You have probably heard a thing or two about agricultural reform in Nigeria recently. The current minister of agriculture, Dr. Akinwunmi Ayo Adesina, is touted as one of the better performing minsters. Some of his reform programs, such as the restructuring of the fertilizer distribution scheme, have been somewhat successful. Cue the plea to youth to get back to agriculture. The argument is that things may finally be turning around in agriculture. I however argue that although gains have been made, key reforms to permanently improve the productivity and contribution of agriculture have yet to happen. I argue that in the long term land use reform is key to sustaining the progress made in agriculture. Without such reform, the rise of agriculture will likely slow soon, and is unlikely to attract much investment.  In order to understand why this is the case it is useful to think about the farm sizes and how profitable farming can be given the current average size of farms.

Data on average farm sizes in Nigeria is hard to come by. To the best of my knowledge there is no official data on the average farm size in Nigeria. The consensus however seems to be that farm sizes are relatively small. A couple of papers document farm sizes ranging from 0.5 hectares to about 3 hectares depending on the region. For the purposes of this article I will assume the average land size is 2 hectares. The bottom line is that farming in Nigeria is predominantly done on a small scale.

Now given that the farm size is 2 hectares, how much income can the average farmer earn? What is the hypothetical best case scenario? Well it depends. It depends on the actual crop farmed, the yield and the market price of these crops. To figure out the best case scenario I considered crop profits from some of the more “productive” countries for crops grown in Nigeria. Cocoa, maize, cotton etc. According to the national cotton council of America, the annual returns of cotton in 2011 in the US was about $123 per acre. A two hectare cotton farm in a country with US-level developed value chains would therefore have fetched a profit of about $607, or about N8105 a month. Not very exciting is it? The numbers for cocoa are no better. A study by the sustainable tree crops program estimates that in Ghana the average returns per hectare average at just under GhC1000 over time. That comes to about N14500 a month. Another financial times article in 2010 put the revenue of cocoa farms in Ivory Coast at about $800 per hectare. This comes out to revenue of about N20000 per month for cocoa farmer with two hectares of land. Remember this doesn’t include costs. Ghana and Ivory Coast are two of the larger cocoa producers. The returns per acre for other crops should be similar. Given an average farm size of two hectares, the potential earnings for farmers isn’t very exciting, although it is more than $1 a day

The bulk of the agricultural reforms done so far have been centered on increasing the productivity of farmers, increasing the returns each farmer gets given his average of two hectares of land. It is pretty clear however, that there is only so much farmers can earn from their relatively small farms. The key factor in increasing the earnings of farmers in the long run depends to a large extent on the size of farms farmers have to work with. The average size of farms however appears to be shrinking. A 1952 survey of cocoa farmers in Western Nigeria by the Nigeria Cocoa Marketing Board put the average size of cocoa farms at about 10 hectares. A 2007 study of cocoa farms in Osun state put the average farm size there at about 5 hectares. Recall the nationwide average is about 2 hectares. This suggest that average farm sizes are falling.

The current land use act is probably to blame for this decline in farm sizes. The current land use act grants local governments control and management of rural land. The act further empowers local governments to administer lands based on customary practices for agricultural purposes. What this really means is that the bulk of rural land isn’t traded but distributed mostly by inheritance. A 2009 study by the International Food and Policy Research institute put the percentage of agricultural land in Nigeria distributed through inheritance at between 62.5% and 76.8% depending on the source. Considering that the size of inherited is usually smaller or at least equal to size owned by original occupier, it is no surprise average farm sizes are falling. The current land use act implies that average farm sizes will keep falling as long as customary practices remain the dominant source of land distribution. Another side effect of customary land allocation practices is that it limits the opportunities for outsiders. By outsiders I refer to farmers whose farms are not in areas where they are historically from. It is not uncommon for outsiders to be systematically kicked off land. Such practices reduce the incentives for investment in farms thereby reducing the potential earnings of “outsider” farmers. Finally,shrinking farm sizes also reduce the incentive for farmers to make investments in farm technology, a long run driver of increasing productivity.

The current agricultural reforms are commendable and have produced real returns. Improving the agriculture value chain can and does increase the earnings of farmers. In the long run however the average size of farms needs to increase. The land use act needs to be tweaked to allow land to be allocated through a more market centered approach and not through customary inheritance practices. There are caveats with market based land allocation, land grabs for instance. On average however, market centric land distribution should allocate land more productively. More importantly it should allow for farmers to more easily increase the size of their holding and consequently their incomes.