Chairman, Tuns Farms Nigeria Limited, Mr. Olatunde Badmus, in this interview with James Emejo, spoke on how to better reposition agriculture to support government’s drive for self-sufficiency. Excerpts:
Sir, can you share your experience of the poultry sector of the Nigerian economy, having being an active player for almost three decades?
Well, it has been a wonderful experience because it has not been easy; the beginning has not been very easy. My actual experience was from the reportorial of being a journalist to also being a farmer in the poultry sectors.
I started with buying and selling electronics equipment to some of the broadcasting stations in the country. The government policy drives the economy, it was then, when the Babangida administration now ruled that before you can have an import license , just like when we have the scarcity of foreign exchange, we said before you can access foreign exchange or import anything, you must have a farm-and that was the policy then. So I was so anxious and desirous of- I have to just acquire some lands and begin to farm. You have to attach your C of O and any other document in getting the import license to import electronics.
But as God would have it, instead of giving me an import license to import electronics, I was given an import license to import agricultural materials which I didn’t know anything about: so when I reported that I was giving an import licence to bring in what is known as concentrate; this is concentrate used in compounding animal feed. I was given a licence also to bring some disinfectants like izal or chemicals for agricultural input.
So since I didn’t have any other job, I had to import all those things, that’s what I had an import licence to bring in to the country. And bringing them into the country I didn’t have a ready- made market, but the farm which I put up, I planted maize. Somebody now said look, if you have planted maize, you have concentrate, what you need to do now is begin to produce live stock feed, which I started producing and the other chemicals I have to sell at a loss because that has not been my line.
But irrespective of selling, I got some machine locally fabricated and started milling feed, and in those days also when you deliver the feed you have to sell on credit and at times some people will come to you to say, oh your feed is not good , it has killed my bird and that was what also led me to have the birds, since I had the feed, I had the premises and that was how I started poultry farming. And the poultry farming started with egg production, from egg production, I then now specialised in the meat production. And all along that has been the case. But, again, the imported chicken from all sort of world came in and most of the farms were closed down.
But as God would have it I was made the president of the poultry association at that time. It has to be a coincident during the time of General Olusegun Obasanjo who happened to be a poultry farmer and also knew what the poultry farmer has gone through. It also coincided with the appointment of Chief Audu Ogbe who also was the chairman of the party then, who also was involved in the poultry farming then and knew what it was to have imported chicken into the country. So all along we were able, the combination of those three we were able to revive the poultry sector to what it is today.
Otherwise the fact that every farm had already closed down; you have imported chicken, you have imported eggs into the country- in fact the feed was also imported , the drugs and vaccines, everything you can think of in that sector was also imported so it actually affected the economy then. But before the administration of Obasanjo left, we were able to save some money in terms of importing most of what we normally imported at that time.
So in the day-old chicks for instance, we had hatchery…So we were able to stabilise at that time and to the extent that what we import in the poultry sector today is minimal because it is only the premix, the amino acids and the vitamins that we import, while all others are locally sourced, except the machinery which we have not started producing, but at least with the feed mill, we have some local fabricators who can produce it well. So in terms of sector that have been able to conserve the foreign for Nigeria, the poultry sector is number one in every sector of agriculture as of today.
So how much of poultry products, particularly eggs are still being imported into the country as of today?
Well, it was bad during those days, the poultry sector was going so bad because they allowed under the so called minister of investment, who does not know anything…When you say minister of investment, he will then go back and say look, can you bring your products to Nigeria and sell, we’ve signed a bilateral agreement-and he’s killing jobs here locally and you are empowering them outside there and killing Nigerian jobs. So we had all sorts of junks into the country.
It’s not that Nigeria cannot compete with any other producer in the world but what we are saying is that you bring it under the same condition as what is applicable locally. Food is not something that you can just dump into the country, it has to be certified and check by agencies like NAFDAC wherever you produced it.
