EFFECT OF ANCHOR BORROWERS PROGRAMME ON POVERTY STATUS OF RICE FARMERS IN NIGERIA
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CHAPTER ONE
INTRODUCTION
1.1 Background of the study
Before the discovery of oil in 1958, agriculture was the backbone of Nigeria’s economy. Nigeria was a major exporter of various agricultural products, such as groundnut, cocoa, rubber, cotton, groundnut oil, cassava, and yam, to many parts of the world. Prior to gaining independence in 1960, agriculture was the country’s primary source of foreign exchange earnings (Oyewole, 2019). However, the discovery of significant oil reserves led Nigeria to shift its focus away from agriculture. Since independence, the majority of Nigerian farmers have been engaged in subsistence farming, producing primarily to feed their families, with little to no surplus for commercial sale (Bashorun et al., 2019).
Rice is a crucial food staple for more than 2.6 billion people worldwide and serves as the main dietary staple for a large portion of the global population. It is the second most produced crop globally, after maize (Oyewole, 2019). In terms of human nutrition and calorie intake, rice is the most important grain, as a significant portion of maize is grown for non-food purposes (Fadeyi, 2020). Rice accounts for about 20% of the calories consumed by people around the world. Although it contains less protein than other cereals, it offers a more balanced amino acid profile (Akachukwu et al., 2021).
Nigeria stands as the leading consumer and top producer of rice in Africa, while also ranking among the world’s largest rice importers. Rice plays a vital role in food security and is a key cash crop, offering Nigerian farmers higher earnings than any other cash crop in the country. In 2008, Nigeria produced over 2 million metric tonnes of milled rice, yet nearly 3 million metric tonnes were imported, including an estimated 800,000 metric tonnes that reportedly enter the country illegally each year (Segun et al., 2017). According to Lakayana (2022), rice has grown in popularity as a staple food in Nigeria over the past few decades. Once reserved for special occasions, rice has become an essential part of the Nigerian diet. On average, a Nigerian consumes about 24.8 kg of rice annually, contributing to 9 percent of their total calorie intake (Oku, 2019). The rising demand for rice has created a substantial gap between supply and demand, highlighting the need for effective policy measures to boost production.
The primary goal of the Anchor Borrower Program is to provide small-scale farmers with agricultural inputs, both in kind and in cash, to boost the production of agricultural commodities. This initiative aims to ensure a consistent supply of inputs to agro-processors and address the country’s negative balance of payments in the food sector (CBN, 2017). During the harvest period, Smallholder Farmers (SHFs) deliver their crops to Agro-processors (Anchors), who then transfer the corresponding payment to the farmers’ accounts. The program was developed through consultations with key stakeholders, including the Federal Ministry of Agriculture & Rural Development, state governors, agricultural produce millers, and smallholder farmers. Its purpose is to increase agricultural production and non-oil exports in Nigeria, especially in light of the volatile crude oil prices that affect the nation’s revenue (Nwachukwu et al., 2020). The Central Bank of Nigeria (CBN) established the Anchor Borrowers’ Programme (ABP) to boost agricultural output and non-oil exports, aiming to mitigate the effects of fluctuating oil prices on Nigeria’s revenue. The program seeks to connect anchor companies involved in processing with smallholder farmers (SHFs) who supply the essential agricultural commodities (CBN, 2017).
Despite the initial optimism and high expectations surrounding the launch of the Anchor Borrower Program, there has been no empirical study conducted to assess its impact on the profitability and income of rice farmers in Nigeria.
1.2 Statement of the Problem
For many decades, Nigeria has been struggling with severe food insecurity, which has led to widespread famine, a heavy reliance on food imports, and various social and economic disorders. This persistent issue has had far-reaching consequences for the nation. As observed by Udoka (2021), despite Nigeria’s abundant agricultural resources and the significant role that rice farming plays in the national economy, a large number of rice farmers continue to live in poverty. These farmers face a multitude of challenges, including limited access to credit, exorbitant production costs, inadequate infrastructure, and restricted access to markets. These obstacles significantly impede their ability to increase productivity and generate income, thereby perpetuating a vicious cycle of poverty and economic hardship.
To address the challenges posed by food insecurity, numerous agricultural initiatives have been introduced over the years, with the primary objective of boosting food production and reducing the prevalence of food shortages across the country (Ikang, 2020). Despite the commendable efforts made by various governments—such as the Green Revolution, Operation Feed the Nation, and the Agricultural Development Programme (ADP)—there seems to have been a lack of sustained political commitment to fully implement these programs and achieve their intended goals (Lakayana, 2022). This shortfall in commitment is evident in the absence of measures to lower interest rates on agricultural loans or reduce tariffs on essential agricultural inputs, both of which are critical to the success of farming activities.
