Deepening Backward Integration in Sugar Sector

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Sugar refining equipment under construction at LASUCO

Obinna Chima who this week visited the Lafiagi Sugar Company, a subsidiary of the BUA Group, highlights efforts the company is taking to support the federal government’s National Sugar Master Plan, boost job creation and support economic diversification

Nigeria’s National Sugar Master Plan (NSMP) was designed to attract over $1 billion annually in local and foreign direct investments and create an estimated 107,000 jobs over the first ten-year period.

 

During a tour of LASUCO

Its aim is to raise local production of sugar to enable the country attain self-sufficiency; stem the tide of unbridled importation; create huge number of job opportunities and to contribute to the production of ethanol and generation of electricity.

Additionally, the plan estimates that demand for sugar would have breached the 1.7 million metric tonnes (MMT) mark by 2020.

Therefore, in order to achieve this, it estimated that the country would need to establish some 28 sugar factories of varying capacities and bring about 250,000 hectares of land into sugarcane cultivation, over the next 10 years.

The bulk of this investment is expected to come from private investors.

 

Rabiu

Indeed, the justification for the sugar sector road map among other factors, stemmed from the huge amount the country was spending annually on sugar importation; that significant investments had been made in developing sugar refineries, all of which were then relying on imported raw sugar; and poor complementary investments in sugarcane plantations.

In order to support the federal government’s Backward Integration Programme (BIP), the BUA Group has continued to take steps to ramp up production in an industry which is believed to still be at its infancy stage.

The company is positioning itself to take advantage of the country’s huge comparative and competitive advantage in sugar production.

Presently, the BUA Group has two ultra-modern and automated mega sugar refineries. And as response to Nigeria’s backward BIP in the sugar industry, it invested in large scale estates within the country to deepen local sugar production through the acquisition of the Lafiagi Sugar Company Limited (LASUCO) in Kwara State and also, the establishment of the Bassa Sugar Company in Kogi State.

The Senior General Manager, Lafiagi Sugar Company (LASUCO), a subsidiary of the BUA Group, Mr. Abdulrasheed Olayiwola, told reporters during a tour of the sugar plantation and refinery site on Monday that the company has invested over $300 million on the project since its acquisition of the facility.

The company has also set target of first quarter of next year for the completion of the sugar refinery factory presently under construction in Lafiagi.

He said when completed, the sugar factory and plantation will have about 5,000 direct staff and indirectly create over 10,000 additional jobs.

He described the project as the fastest-growing BIP in the country’s sugar sector.

Olayiwola said: “We took over Lafiagi formally in 2014 and the project started in 2016. Since then, there has been no going back. This is the fastest-growing BIP project in the country at the moment. Lafiagi is divided into two areas: the plantation development and the infrastructure development.

“For the plantation, we have a lot of fields to be developed, a minimum of 15,000 hectares would be under cane.

“As at the time we took over, what was attached to the sugar plant was just 5,000 hectares, but because BUA really has the intention of producing sugar in the country, we had to go for more land and we were able to get Lafiagi to 20,000 hectares and the soil composition is very good for sugar cane production.”

According to him, the project is an integrated factory, which will be four factories in one.

 

“This is Greenfield project, which we started from scratch. We’re building a mill – a 10,000 tonnes per day mill. That is the highest capacity in the country; we are building an ethanol plant – none of the sugar plantation plants in the country presently have ethanol plant.

“We are not stopping at the mill because that is the brown sugar you see, but we are migrating to a refinery, we are going to be refining the sugar. So, we have the refinery under construction at the moment, and we are building a power plant- a 35 megawatts power plant and part of it would be solely for the refinery and part of it would go to the national grid.

“So, in a way, BUA Group, with this plantation, is contributing to different sectors of the economy,” he added.

Already, close to 7,000 hectares of the plantation have been cleared and is being developed for planting, while close to 2,000 hectares of land have been cultivated. LASUCO has a special nursery, where different varieties of cane are tested. It is situated on about 17 hectares of land.

Also, the Head of Project, LASUCO, Mr. Labaran Saidu, said apart from the plantation, which is the main attraction, the BUA Group had embarked on aggressive infrastructure development in its host communities, while also highlighting the corporate social responsibility projects it has undertaken in Lafiagi.

“For us at the BUA Group, we believe whatever is worth doing at all, is worth doing well. That was why we started this sugar project on a big scale.

“We have over 20 varieties of sugar cane here at Lafiagi that we are testing presently and the idea is to know the one that is best suited for commercial propagation,” he stated.

Saidu said the Lafiaji factory is one of the sugar production sites highly rated by the sugar council.

“If you talk to anybody in Sugar council today, they will tell you that Lafiaji is the main BIP project that they are looking up to. Look at the array of products that will be coming out from that factory, none of the sugar plantation which has even been in existence before this came on board has come near it.

“Others are either producing 3,500 tonnes per day, or 3,000 tonnes per day and it is brown sugar. None is up to 10,000 tonnes per day.

“So that is why this site is highly rated and it is one of the factories the sugar council is looking up to, to lead the realisation of the Sugar Master Plan.

“Every quarter, members of the sugar council team come here to check the progress of work here and they always leave this site fully satisfied that yes BUA is on course.”

