The Federal Government has prioritised agriculture as an alternative source of revenue to lift Nigeria out of economic recession. On the sidelines of a recent visit to Olam Nigeria’s multi-million dollar rice farm and mill at Rukubi, Doma Local Government Area of Nasarawa State, the firm’s Vice President Corporate and Government Relations, Mr. Ade Adefeko spoke with Abimbola Akosile on the rice value chain and the growing influence of agriculture and the quest for food security, amongst other issues
Can we know you briefly?
I am Ade Adefeko; Vice President Corporate & Government Relations Olam. I manage External Communication and Stakeholder Relations at Olam Nigeria; the largest agribusiness and Food Company in Nigeria and a subsidiary of Olam International of Singapore, which is the parent company and has a presence in 70 countries. Prior to joining Olam, I played a pivotal role in broadcast policy advocacy as Head Corporate Communications and Public Affairs with Multi-Choice (DStv) Nigeria. Subsequently, I served as Area Head of Communication and Regulatory Affairs, British American Tobacco for Benin, Niger and Togo based in Nigeria where I managed core regulatory issues in the highly sensitive tobacco industry. Currently I am currently the Chairman of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture Export Action Group (NACCIMA) NEXAG. In a nutshell I help initiate, nurture and sustain relationships across the broad spectrum of critical players in the agriculture and food value chain where Olam is a major player.
How do you assess the federal government’s drive to make agriculture a viable alternative to oil revenue, vis-a-vis the Agricultural Transformation Agenda (ATA), which started from the previous administration?
A concerted effort has been made by this administration to continue from the ATA by the last administration to the Green Alternative now. We must move fast and reward those who have put their skin in the game rather than those who just want to take advantage of intervention funds by promising so much but deliver very little either due to lack of sincerity or lack of capacity. Nigeria has comparative advantage in maize, cashew, cocoa, sesame, cassava, groundnut, soya beans and the likes but we must work on our competitive edge, which is the missing link. Infrastructure, fertiliser, Inputs, financing, power and irrigation as well as capacity building and incentives are enablers to achieving competitiveness continentally and globally. Take a case in point cashew; Nigeria is the 6th largest producer of cashew in the world after Cote d’Ivoire, India, Vietnam, Tanzania and Guinea Bissau in that order with about 150,000 metric tonnes. But, while the others export almost all theirs in processed form, Nigeria only exports 15 per cent of same and generates about $42 million but if it were to export the raw form it will be down to $33 million. The bulk of the raw cashew is sent to India and Vietnam where it is processed but the way out of this is to levy the raw cashew from here to make it unattractive to export raw but add value by processing here, which is what Cote d’Ivoire is doing.
In your own view, what is the quickest way out of the current economic recession, from an agricultural perspective?
A few come to mind: the sector must be supported with incentives and policy initiatives that are long term in nature. Government should actively encourage and support cooperatives with tools to organise farmers as well as capacity building via training. As you know the major challenges are low yields due to poor seeds, low or wrong mix of fertiliser, rain dependence, poor quality especially with crops like cashew, cocoa, cotton with regards to farming and harvest practices. Equally, lack of storage infrastructure, value addition and processing is hampered by lack of power and infrastructure, irrigation, roads, port delays and of course high funding costs, which are usually high double digit.
There are reports of 14 different states producing rice varieties in Nigeria…what does this mean for food security in the country?
The rice conversation is a very sensitive and political one. In setting the context, let us look at our consumption, Nigeria consumes, according to the federal government, about 7 million tonnes of rice and production as at 2015 was in the neighbourhood of 2.7 million tonnes, leaving us with a gap of 4.3 million tonnes but if we countenance the Kebbi production, which is said to be about 1 2 million tonnes then the gap is further reduced. The conversation has started and is commendable but must be sustained. Importantly though, we must factor in smuggled rice which is about 1 million tonnes. Backward integration is on the increase and we at Olam Nigeria are at the forefront of that effort. I must acknowledge however the forays of the likes of WACOT, Dangote and BUA. It is a welcome development for the rice value chain.
Olam is a reputed major player in rice cultivation and processing in Nigeria and possibly Africa…..how wide is your product circulation and what varieties do you produce?
We are the foremost player in the rice value chain space and are amongst the few that can boast of a farm and mill. We have a $120 million fully mechanised 10,000 hectare farm in Rukubi Nasarawa state coupled with a state-of-the-art mill with capacity for 105,000 metric tonnes. Our rice varieties range from Faro 44, C90, C20 and L34 We are currently studying over 100 other varieties to choose from, The product of that farm and mill is the Mama’s Pride and Chef’s Choice our locally grown home rice you see in the market and is available nationwide.
What are the ripple effects of your rice production and processing activities on the host communities in Rukubi, Nasarawa State, in terms of employment opportunities and other benefits?
In the community, we provided bore wells, solar lamps, school buildings with materials, as well as scholarship schemes. In addition, we built 54 kilometres of roads through the surrounding communities. We have assisted over 5,000 local smallholder farmers since 2013 and 25,000 metric tonnes of paddy have been produced. Profits per farmer per hectare have increased from about N305,000 to over N1.2 million. Olam hopes to scale this up to about 20,000 farmers as we want to act as catalysts by providing training and improved rice varieties in equipping the small holder famers to secure their future.
Rice is a staple grain product in Nigeria with huge local demand…can Nigeria successfully fill the local demand quote and also export…if yes, when can this reasonably happen?
Let us not over-reach ourselves by talking about export… this cannot be legislated but must be clearly articulated via a policy that encourages local production through providing improved seeds, pesticides and herbicides, fertiliser, financing, training as well as proper irrigation. We are in the lead on this at Olam as we do two cropping cycles and exceed the national average yield of about 1.8 tonnes per hectare as we do about close to 10 tonnes if you add dry and wet season. Government has made considerable progress though with the CBN Anchor Borrower programme that loops in thousands of farmers but they need to combat smuggling from the ports and land borders, which makes local rice more expensive and largely unaffordable. I am a proponent of fiscal measure via tariffs and levies to bring in rice legitimately to fill in the gap over a defined period while investment in backward integration is pursued. This has worked for cement and sugar and I don’t see the reason why it cannot work for rice.
How has Olam Nigeria been able to weather the harsh economic conditions, the ripple effects of the unstable naira and dollar, and the effects of smuggling and adulteration of your products?
Olam has been in Nigeria over 27 years as we started here in 1989 with cashew but have diversified over the years into processing and exports of cocoa, cashew and sesame, soya beans and now groundnut. We operate from seed to shelf, as we are into wheat milling and flour, pasta and noodles, biscuits and confectionary and dairy products as well as juices. We play in the culinary space as well with tomato paste and additives. We have invested over the years over $1 billion with 15 processing sites pan Nigeria. Olam recently veered into animal feed and poultry and we are on the verge of unveiling our $100 million plant in Kaduna later this year 2017..when completed it will be the largest in West Africa and will have capacity to produce 100 million hatching eggs per annum, 85 million broilers, layers and cockerel day old chicks (DOC) and this will help stock over 30,000 existing farms creating employment for between 300,000 and 400,000 people and saving the country about $150 million in foreign exchange
It is pertinent to mention that we are a subsidiary of Olam International based in Singapore with footprint in over 70 countries, 24 of which are in Africa. We have gone through the whole gamut; good times and bad times and we are here as marathoners not sprinters. Our origins are here and we are here for the long term; born in Nigeria and we believe in Nigeria.