Agriculture
In an interview with journalists in Lagos, Chief Executive
Officer of Origin Group Limited, Mr. Samuel J. Samuel, stresses the importance
of small scale farmers in the survival of the nation’s agricultural sector and
other challenges facing the real sector. Crusoe Osagie provides excerpts:
Perception of Agricultural Sector
We have continued to see that agriculture in Nigeria is just
starting. At least we now know that we need to start, we now know that the
direction to go is now agric. We now have the situation where agric is now seen
as a business.
Basically, I think the federal government and all state
governments are now waking up to the realisation that the solution to Nigeria’s
situation in terms of creation of jobs, empowerment of people, and good
security situation in Nigeria can be obtained with agric.
Nigerian agric has seen a lapse in the last, let me say 25
years, because we did well during Shagari era and even some part of Babangida’s
era in terms of developing very huge capacity of agric estates, dams, and all
that. Of course the successive administration at the tail end of Babangida’s
era caused a huge neglect of agriculture which up till now we have not
recovered from.
Most of the indices in terms of food production capacity
that Nigeria attained in the early 90s and late 80s, we have not reached that
capacity; not to talk of surpassing it. A good example is 1983, Nigeria was
doing 2.3 million tonnes of tomato per annum and today we are doing less than 2
million tonnes of tomato until the advent of the current administration that
has increased that capacity now. So we have seen a huge neglect, so rising up
now to first go up to where we were and then begin to open up is a good thing.
The sector is seeing a new emergence, it is seeing changes
and people are waking up. At least I know of Governors who are interested now
in setting up banks. I know of Ministers who are setting up farms, I know of
even editors setting up farms. It is good news, for the sector.
Govt Making a Difference
Government, in terms of policies, has done very well; we
have some very nice policies. There are special funds that government has set
up to support agric. We have not seen an implementation to the letter of some
of these policies for example, the Commercial Agric Credit Scheme (CACS)
initiative. It is one of the best initiatives ever anywhere in the world. It
has never happened anywhere in the world, so, for me it’s a good initiative.
The other thing is that the government is now trying to
remove itself from the real practice of agric and creating what it should do,
that is the regulatory framework. Of course for now Nigeria does not have
capacity so we are mostly a consuming nation, so most of what we are doing at
the moment, even if you are trying to talk about preservatives, processing, and
all that, we don’t have capacity to manufacture machines so we import. When we
import these machines, we have problems at the port and the rest of them.
Then you now talk of raw materials that help you in the
process of preserving it. A good example in our sector is tin plates. You need
to process tomato from the farm, after processing it, you need to put it in
frames after that you need to re-process it again and put it in the can which
is in the tin and of course we have chemicals that are required like copper,
glue and things like that, that are not available locally at all not even in
the whole of the West African countries. So we have to import these items.
The only challenge we have for now is the port, because you
cannot even determine how much you will clear a particular item from the port.
You can’t bring in a drum of tomato or sheet of plate and say it will cost you
N100 to clear.
A Chinese man came to me and he was complaining that he is
moving his factory to Ghana. Unfortunately, for Nigeria this is one of the very
few factories that produce what we called tin cans, which we use for Tomato
paste.
We are luckier in our factory; already we have our own tin
can production machine. But many other factories are rising but they don’t
have. They depend on local manufacturers and this man said he has to leave and
I said why, he said the cost of clearing a container and government tariff for
clearing Tin plate is 5 per cent but the tariff is 5 per cent, but even if he
presents it there he has to pay like 20 per cent. He said why.
I said he should not leave, he said no that he is going, he
said because the fact remains that if you don’t clear your goods, you are at
the mercy of terminal operators and shipping companies who will charge you huge
demurrage on it. So if the Customs officer say you must pay me X and you say
no, you are not going to give, the thing that happens is that you abandon the
thing there.
So that is the core challenge that manufacturing has in
Nigeria. You need to be able to say, my product will get out at this cost and
the port has a key role to play in it. The Chinese man was telling me at his
factory that he’s building in Ghana is just 15 minutes down from the Tema Port
and that from the Tema port to his factory it will take just $100 to charter a
truck and then the cost of clearing his container is $200, and he asked me this
question; can this ever happen in Nigeria that a container will cost only N800
to bring to your factory? I said no because at the moment it cost me about
minimum of $550 – $1,500 to clear one container; that is 500 times higher than
what is obtainable in Ghana.
I said well I’m a Nigerian and I have nowhere to go. I will
continue to struggle with government and work harder to see how these solutions
can come.
So processing like you asked, yes, government has created
incentives for processing, yes, CBN has provided the funding, yes, the policies
are there but there is need for enforcement. There is need for implementation
of these policies. Of course, I also think there is a need for the stakeholders
to come together and form a pressure group that will ensure that some of the
policies are adhered to by Nigerians.
Addressing Food Wastage
In terms of waste, even the highest producers they still
waste it’s normal. It is abnormal in our situation because our production is
not high, we don’t have much of it. And
there is more hunger and starvation. But for me I do believe that with what is
happening now most of the people that are building capacity e.g. Dangote is
building one of the largest motor parks in the world and many other factories
are building huge things, We have a cassava processing plant in Ekiti and we
are supporting this plant by also supporting the farmers to do production.
Wastage could be limited if stakeholders can come together
and harness the energy and the resources that have been produced.
