64 Food for thought, and for growth
The September launch of a feedmill by Olam, and anouncements of new projects by Dangote Group, show investors are ready to commit to Nigeria’s diversification
With oil prices on the skids, local and international players – like Dangote Group and Singapore’s Olam – are investing big bucks on a long-term strategy to feed the growing masses of Africa’s most populous economy. With Nigeria expected to be the world’s third-most populous country in the world by 2050, companies are moving to bridge the gap between demand and supply. Dangote Group, owned by Nigerian billionaire Aliko Dangote, announced this year its plans to invest $3.8bn in sugar and $800m in dairy products over the next three years( see box ). Olam International has grown from a small-volume cashew exporter in Nigeria back in 1989 to a conglomerate with a presence in 70 countries. Now its household staples come from its 18 factories and 115 warehouses across Nigeria. Early this September, Olam launched a new animal feedmill and hatchery with a capacity to produce an estimated 1.6m chicks weekly in Chikpiri Gabas, a village just outside Kaduna, 209km north of Abuja. The facility, sitting on 850ha of land donated by the Kaduna State government, includes a 10,000km2 warehouse for raw goods, another for finished goods at half that capacity and four breeder farms. Olam’s $150m investment spans not just its new Kaduna facility but also another new integrated poultry and fish feed mill in Ilorin, the capital of Kwara State, where production has also begun. President Muhammadu Buhari inaugurated the Kaduna facilities, making his first public outing since the resumption of duties after 103 days of medical leave. Buhari spoke briefly about the significance of the launch as the country readies itself to diversify and wean itself from decades of overdependence on oil. Agriculture minister Audu Ogbeh then delivered Buhari’s address.
SIGN OF RECOVERY
Buhari stressed that the new facility shows Nigeria is on the road to recovery, calling it “clear evidence that, in spite of all odds, economic growth is taking place, especially in the agricultural sector. […] It is our article of faith and our earnest belief that agriculture offers the most viable and all-encompassing option in our attempt to diversify our economy,” Ogbeh said on behalf of the government. The whizzing machines in the feedmill are so loud the engineers have to empty the building and let the self-automated process take over. Just outside, its boiler purrs softly to life, using agro-waste (corn cob fuel) rather than fossil fuel. The strict biosecurity process is powered by smooth-rolling automated generators across the facility. Key to investors’ hopes is the government’s recent hardline stance on frozen poultry imports. Imported frozen poultry was first banned in 2003, but 1.2m tonnes continued to be smuggled in per year. Now, in a bid to increase self-sufficiency and integrate the poultry value chain into the economic recovery plan announced by vice-president Yemi Osinbajo in April 2016 there has been a real crackdown on the smuggling. This has been rewarded with an uptick in investments going into the agro-processing subsector. Olam, one of the largest non-oil exporters in Nigeria in the last decade, is looking to capitalise on it and offer small-scale farmers improved options for the long run. Keshav C. Suresh, global head of Olam’s grains division, tells The Africa Report: “This is not a sprint, it’s a marathon.” He adds: “We’re getting confident from what government is saying, so we’re bringing in all this foreign direct investment in the hope that government follows through to help the small-scale farmer. We’ve seen it in the rice sector, so we
hope they follow through in other subsectors of agriculture, given the rural population numbers.” Olam’s optimism in Nigeria, even with the difficulty of doing business there, is understandable. Its operations in Nigeria accounted for a large chunk of the 16% of its 2016 revenues that came from Africa – S$3.3bn ($2.4bn) of the S$20.59bn global total. The company says it is dealing with 300,000 smallholder crop farmers to source the bulk of raw materials for its animal feed mills, including soybeans, corn and cassava. Beyond that, it is also collaborating with the International Institute of Tropical Agriculture in Ibadan to use seed varieties from its research to boost smallholder yields.
GOOD FOR SMALL FARMERS
Olam is also worried about the optics of its investment. Architect Kabiru Ibrahim, president of All Farmers Association of Nigeria, told reporters at the launch event: “It is not a threat to small producers […]. It’s a threat to the big players because small farmers would even get the pullets cheap and they would also have feed because they are also producing feed there.” The new facility aims to cut losses along the value chain that are caused by a lack of personnel to verify chick health as well as issues like transport and husbandry techniques. Olam’s automated processes run non-stop, consuming a lot of energy in a country where electricity supply remains shaky. According to the company management, Olam chose Kaduna for its conducive weather and investor-friendly government, with governor Nasir El-rufai alluding to his administration’s willingness to secure the investment. “I pleaded with President Buhari to turn down his invitation to attend the United Nations General Assembly in 2015 so I could meet with Olam”, El-rufai said. “Our September 2015 meetings with Olam in Singapore produced a meeting of minds, and the company made a firm decision to invest further in Nigeria and in Kaduna State.” To fill the personnel gap, Olam is targeting new veterinarians from 10 universities across the country by offering 80 of them a two-year internship. One of them is 25-yearold Mary Chisom Esonu, who met Olam staff when they went on a recruitment drive during the 2016 oath-taking ceremony for new vets at Ahmadu Bello University. “This is my first experience in practical terms,” she tells The Africa Report. “And it is an opportunity for me to use some of the facilities that I’ve previously seen only in books. The facilities are nice.” Esonu, whose goal is to become an academic, will get a stipend and accommodation within the Kaduna premises.
Olam’s plant can produce 1.6m chicks weekly, contributing to Nigeria’s 1.5m tonne poultry needs