But in all cases there is no trace of NAFDAC certifying all those chicken that’s been imported through Cotonou and other borders- they are all smuggled into the country.
So, to be specific, the last administration was so bad for the country but this time around, things are now getting better. We don’t have much of these imported chickens that is also injurious to your health, because it’s cancerous.
Chickens produced here will last you for close to one week or so because they are freshly produced, but the ones produced over there are the ones you need to use chemical to preserved and you can imagine it coming through the sea. If you perceived the odour of the sea, you will know that what you are consuming is so bad and when you now see where it’s being stored in the Cotonou boarder there, it’s worse. It’s only God that has been saving us. That partly explains why Nigeria in the past knew nothing like cancer; who knows, most of us hospitals now are treating cancer patients because of what we eat.
So if the country has managed to attain self-sufficiency in poultry produce, do we presently have the quality and capacity for export?
Not for now; because of the last administration’s policy on investment, we’ve a lot of chicken and eggs dumped into the country, and that made a lot of the producers to reduce production. But we are now producing up to about 50 percent or 70 percent of what we have. In fact, it should have been much better than this but because of the price of the maize and the competition between the poultry farmers and human consumption which is so high now-the price of maize is so high which is also a blessing because it’s good for the maize producer so that a lot of people can go into maize production as the price is good for them.
It’s not competitive in the international market, because of the demand, and demand will continue be on the high side but at the same time the maize producer should not be thinking about 200,000 percent profit- in the past,we’ve being at a loss, but it’s an opportunity for them.
So for now the focus is to produce for local consumption and also be competitive so that if tomorrow we have a government policy that will say chicken should come into the country, we match competition-but we agreed that if chicken would come into the country, it has to be a healthy chicken and not the ones being preserved by chemical that will be injurious to the health of Nigerians.
Given the efforts of the present administration to diversify the economy into agriculture and other key sectors, does the Nigerian poultry market have the ability to export products to other countries?
In terms of quality, we have some of us who have been certified internationally to produce. Take for instance, my own farm and one other farm in the country are the only certified company that can produce for KSP and other international companies in this country. It is not every producer of chicken that can supply them because we are subject to a bi-annual audit by international auditors-and whereby my own farm came first in the whole of Africa , so you can imagine , with that if I can produce enough, it means I can sell my chicken anywhere in Africa. So you can imagine, it means if I can produce enough, it means I can sell my chickens anywhere in Africa.
The other farm has also that potential to produce and supply in Africa because by the reasons we were given, they have a standard, African standard, European standard and American standard- so the specification of what a standard should be in Africa, we have two of us in Nigeria that are qualified that. So in the issue of exporting-we still have a lot of job opportunities for our people in Nigeria here because from what we are producing, in Europe for instance, and in some farms in America they process about 30 million chicken on weekly basis, can you compare it with my own, this is only about 700,000 in a month. We actually have the potentials that if we want to produce two or five million in a month, we have that but you know, the capital, the monetary aspect and the interest rate.
The bank interest rate cannot support that, you also look at the other conditions like the electricity, the water, everything you want to produce, you have to make sure you have all these things by yourself in your farm unlike Europe where everything is always ready there. But here, you have to have your own electricity, borehole, treated water plant, you have to have everything and while you now talk about the cost of funds. Until when we have all these things in place, the target now is to produce locally and create job opportunity for people. On the egg we are not anywhere near the target, and that’s why the federal government felt there’s a need also to promote the egg aspect of the poultry sector.
And in the poultry sector, let me tell you, we have many sectors, we have the feed, we have the day old chick, we have the processed chicken or something like that. The feed as of today Nigeria can produce the feed requirement for the whole of Africa in terms of the plants we have but it requires maize which we cannot meet up for now. It requires soya but as to the plants and machinery, we have that enough on ground but raw materials that will go with it and the cost of funds that will support that material is what is missing. So as far as the poultry sector is concerned the sector is ready but there are other side effects that have to join. So if tomorrow we have to produce enough maize for Nigeria, Nigerian feed milers can supply the whole of Africa their requirement.
