ECONOMIC IMPACT ANALYSIS OF VALUE CHAIN DEVELOPMENT PROGRAM (VCDP) ON FOOD SECURITY AND INCOME OF RICE PROCESSORS IN NIGER STATE, NIGERIA

CHAPTER ONE

INTRODUCTION

1.1. BACKGROUND OF THE STUDY

The International Fund for Agricultural Development (IFAD) is a specialized agency of the United Nations (UNs), it was established as an international financial institution in 1977 as one of the major outcomes of the 1974 World Food Conference. It resolved that an International Fund for Agricultural Development should be established immediately to finance agricultural development projects primarily for food production in the developing countries with focus on alleviating poverty of the rural dwellers through investment in agricultural activities, as agriculture is seen in the developing countries as a sector with viable potential to move the rural poor out of poverty and with the capacity to feed the world. In sub-Saharan Africa for instance, maximizing the potential of agriculture would yield faster growth in reducing poverty than investment in other sectors, knowing the world population and the increasing demand, as population rises. The sub-Saharan Africa has enormous natural, physical and human potential, compared to the developed countries where the cost of producing food is becoming high and land is scarce. With the magnitude of untapped resources in sub-Saharan Africa, the focus of the international community (Agricultural finance donors) has shifted from food aid to developing the capacity of the numerous smallholder farmers to increase their productivity (R.N Mgbenka & E.N Mbah, 2016). Africa has large expanse of land and with enough resources, agriculture would set a new pace for Africa’s growth and development. The IFAD intervention maximizes the potential of smallholder farmers by exposing them to opportunities through inputs support, market access and services that would increase their farming yield, build their human capacity and consequently increase their income. Through low-interest loans and grants, IFAD works with governments to develop and finance programmes and projects that enable rural poor people to overcome poverty. Since starting operations in 1978, IFAD has invested US$14.8 billion in over 900 projects and programmes that have reached some 400 million poor rural people. Governments and other financing sources in donor countries, including project participants, contributed US$12.2 billion, and multilateral, bilateral and other donors provided approximately another US$9.6 billion in co-financing. This represents a total investment of about US$21.8billion. The IFAD intervention in Nigeria is focused on Value Chain Development Programme (VCDP) because of the challenges faced by smallholder farmers such as low productivity, poor access to market, poor processing technology, lack of adequate information, high costs of farm inputs, inadequate credit system, the vicious cycle of poverty and the recent challenge which has seemed formidable; climate change. The partnership between the International Fund for Agricultural Development and the Federal Government of Nigeria is focused on cassava and rice smallholder farmers, knowing the potential economic value of the staple crops if every challenge is removed from planting through harvesting to consumption. Also, to achieve Nigeria’s Agricultural Transformation Agenda which aims to increase production, reduce food imports and provide millions of new jobs for young people; the potential of agriculture needs to be adequately harnessed since the sector is seen as an alternative to the oil dependent economy that has not been able to deliver the country from economic, social and other challenges be-devilling the nation. Over 80% of the total farming population in Nigeria are smallholder farmers cultivating less than 5 hectares in the rural areas producing about 95% of the total national output, yet poverty still remains a rural phenomenon with two-thirds of the total population considered poor. The Value Chain Development Program is a development initiative that was contrived for Nigeria, it is an approach to tackle the challenges faced by smallholder farmers. The six-year programme is aimed at improving cassava and rice value chains in six states in Nigeria by proffering solutions to low productivity, limited access to productive assets and inputs, paucity of opportunities for value addition, inadequate support services such as extension services and research, inability to access rural financial services, inadequate market and rural infrastructure. The IFAD/FGN adopted the value chain approach to enhance productivity, promote agroprocessing, access to markets and opportunities to facilitate improved engagement of the private sector and farmers’ organisations. The programme, through commodity-specific Value Chain Action Plans (VCAP) at different local governments in the participating states engages with actors along the chain – producers, processors, marketers and their farmer organisations as well as public and private institutions, service providers, policy and regulatory environment to deliver relevant and sustainable activities that would lead to gradual transformation of the sector and contribute to achieving food security, expand income-generating activities and employment opportunities. The field research indicates that, IFAD-VCDP has contributed to the increased standard of living of smallholder farmers in the area as they all could attest to provision of farm inputs, improved market access and linkage to extension services, participation in trainings, increase in income e.t.c. For effective coordination and monitoring of the intervention, the implementing state (Niger state) ensured every farmer belonged to a farmer organization and existing ones were recognised and adjusted to suit the modus operandi of the intervention.

