EFFECT OF ANCHOR BORROWERS PROGRAMME ON POVERTY STATUS OF RICE FARMERS IN NIGERIA

CHAPTER ONE

INTRODUCTION

1.1 Background of the study

Agriculture served as the primary pillar of Nigeria's economy prior to the discovery of oil in 1958. In reality, Nigeria was exporting several agricultural commodities, including groundnut, cocoa, rubber, cotton, groundnut oil, cassava, and yam, to different regions of the world.  Prior to Nigeria's independence in 1960, agriculture served as the primary means by which the country earned foreign exchange (Oyewole, 2019). As a result, the discovery of oil in significant amounts caused Nigeria to forsake agriculture.  Since Nigeria gained independence, a significant majority of farmers in the country have typically been involved in subsistence farming. This type of farming primarily aims to produce food for their own families, with little or no surplus available for sale (Bashorun et al., 2019).

Rice serves as a fundamental dietary component for over 2.6 billion individuals globally. Furthermore, it serves as the primary dietary staple for a significant portion of the global human population. It ranks as the second highest global production, following maize (Oyewole, 2019). Rice is the most significant grain in terms of human nutrition and calorie intake, as a substantial share of maize crops are cultivated for purposes other than human use (Fadeyi, 2020). Rice contributes around 20% of the calories consumed globally by humans. While it may have less protein than other cereals, it has a more favourable combination of amino acids (Akachukwu et al., 2021).

Nigeria is the foremost user and primary producer of rice in Africa, while also being one of the top rice importers globally. Rice, as a crucial staple commodity for food security, serves as a primary cash crop that generates higher income for Nigerian farmers compared to any other cash crop in the nation. In 2008, Nigeria's milled rice production amounted to over 2 million metric tonnes, while imports reached nearly 3 million metric tonnes. This includes an estimated 800,000 metric tonnes that is believed to enter the nation illegally each year (Segun et al, 2017). Lakayana (2022) states that rice has been a popular and favoured staple food in Nigeria during the past few decades. Rice, hitherto limited to ceremonial use, has gained significance as a staple in Nigerian cuisine. The average rice consumption per year for a Nigerian is approximately 24.8kg, which accounts for 9 percent of their overall calorie intake (Oku, 2019). The surge in rice consumption has resulted in a significant supply-demand imbalance, unless effective policy measures are implemented to enhance production.

The main objective of the Anchor Borrower Program is to provide agricultural inputs, both in the form of goods and money (for work), to small-scale farmers. This is done to increase the output of agricultural commodities, ensure a stable supply of inputs to agro processors, and solve the country's unfavourable balance of payments in the food sector (CBN, 2071). During the harvest season, the Smallholder Farmer (SHF) delivers their crops to the Agro-processor (Anchor) who then transfers the corresponding amount of money to the farmer's account. The Programme was developed through discussions with key stakeholders, including the Federal Ministry of Agriculture & Rural Development, State Governors, agricultural produce millers, and smallholder farmers. Its aim is to enhance agricultural production and non-oil exports in Nigeria, considering the unpredictable fluctuations in crude oil prices and their impact on the country's revenue profile (Nwachukwu et al., 2020). The Central Bank of Nigeria (CBN) established the "Anchor Borrowers' Programme" (ABP) to enhance agricultural production and non-oil exports. This initiative aims to counter the impact of unpredictable crude oil prices on Nigeria's revenue profile. The Programme aims to establish a connection between anchor enterprises engaged in processing and smallholder farmers (SHFs) who produce the necessary core agricultural commodities (CBN, 2017). 

Although the launch of the Anchor Borrower Program was met with optimism and high expectations, there has been no documented empirical study on the impact of the program on the profitability and income of rice farmers in Nigeria.

1.2 Statement of the problem

Nigeria has long been struggling with food insecurity, which has resulted in famine, extensive imports, and societal disorders, among other results. A observed by Udoka (2021) despite Nigeria's abundant agricultural potential and the substantial contribution of rice farming to the national economy, a considerable number of rice farmers nevertheless experience poverty. These farmers encounter numerous obstacles, such as restricted loan availability, exorbitant production expenses, insufficient infrastructure, and inadequate market entry. These barriers greatly impede their ability to be productive and earn revenue, therefore continuing a cycle of poverty.

