BIOFUELS ADOPTION IN NIGERIA: ATTAINING AN EQUILIBRIUM IN THE FOOD, FUEL, FEED AND FIBRE OBJECTIVES

BIOFUELS ADOPTION IN NIGERIA: ATTAINING AN EQUILIBRIUM IN THE FOOD, FUEL, FEED AND FIBRE OBJECTIVES Nelson Abila Department of Industrial Management, ...
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BIOFUELS ADOPTION IN NIGERIA: ATTAINING AN EQUILIBRIUM IN THE FOOD, FUEL, FEED AND FIBRE OBJECTIVES Nelson Abila Department of Industrial Management, University of Vaasa P.O. Box 700, 65101 Vaasa, Finland

ABSTRACT The drive towards economic development in Nigeria brings about the pursuits of many objectives. The Federal Government of Nigeria is currently promoting the production, processing and utilization of biofuels. This paper investigates the pros and cons in biofuels adoption in Nigeria vis-à-vis the attainment of a balance in the food, fuel, feed and fibre objectives. Crops already profiled as preferred sources of feedstock for the primary biofuels production are also crucial for food, feed and fibre. The land, water, labour and other resources needed for producing these crops are limited, hence the need for a balance. The paper explores the possible scenario for attaining a balance in the multiple goals and also proposed an optimum solution in the pursuits of the objectives for attaining economic development. In conclusion, the paper presents policy recommendations for implementing a sustainable biofuels adoption while attaining other equally important but conflicting objectives. Keywords: Biofuels, objectives, resources, economic development, Nigeria 1. INTRODUCTION The multipronged natures of energy make it a critical factor in the pursuits of economic growth and development objectives of any nation. Nations such as

Nigeria that are endowed with the conventional energy resources such as petroleum, coals and natural gas must harnessed these resources to meet the fuel requirement for growth and development. Harnessing the resource endowments for renewable energy generation is equally important. Karekezi (1) quoted an earlier report which indicated that the rationing of electricity in Ethiopia, Kenya, Malawi, Nigeria and Tanzania impacted adversely these economies. Energy is required for driving activities in the various sectors responsible for meeting the food, fuel, feed, and fibre targets which in turn determine the aggregate contribution of agriculture to the national gross domestic product (GDP). The dependence of Nigeria on imported refined petroleum products for meeting the local consumption for transport, electricity generation and powering other activities is a major concern. Recent industrial and civil crisis relating to the hike in price of petroleum products, resulting from the removal of subsidies on imported refined petroleum products is an indicator of how dire the energy situation in Nigeria is. Meeting the food and fibre components of the national objectives is also dependent on import due to the decreasing production capacity and productivity of the agricultural sector. Like in other countries with food security concern in West Africa, Nigeria import food to meet the shortfall in local demand that local production cannot fulfil (2). The trend in import has been on the increasing making Nigeria a net imported of food. The overall impact of unstable supply of imported petroleum products, unstable prices tied to prices of crude

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internationally constitute further constraint on an economy with increasing unemployment, poverty rate among other socio-economic indicators. The introduction of the biofuel policy in 2007 was set provide an alternative path through agriculture to solving some of the socio-economic problems. This paper will explore the pros and cons of pursuing domestic production of biofuels as it affects the national objectives of the security of food, fuel, feed and fibre.

disposed of, constitute environmental pollution and ecosystem destruction, to be channelled into feed for livestock in an integrated production system. The interlink between agriculture and the new energy sources – biofuels makes the need for ensuring interdependence and optimal sharing and allocation of the limited resources as well as transfer of bye-products from one enterprise to the other, the required paradigm shift to ensure biofuels sustainability.