On the day old chicks, there was a time we were extending our sales to West African countries. When I was the president of the poultry farm association, I was encouraged by the former President (Obasanjo) to go to West Africa and market our day old chicks but unfortunately, the condition given to us was that most of their poultry products are tied down to grants either from French…because when the French found out that if they had surplus production, they now give it to these their French countries as a grant, and then the Brazilians were trying to come into the market, then the Americans in Ghana-they made sure that they gave them a grant which was about a ship load of chicken for them also to sell and use in the developing their country. But after selling and after giving them that grant, then the subsequent ones were imported from here. So, they were looking at us as the giant of Africa to also compete with Americans and the French which we didn’t have the capacity to do, but in terms of day old chicks we had enough machinery, we had the grandparents stock that can supply the whole of West African countries.
Obviously, lack of affordable funding is a major constraint to the expansion of the poultry sector. What alternative financing sources to you currently have and how would you advice government?
The federal government has tried its best; they have about N550 billion intervention funds from the Central Bank of Nigeria (CBN) now. It’s not only for rice production, it’s meant for all the agricultural sector, but the problem is that the bank has to discuss and in disbursement, the bank will require certain of collateral from the customer. The federal government has done what they are supposed to do internationally by providing a window level for that but at the same time when the federal government gave the banks this money; they write it against the bank. So the banks again will claim that this money belongs to them, but the money is meant to service their customers.
In doing that, I think some banks need to go through some orientation and the CBN also has asked the banks to have an agric desk which most of them are complying with now. In the past they didn’t take it serious, the agric desk is just a window dressing and window dressing agric desk will not help you in any way, so they are compelled now to have an agric desk which most of them are doing now.
Essentially, the leadership of the banks still need to go into some sort of orientation because they don’t believe in agric, they believe it’s so risky-that it takes years for you to have permanent what it has taking you so many years to build, they have to support and build. They also claim that in the past the funding given to them was for a short-term but this one is not a short term and If also the federal government can extend some of this funds to twenty years.
My first recommendation will be that the intervention fund from the CBN should be made ten or fifteen years. That will give the banks comfort to now lend to the real sector of agric. Take for instance, no bank will take interest in lending to the farmer who just wants to plant or want to have a farm. They will be interested in other sector of agric, like me now producing chicken and sell it to any restaurant, the restaurant will just put oil and fry the chicken and take money; even before you buy the chicken from the restaurant they take money from you. So, the banks will prefer to lend money to the restaurant than you that will grow the chicken because they know that money is coming on daily basis. So for me, agricultural loan tenure should be for ten to fifteen years to allow failure and success because it is not automatic.
My state for instance, took money and said Mr. A, I have N350 million to develop poultry farmers in Osun; he gave N350 million-no interest-and said, look, I want the money back in four years. And after the first year, he found that the programme was so successful, he now increased the number of day-old Chickens to be given to the farmer from one hundred to two hundred thousand. But he said, look, I cannot exceed the amount I am giving you as a promoter; we now said look, if it is that, it means you’ll now want your money to be paid back in six or eight years not four years. And he said that’s okay.
And as of today, the government has recouped more than 75 percent of the money within four of five years of this programme. And farmers made a profit of nothing less than N750 million, individual profits by farmers and who paid the interest back to the banks? The government volunteered that the interest would be paid. And they took the money from the CBN which is at 7 percent and which is minimal and today, the farmer, in terms of paying back, agreed that 5 percent of their profit be paid to government as tax and they have created a lot of employment through that.
So you can see that the government is finding a way of reducing the burden of interest to the farmers, so the farmer now has access to the fund but it must be somebody who is very reputable to make the refund and not directly the farmer.
