Ugo Aliogo examines the challenges in attaining self-sufficiency in food production and the need for government to embrace backward integration
Nigeria has the most significant arable land in Africa, yet there is huge dependence on imported food overseas. The country is still far from achieving food security in major parts of the country, especially regions rampant with insecurity and conflicts. As a result, many farmers have fled their homes and farming communities to urban areas in order to avoid being killed, therefore hindering agricultural activities.
Data from Statista shows that between 2014 and 2016, the rate of food insecurity rose by 6.6 per cent. This increased to 9.3 per cent between 2015 and 2017; 12.1 per cent between 2016 and 2018; 14.8 per cent between 2017 and 2019 and 21.4 per cent between 2018 and 2020. This confirms the 2021 Global Hunger Index (GHI), which ranks Nigeria as the 103rd out of 135 countries with an index of 28.3 in the same league with Afghanistan
Production of food and cash crops was relatively self-sufficient but this gradually changed after Nigeria shifted from agriculture to oil production. As oil prices went up, interest in agriculture waned. Now, the country is feeling the brunt of rising food items, which have gone up by over 100 per cent since 2006.
The National Bureau of Statistics (NBS) selected Food Price Watch for the month of May 2022 shows that the average price of 1kg of beans rose on a year-on-year basis by 37.22 per cent from N382.37 in May 2021 to N524.70 in May 2022. Also, on a month-on-month basis, this increased by 1.09 per cent from N519.05 in April 2022. The average price of 1kg of a Yam tuber increased on a year-on-year basis by 37.87 per cent from N269.98 in May 2021 to N372.23 in May 2022.
On a month-on-month basis, the average price of the item increased by 3.05 per cent in May 2022. Similarly, the average price of 2kg of Wheat flour: pre-packed (golden penny) on a year-on-year basis, rose by 34.92% from the value recorded in May 2021 (N785.87) to N1,060.26 in May 2022.
On a month-on-month basis, it increased from N1,047.74 in April 2022 to N1,060.26 in May 2022 indicating a 1.20 per cent growth. In the same vein, the average price of Palm oil: (1 bottle, specify bottle) increased by 42.81 per cent from N593.36 in May 2021 to N847.39 in May 2022. It also grew by 0.55 per cent on a month-on-month basis. The average price of 1kg of beef (boneless) rose by 34.11 per cent on a year-on-year basis from N1,513.43 in May 2021 to N 2,029.59 in May 2022. In addition, the average price of Groundnut oil: 1 bottle, specify bottle stood at N1,040.88 in May 2022, showing an increase of 47.99 per crnt from N703.36 in May 2021.
It rose by 3.29 per cent from N 1,007.68 in April 2022. At the state level, Ebonyi recorded the highest average price of beans (white, Black eye, sold loose) with N899.79, while the lowest was reported in Borno with N262.79. The highest average price of 1kg of a Yam tuber was recorded in Akwa-Ibom with N804.45, while the lowest was recorded in Bauchi with N134.17. In addition, Abia State recorded the highest price of Wheat flour: prepacked (golden penny 2kg) with N1, 393, while Yobe recorded the lowest with N755.03.
As a key player in the Nigeria agro-processing and allied value chain, Buhler Nigeria says it is committed to supporting federal government efforts to address food security through initiatives such as the construction of the Grain Processing Innovation Center in Kano, which will become the centre of competence for the milling of local grains such as maize, sorghum, millets, fonio, cassava, soya and alike.
This commitment was made at Buhler Nigeria 2022 Customer Experience Day in their new office in Lagos. The event had in attendance over 200 decision makers in the food and agro sector. With the theme: “Thriving through collaboration”, the attendees and keynote speakers brainstormed on how to collaborate and accelerate their impact in increasing Nigeria’s food self-sufficiency.
Managing Director of Buhler Nigeria, Mr. Manuel Murrenhoff, disclosed that Nigeria had the most significant arable land in Africa, and that Buhler Nigeria was committed to supporting the nation’s goal of achieving food independence through provision of reliable food processing technology.
Murrenhoff hinted that by 2100, Nigeria would emerge as the second most populous country in the world with approximately 800 million people, and this would require a large and dynamic food sector to feed sustainably within the boundaries of our planet.
According to him, “We have been investing heavily in Nigeria and one of these projects is a grain processing innovation centre that we are setting up in Kano State and so we target is that together with our partners and customers, we will develop solutions, recipe products, processes, to actually mill and process local grains. So, grains that are produced in Nigeria, they are processed in Nigeria and consumed in Nigeria or exported even to gain more Forex.”
Contributions of BOI
While speaking at the Buhler Nigeria Customer Experience Day, with the theme: “Thriving Through Collaboration” General Manager, Bank of Industry (BOI), Mr. Loe Kange, said as part of the mandate of the bank, they would focus on agribusiness sector, especially food processing and non-food processing subsector.
