To stabilise food prices, Bank of Agriculture (BOA), in collaboration with the Federal Ministry of Agriculture and Food Security and the Nigeria Commodity Exchange (NCX) has unveiled the Guaranteed Minimum Price, (GMP) Mechanism to protect 500,000 farmers representing 11.6million faming households.
The launch of the GMP followed the release of N200billion to BOA by President Bola Ahmed Tinubu to stabilise food prices and ensure farmers does not incur looses due to crash in food prices.
Speaking during the launch of the Programme yesterday in Abuja the Managing Director of BOA Ayotunde Sotinrin revealed that the project was aimed at aggregating about 1million metric tonnes of grains including rice , maize, sorghum and others at farmers price.
He clarified that the GMP is targeted at farmers who cultivate crops and would not extend to traders, who would be supported through other financial instruments, saying the aim is to buy grains when prices were low, store them and release them into the market when prices rise, thereby helping to stabilise food prices.
BOA MD disclosed plans to work with farm aggregation companies to identify farmers and aggregate their produce, while payments would be made directly into the farmers’ bank accounts through a technology-driven system.
He said the Nigeria Commodity Exchange (NCX) would provide the market infrastructure, including a structured warehouse receipt system, commodity grading through collateral managers and transparent pricing mechanisms to ensure transparency and efficiency in the implementation of the programme.
He said the technology would be deployed to prevent traders from presenting themselves as farmers and accessing the programme, saying farmers would be required to open accounts and verify their identities and commodity details before receiving payments directly.
On the scope of the programme, he said it would initially target a limited number of farmers because government resources could not cover all the estimated 70 million Nigerians involved in agriculture.
Sotinrin recalled that the Bank has embarked on a program that enabled farmers access subsidised financing at single-digit interest rates to enable them to purchase quality inputs and increase productivity.
According to him, farmers participating in the financing programme would access loans at about nine per cent, compared with commercial and microfinance bank rates that could be significantly higher.
He said the program had encouraged farmers to use improved and hybrid seeds to increase yields. “If you use proper seeds, instead of getting one tonne per hectare, you can get a minimum of five tonnes per hectare,” he said.
He further disclosed that the government planned to introduce solar-powered irrigation systems for farmers during the dry season to enable them to cultivate their farms several times a year, disclosing that the irrigation facilities would be provided through asset financing at reduced costs, allowing farmers to repay over time.
According to him, increased productivity and multiple production cycles would improve farmers’ incomes and enable them to repay their loans, making the funds available to other farmers.
The BOA boss urged farmers to repay government-backed loans to ensure the sustainability and expansion of the programme. “We cannot have enough money to finance all farmers at once. But when farmers repay the money collected through this system, we can give it to the next set of farmers, and the money continues to grow,” he said.
The National President of the All Farmers Association of Nigeria (AFAN) Mohammad Magaji lauded the introduction of the long awaited GMP saying farmers had long advocated a system that would provide inputs at the appropriate time and guarantee markets for their produce immediately after harvest to protect farmers from distress sales and encourage increased production.
He said it would provide farmers with greater confidence to invest in agriculture.
He disclosed that farmers in southern Nigeria had already begun harvesting and were expected to supply dry grains that met the required standards to aggregators.
Magaji called for wider sensitisation of farmers across the country in local languages to ensure that they understood the programme and its requirements.
He further stressed the need for collaboration among government agencies, farmers’ associations, aggregators and market institutions to ensure the success and sustainability of the initiative.