In an attempt to tackle the ongoing challenges facing the agricultural sector and to help Nigeria overcome its dependence on oil revenue and food imports, the Anchor Borrowers’ Programme (ABP) was launched on November 17, 2015 (Lucky, 2020). This program was specifically designed to provide small-scale farmers with the necessary agricultural inputs, both in the form of goods and financial support, to enhance the cultivation of key crops such as rice, wheat, sugarcane, soybean, and others. The program operates on a model where, during the harvest season, smallholder farmers deliver their produce to designated agro-processors, known as Anchors, who then transfer the corresponding payment directly into the farmers’ accounts (Ikang, 2020). According to Asani (2023), the Anchor Borrowers’ Programme was envisioned as a strategic initiative to reduce poverty and increase the income levels of participating farmers by improving their profitability. Given the current situation, this study seeks to evaluate the impact of the Anchor Borrowers’ Programme on the poverty status of rice farmers in Nigeria, with a focus on how the program has influenced their economic well-being and overall livelihood.
Although the program’s goals are clear, and its potential benefits are considerable, there is a notable lack of empirical evidence regarding its actual impact on the poverty levels of rice farmers in Nigeria. This gap in knowledge is a significant concern, as understanding the effectiveness of the Anchor Borrowers’ Programme is essential for making informed policy decisions and improving future agricultural initiatives. This need underscores the importance of conducting this study.
Objectives of the Study
The main aim of this study is to critically examine the impact of the Anchor Borrowers’ Programme on the poverty levels of rice farmers in Nigeria. The specific objectives are:
- To evaluate the impact of the Anchor Borrowers’ Programme on the poverty levels of rice farmers.
- To examine how the Anchor Borrowers’ Programme has affected the productivity of rice farming.
- To assess the influence of the Anchor Borrowers’ Programme on the income levels of rice farmers in Nigeria.
- To identify the challenges that rice farmers face in accessing and benefiting from the Anchor Borrowers’ Programme.
Research Questions
The following research questions, aligned with the objectives of this study, will be addressed:
- What impact does the Anchor Borrowers’ Programme have on the poverty levels of rice farmers?
- How has the Anchor Borrowers’ Programme influenced the productivity of rice farming?
- What effect does the Anchor Borrowers’ Programme have on the income levels of rice farmers in Nigeria?
- What challenges do rice farmers face in accessing and benefiting from the Anchor Borrowers’ Programme?
1.5 Research Hypotheses
To assess the effectiveness of this study, the following null hypotheses have been formulated to guide the research. These hypotheses will be tested at a significance level of 0.05%:
Ho: The Anchor Borrowers’ Programme has no significant effect on the poverty levels of rice farmers.
Ha: The Anchor Borrowers’ Programme has a significant effect on the poverty levels of rice farmers.
1.6 Significance of the Study
Examining the impact of the Anchor Borrowers’ Programme on the poverty levels of rice farmers in Nigeria is essential for developing practical solutions, promoting inclusive development, and improving the well-being of rural communities. This study aims to generate actionable and insightful knowledge that can enhance efforts to alleviate poverty and support sustainable agricultural growth in the country. The findings will serve as a valuable resource for farmers, policymakers, students, and scholars.
Analyzing the effects of the Anchor Borrowers’ Programme on the poverty status of rice farmers can provide critical insights into its effectiveness in boosting household incomes, reducing poverty rates, and empowering rural communities economically. These insights are crucial for designing targeted interventions to support vulnerable populations and achieve sustainable development goals. Moreover, evaluating the programme’s impact on poverty among rice farmers contributes to improved food security and nutritional outcomes. By increasing farmers’ access to credit, inputs, and technical support, the initiative aims to enhance agricultural productivity and ensure a stable food supply, ultimately leading to better nutrition and overall well-being.
Additionally, the findings of this study can offer valuable insights to policymakers and development practitioners about the effectiveness of the Anchor Borrowers’ Programme in reducing poverty among rice farmers in Nigeria. The program has the potential to highlight best practices, identify challenges, and recommend policy enhancements to maximize its impact on poverty reduction and rural development.
Furthermore, the study can assess not only the program’s impact on poverty levels but also its broader social and economic effects, such as improved access to education and healthcare, greater gender equality, and increased resilience to economic shocks within rice farming communities. This research contributes significantly to the achievement of Sustainable Development Goal 1 (No Poverty), Sustainable Development Goal 2 (Zero Hunger), and Sustainable Development Goal 8 (Decent Work and Economic Growth) by identifying strategies to enhance agricultural productivity, reduce poverty, and promote inclusive economic growth in Nigeria.
