By Dele Sobowale

“The time is a quarter to mid-night”. Dr Burlough, the father of the Green Revolution.

In one corner of Cross River State, raw rubber production, which should be at its highest during the rainy season, is dropping. Reason; a paramount chief in the area died recently and ten human heads are needed before he can be buried.

Two headless bodies in one farm had sent all the farm labourers, for miles around, refusing to harvest rubber. It is quite possible that by the time the remaining eight scalps are collected, the rubber season will be over and Nigeria would have lost millions of dollars in foreign exchange.

A farmer with large plantation of both rubber and palm products is now in a dilemma about how to get help which is now unavailable at any price; meanwhile the local police look the other way. Unfortunately, it is not just rubber production which is suffering from inadequate attention, farmers are reluctant to go to any farm in the area – irrespective of the crop involved..

While the death of paramount chief is a rare occurrence, what happens to millions of farmers routinely suffer from banks in ways that are simply pathetic. Presented below are the details of what started as an agricultural loan, urgently required to save a catfish crop from perishing. The bank refused the application for agricultural loan and instead offered a personal loan – which carries higher interest rates. Read and cry for our beloved country because this is real.

Facility type: Term Loan

Facility Amount: N750,000 (Seven hundred and fifty thousand naira only)

Purpose: To support working capital requirement for venture into a new fish farming project. Repayment Source: Repayment shall be from your business inflows.

Repayment Terms: Monthly repayment of interest thereon while principal repayment will be included in the monthly repayment after the moratorium of 3 months.

Pricing:

Interest rate: 27% p.a (Please know that interest rate is variable; depending on prevailing

market conditions). Processing fee: 0.25% flat Management fee: 0.75% per quarter

Commitment: 1.00% C O T: N5.00 per mile.

Security:

Lien on original Deal Slip of N3 million only with the Branch. Personal Guarantee of a Third Party supported with notarized statement of net worth. It requires no PhD in mathematics to calculate that the lender is paying about 36% for an agricultural loan.

That makes Nigeria the worst country in the world to invest in agriculture. Thus, when the current Minster for Agriculture came into office exclaiming about the N1.2 trillion we spend annually importing food, one is forced to ask him if he has looked around Abuja where the saboteurs of Nigeria’s agriculture reside and work – including Aso Rock.

First, the readers, and I hope they include the Governor of Central Bank, the Federal Minister for Agriculture, the Coordinating Minister for the Economy, the Senate and House Committee members on Agriculture, and, if he has time to read, President Jonathan, will notice that the lender had more collateral with the bank than the facility for which request was made.

So, the risk of default, which banks use as an excuse for denying agricultural loan, was virtually nil. Yet, the fish farmer was forced to take an agricultural loan at these Shylock rates. Furthermore, the bank sent a representative to the site who saw that the fish farmer had invested over ten times the amount of loan requested.

He had fish ponds already stocked with fish, five giant water tanks, three generators, bags of fish meal; and staff. Above all, he lived on the premises and he is a public figure – not one to abscond because of N750,000.

Second, the bank did not even pretend not to know that this loan was sought for an agricultural project, since it acknowledged that the purpose of the loan was for working capital to promote a fish farm. Third, every condition known to honest bankers for granting a loan – including adequate collaterals had been met by the lender. These are the same banks which allow the “high and mighty” to collect loans and release the collaterals before the loan is paid up.

Finally, the farmer had been a customer of the bank and had previously taken a bigger loan to purchase a personal car and he had serviced the loan without blemish completely. So his record with the bank had been exemplary.

Suddenly, he is being taken to the cleaners because this time it is a request for an agricultural loan. Yet, this is not an isolated case. Millions of farmers are placed in this untenable position which makes nonsense of official claim of support for agriculture.

If the truth must be told, government does everything, in collusion with bankers, to discourage farmers. It is a fact that, no single bank, in Nigeria, had given out, in any year, all the agricultural loans for which provisions were made.

Instead of providing agricultural loans, they annually pay the penalty for depriving the agricultural sector the funds required to increase the land brought under cultivation and the aggregate yield of food items nationwide. The Central Bank had been in almost criminal conspiracy with the banks to deprive farmers of funds required for more than three decades.

And, it does not seem about to change its ways. Sanusi talks more than he acts and the President as well as the NASS do even less. They all allow banks to get away with murder because avoidable starvation and malnutrition are deadly.

Meanwhile, the nation’s food import bill mounts annually; our ability to continue to import at the present rate is threatened by possible global recession and rising costs of food items globally.

By contrast, the same Central Bank of Nigeria, CBN, provided N300 billion aviation intervention fund which had been exhausted by airlines, some of whom have diverted the funds. And, the aviation intervention loan is available at 2% per annum –flat.

Nothing demonstrates our collective lack of sense of priorities than the fact that while less than two per cent is charged as interest rate for aviation which less two per cent of Nigerians enjoy, over 30% is charged to farmers who provide the food we all eat – including the cassava bread eaters of Aso Rock.

What would have been a grave crisis in the past is now threatening to become a major catastrophe with Boko Haram driving farmers, extension workers and transporters away from Northern farms in droves. More than ever, this is the time for the Federal government to insist on banks providing loans to all farmers in relatively safe areas in order to make up part of the shortfall which is imminent from the Northeast as well as some parts of the Northwest.

Without that, the food import bill will certainly escalate beyond our means to pay; erode our external reserves; result in hyper-inflation and throw this country into a vicious cycle from which it will be almost impossible to retreat. If care is not taken, and soon too, Nigeria might join the list of countries begging for food to feed its people.

NEXT WEEK: REVISITING THE AGRICULTURAL DEVELOPMENT BANK.