The federal government should give a minimum of ten years and maximum of fifteen years for agric sector loans to enable that sector to actually stabilize and be able to produce for Africa. Because along the line you have certain problems and when you now think about the bank rate, it is worrisome.
Your farm is currently in collaboration with the federal government on the school feeding initiate. What’s the extent of that partnership?
Well, the school feeding programme started from Osun; from the chicken produced through the collaboration of the government is been processed and supplied back to the school to feed the children, and the government is also paying money for buying those products. I think at that level the federal government found that there’s a programme in Osun and it is working and because of that, the federal government is now interested to see the model being used in Osun. The model has created a lot of employment and also created some wealth. Whatever the children consume in Osun, they’re home grown food. The meat production side happened to be the most successful government intervention in that state.
As I said it has created thousands of employment, it has also created about three or four hundred millionaires who can say my farm is worth millions of naira. So, it has also created self-entrepreneur who can say I am the owner of this and that, self-employed. We have some farmers who say their children should not do any other thing than to be a poultry farmer. In fact, the programme is now made up of about fifty five percent of post-secondary school graduates, HND holders, and university graduates. So the level of youth thuggery has reduced drastically in Osun, there’s no thuggery or roaming about the state, the state is so peaceful and hardly can you hear of any of these people with idle mind.
I think that’s some of the reasons why the federal government now decided to adopt what we were doing there and we are much involved in that and recently we received about seven states who are also interested in starting their school feeding programme under the umbrella of the federal government and we are asked to give them the ‘how do we do it? What do we do’? That’s on the general note. Before then, when you talk about poultry products, there are two products that are going to be included in the school feeding programme, the meat and the eggs.
So, tell us about your recent memorandum of understanding (MoU) with the federal government on the national egg production scheme. What does it mean for the country?
Thank you. On the MOU signed, the federal government found out our record and decided to invite us to say okay, the way you have developed the meat production side, we need to also develop the egg side and the egg is required to be included in the school children feeding programme. There are some states producing now, there are others that are not producing and when you say home grown, it means that whatever you are feeding the children must be produced in that state and it creates employment within that state. So we were invited to submit a proposal on that which we did and said look it is a thing that is workable.
We are going to have a minimum of 20,000 birds laying in all the 774 local governments in the country, we have twenty thousand birds and we want to concentrate on small families.
So maybe we give you 2,000 birds to manage, you will know that this will not cost less than about N10 million for a start, but you are not going to pay. We have identified those who will give you the day-old chicks, we have identified those who will give you feed, we have identified those who will give you the drug and vaccine to use throughout, and they will not take the money back until when the birds start laying. And when they start laying, the state entrepreneur will take it back and sell to the school feeding programme so that the income there is guaranteed. There is going to be a ratio of what it will be between the farmer and the state entrepreneur.
So, the MOU basically is based on the federal government interest to create job opportunities, which the programme will give a minimum of one million. The federal government is interested in stopping all sorts of importing eggs into the country; the federal government is also interested in creating wealth amongst the citizenry so that you are self employed. So these are the basic objective of the federal government in agreeing with us to do that, and the federal government is also thinking of conserving foreign exchange, because when we produce after the human consumption, we envisage that there’s going to be excess-the excess now is going to be turned into egg powder. All the Cadbury, the Nestle who are importing powdered egg into the country to mix with beverages for feeding the children- all those ones will eliminated and the egg powder will now be produced locally and supplied to all these factories.
You can see that they a focus-so in the next three to four years now, there won’t be any importation of egg powder in the country again. And the egg powder, if you now produce in excess, which we don’t really know for now, will be exported to other countries-our target is West Africa and Africa.
So what are the major content of the N25 billion MoU?
No, the N25 billion is not given to Tuns Farms. Actually what we require is about N200 billion but because the scheme is not taking off 100 percent in the first year, it has to be gradual. Our target is to take off from six or seven states and in that case, the total money required will not be up to N100 billion or N200 billion. So what why we determined the initial money required to begin with. The money required is not for Tuns but Tuns is just a scheme manager and ordinarily Tuns is supposed to be paid by the federal government for using these services.
