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

The Africa Report - - CONTENTS - Eromo Eg­be­jule in Chikpiri Gabas

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.


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.


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

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