Wild Allegations against Fertiliser Manufacturers

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Crusoe Osagie discusses the allegation of threat to national security and the economy levelled against Notore and Indorama, the vehement responses from the companies and the implications of such sensitive declarations on the nation’s quest for inflow of foreign investment

Nigerians are still at a loss as to the motivation of the Office of the National Security Adviser (ONAS) to declare that Notore Chemical Industries Plc, mostly owned by Nigerians and Indorama Petrochemical Limited, are threatening the nation’s economy and its security by their business activities.

Some analysts who said the accusations appeared to be unfounded and downright absurd, explained that the issue was tantamount to accusing a man who is without any insurance policy of willingly trying to burn down his own house and render his family homeless.

A social-economic rights activist, Mr. Omobude Agho, who spoke to THISDAY on the issue, explained that Notore for example, has a sprawling factory complex in Onne, Rivers State and distribution offices all over the country, from the north to the south, all valued in billions of dollars.
He stressed that the survival and profitability of Notore’s business are in every way, directly dependent on the peace, security and economic prosperity of Nigeria as a country and therefore, it is not in the company’s interest at all to threaten the nation’s peace and prosperity.
“How can such a company try to demolish the platform and foundation which guarantees its own survival?” he asked.

Omobude warned the federal government to be careful about the nature of comments it makes about companies that provide employment for thousands of Nigerians and keep several families fed and sheltered; pay taxes to government and help the country to preserve the very scarce foreign exchange that would have been used to import fertiliser for farmers if they had not invested in making the commodity locally.

He said such comments did not only discourage already existing investors, but also put off prospective investors who are contemplating whether to invest in the country or not, as no one would want to put investments in a country where security agencies threaten the existence of law-abiding businesses.

Notore Kicks
After the controversial allegations were made, Notore, however, vehemently denied allegations that it is involved in activities which sabotage Nigeria’s security and economy
In an apparent response to statements credited to the Office of the National Security Adviser (ONSA) in the media two weeks, the foremost manufacturer of fertiliser stressed that the allegations in no way represented the character and operation of their business.

According to Notore, “Our attention has been drawn to various publications in the media containing serious allegations about Notore Chemical Industries Plc (Notore). In the publications, Notore is alleged to be sabotaging Nigeria’s national security and economy by being a conduit for explosive materials as well as being “unpatriotic.” Notore is constrained to refute the allegations in the strongest terms.

“Notore has not been, is not, and has no intention whatsoever, of engaging in any activity that is detrimental to Nigeria. As a Nigerian company with predominantly Nigerian beneficial shareholders, Notore has always been committed and is focused on supporting initiatives of the Federal Government of Nigeria and championing the African Green Revolution with a focus on Nigeria.

“Notore is the premier producer of urea fertilizer in sub-Saharan Africa and has been in production for over six years. As the Champion of the African Green Revolution, Notore has as its core goal the enhancement of food production and food security in Africa, particularly in Nigeria. Part of its strategy to achieve this goal is to focus on sales in the local market via Notore’s extensive, controlled and award-winning distribution channels. In addition, Notore has and uses extension workers who are committed to the training of local farmers on best practices and the creation of ‘test plots’ to showcase the benefits of effective use of fertilizer on crops, the creation of an effective and efficient distribution channel to ease access to fertilizers for the farmers, as well as boosting production capacity to meet the ever increasing demand of the Nigerian farmer.”

The Onne-based fertiliser makers and distributors said over the past several years, through its private extension services and controlled distribution channels, which include over 2,500 Village Promoters, it has reached over 3 million Nigerian farmers who have been impacted positively with increased yields.

It added that as estimated by a 2013 report by Propcom-DFID, an innovative, market-driven initiative of the United Kingdom’s Department for International Development (DFID) that aims to reduce poverty in Nigeria, over 33% of smallholder farmers in seven selected northern states learned at least one improved farming practice from Notore’s activities, leading to increased yields and income.

Notore said it also worked with the Federal Ministry of Agriculture and Rural Development, some selected states, and International Fertilizer Development Center (IFDC) in designing and implementing the fertilizer voucher program between 2009 and 2012, which greatly improved the administration of the fertilizer subsidy program by increasing the reach to target beneficiaries from a previous 11% to as high as 60%.

“The success of this voucher program became the basis on which the Federal Government created the Growth Enhancement Support Scheme (GESS) e-wallet program, which sought to improve agricultural productivity through the effective and efficient delivery of farm inputs such as fertilizer, which increased yields. It is through these and other activities that Notore has helped and continues to help build Nigeria’s agricultural and economic landscape, which has a direct impact on the country’s GDP.