To address the difficulties caused by food insecurity, numerous agricultural projects were implemented with the primary objective of enhancing food production and reducing the prevalence of food insecurity (Ikang, 2020). Despite the commendable initiatives undertaken by successive governments, such as the Green Revolution, Operation Feed the Nation, and the Agricultural Development Programme (ADP), it seems that there was a lack of political determination to fully implement these programs (Lakayana, 2022). This is because no measures were taken to decrease the interest rates for farm loans or reduce the tariffs for agricultural inputs.

 In an attempt to address the difficulties confronting the agricultural industry and assist Nigeria in overcoming the issue of food insecurity caused by over reliance on oil revenue and importation, the Anchor Borrowers' Programme (ABP) was initiated on November 17, 2015, as stated by Lucky (2020). This program entails providing agricultural inputs, both in the form of goods and money (for labour), to small-scale farmers in order to enhance the cultivation of specific crops such as rice, wheat, sugarcane, soybean, and others. During the harvest, the smallholder farmer supplies their produce to the agro-processor, also known as the Anchor. of return, the Anchor sends the corresponding amount of cash to the farmer's account (Ikang, 2020).  Asani (2023) mentioned that the Anchor Borrower Program was designed with the aim of reducing poverty and increasing income by improving the profitability of the farmers who benefit from it. This study aims to evaluate the impact of the anchor borrowers' program on the poverty status of rice farmers in Nigeria, taking into account the current situation. 

Although the program's goals are evident and its potential advantages are significant, there is a scarcity of empirical data regarding its actual influence on the poor status of rice farmers in Nigeria. The lack of knowledge in this area poses a significant issue, as it is crucial to comprehend the efficacy of the Anchor Borrowers' Programme in order to make informed policy decisions and enhance future agricultural initiatives. Therefore, the necessity for doing this investigation arises.

Objectives of the study

The primary objective of this study is to critically assess the effect of anchor borrowers’ programme on poverty status of rice farmers in Nigeria. Specific objectives of this study are to:

To evaluate the effect of Anchor Borrowers Programme on the poverty status of rice farmers

To assess the effect of Anchor Borrowers Programme on enhancing the productivity of rice farming 

To assess the effect of Anchor Borrowers Programme on the income level of rice farmers in Nigeria

To Identify the challenges faced by rice farmers in accessing and benefiting from the Anchor Borrowers Programme.

1.4 Research Questions

The following research questions which are in line with the objectives of this study will be answered in this study:

What is the effect of Anchor Borrowers Programme on the poverty status of rice farmers?

What is the effect of Anchor Borrowers Programme on enhancing the productivity of rice farming?

What is the effect of Anchor Borrowers Programme on the income level of rice farmers in Nigeria?

What is the challenges faced by rice farmers in accessing and benefiting from the Anchor Borrowers Programme?

1.5 Research Hypotheses

To determine the effectiveness of this study, the following research null hypotheses will be formulated to guide the study and it will be tested at 0.05% levels of significance.:

Ho: There is no significant effect of Anchor Borrowers Programme on the poverty status of rice farmers.

Ha: There is significant effect of Anchor Borrowers Programme on the poverty status of rice farmers.

1.6 Significance of the study

Studying the impact of the Anchor Borrowers' Programme on the poverty level of rice farmers in Nigeria is crucial for providing factual remedies, fostering inclusive development, and enhancing the welfare of rural communities. The objective of this project is to produce practical and valuable knowledge that will help improve efforts to reduce poverty and promote sustainable agricultural growth in the country. The study will function as a key source of information for farmers, politicians, students, and intellectuals.

An analysis of the impact of the Anchor Borrowers Programme on the poverty status of rice farmers can offer valuable insights into its efficacy in enhancing household incomes, diminishing poverty rates, and fostering economic empowerment in rural communities. These observations are essential for creating focused interventions to assist at-risk people and accomplish sustainable development objectives. Evaluating the effect of the Anchor Borrowers Programme on poverty levels among rice producers helps improve food security and nutrition results. The initiative seeks to enhance farmers' access to loans, inputs, and technical help in order to boost agricultural output and guarantee an adequate food supply. Consequently, this will have a favourable effect on general nutrition and well-being.