2. MAKING BIOFUELS SUSTAINABLE

2. THE CURRENT SCENARIO OF THE FOUR OBJECTIVES

Biofuels adoption, promotion and utilization do not necessarily and should not be about trade-offs between fuel and food or indeed other essentials such as fibre, feed, ecosystem preservation or biodiversity conservation. Biofuels use in the various primary forms has been part and parcel of our humanity since man discovered fire. Therefore, scientific arguments – environmental, technological, political, social and economic are no longer about if biofuels are acceptable but on how to guarantee and stabilize gains from the adoption of biofuels; maximize biofuels output per investment in feedstocks, processing technologies and distribution channels; optimize natural resource use in a biofuels’ revolution; minimize environmental impacts and develop efficient frameworks for meeting biofuels targets. van Braun (3) observed that the Otto motor and Diesel engines earlier innovations originally ran on biofuels. The increasing adoption, promotion and investment into biofuels development have become irreversible owing to the obvious and mainly incontestable factors driving the biofuels revolution. From the political, to economic, to environmental, to social factors driving biofuels adoption (4, 5, 6, 7) it is obvious that the additional goals is to ensure a sustainable biofuels’ era. von Braun (3) argued for a broader conceptual perspective in assessing biofuels issues rather than the use of simple yardstick of trade-offs between food and fuel. As much as the three main domains proposed by von Braun (3) remain valid, the policy formulations and discussions about biofuels should transcend the meeting point between agriculture and energy on the political, economic and environmental domain. The emerging pivot for pushing for sustainable biofuels utilization is allowing for a balance in the pursuits of the multiple, competing and or complimenting objectives. The pursuit of the food, fuel, feed and fibre objective can be seen beyond the competition for available arable lands, water resources, labour and capital. In avoiding conflict in pursuits of these multiple goals, interlink between the objectives through a vertical integration that allows for bye products from one venture to be transfers to another will enhance productivity. A perfect example is ensuring that the byeproducts from cassava production and processing that have for some time been considered as waste and

2.1 Food, Fuel and Feed Production in Nigeria Nigeria has been a net importer of processed and unprocessed foods since the discovery of petroleum gave way to the reduced priority over agricultural production. FAO (8) reported that wheat and milled rice top Nigeria’s staple food import apart from other dairy and processed products such as tallow, palm oil, milk, malt and margarine. The value of Nigeria’s top twenty import agricultural commodity stood at $3.7billion for 2009. This is an indication of the inability to meet consumption of key staples from domestic production. Efforts in the last decades has been on increasing local production of staple crops such as rice accounting for a huge drain on the foreign reserve, and tilting the trade balance towards the negative. von Braun (9) analysis of the global food situation posited a not obvious change in the food consumption pattern in Nigeria from 1990 to 2005 unlike in other developing economies where a high demand for high valued food products such as meat, milk, fish, fruits and vegetables has witnessed marked increased. Nigeria continues to struggle with the food crisis, chief among which is high inflation on food prices. The prevailing food concern in Nigeria has been a symptom of the declining local production, which is exacerbated by the energy crisis facing the country. Curbing the spiralling inflation on food prices requires ensuring affordable and profitable local production and or the distribution of the imported food products which is dependent largely on the fuel prices. The tie between food prices and fuel prices has increasingly become entrenched with the dependent on import for meeting local fuel consumption. Hike in the price of crude internationally translate into an increase in the cost of everything, particularly food with no visible safety net such as subsidizing the transport and haulage for food products. The lack of cheaper alternative fuelling options for heavy transport other than expensive diesel makes the drive towards developing locally produced biodiesel a priority for curbing food crisis. The entire value chain of food production through processing to distribution require diesel – the most expensive petroleum product in Nigeria.