“As part of its commitment to Nigeria, the bulk (about 75%) of Notore’s production of fertilizer is focused on the Nigerian market, and because Nigeria largely has only one planting season, the majority of this production is sold locally during this peak season. Notore only exports limited amounts of fertilizer during the dry season — when there is essentially zero demand for fertilizer in Nigeria– yet continues to work aggressively with the Federal Ministry of Agriculture and Rural Development to encourage and stimulate farming in Nigeria during the off-season in order to further its core goal of increased food production and food security in Nigeria. For instance, Notore has been a key partner in the CBN Anchor Borrowers’ Program aimed at increasing the local production of key crops. During the recently completed pilot of the rice anchor borrowers’ program in Kebbi State, Notore supplied all the urea fertilizer used in the program. It is important to note that the company delivered the requested fertilizer for the program within a very short period to all the locations in which the program was implemented in the state. In continuation of that program, Notore has also committed to supplying all the urea fertilizer required for the program during the current rainy season in all 11 target states.

“Another example of Notore’s aggressive efforts to stimulate farming in Nigeria is its successful onion intervention in Kebbi State. In 2010, an unprecedented severe case of onion twister disease in Kebbi State, similar to the recent tomato crisis, crippled all farming activities involving onions. As of the time of Notore’s intervention in 2010, onions were in short supply with high demand, thereby raising the price to an all-time high of N40,000 per bag. However, following Notore’s intervention, involving a combination of experiments to test different options to combat the problem as well as educating farmers on the need to adopt best practices, the dry season of 2011-2012 saw a huge rise in produce availability. This pushed down the price per bag of onions from about N7,000 in December 2011 to N1,000 in May 2012.

“Urea fertilizer is crucial for the agricultural revolution in Nigeria and for the millions of farmers who rely on it to achieve food security and self-sustenance. Notore produces urea solely for agricultural purposes, and urea, on its own, is harmless. It is only when people that are involved in nefarious activities further process urea by mixing it with harmful substances, such as nitric acid, that the combination can become dangerous. Notore does not produce, import, or in any way use nitric acid. Furthermore, Notore has worked and continues to work with government agencies to ensure that its products move strictly through its controlled distribution channels to be delivered directly to official distribution partners and then into the market.” the company stated.

Commendations for Notore
Federal Ministry of Agriculture in the recent past, commended Notore support for green revolution programme for food production in the country, noting that food security is indeed a matter of national security.

The former Minister of Agriculture and current President of the Africa Development Bank, Dr. Akinwunmi Adesina, earlier explained that Nigeria must learn from Asian countries by tapping into all resources of its farmers across the nation and delivering a green revolution that will make Nigeria self-sufficient in food production.

“We must turn Nigeria into a bread basket, a power house for food production. To do so, we must make a fundamental paradigm shift. Agriculture is a business, not a development programme. It must be structured, developed, resourced and financed as a business.

“One sure way to achieve the nation’s food self-sufficiency goal is the astronomical increase in farm output that comes with the adequate use of fertiliser and this is where Notore Chemical Industries Plc, the foremost fertiliser manufacturer in Africa, south of the Sahara including South Africa, could easily pass as the most thoughtful investment in Nigeria in the past decade and half.

“Farm output in Nigeria could easily be 20 times of what it currently is if fertiliser is accessible to farmers in Nigeria every time and anytime. But being one of the commodities around which much corruption thrived, it had been a near impossibility for real farmers to get fertiliser without first going through portfolio farmers and politicians.

“All these non-farming fertiliser merchants were interested in was the massive government subsidy that accompanied the commodity, which of course, never got to actual farmers in the far-flung rural communities where most of them lived and farmed.

“Thankfully, the story today is different because all a farmer needs to have now is a token and he would have a 1kg packaged Notore Fertiliser for his nutrient-hungry crops. As it stands now, the only people that qualify for any form of subsidy are those who have invested in the local production of this desperately-needed commodity because they can easily transfer the subsidy to farmers with cheaper fertiliser prices,” he said.

Forbes once wrote of the Notore ingenious investment, saying: “From time to time, we will write mini-profiles of outstanding African companies, which are constantly providing audacious and innovative solutions to some of the continent’s most daunting challenges.

“Today, we profile Notore Chemical Industries, a pioneering Nigerian Fertiliser Company that is boosting Africa’s farm yields and working assiduously towards accelerating the continent’s green revolution. If African agricultural yields could be raised to European levels, it would be possible for the continent to provide at least 50 per cent more food than it currently does. But it takes fertiliser to make this happen. Currently, Notore Chemical Industries, a $400 million (revenues) Nigerian company is the only producer of urea fertiliser in sub-Saharan Africa, including South Africa.

“Urea is a by-product of the oil and gas industry, which alongside agriculture, is Nigeria’s other major industry. By making fertiliser more accessible to farmers through its supply chain and pricing, Notore is helping to stimulate the local production of foods such as rice and sugar, increasing self-sufficiency and reducing the continent’s dependence on imports.

“And it is some dependence – last year alone, African countries spent over $30 billion importing food. Seven out of ten Africans earn their living from farming. Yet, even at this time of high unemployment, farming remains a low-input and low-output enterprise, unpopular with the young – a critical imbalance which Notore aims to redress with education programmes and training,” Forbes stated.

