Banks in many African countries still favour lending to governments and large companies, resulting in less finance for small and medium-sized enterprises (SMEs), according to Banking in Africa, published by the European Investment Bank on February 27.
AGRIBUSINESS | ITW: Ade Adefeko, VP corporate and government relations, Olam; “Farmers big and small”
TAR: Is Nigeria ready for self-sufficiency and possible exports in, say, 2019?Ade Adefeko: Let us not overreach 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 1.8tn/ha, as we do about close to 10tn if you add dry and wet season [together].
Government has made considerable progress though, with the Central Bank of Nigeria Anchor Borrowers 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 measures 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 any reason why it cannot work for rice.
How does Olam use technology to secure and increase productivity?Olam is into large-scale farming and uses state-of-the-art technologies like: LiDAR, normalised difference vegetation index images and yield maps. […] Olam also draws on knowledge from various international institutions like the International Rice Research Institute, the Africa Rice Center, CIRAD in France, Cornell University and the Rice Research and Training Center in Egypt. Apart from the above, Olam has an internal research and development facility to develop and adapt seeds to the local conditions, a seed cleaning plant and a state-of-the-art rice mill.
Cost-wise, how does local milling compare to importing rice?Local costs are high due to lack of infrastructure, fuel costs and the high cost of raw materials. For instance, a tonne of fully packaged rice can be bought in Thailand for $380 free on board, while a tonne of paddy in Nigeria costs N150,000 ($470). This is paddy, and if you convert to rice terms, the cost is $826/tn as you recover only 60% as head rice! So, overall, the cost is very high. The major component is the extremely high cost of paddy.
Is smuggling still a big problem?Nigeria consumes almost 7m tonnes of rice, and there is a gap of nearly 3m tonnes between production and consumption. Almost 2m tonnes of rice is smuggled into the country annually.
Is President Muhammadu Buhari’s import-substitution policy working? Are you working with the government on this?We are involved in the Anchor Borrowers Programme: we have assisted over 5,000 local smallholder farmers since 2013, and 25,000tn of paddy has been produced. Profits per farmer per hectare have increased from about N305,000 to over N1.2m. 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, equipping the smallholder famers to secure their future.
From the June 2017 print edition