Anchor Borrowers Programme Loan: How To Form Farmers’ Cooperative To Access Agric Funds

If you don’t belong to a functional farmers’ cooperative, you are definitely missing out on a lot of funding opportunities. One of such is the Anchor Borrowers Programme Loan or ABP.

The fact that the last update most of you heard about the agricultural loan was sometimes in July 2020, yet there are some modalities going behind the doors and how you can proactively tap into the ABP loans in boosting your agric produce.

It is one of the loans being funded by the Central Bank of Nigeria (CBN) just like AGSMEIS loan which we discussed extensively in one of our publications.

What’s ABP loan all about?

Year of Establishment: November 17, 2015

Sponsor: Central Bank of Nigeria

Available Loan Under ABP: Provision shall be provided from the N220 billion Micro, Small and Medium Enterprises Development Fund (MSMEDF).

The loan amount for each SHF shall be arrived upon from the economics of production agreed with stakeholders

Interest Rate: 9% per annum (all-inclusive, pre and post disbursement)

Repayment: Loans granted to the SHFs shall be repaid with the harvested produce that shall be mandatorily delivered to the Anchor at a designated collection centre in line with the provisions of the Agreement signed. The produce to be delivered must cover the loan principal and interest.

Cardinal Requirement For Access: Groups or cooperatives of between five and 20

Cardinal objective: To address Nigeria’s negative balance of payments on food.

The ABP loan came up with the aim of linking anchor companies involved in the processing and smallholder farmers (SHFs) of the required key agricultural commodities.

Loans which are provided by the Central Bank of Nigeria (CBN) are used to procure farm inputs in kind and cash (for farm labour) to aid the production of the farmers in their localities and stabilize inputs supply to agro-processors.

This became imperative because of the dependence of Nigeria’s economy on the importation of agricultural products and consumables.

Pathetically, some of the importations can reliably be produced at home if there is enabling environment and financial supports for farmers.

If you cultivate any of the below-targeted commodities of comparative advantage to your state, you can access the programme, some of the commodities are:

• Wheat
• Cotton
• Cassava,
• Yam,
• Ginger
• Oil palm,
• Sesame seed,
• Cowpea
• Cocoa,
• Rubber
• Soybean,
• Ruminants
• Tomato
• Fish,
• Poultry,
• Sugarcane
• Potatoes,
• Rice,
• Maize,

How it works

Smallholders farmers supply their agric produce to the Agro-processor (Anchor) who in turn pays the cash equivalent to the farmer’s account.

The government loan is aimed at boosting the confidence of the SHFs in large scale production.

Stakeholders of the programme:

The major players in the programme are:

• The apex bank
• Nigerian Agricultural Insurance Corporation (NAIC
• Development partners
• Financial institutions
• Small Holders Farmers
• State governments
• Anchor company
• Project Management Team (PMT)
• Nigerian Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL)

How To Form Farmers’ Cooperative Group To Access ABP Loan

In 2020 when the programme was launched I could remember that a friend called in a bid to form a farmers’ cooperative in order to access the loan.

To cut the story short, he couldn’t get access to the loan because he didn’t belong to the farmers’ group and his effort to raise proved abortive.

Accessing agric loan or any of the available government loans doesn’t really work by fire brigade approach.

Most times, you would need to prove that you are a genuine farmer and must have a functional association registered by the Corporate Affairs Commission (CAC).

So what are the requirements in forming farmers’ cooperative? To organise this kind of society, take note of the following:

• In your community, organize yourself into groups/cooperatives
• Cross guarantee one another
• Have evidence of farm ownership
• Find an extension workers at the state Ministry of Agriculture to work with

Step-By-Step Guide of Establishing Farmers’ Cooperative Group

Step 1: Identity interested and committed farmers in your community

Step 2: Brainstorm on a name for your group

Step 3: Draft a constitution for your association. You can employ the services of a lawyer to execute this for you

Step 4: Choose the executive among yourself. This is because you shall have a representative to serve on the Project Management Team.

Step 5: Ensure participating member open bank account and obtain Bank Verification Number (BVN).

Step 6: Legalise your farmers’ association by getting it to register at CAC

Step 7: Apply for Anchor Borrowers Programme Loan

For instance:

If Farmer A has the capacity to produce 50 bags of corn at the end of a production season, Farmer B has the production capacity of turning in 40 bags of cocoa etc, you can organise yourself into farmers’ cooperative.

Note:

Ensure that core farmers belong to your association because the government frowns at diverting to loan to something else.

You must also commit to abide by the terms of the agreement and not to side sell produce

Ensure that you repay the loan as and when due by surrendering the output to the Anchor or State

Provide equity contribution in cash of a minimum of 5 per cent of the loan amount.

Final thought:

Don’t rush to form farmers’ cooperative when there is a privilege to apply for an agric loan.

A document by the apex bank shows that you must start now if you really want to enjoy some of the benefits of CBN loans targeted at core farmers across the country.

According to NIRSAL, the programme was designed with the projection of creating over 250,000 direct jobs for farmers and up to 1.25m indirect jobs across Nigeria.

The time is NOW!