The Chairman/Chief Executive Officer, BUA Group of Companies, Alhaji Abdulsamad Rabiu, recently pointed out that the sugar plantation and refinery projects situated in Edu local government area of Kwara state, “is one of the most advanced anywhere in the world.”

“Kwara State is one of the states with land, water and climate and we set up our business here because we know sugar refining will succeed here.”

He added that, “Instead of importing raw sugar and process it in Nigeria, we decided to establish sugar plantation and refinery in Nigeria and Kwara State happens to be the best located state for the investment.”

The Kwara State Governor, Alhaji Abdulrahman Abdulrasaq, had pledged the state’s support for the project.

AbdulRazaq had commended the BUA Group for citing the sugar plant in Lafiagi, saying the facility would make the local government the richest in the north central.

He said, “BUA today is the biggest investor in North Central Nigeria and we are happy that their investment is in Kwara State. I am in fact happy that it is in Lafiagi, Edu Local Government.”

He said the plant would produce about 25 per cent of Nigeria’s sugar need when it begins operation later next year and 75 per cent of the country’s sugar needs in the next 10 years.

“Kwara wants to be the epicentre of sugar production in Nigeria and we are creating a peaceful environment for business to thrive,” AbdulRazaq said.
He added that such investments would cut poverty rate and strengthen Kwara’s capacity to achieve the United Nations Sustainable Development Goals since the issues of water and electricity would be tackled once the factory begins operation.

Infrastructure Development

Since it took over the facility, the BUA Group has been taking steps to bring about infrastructural development in the location.

For instance, the company has constructed an airstrip at the site to ease the movement of goods and persons; it has also constructed an estate as well as a staff quarters for its workers and other personnel working on the site.

Olayiwola added: “With what we are doing here, we are developing a new city entirely for sugar. In the past, if you were coming here, you can’t come in through the airstrip, because there was none then.

“You would have come through the town (Ilorin), which takes about four hours. Also, it is this project that brought about the construction of the entire road network you are seeing here today.”

The entire road network under construction at the site is 235 kilometres. Also, considering that the sugar cane plantation requires a lot of water, the company is constructing canals to bring water from River Niger. The water would be channeled from River Niger, from two ends to be 10 kilometre long for each.

“We are turning this entire place into a city, that is why you see a lot of housing projects ongoing at the moment. We have finished phase one, phase two is ongoing, while phase three is about to start,” he added.

The company intends to construct over 200 housing units, even as healthcare facilities, a clinic, school, are presently under construction. It also has a laboratory where all the varieties of sugar cane are tested daily as well as a Research and Development centre inside the factory, in demonstration of its seriousness in realising the federal government’s BIP.

“We are using the drip and sprinkler irrigation method for the entire plantation. Drip is a special type of irrigation system from Isreal, where the amount of water to be used will be less, but with higher yield because water will be taken to the root of the cane directly.

“BUA is the only company that has commenced the drip irrigation system. We are doing 4,000 hectares of drip irrigation in the first instance. We have signed the contract with an Isreali company and they are about finalising the design for construction to kick off. That is to show the kind of investment that BUA is putting into sugar production in Nigeria,” Olayiwola said.

Outgrower Programme

As part of efforts to empower rural dwellers in the community, LASUCO supported a programme for outgrowers on 5,000 hectares of land.
“We have developed a minimum level for the out growers and our agronomist are on ground to monitor them because we want to be sure that what they are bringing for us to crush are in line with what we want for the mill.
“That is because if they bring any cane that is contaminated or has low level content, it would impact on our sugar. Secondly, by the time we begin to take cane from our out growers, it is the basis we would use for payment.
“So, a lot of people around here especially the farmers will benefit from that. In fact we try to encourage to ensure that they are engaged,” Saidu said.

Corporate Social Responsibility

The BUA Group is a company that takes corporate social responsibility (CSR) serious. In line with this, even though it the factory is still under construction, LASUCO has been taking steps to support its host community.
“With the ongoing road construction, we have connected more than 15 communities and we are still building more. In addition, as part of our CSR, a lot of the communities are close to the River Niger and as such they are always faced with challenge of flooding and BUA has been intervening to address this challenge.

“We also make sure during Ramadan, gifts are shared to all the communities in the local government. It is something we started in 2016, and we have been consistent with it.

“We recently did some renovation at the NYSC camp as part of CSR to support the state. At the state level, we have done a lot in supporting sporting activities and youth empowerment.

“BUA is constructing a 7.5 kilometres dual carriage way and a bypass to ease the movement of goods from the farm to town. The BUA Foundation is also working on several other intervention projects,” Olayiwola said.

The foregoing shows that this is the time the more investments are required in the sugar industry to meet the shortfall in the sector.

“We hardly produce and we don’t even produce one tenth of what we need to refine in Nigeria. And there is a shortfall in supply, there is also a shortfall in plantations across the country.

“Importation of raw sugar is a foreign exchange guzzler that is why the government has advised companies in the sector to go to the field. So, while they are expanding their mills, they are slowly cutting down the rate of importation of raw sugar. So whoever does not have a refinery in its plantation at the moment doesn’t have intention of stopping importation. That is just the basic truth,” ,” Olayiwola stressed.