Notore also received accolades at the Ernst & Young’s Strategic Growth Forum in Africa.
A report released by the organisers of the forum noted that Notore was picked as an example of business innovation excellence, during a panel session titled ‘transforming your supply chain: better, faster, cheaper across Africa and beyond’.

According to reports from the global event, supply chain and logistics experts deliberated on how effective supply chain management can be a critical differentiator in the face of poor infrastructure.

“Notore’s supply chain process was featured as a success story within a case study on ‘Innovation in Supply Chain in Africa’. In building its distribution network, Notore works with a number of carefully selected partners to guarantee the availability and maintain the quality of products to all communities nationwide.

It has developed products in pack sizes (1kg, 10kg, and 50kg) and pricing that address the unique needs of each user,” the conference noted.

As part of efforts to ensure that Africa comes top among the fastest growing economies over the next five years, Ernst & Young recently brought CEOs, chief financial officers, leading entrepreneurs, investors and industry experts together. This was part of the Ernst & Young Strategic Growth Forum event series.

According to the organisers, “the exciting developments in Africa are creating a business environment rich with opportunities and the time is ripe for the innovative strategic conference themed ‘Unlocking value to grow beyond the possible’.”

During a tour of the plant by Adesina, Notore noted that it has achieved 98 per cent capacity utilisation for Ammonia production and 100 per cent for Urea, and the company will produce 600,000 metric tonnes of fertiliser in the current year.

Okoloko, who revealed this, said Notore now exports fertiliser to Cameroon, Togo, Ivory Coast, France, Uruguay, Senegal and Angola. This, according to him, “is proof of the international standard and quality of our products”.

Notore accounts for 100 per cent of the Urea market in Nigeria because most of the big importers of Urea no longer import it. The company’s NPK plant was launched few months back. Based on this, the company possesses a huge share of the market.

Okoloko stated need to engender an import substitution programme in such a way that “we actually produce for our local market and export the excess only after the local market has taken in its volume”.

“And that way we can conserve foreign exchange in Nigeria, and begin to earn foreign exchange from any additional export outside what is demanded in the local market and grow the country into one of the leading economies in the year 2020,” he said.

Listing his company’s achievements to date further, Okoloko said: “We participated in the Federal Government fertiliser supply in 2009, 2010 and 2011. We worked with the International Fertiliser Development Centre (IFDC). “PropCom, IITA, the World Bank and Alliance for a Green Revolution in Africa (AGRA), built a world class supply chain network supporting agro-dealers and village programme scheme and commenced seed business,” he said.

He explained the concept of commercial farming and subsistence farming: “A lot of people believe that commercial farming means large scale farming. Yes, in a way that is right. But there are certainly different types of regions that have certain types of farming structures.

“In America or in the first world, you can actually have big commercial farmers. But in areas like China, India, Thailand, Pakistan, where farming today has reached commercial levels, those farmlands are in smallholder farms structures. The big exports that come to us here in Nigeria are products of these smallholder farmers put together,” he added.
The Minister of Agriculture and Rural Development commended Notore for its good structure and for being a well-run company.

He noted in particular that Notore appropriately has in its mission statement ‘improving the lives of people. “What is important in agriculture is improving the lives of people,” he said.
The minister faulted the claim in certain quarters that fertiliser causes a lot of environmental problem in Africa, therefore, what Africa needed “is low input or in fact no input at all.”
“No, that is not true. The reason the yields are low in Africa is not because we are misusing fertiliser, it is because we are not using fertiliser at all. The deforestation rate in Africa today is 200 per cent of the global average just because we are not using fertiliser.

“So, most of the production today comes out of the expanding cultivated area, not from increase in yield per unit area. And there is no way we can continue with that in Nigeria. That is not environmentally sound or sustainable. So for us to feed ourselves as a country, we must fundamentally change the use of seeds, the use of fertilisers, and water,” he added.
On the issue of seeds, he commended Notore for its foray into seed business. “Life of agriculture starts with seeds,” he said.

“We are using today in Nigeria 8,000 metric tonnes of seeds for a population of 150 million people. Kenya’s population is 40 million and they produce and use 40,000 metric tonnes of seeds.
“The fundamental reasons why our yields are one of the lowest in the world is because we are not using improved seeds. And I am determined that during my term as Minister of Agriculture in this country we will grow the seed sector in a very strategic way,” he added.

Notore Chemical Limited acquired the former National Fertiliser Company of Nigeria (NAFCON) for $152 million in 2005, and signed a 20-year gas plan in 2006 with Nigerian Gas Company. In 2007, it raised $222 million in debt from a consortium of Nigerian banks.

Notore recently signed a technical service agreement with Tata Chemicals of India. As technical partner, Tata, helps Notore in meeting its medium term expansion plans through the optimisation of its operations in Onne, Rivers State.

The technical partnership agreement is a significant move for Notore, as it seeks to expand by leveraging on the expertise of the management of one of the most efficient fertiliser plant in the world.