Moreover, the exploration of the Anchor Borrowers’ Programme’s effects on poverty among rice farmers adds to the current body of knowledge on agricultural development and poverty alleviation strategies in Nigeria. The empirical evidence gathered can guide future research, inform policymaking, and support the implementation of programs aimed at assisting smallholder farmers and promoting sustainable agricultural practices.
1.7 Scope of the Study
The primary aim of this study is to conduct an in-depth assessment of the Anchor Borrowers’ Programme and its impact on the poverty levels of rice farmers in Nigeria. The research will address several specific objectives to provide a comprehensive understanding of the programme’s effects:
- Evaluating the Impact on Poverty Status: The study will investigate how the Anchor Borrowers’ Programme has influenced the poverty status of rice farmers. This involves analyzing whether the programme has successfully alleviated poverty among this group and to what extent it has made a difference in their economic conditions.
- Assessing Productivity Enhancements: An important focus of the study will be to evaluate how the programme has contributed to improving the productivity of rice farming. This includes examining changes in yield, farming practices, and overall efficiency brought about by the support and resources provided through the programme.
- Analyzing Income Levels: The research will also assess the effect of the Anchor Borrowers’ Programme on the income levels of rice farmers in Nigeria. This involves looking at whether the programme has led to an increase in earnings and financial stability for the farmers.
- Identifying Challenges: The study will identify and explore the various challenges faced by rice farmers in accessing and benefiting from the Anchor Borrowers’ Programme. This includes logistical, financial, and operational obstacles that may hinder the programme’s effectiveness.
In summary, the scope of this study is to provide a detailed examination of the Anchor Borrowers’ Programme’s impact on the poverty status of rice farmers across Nigeria. It aims to explore how the programme has contributed to enhancing rice farming productivity and increasing the income levels of farmers. Additionally, the study will seek to uncover the specific challenges that rice farmers encounter in their efforts to access and benefit from the programme. The research will be conducted throughout Nigeria, focusing on understanding the nationwide effects and challenges associated with the programme.
1.8 Limitations of the Study
As with any research project, several constraints and limitations were encountered during the course of this investigation. One of the primary challenges was the scarcity of comprehensive literature and data regarding the specific impact of the Anchor Borrowers’ Programme on the poverty status of rice farmers in Nigeria. This lack of readily available information necessitated a significant investment of time and effort to identify and gather relevant materials, books, and data sources. The difficulty in accessing detailed and comprehensive data on this subject presented a substantial obstacle to the research process.
Another limitation was related to the sample size and geographical scope of the study. The research focused specifically on Nigeria and involved a relatively small sample size. This limitation means that the findings and conclusions drawn from this study cannot be generalized to other regions or countries. The restricted geographic focus and sample size underscore the need for additional research to explore these issues more broadly and to validate the results in different contexts.
Financial constraints also played a significant role in limiting the study. As the researcher is a student with limited financial resources, the costs associated with conducting research—such as traveling to research sites and acquiring necessary materials—were substantial. The high transportation costs, which have been exacerbated by current inflation rates in Nigeria, made it challenging to afford the necessary travel expenses to gather data from various locations.
Furthermore, time constraints were a notable limitation, as the researcher had to balance the demands of conducting this study with other academic responsibilities, including attending lectures and engaging in other educational activities. This dual commitment constrained the amount of time available for thorough research and in-depth data analysis, impacting the overall depth and breadth of the study.
1.9 Definition of Terms
- Anchor Borrower Programme: The Anchor Borrowers’ Programme (ABP) was established by the Central Bank of Nigeria (CBN) in November 2015 with the goal of fostering economic linkages between smallholder farmers (SHFs) and larger anchor firms. The programme provides crucial support in the form of agricultural inputs, financial resources, and technical assistance to small-scale farmers to enhance their production capabilities and improve their economic outcomes.
- Agricultural Commodities: Agricultural commodities refer to raw, unprocessed products that are sourced from various agricultural activities, including farming, ranching, and aquaculture. These products are cultivated, raised, or harvested from land, forests, and bodies of water by producers who have legal access rights. Agricultural commodities include a wide range of items, from crops and livestock to fish and forest products.
- Small-Scale Farmers: The term “small-scale farmers” describes individuals who manage relatively small plots of land, typically less than 5 acres in Nigeria. These farmers engage primarily in subsistence farming, producing enough food to meet their own needs and, in some cases, growing one or two cash crops for additional income. Their farming operations are usually characterized by limited resources and small-scale production techniques.