Moreover, the results of this study can provide valuable insights to policymakers and development professionals regarding the efficacy of the Anchor Borrowers Programme in alleviating poverty among rice farmers in Nigeria. The program can effectively showcase successful techniques, pinpoint difficulties, and propose policy improvements to maximise its impact on poverty alleviation and rural development.

In addition, the study can evaluate the impact of the Anchor Borrowers Programme on poverty status and also assess its wider social and economic effects, such as improved access to education and healthcare, enhanced gender equality, and increased resilience to economic shocks in rice farming communities. This study makes a valuable contribution towards the attainment of Sustainable Development Goal 1 (No Poverty), Sustainable Development Goal 2 (Zero Hunger), and Sustainable Development Goal 8 (Decent Work and Economic Growth) by finding solutions to improve agricultural productivity, alleviate poverty, and foster inclusive economic growth in Nigeria.

Moreover, the investigation into the effects of the Anchor Borrowers Programme on poverty levels among rice farmers contributes to the existing understanding of agricultural progress and ideas for alleviating poverty in Nigeria. The empirical evidence it provides can inform future research, policy-making, and program implementation efforts to support smallholder farmers and promote sustainable agricultural practices.

1.7 Scope of the study

The primary objective of this study is to critically assess the effect of anchor borrowers’ programme on poverty status of rice farmers in Nigeria. Specific objectives of this study are to:

To evaluate the effect of Anchor Borrowers Programme on the poverty status of rice farmers

To assess the effect of Anchor Borrowers Programme on enhancing the productivity of rice farming 

To assess the effect of Anchor Borrowers Programme on the income level of rice farmers in Nigeria

To Identify the challenges faced by rice farmers in accessing and benefiting from the Anchor Borrowers Programme.

Broadly, this study focus is to critically assess the effect of anchor borrowers’ programme on poverty status of rice farmers in Nigeria. Specifically, this study seeks to assess the effect of Anchor Borrowers Programme on enhancing the productivity of rice farming in Nigeria and assess the effect of Anchor Borrowers Programme on enhancing the productivity of rice farming. 

Further, this study will focus on assessing the effect of Anchor Borrowers Programme on the income level of rice farmers in Nigeria and it also seeks to Identify the challenges faced by rice farmers in accessing and benefiting from the Anchor Borrowers Programme.

 The study is carried out in Nigeria. 

1.8 Limitations of the study

Like in any human attempt, the researchers encountered several small limits during the investigation. The primary constraint was the dearth of comprehensive literature on the topic, given the scarcity of data pertaining to effect of anchor borrowers’ programme on poverty status of rice farmers in Nigeria. Therefore, a substantial investment of time and effort was required to identify the suitable materials, books, or information and to collect data. 

Moreover, this study is limited by its diminutive sample size and restricted geographical range, concentrating just on Nigeria. Hence, the findings of this study cannot be extrapolated, thereby necessitating additional research. 

Furthermore, the researcher's restraints were predominantly attributable to financial limitations, as they are a student without a means of revenue to support themselves. The research location's high transportation costs, impacted by current inflation in Nigeria, made it difficult to afford transportation fees.

In addition, the researcher encountered a time limitation as a result of the necessity to do this research while simultaneously meeting the responsibilities of attending lectures and engaging in other educational pursuits.

1.9 Definition of terms

Anchor Borrower Programme: The Anchor Borrowers Program (ABP) of the CBN was established in November 2015 with the objective of creating economic linkages between Small Holder Farmers (SHF) and Anchors

Agricultural commodities: Agricultural commodity. An unprocessed product of farms, ranches, nurseries, and forests and natural and man-made bodies of water, that the Independent Producer has cultivated, raised, or harvested with legal access rights

Small scale farmers: The term “smallholder farmers” is typically used to describe farmers who own small plots of land (in Nigeria – less than 5 acres of land) which they use to farm subsistence crops and one or two cash crops.