Agriculture and biofuel: Matters arising

TWO factors underlie the quest for biofuel energy production in Nigeria. First is the availability of vast arable agricultural land that is lying waste and largely uncultivated. The oil boom of the mid-70s upturned the country's economy from being predominantly agrarian to a crude oil based diseconomy. The result is the shift to oil as a major source of foreign revenue.

Consequently, the share of agricultural production in total exports reduced drastically from over 70 per cent in 1960 to less than two per cent today. How to rekindle interest in agriculture has for decades remained a daunting problem for government. The development of biofuel would inevitably boost agricultural production of the main cash crops needed for food as well as raw material in industrial biofuel production.

Second is the energy crisis that has overwhelmed the country due to the mismanagement of the crude oil revenue earnings and lack of appropriate energy policy framework. The collapse of the electricity sub-sector and the prohibitive cost of petrol, cooking gas and kerosene have forced the authorities to seek alternative sources of cheap energy. The result is the decision by government to give impetus to investment in biofuel production as one alternative source of energy.

Notwithstanding that the price of oil has soared steadily in the world market over the past three decades with Nigeria earning huge revenue now put at over $400 billion since 1960, the country's economy still remains among the least developed in the world.

For example, the country scored 0.470 (low) in the 2007 Human Development Index and was placed at the 158th position in the world. The poor state of affairs has been attributed to high-level corruption and mismanagement of the country's resources. This has impacted negatively on practically every sector of the economy. Nigeria suffers from chronic energy crisis that has left the country literally in darkness. Besides, with the abandonment of agriculture, the country has turned into a net importer of food while its vast arable land is lying waste.

Nigeria has great potential for agricultural development. Over 90 per cent of the country's land area is arable and could support a wide variety of agricultural products. It is estimated that 82 million hectares out of the country's total land area of 91 million hectares or 90 per cent are arable. Out of this, only 34 million hectares or 41 per cent are under cultivation mostly by peasant farmers. The remaining 48 million hectares of arable land or 59 per cent are lying waste and uncultivated. When it is considered that even the land under cultivation is underutilized, it becomes obvious that only a small proportion of Nigeria's land is actually cultivated.

Since the 1980s, the growth in agricultural output has been unimpressive. For example, in the first half of the 1980s when the country experienced stagnation, the growth in output averaged just about 0.5 per cent. Many farmers abandoned their farm plots in pursuit of other viable economic activities. Most of them took up white-collar jobs in the cities.

Shortly afterwards, there was a slight improvement in the fortunes of agriculture following some economic reforms introduced in 1986. These included improved producer prices, trade liberalization, dissolution of price-fixing marketing boards and the devaluation of the naira. These caused growth in the sector to rise slightly and averaged 3.8 per cent.

Many farmers returned to their abandoned fields and there was a burst of activity in cash crop production. The renewed zeal was however not sustained. Investment in cash crop production was little, instead, more food crop was produced which contributed to a fall in food importation from 19.3 per cent of total imports in 1983 to 7.1 per cent in 1991.

Although government has made effort through giving of incentives to encourage farmers to invest in agriculture and agro-based industries but this has not been successful. For example, the production of cocoa, which is the country's biggest non-oil foreign revenue earner has remained stagnant at around 160, 000 tons per year in 1995. In comparison, the annual average production of cocoa before the oil boom was more than 400, 000 tons. The same goes with the other cash crops.

The challenge before government is in revamping agricultural production and ensuring its sustainability. There is need to shift from subsistence farming to large-scale mechanized agriculture. It is on this basis that investment in large-scale cash crop production for biofuel energy would serve as catalyst in reviving agriculture.

Nigeria is currently facing a crippling energy crisis. The energy output is put at a mere 1400 megawatts (MW). This amount is generated from all power supply sources currently in operation. For the country to grow industrially, the energy generated should be in the neighbourhood of 30, 000 MW. There is a wide gap when this is put against what is currently produced. The country has a total installed power generating capacity of about 5, 000 MW comprising of both hydro and thermal power plants. There are eight main electricity-generating stations in the country.

Owing to official negligence and lack of maintenance, most of the generating power plants depreciated and could hardly generate a quarter of their installed capacity. Many packed up and went out of service.

Between 1999 and 2007, about N7.5 billion worth of contracts were awarded to rehabilitate the Egbin Power Plant, the biggest in the country. The same was done for the premier Kainji Dam.

Despite all these attempts, the power sector remains prostrate. It is alleged that the country spent N16 billion on the power sector in eight years under the Obasanjo administration without any change or improvement. Allegations of corruption, embezzlement and mismanagement of funds have trailed the award of the independent power contracts, which is now a subject of probe by the National Assembly.

The slow pace of action in the realization of the goal of boosting power supply through the independent power projects and the uncertainty surrounding the energy sector formed the basis for looking beyond hydropower and gas for alternative sources of energy. Biofuel is one energy alternative that is being explored.

Notwithstanding the criticisms against diverting agricultural land to biofuel crop production, government is in the process of developing a framework that would encourage the development of this form of cheap energy.

The argument that biofuel would put food out of the reach of the poor is out of the question in Nigeria. There is already hunger in the land without biofuel. While this may be true in some land hungry countries, this is not the case in Nigeria where 48 million hectares or nearly 60 per cent of the country's arable land is lying waste. Nigeria has enough land to grow food crops as well as industrial raw materials for biofuel production.

Under the post-independent agrarian economy, large tracts of land were held under the cultivation of export cash crops such as palm oil, cocoa, rubber, timber and cotton without reducing food crop production capacity.

Today, with the abandonment of agriculture, most of the tracts of land are lying waste. The land is neither used for the production of crops for food nor for industrial raw materials. It therefore makes more economic sense for the country to put the land into crop cultivation for biofule production.

Nigerians are desirous of having cheap energy supply irrespective of the source. There is no discontent from the people on the development of biofuel technology in the country. Government on its own is gradually bracing up with the idea of developing bioenergy if that will help to reduce the country's energy crisis.

In 2007, government approved and issued a gazette on a National Biofuel Policy Incentive (NBPI), which provides the enabling environment for investors to operate.

Furthermore, the Nigerian National Petroleum Corporation (NNPC) has created a Renewable Energy Division (RED) to spearhead the development of biofuel industry in the country. RED has launched a biofuel initiative by inviting Expressions of Interest (EoI) to enlist join-venture investors into the industry.

Global Biofuels Limited, a private venture concern, has also initiated the construction of Nigeria's first biofuel refinery at Arigidi-Akoko in Ondo State. The refinery is expected to begin operation in 2009 with a daily production capacity of about 1,5 million litres of ethanol. No fewer than 58, 000 people would be employed in the project directly of indirectly. Other large-scale biofuel projects are being initiated in Jigawa and elsewhere. Undoubtedly, biofuel holds great prospects for agricultural development as well as mitigating the energy crisis in Nigeria.