He further explained that within the food processing subsector, one of the challenges that they have discovered is that the customers, they were supporting, were having challenges getting the right inputs, especially raw materials that they required to process into finished product.
“We also found that it was important to ensure that we support the entire value chain especially looking at it from the farm to the marketplace or farm to the home where the finished product is actually consumed. So we decided to work with the large corporation that we support, who are in the food processing sector such Olam Nigeria Limited and all the aggregators. We worked with them to provide support to their input suppliers, who are in this case our small farm holders. We discovered that one of the biggest challenges that the smallholder farmers have includes quality of seedlings, and lack of financing to engage in mechanised farming and to buy fertilizers,” he noted.
He hinted that another important factor is the market to sell, once the commodities are produced, adding that there is no market that these farmers and producers can actually concentrate their products to, “so, they begin to experience the issue of post-harvest losses, moreover storage facilities are also hard to find and even when they find it, it is expensive to afford.”
He remarked as part efforts to mitigate the challenges with processing, and post-harvest losses, the bank decided to examine the entire value chain in order to see how they can work with large corporations, “and have these farmers as their impute suppliers and see how they can expand their product.”
Kange said the development bank has disbursed about N418bn supporting entrepreneurs, businesses and groups to scale their businesses in the country.
According to him, “We will provide financing to the large corporations and aggregators, they in turn provide support in kind to the smallholders farmers. How do they do that? They provide improved seedlings, support them with modern farming techniques, provide fertilizers, mechanization and most importantly they provide an off-taker, (they the buyers for the farmers). So the farmers are assured that whatever they produce it can be bought over and that helps them to begin to produce with all the assistance in mechanization, fertilizers, improved seedlings and farming techniques. We found that they are actually producing more and when they are able to sell to the large corporation what happens is the money they got from them they are able to deploy it and expand their farms and that increases the production and therefore that has helped to thrive food security.”
Well, one of the key things we are doing is encouraging our customers, the large corporations, and aggregators, to try and source their materials locally, because that is the surest way. Nigeria has to be independent in every way and not rely on imports because when you import raw from outside the country, you are not helping create jobs in Nigeria. Yes, when your expand production, you create jobs, Kange further said.
Backward Integration
Kange explained that for backward integration the bank would criteria examine the entire value chain to find out if a producer has been importing commodities from oversees such as raw materials or equipment.
He said: “Where we have the production capacity in Nigeria, we will encourage our customers to actually do linkages that is business linkages. We say look these machines is being produced here like why don’t you try it, or these raw materials we have some people working with the farmers and they have helped them to actually produce quality seedlings and produce that you can use. So that helps to address the issue of import substitution.
“We also encourage them that when they also produce, they should try to export, and look at the export market because only then will you begin to earn foreign exchange. So that way even if you have to import you still have foreign exchange inflows from your export earnings that you can offset that so you will not have to keep depending on asking government to give you foreign exchange all the time to import.”
On his part, Murrenhoff, stated that in a bid to attain self-sufficiency in food and promote backward integration, government has to ensure there is price parity, which implies that the producers that produce and process locally has the same or lower price than if they import it.
He added that the rice smuggled into Nigeria, is sometimes cheaper than the locally produced rice, but revealed that if there is investment in the production and processing of rice, maize, sorghum, and millet, it would help promote price parity, “because it is about having an efficient system, in the agricultural sector as against agro processing, then it will be a lot cheaper than importing from outside.”
The Role of Lagos State
Commissioner for Agriculture, Lagos State, Ms. Abisola Olusanya, commended Buhler for its significant contribution in supporting Nigeria with reliable industrial technology.
She expressed delight with the ongoing partnership with the State government in building the the Rice Mill in Imota, Lagos State, which she described as the biggest in West Africa.
She explained that the Mill would integrate the entire value chain in rice production, serving over 20 million Lagosians and other parts of the country.
The Commissioner informed the stakeholders and Buhler’s customers in attendance at the event that Lagos is open for business and eager to collaborate with other leading players in the agri-business value chain.
She further stated that regarding the Imota rice project it has been about four years in terms of facilitation and it is close to completion, adding that in terms of capacity, it is the largest in Africa and produces 32 tonnes per hour, “which means in a year, you should be getting about 2.4 million 50 kilo bags of rice.”
Olusanya said: “In terms of completion, the project is at 95 percent completion level. We have partners apart from Buhler that we are working with to ensure completion and I’m hoping that in the next few months the mill will be ready for inauguration.
“We are looking at solutions regarding the backward integration as well as forward integration. So today, for instance the State ministry of agriculture is working on backward integration initiative empowering rice farmers with inputs and training, such that we could expand on what we had been doing around production as well as into sister states in the country towards getting the input required for the mill to take off.”