So the N25 billion is a loan to entrepreneurs. We have three steps: the first step is national input supplier. The national input supplier is the one to produce day-old chicks and give to the farmers, they are the ones to produce feed and supply to the state, and they are the ones to produce drugs and vaccine for the birds. So these are the set of people if they require funding, they will go to the Bank of Industry (BoI) and submit and have their collateral or whatever it is to access the money. But it is going to be between six and nine per cent interest rate- it is not going to be the commercial rate of 20 percent or 22 percent. It is those who are going to be in this category that will access the money based on their security, if they don’t have the security the bank will not give you the money. It is not to be disbursed by Tuns; the only area that Tuns comes in is to identify who and who qualify to access the money.
For instance, we have identified all those who will be the national input supplier. Then the next stage is the state entrepreneur, the input supplier will supply all these materials to the state entrepreneur who in return will also pay these suppliers back. The state entrepreneur is the anchor person in that state, he also is entitled, if he wants money from the BOI, he will go and borrow to pay this national input supplier. But the state entrepreneur will in return also supply the farmers through the cooperative societies of each state and distribute to the farmers.
So the farmer will not pay him back until when they start having the eggs. So he also will go to bank and borrow money. The farmer will not borrow money, the farmer will only be guaranteed by their cooperative societies. So they will have interest free fund and they will have about seven months before they start paying back through the eggs produced from their farms and the eggs will now be sold to the school feeding programme which will also pay the state entrepreneur. So it is through that method that the state entrepreneur will now be paying back what he has borrowed from the bank. The government has put the money there at a fixed interest rate to these key people, who will now give the input to the farmers. No money is actually going to exchange hands per say except between the national input supplier and the state entrepreneur.
Because when the national input supplier supplies the materials; we are trying to model out now that the national input supplier should extend ninety days credit facility to the state entrepreneur while the state entrepreneur will extend another ninety days to the cooperatives. Within these ninety days or there about the eggs will start coming out, so the risk is borne by the national input supplier and the state entrepreneur. So the cooperative will only give a written MOU between them and the state entrepreneur. So the money is to be well managed. So there’s no way somebody can just go and take N25 billion from the treasury- if that can happen in other regimes not this one. So the money is to be well managed because the first year anniversary is that N25 billion, the second year anniversary may be about N50 billion and as I said we are starting with six or seven states, and because poultry is also one of the road maps of this present administration to develop it because in Nigeria now we hardly cook in our homes, everybody goes to an eatery and the common thing there is chicken before you talk of fish and meat is number three. So the demand is so high and the school children they require eggs for essential nutrients.
So apart from the opportunities provided by this egg scheme, do you for see any challenges that should be resolved?
Definitely there are going to be bounds of challenges; one of the major challenges we are trying to solve now is the weather challenges in the north, because the weather condition for keeping the birds in the south, is different from the weather condition in the north, and so we’ve gone round, we went to china, we went to Indonesia, we went to India because Americans have twenty four hours electricity, so they can keep the bird under same condition we are here now but those country cannot do that-so we’ve seen the way they constructed their building so as to make the birds to perform and we envisage that , we have been able to solve that problem by checking what type of building do you have in the northern part that the temperature is so high, we have solved that but we want to practicalise it here, but from countries where we want to copy from it has been very successful and we don’t envisage any problem there. Then also we are envisaging the challenges of our people not being seriously minded, and stealing-which is very common among our people and that is why we are targeting households-2,000 birds for you to manage in your home, feed your family, let everybody be comfortable and it’s more or less a family business.