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The fuel consumption in Nigeria has also been import dependent. Jesuleye et al. (10) indicated an increasing importation of refined products as the local refining capacity of declined. This indicates the supply for meeting local fuel consumption for transport, cooking, lightening and electricity generation that represent the topmost demand for petroleum of products diesel, petrol, and kerosene have increasingly depend on import. The fuel situation is further compounded by the persisting inability of the country to generate electricity for household and industrial need. With the current rate of electricity generation in Nigeria hovering around 4000 MW, the inadequacy of this generation capacity get more glaring as the population increases. Abila (4) highlighted the dependence on primary biomass for basic energy requirements such as cooking on the account of the lack of the conventional and cleaner alternative. IEA (11) shows that electrification rate for Nigeria only covers about 47 percent of the country. This data only rates to the electrification infrastructure and does not provide the frequency and quality of the supply of electricity which has been on the decline even in areas with installed transmission structures. Most homes, businesses, public and private institutions have to resort to standalone electricity generation running diesel or petrol.

hydrological conditions for the production of most fibres crops, but cotton has been the main going concern. Bamboo, jute, hemp and other fibre crops grow very well in Nigeria, but these have not been harnessed at a commercial scale, nor has there been an obvious concerted effort devoted to their production at a large scale for deriving fibre raw-materials for meeting the local manufacturing demand or for export. Cotton, which has dominated the fibre sub-sector in Nigeria has witness spiral trend in the production since 1960. The five decades data for cotton production in Nigeria shows an up and down trend within each decade with the 80s showing the lowest production of cotton lint when the country produced a mere 10,524 tonnes. Since the lowest record of 1985, cotton lint production has witness an unsteady growth. According to FAO (8), the cotton production in Nigeria peaked with 0.197million tonnes of cotton lint in 2006. Fig. 1 shows the unstable production this main fibre crops over five decades. Like it is for other agricultural commodities such as cocoa, rubber, ground nut which have to a great extent stable international demand, Nigeria production has been inconsistent. Abila (4) compared the ranking of Nigeria on productivity per hectare devoted to the production of major biofuels crops. For most of these crops, Nigeria ranked lower in productivity as compared to the country higher rank in terms nominal output and land area cultivated. For cotton, Nigeria ranked ninth in terms of land area cultivated, but ranked eighteenth in terms of productivity. Increasing the productivity per land, labour, capital and other resources devoted to the production of cotton lint and by implication, cotton seed is an essential goal that must come along with the pursuits of increasing nominal output.

The feed concern is also capture by the current shortfall in meeting animal protein requirement for the country. FAO (8) data shows Nigeria still depend on import for meeting the requirement for meat, eggs, milk and other animal products. This indicates the inability of the country to meet the demand for animal products, particularly dairy products such as milk, cheese, among others, from the local production.

The Federal Government of Nigeria (FGN) has set forth a target of tripling the current production level for cotton lint and cotton seed by 2015. This target aims to engender local production of cotton lint and cotton seed for the

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Fig. 1: Five decade trend in cotton production in Nigeria

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purposes of reviving the nearly extinct textile industry, and stimulate production of allied industries such as the vegetable oil production. The drive for revamping the local cotton production is towards increasing the contribution of the fibre sub-sector to the agricultural component of the GDP which has been low for some time.

3. RESOURCE CONSTRAINTS FOR ATTAINING FOOD, FUEL, FEED AND FIBRE OBJECTIVES The four objectives are natural and human resources dependent. The food, fuel (biofuel), feed and fibre are agriculture related objectives which require access to land, labour, water for their production. Spiertz and Ewert (12) hinted on the dependence of production of food, feed and fuel objectives on the critical resources of land, fresh water, and biodiversity. von Braun (3) outlined the resources critical for a nation to qualify for having the potential for biofuel production to include water resources and availability of arable land. In Nigeria, land, water, labour and capital are critical resources for the production of biofuels feedstocks. These resources are also critical for the production of food, feed and fibre. The existence of these multiple objectives set the fundamental need for prioritization of the utilization of the limited resources for attaining optimum production and productivity levels for each objective. Optimizing the production and productivity of these sub-sectors of agriculture is necessary for increasing the sector’s contribution to economic growth captured in the national GDP. The top nineteen major crops produced in Nigeria currently account for 31.9million hectares (8) The total land area devoted to the cultivation of yam, cassava, citrus, vegetables, ground nut, rice, maize, millet, sorghum, okra, plantain, cocoyam, cashew, cowpea, mango and oil palm which constitute the main top crops produced in Nigeria only account for the 42.9 percent of

