria; value addition, trust and accountability, social entrepreneurship

and networking appear to be the areas where private extension is most active as well as

well as showing potential for development. (See Table 5.1)

S/No Codes Related Issues Theory

1. Value Addition Quality Assurance, Cost of Production,

Value addition for commodities influences quality requirements and cost of products

2. Trust and Accountability

Motivation and Participation, Technology Assimilation, Stakeholder Feedback

The effect of motivation in encouraging participation across the value chain

3. Social Entrepreneurship

Business Demography, Legal Framework, Smallholder Inclusion

Social entrepreneurship as viable model for developing agriculture due to its prioritization of social value and development as well as economic value.

4. Networking Access to funds, Solving Logistics Problems

The importance of networking for agribusiness firms in improving production processes and sharing knowledge

Table 12: Themes from Semi Structured Interviews.

Sources: Author’s Compilation

The lack of adequate value addition facilities affects the manufacturing process,

resulting in annual losses of substantial amounts of produce. By providing storage and

transportation services, extension providers are eventually able to lower their costs of

production by investing in their sources of raw material.

Smallholder farmers are sceptical of the public extension projects owing to years of bad

experiences, to allay these fears and gain the trust of participating farmers represents

the biggest achievement and continuing challenge for private extension providers. Due

53

to a history of misinformation and politicization of agricultural initiatives, there has been

an uneven or virtually no improvement in certain areas of the value chain. The approach

of local firms largely takes into account the considerations of smallholder farmers,

making them more willing to accept better yielding practices. This approach has thus far

proved successful in engaging stakeholders and could be used as a model for

government intervention. The establishment of private standard initiatives such as the

GLOBAL G.A.P could go a long way to harmonizing relations with farmers, as well as

an effective, dedicated option for product certification.

The private extension models ran by the participatory firms run to an extent as social

enterprises, making profit as well as prioritizing the development of social value and the

welfare of participating farmers. Given that the agricultural sector has been largely

dormant, this approach is best suited to initially improving the fortunes of those who are

most fundamental to the value chain i.e. smallholder farmers.

This is crucial in developing an industry in its infancy. It is important for knowledge and

innovation to flow not only across the value chain but also with other businesses that

may have common issues and be able to offer solutions. It is also an avenue to

publicize polices that are most harmful and can potentially act as pressure groups to

drive the necessary changes required.

54

6.1 LIMITATIONS OF THE STUDY AND SUGGESTIONS FOR FURTHER RESEARCH

The low response rate from participants proved to be a major hindrance to this study.

The distance from Nigeria has contributed to the researcher’s inability to immerse

completely in the studied phenomena and has affected the ability to include more

agribusiness enterprises in the research study. The use of secondary data meant that

the researcher was dependent on research conducted by other people.

The semi structured interviews would provide more perspective if they involved

smallholder opinions to obtain their opinions on private providers. The depth of work

required to fully analyse the focus areas of private extension holders was not one that

was permitted due to time constraints. Furthermore, to supplement the findings from

secondary data would require the use of more sample firms to give weight to the

themes found in the analysis of the primary data. The researcher would suggest a more

extensive study of the phenomena of private extension by focusing on the perspectives

of the participating smallholder farmers who are arguably the most important and

underutilized stakeholders.

55

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APPENDIX APPENDIX A: SEMI STRUCTURED INTERVIEW PROMPTS S.No

Interview Questions Issues Explored Underpinning Areas of Literature

1. Do you consider your

business process successful?

Nature of the business enterprise

To establish scale of operations of selected firms

2. How would you describe your

input-output

structure(Products in to

Products out)

Researcher wants to establish the scale of operations

To understand the connection between different goods and services in the value chain

3. Do you consider your

relationship with your

smallholder suppliers as

buyer-driven (Your

Organization), producer

driven (Smallholder farmers),

or that of a traditional market

(Domestic, subsistence

markets)?

Governance Structure

For an understanding on how the chain is controlled and coordinated

4. What is your approach to

industry policies that you find

hindering?

Role of Federal Government in Governance

The impact of the institutional framework on private initiatives

5. How important is feedback

and accountability across

your value chain?

How information is collected to improve operations

Benefits of communication in upgrading the value chain

6. What is your opinion on Challenges to private governance

Researcher wants to gain an insight into factors that discourage entry of firms

64

infrastructural challenges that

affect your firm?

initiatives into the sector

7. How far apart are quality

regulations (NAFDAC)

between the domestic market

and export market?

If the approach differs depending on target market

To understand what factors influence the production and of commodities

8. Does the legal framework

encourage your development

?(Contract enforcement,

landowner rights)

Business demography

9. To what extent does political

instability affect your

operations?

Business demography

To explore the extent to which market and political powers are intertwined in the sector

10. Does public power abuse

ever affect your relations with

smallholder farmers?

Business demography

To establish a contextual view of how businesses operate when dealing with people in positions of power

11. Are you affiliated to any

business or social network?

Researcher wants to explore the level of business

The advantages of firms networking to collectively tackle mutual problems