That is what we are targeting, if we target more than that, we envisage there may be problem. It is going to be that easy for somebody to manage when you know that this is my family business so that pilfering and stealing will not be too much. These are the two major things that we expect, but in terms of default, we don’t envisage any default except they are moral and weather condition. Not that along the line we will not encounter things but the risk is not going to be much because we also device a means whereby like what we have in Osun, on every farmer, in the course of calculating the selling cost, we factor in a security risk of about N15 per bird, and that goes to the association there so that if there is any problem on the farm, we will use that money to pay the farmer the compensation back.
The poultry association of Osun under that system I think have about N35 million fixed money in their account, which any member of their association that has genuine but not criminal problem-If it is criminal it will be reported to the police, but if it’s a genuine problem, they will pay that farmer 100 percent of the loss which no insurance company will pay you.
So, that type of arrangement has worked… So we will try and copy all those ones in the other states and get it to work. Under that system, the programme will not fail, but the major challenges are these two I mentioned earlier on, the weather condition which I believe we have overcome, we will we practicalise it.
We will follow the recommendation of where it works, and then the issue among ourselves, because everybody wants to be a millionaire in one day. So if we are able to get some honest people to be involved , and like I said earlier on we had the same problem in Osun where somebody just feels because he is keeping the birds, the daughter is getting married and just went and took fifty birds. But after the daughter’s wedding, the person had to be in prison for about four weeks. So we had about seven of them like that and ever since, nobody has ever come up with such an act again. If you want to buy, you buy, it does not belong to you, simply because it’s entrusted to you.
How would you really justify your recommendation for longer repayment space for loans to agricultural?
The current loan life span is about five to six years, the maximum is six years and it does not give room for growth. For instance, if we start with twenty thousand birds per local government twenty, there are tendencies along the line when the population or the market is improving, there are tendency that the farmer will like to go into thirty thousand, forty thousand or there about, so whatever money he is able to make as profit he now plough back to further expand because the more you produce the more income will come to you, until when it reaches a certain level. So along the years it takes time to do that , I got my own experience from Osun, you see when you give a farmer two thousand birds, by the time he makes about N500,000 profit, he goes back and builds another house, another bird house and increase his own capacity by one thousand more or there about. It’s a continuous investment.
Now, in our own case our processing plan can only process about one hundred and fifty thousand bird on a daily basis, there are other machines that can process one million, but if the farmers are producing 100 percent above what they did, there is need also for me to upgrade my own processing plant , all those things are there and after about five or six years or ten years, it will now give you an international competitive advantage, so nobody can think about smuggling again when they know that the cost of you producing locally is even cheaper than the one you want to import.
Another thing is the cost of fund because the nine per cent which we are talking about is still on the high side; the maximum should be about five to six per cent.
Why don’t we device a means where by the interest rate should not be higher than five or six per cent and maximum including what the bank that takes the risk will charge including what CBN takes, so it should not be more than that, and it should be between ten and fifteen years to enable the growth because we are growing. The growth cannot be in four or five years, it has to be a continuous growth.
And if you need to borrow money from the bank today to set up a business, that business will not start operating until the next one year, and before they know you in the market it takes another two years before you actually penetrate, and all these take time, it is not something that you can say I want to pay within a particular time.
But with this arrangement of federal government, using some people as a broker and also making sure that the interest is not paid directly, I think farmers should be happy.
What is your vision for Tuns Farms within the next five years?
Well, Tuns farms currently has a national target, the success of that national target will be the highest feat that Tuns Farms will aspire to be. You know, we did it at the local level, we did it at the state level, I did it when I was the national president as an individual, but now the company is been challenged to pull all over Nigeria and set up the egg production scheme and empower and be able to create over one million jobs on behalf of the federal government.
So that is the challenge that we now have and if we are able to achieve that, the target is to produce fifty million of table eggs on daily basis in Nigeria , so how do we go about this? That has been our major aspiration which is enough challenge and that is what we want to face and Insha Allau, we will be able to succeed. So that’s my prayer.