Food items on display in the market
As the threat of a global food shortage looms large, Nigerian banks have been challenged to rally round farmers in order to take advantage of the opportunity in the emerging world food market.
In its monthly report on the economy, Financial Derivates Company, advised that time had come for Nigerian farmers to be propelled not only to meet domestic food needs but also to maximise the opportunity created by the emerging shortfall in global food production.
According to the company's March economic report, FDC indicated that food prices are expected to remain high in 2011 and 2012 as global demand continues to outstrip supply.
It stated that in view of the potential of Nigerian farmers, banks cannot continue to wait for government stimulus packages when the opportunity to throw their weight behind Nigerian farmers stares them in the face.
“The question therefore is who is banking farmers to purchase fertilisers, machinery, livestock, enhanced seedlings, pesticides, herbicides and other farm inputs?
“Who is banking the cocoa farmers at this time when there is an international shortfall of approximately 800,000 tonnes of cocoa caused by Cote d'Ivoire's internal squabbles?” the report asked.
FDC, however, warned that it may be too late to benefit from the current global food prices rally like Kenyan tea farmers and Ghanaian cocoa farmers have. They however raised the hope that something can still be done about the future.
The company in its report maintained that stakeholders need to take strategic positions along the value chain in order to take advantage of current and future opportunities.
It criticised the present banking model of jostling for big ticket transactions, which FDC argued has been proven to be faulty as the risk of that transaction failing can destabilise the banks.
“The aspect of growth fostering lending activities could be taken off the back burner and given strategic attention.
“The banking sector, the intermediary for the transmission of funds from the surplus spending unit to the deficit spending unit, needs to stop paying lip service to lending to the agric sector and reclaim its position as a key driver of growth in the economy,” the company stated. The United Nations Food and Agricultural Organisation estimates that food prices hit record highs in January 2011 up by 3.4 percent. It has surpassed the 2008 levels that sparked a global food crisis and is at the highest level since the organisation started tracking global food prices in 1990.
The UN in its assessment of global trends has said “Persistent high levels of underemployment and vulnerable employment, as well as continued widespread malnourishment, will remain concerns in the near outlook.”