the total agricultural land area of Nigeria. Fig. 2 shows the spiral utilization of land for the production of these top essential crops between year 2000 and 2009 based on the FAO estimates. This indicates an underutilization of the existing arable and agricultural land resources of the country. The irrigated land resource of the country is also underutilized as agricultural production has not increase significantly to harness the full capacity of the installed dam and irrigation facilities in the country. Apart from the current underutilization of land resources, Abila (4) detailed the very low productivity per hectare of land resource devoted to the production of the main food crops which are also possible biofuel crops in Nigeria. Though the country ranked among the topmost in the nominal production ranking for cassava, sesame, oil palm, ground nut, soya bean, coconut, cotton and maize, the country’s ranking in terms of land-use productivity is still abysmal. This is an indication of the inefficient resource management, particularly for land and other resources that should have contributed to increase the return per hectare devoted to the cultivation of these crops. FAO database on resources also indicated that irrigation facilities in Nigeria between 2000 and 2009 have remained stagnant. This indicate of the lack of growth in the utilization of the fresh water resource for irrigation to boost the production of the major staples crops and extending production period beyond the restrictive rainfall regimes of between 8 to 3 months in the forest and savannah agricultural zones of Nigeria. Though the urban population has been steadily on the increase in Nigeria, the agricultural population has been relatively stable in the last decade. Agricultural credit facility currently attracts lower rate compared to credit facilities for other sectors. The CBN agricultural credit guarantee scheme provides lower lending rate. The coopting of major commercial banks in into the agricultural credit scheme provides some respite for curbing the

Fig. 2: Arable land utilization between 2000 and 2009

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bottleneck in accessing credit. Fig. 3 shows the value and access to the guaranteed agricultural credit for between 1978 and 2010. The figure captured the value of the accessed credits for major agricultural enterprise production which includes oil palm, rubber, cocoa, cotton, ground nut, cereals, and root and tuber crops. Other agricultural sectors captured in the data are poultry, cattle, sheep and other livestocks. The figure shows a steady increase in value of accessed guaranteed credit from year 2000, but witnessed a decline in 2006. This spiral nature of the value and by implication access to the credit facility may account for the decline in productivity in the major agricultural sub-sectors. Even as it is not certain what accounts for the decline after a progressive climb in the value and access to credit, one may assume the series of banking consolidations and resultant banking crisis following may have impacted on the administration of the credit facility and the accessibility to small holder farmers. The existing biofuel policy of Nigeria also provide a guarantee window to ensure access for credit facility for pioneers in upstream and downstream sectors of the biofuel industry in Nigeria. There is need to synchronise credit policy that will be implemented under the biofuel policy promotion with the existing agricultural credit scheme. A synergy of existing favourable credit facilities (guaranteed or not) must be attained and geared towards attaining a balance in production of food, fuel, feed and fibre.

4. THE LINKAGE BETWEEN BIOFUELS ADOPTION AND THE FOUR OBJECTIVES The entire value-chain from on the farm production to processing of the four outline products require fuel. The

production of biofuels particularly at the farm level provides an alternative fuelling option for farm operations. Enhancing energy self-sufficiency for farms, particularly fuel for tractor operations, haulage, running generators for electricity used in processing and refrigeration will be a good cost saving option, for increasing productivity, increasing profit and reducing farm level emissions. Though it is expected that there might be a competition between food, fuel, feed and fibre objectives, it is anticipated that an efficient allocation of the required resources and design an appropriate plan for implementing vertical integration of production will help in increasing productivity per resource utilized. This paper is premised on the assumption that going by the current concerns for food, fuel, feed, and fibre, the adoption and development of biofuels in Nigeria creates a unique avenue for creating a linkage for attaining balance between the objectives and attaining desired growth in each sub-sector and the required minimum contribution to GDP which will better reflect evenly distributed economic growth rather than a skewed growth accounted for by a few promising sub-sectors. Attaining a balance in the multiple objectives, which are as equally complementing and competing can be achieved through integration, that is, channelling, bye products or hitherto unutilized wastes from one objectives venture into another. Bye products such as waste and compost will contribute to increasing the attainment of other objective ventures by improving the utility of constraint resources such as land and labour and offsetting the cost of capital. In the scenarios where the objectives ventures cannot be paired or co-produce

