As part of the drive to support the federal government’s backward integration programme, corporate organisations have taken to agriculture as a means of sustaining the flow of raw materials to their factories. In this interview with AGBO-PAUL AUGUSTINE, the group managing director of Flour Mills of Nigeria Plc, Paul Gbededo, gives reasons for taking to agriculture and expresses hope in the future of commercial farming in Nigeria.
Why did Flour Mills decide to go into agriculture?
Our foray into agro-allied business is deliberate. We are not into agro-allied business by accident; we preceded this government in agricultural farming. We have been running Kaboji farms now for over 15 years and we have been in the agro-allied not only in cultivation but in agricultural inputs since 1999 when it was liberalised. Today, we are the leading supplier of NPK to the Nigerian market on our brand which is golden fertiliser.
But as we move along, we also saw the need to be more serious with cultivation because we realised that even when you want to be a processor of agric produce and you are not a cultivator, you find it very difficult to sustain your processing plants because Nigeria is a big agricultural country that consumes virtually all that is produced.
Cassava for example, Nigeria produces over 37 million metric tonnes of cassava annually. One would have thought that with 37 million metric tonnes of cassava there will be plenty of tubers around in the country. It’s not so, because the more we produce cassava, it’s the basic staple food for every home in Nigeria and therefore you will not get the industrial materials that you will need for your processing plant.
Therefore, it becomes necessary to become a cultivator of cassava for your own processing plant. We have the land, the weather, labour and the capability to really produce the cassava. That is why we have gone into agriculture.
Your company appears to have taken special interest in sugar production. Can you tell us why?
You can see that the sugar need of this country is 99 per cent being imported at this point in time. However, the federal government has come up with the National Sugar Master Plan and the plan directs all refineries to have a backward integration programme. Our own backward integration programme is the Sunti Farm in Mokwa local government area of Niger State.
We are poised to support that scheme; we want to invest in the cultivation of sugar cane so as to supply the Nigerian consumers their sugar needs.
Sunti Farm is a 17,000 hectares farm. But out of that about 10, 000 hectares can be used for sugar cultivation. We have cleared about 5, 000 hectares of the land and planted about 2000 hectares already. 10, 000 hectares will give us 100, 000 metric tonnes of raw sugar and 1 million metric tonnes sugar cane.
After crushing, we are expecting 100, 000 metric tonnes of raw sugar and that is what we will refine in our refinery and distribute to the market. We are not just limiting ourselves to 10, 000 hectares, we are currently discussing with Kogi State government for a 20, 000 hectares of land and the government has given us the nod for 20, 000 hectares of land that we will develop and cultivate sugar cane. That will give us another 200, 000 metric tonnes of raw sugar.
We are pursuing it vigorously because it’s part of the agreement that we have made with the National Sugar Development Council, which we will develop as quickly as possible with 10, 000 hectares of sugar cane.
Agriculture is the future of this country, whoever does not join the train now will be left behind.
The Songhai farm in Benin Republic is known for using waste in generating electricity through bio-gas. When should we expect the Flour Mills farms to start generating electricity from sugar waste?
If you fail to plan for the waste that comes from sugar cane plantation and the raw sugar that you have extracted it becomes a problem. Like any sugar estate, you have to start thinking of the scheme that will help you to utilise the waste. There are so many usages of bio-gas. You can turn bio-gas to fertiliser, electricity to paper production etc. We have all these in place already. The very popular one is how to generate power and we are looking at this as our top priority.
How much reduction in cost of production has the company seen after taking on agriculture?
We have a problem with agricultural yield, in Nigeria the best we have done on the average as a company is about 3 to 3.5 metric tonnes of corn per hectare.
Whereas, the average in South Africa is about 5 metric tonnes per hectare, Mexico is 8 metric tonnes per hectare. The higher the yield the lower the cost of production; cost of production in Nigeria is high because we are not yet competitive and that’s why even up till now it is cheaper to import corn into Nigeria than to buy it in the Nigerian market.
However, the more we have a go at it, the more we will continue to improve our agronomy, farming technique, and to improve the yield the better we come up to the international standard and thereby the cost of production will continue to drop.
Seeds have always been a problem for commercial farmers in Nigeria. How do you intend to work through that challenge?
We are thinking of setting up our own seed production unit. We want to see how we can, in the future, develop and nurture seed that will guarantee the right seeds for our farms and be able to sustain the quality of seeds that we will need for our crops.
Through the federal ministry of agriculture that efforts are on to develop quality seeds for Nigerian market.
How much of local resources has Flour Mills utilised in its agro-allied business?
Virtually all the research institutes that are engaged in crop development especially for the crops that we are driving the value chain we have worked with them. IITA is at the forefront. We are working closely with the institute to support us technically with our seeds and see the varieties that they have especially cassava and sugar cane varieties that they have. We have worked with the Nigerian Institute for Oil Palm Research (NIFOR) in Edo State to check the varieties of the oil palm seeds that they have.
We are also working with National Cereals Research Institute (NCRI) Badeggi in Bida Niger State. They told us that they have rice seeds that can yield about 4 to 5 metric tonnes per hectare and we are trying all these varieties that they have.
How many jobs is the company projecting to create in the agro-allied venture?
The agro-allied division of our business alone has got a five-year projection. Our investment is going to triple in five years. The job that we would have created in five years would have been quadruple of what we have today.
In real time, at least 5, 000 thousand farmers will be involved in sugar production alone. We are expecting to have the same thing in cassava. Look at the 20, 000 hectares of land we want to cultivate for cassava production in Kwara. We are developing on our own 10, 000 hectares and the remaining 10, 000 will be for out-growers. Out-growers are going to be given at least 1 hectare each; we are talking about 10, 000 farmers to be engaged in Kwara alone.
With the massive investment of Flour Mills in the agricultural business, is the company prepared for a policy somersault?
Before we go into any project we have to do a thorough business projection and see whether the business is going to be profitable enough or not even though we know that agricultural investment is long time and the profits are low.
We believe that that is the future for our organisation and Nigeria.
We will continue to press on the government to support agriculture because agriculture is the future of Nigeria. It provides 40 per cent of the GDP of Nigeria and that can only grow. No government will come in Nigeria without recognising the need for agriculture.