1.2 STATEMENT OF PROBLEM

The value chain describes the full range of activities that firms and workers do to bring a product from its conception to its end use and beyond (WBCSD, 2011).The three main pillars of the Value Chain Addition (VCA), namely production, processing and marketing of the produce, are the main aspects that relate directly to the food security framework. The reason for the existence of a value chain is that goods, services or information are passed on to the different actors. Low productivity undermines potential food production and stifles income quality and keeps many farming families impoverished, hungry and undernourished. Inability to access capital to buy modern agriculture inputs reduces productivity yield of smallholder farmers knowing how much we rely on farm produce for our daily consumption and the process or efforts put into production, marketing and distribution; farmers‟ livelihood hasn’t been improved evenly and therefore, some still leave below the poverty line. Through value addition interventions, it seems promising for their livelihood to be improved.

1.3. AIMS AND OBJECTIVES OF THE STUDY

The major aim of the study is to examine economic impact analysis of value chain development program on food security and income of rice processors in Niger state, Nigeria. Other specific objectives of the study include;

1. To examine the benefits of value chain development program on farmer’s productivity and security.
2. To examine the profitability of the rice farmers through value chain development program.
3. To examine the socio-economic impact of value chain development program on food security and income of the rice farmers in the study area.
4. To identify the constraints and opportunities in rice value chain and to recommend measures for improvement.
5. To examine the relationship between value chain development program, food security and income of rice processors in Niger state.
6. To examine the importance of value chain development program to rice farmers in Niger state.
   1. RESEARCH QUESTIONS

1. What are the benefits of value chain development program on farmer’s productivity and security?
2. What is the profitability of the rice farmers through value chain development program?
3. What is the socio-economic impact value chain development program on food security and income of the farmers in rice processors in the study area?
4. What are the constraints and opportunities in rice value chain and measures for improvement?
5. What is the relationship between value chain development program, food security and income of rice processors in Niger state?
6. What is the importance of value chain development program to rice farmers in Niger state?

1.5 RESEARCH HYPOTHESES

Hypothesis 1

H0: There is no significant socio-economic impact value chain development program on food security and income of the farmers in rice processors in the study area.

H1: There is a significant socio-economic impact of value chain development program on food security and income of the rice farmers in the study area.

Hypothesis 2

H0: There is no significant relationship between value chain development program, food security and income of rice processors in Niger state.

H1: There is a significant relationship between value chain development program,  food security and income of rice processors in Niger state

1.6 SIGNIFICANCE OF THE STUDY

The study would be of benefit towards providing relevant information to value chain actors that would enhance the competitiveness of the rice value chain. This research tends to bring to the fore the optimum rice enterprise combinations in the study area, as well as the distribution of the gains within the value chain. This would be of immense benefit to the value chain actors, especially the farmers who are resource constrained and lack adequate information on the right production system to adopt in other to optimize profit. The study would also be of immense benefit to students, researchers and scholars who are interested in developing further studies on the subject matter.

1. SCOPE AND LIMITATION OF THE STUDY

The study is restricted to economic impact analysis of value chain development program on food security and income of rice processors in Niger state, Nigeria.

1. LIMITATION OF THE STUDY

Financial constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview)

Time constraint: The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1. DEFINITION OF TERMS

Smallholder Farmers: Smallholder farmers are often referred to small scale farmers with less access to resources to farm. Small scale farmers are defined as those farmers owning small-based plots of land on which they grow subsistence crops and one or two cash crops relying almost exclusively on family labour. (DAFF, 2012)

 Value Chain: Value chain development describes the full range of activities which are required to bring a product or service from conception, through the different phases of production (involving a combination of physical transformation and the input of various producer services), delivery to final consumers, and final disposal after use. These include activities such as design, production, marketing, distribution, and support services up to the final consumer (and often beyond, when recycling processes are taken into account). (WBCSD,2011).