Fig. 3: Value of Guaranteed Agricultural Credit from 1978 – 2010

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attainment of the objectives. Policy interventions should be tailored towards the stimulation of small and medium scale holder farms to attain balance in production of at least two objectives.

simultaneously, an arrangement for consecutive production plan bringing in additional resources at lower cost may be appropriate. A typical example can be producing food crops when they are better produced optimally rain fed and switching to biofuel crops during the dry season or seasons of low rainfall for crops with less demand for rainfall. The scenario may have to be varied from the low rainfall regions of northern agro ecological zone to the high rainfall humid southern region.

6. REFERENCES

The existing biofuel incentives and policies must go a little further to adjust the existing plans for the biofuel programs of the Federal Government and various other private and public entities to take cognizance of the need to attain balance in the multiple objectives. The growing population of Nigeria is a unique incentive and caution for taking a more analytical path which considers the element of growth in the population, and the attendant increase in the demand for the various objective ventures of food, feed, fibre, as well as the increasing constraints and possible conflicts between the objectives for the limited resources. Fig. 4 shows a possible integration pathway for integrating biofuels production with the other equally important objectives.

(1) Karekezi, S. Renewables in Africa—meeting the energy needs of the poor, Energy Policy, Volume 30, Issues 11–12, September 2002, Pages 10591069. (2) Kargbo, J.M., Food imports and foreign exchange constraints under macroeconomic adjustment programs in West Africa. Journal of Policy Modeling 29, 2007, pp. 81–85. (3) von Braun, J. “When food makes fuel: the promises and challenges of biofuels”, keynote speech at the Crawford Fund Annual Conference, 2007, Melbourne. (4) Abila, N., Biofuels development and adoption in Nigeria: Synthesis of drivers, incentives and enablers, Energy Policy, Volume 43, 2012, Pages 387-395 (5) Rourke, F.O., Boyle, F., Reynolds, A., Renewable

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Fig. 4: Conceptual Integration Path between biofuels and food, fuel, feed and fibre

5.0 CONCLUSION This paper has attempted a preliminary assessment of the pros and cons in the pursuits of the multiple and competing objectives of food, fuel, feed and fibre as Nigeria promotes biofuel development and adoption. In as much as the current agricultural production indicates the existence of room for increasing productivity, there is need for policy interventions to ensure a balance in the

energy resources and technologies applicable to Ireland. Renewable and Sustainable Energy Reviews 13, 2009, pp. 1975 – 984. (6) Charles, M.B., Ryan, R., Ryan, N., Oloruntoba, R., Public policy and biofuels: the way forward? Energy Policy 35, 2007, pp. 5737 – 5746. (7) Schut, M., Slingerland, M., Locke, A., Biofuel developments in Mozambique: update and analysis of policy, potential and reality. Energy Policy, 38, 2010., pp. 5151–5165.

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FAO 2010 FAOSTAT database. Available at:www.faostat.fao.org/default.aspx sourced on. (9) von Braun, J. The world food situation: New driving forces and required actions. IFPRI Food Policy Report, 2007, Washington. p18. (10) Jesuleye, O.A.; Siyanbola, W.O.; Sanni, S.A.; Ilori, M.O., Energy demand analysis of Port-Harcourt refinery, Nigeria and its policy implications. Energy Policy 35, 2007, pp. 1338–1345. (11) IEA, 2008, Energy Statistics 2008, (accessed 20.10.2010). (12) Spiertz, J.H.J.; Ewert, F. 2009. Crop production and resource use to meet the growing demand for food, feed and fuel: opportunities and constraints, NJAS Wageningen Journal of Life Sciences, Volume 56, Issue 4, June 2009, Pages 281-300

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