Relevance of Small-scale Farmers
For me, I believe that the core people we should relate with
and work with are the small scale farmers. They are the ones that have paid the
price and stayed the course over these years to sustain that sector because by
the way they don’t have any other job to do.
Newcomers in agric have to find a way to relate and engage
more with these smallholder farmers because I believe the smallholder farmers
still are the mainstay of the agric sector in Nigeria. So for us in Origin
group we are partnering them and they are our out-growers. We empower them by
preparing the land for them and they come and do the planting while we come for
harvesting it. Then we share it and we even create market for their products.
This kind of arrangement is what needs to be encouraged all over. Government
needs to encourage more of this kind of arrangement to happen in various states
at Local Government level.
One of the challenges to that is the current land ownership
structure, which is making that very difficult. For example on 100 hectares of
land you have like 100 farmers. One person plants maize, the other person
plants corn, beans and all that. Now this farm if it is used to plant corn it
will be cheaper to do planting, it will be cheaper to do harvesting and the
farmers might get better value.
So there is a need to cluster the farmers together; that’s
where government needs to come in to do a lot of mobilisation, re-orientation
and of course encourage the farmers to go into cluster groups.
Burden of Funding
Yes, we collaborate with the small farmers and the burden of
funding is reduced to the barest minimum.
Challenge of Financing Agric Initiatives
The dynamics of financing agric require a lot of knowledge
and also a lot of perseverance and it requires also building the total value
chain for you to be able to get value from it.
So, the banks up till now have not been able to fully grasp
agric, so because of that it’s difficult for them to fund it. It’s like going
to borrow somebody money who tells you he will make N100 and you can’t see
where the N100 will come from. You would not want to fund the person.
The challenges are there but I believe that the financing of
farmers in Nigeria by the banks will happen through engagement, reorientation
and all that. That is going on. It is very difficult to get money from banks
but for one I do believe that anybody who wants to get funds from banks should
work harder. You are to convince the banks because basically that is what the
banks are set up to do, to lend money to customers and they make their money
from there. But if they see that their money will not be paid, they won’t lend
it.
Helping the Farmers
The problem in Nigeria, banks want you to bring collateral
for loan and farmers don’t have collateral. They live in mud houses and all
that, how do they get collateral to cover their loan? I think that the era of
collateral has to stop, something has to be done about it because basically if
you are borrowing me money because of collateral what you are telling me is
that once I fail I take the blame, the brunt alone.
You go and sell the property I have before starting the
business to recover your money and thus I see nothing. There is nothing as
criminal, more criminal than that because basically it’s a sin to go into
business, that is what we are saying and that is why many people are not going
into enterprises.
There are few banks in Nigeria that don’t borrow money to
Nigerians because they feel that the risk is very high, and they are right but
then if you look at it again, how do we support the real sector, how do we
create jobs if we don’t borrow money to people who want to use it for business
because I borrow money from you to do a business, which is supposed to support
you and profit me and then the business fails?
You did not do anything and the next thing, you go to sell
my property, the only thing I have before I came to borrow money from you and
that is why everybody is afraid to go into business today because they are
afraid they can sell my property tomorrow then I live with nothing so they keep
managing. So, entrepreneurs are not encouraged to venture and people who should
venture are not doing it.
Way out
The way out, I think there is a need for culture change on
the part of everybody. We have a situation in Nigeria at the moment where there
is insecurity in the land. There is a lot of indiscipline, corruption in the
high places, everywhere. The reasons are not far-fetched. Nigeria should return to meritocracy, where
merit and hard work is encouraged.
For me, that is the prescription. I have looked at it,
Nigeria is very rich, but there is need for meritocracy, put the right people
in the right places, let those who are qualified be given the job; give
opportunity to all.
If that happens and Mr. A knows that if he goes to school
and graduates with a first class, he is qualified to work anywhere in Nigeria.;
Mr. B knows that if he’s qualified for X, he can get a loan, you understand
without calling anybody or using anybody’s name. Mr. B knows that okay my
promotion is due X and he’s given, he’ll be encouraged to do more.
A contractor knows that because I have a furniture factory,
if a contract is given out then he will get it. He’ll be encouraged to set up
and borrow money to set up a furniture factory. But where he sets up the
factory and somebody else is being given contracts, there is no merit in this
case.
Banks-farmer Relationship
I think we need the same orientation. We need only one
orientation in Nigeria. There is need for culture change. If there is culture
change, there will be patriotism. There is no reason why I will not be
patriotic to my country if I know that my country will protect my interest.
If I know that if I’m qualified for this and as a citizen of
Nigeria I will get it. If I know the law reigns, I mean there’s no reason why I
won’t be patriotic. There’s no reason a bank manager won’t go all the way out
to borrow me money when he knows the right man is the one managing the
business, you understand, that this man won’t take the money and do something
else with it. It’s this culture change that will go and start a spiral effect over
the whole system.
Structures Put in Place
In the short run, there are a lot of structures that have
been created by government, and if you know that you don’t have collateral then
join the right associations. Cooperative societies are being encouraged and
through this medium loans can be accessed.
This is the only country in the world I see people who don’t
have mentors, everybody is self-made. All over the world people have mentors;
they have people they look up to. You can go to somebody to show him what you
are about to do, he advises you and he can even guarantee you. People need to
be mentored, to grow, somehow like I always say, someone must pay the price,
it’s either you go to someone who has paid the price or you pay the price
somehow.
Nigerian Goods Competing Globally
Ironically, Nigerian products, because of the fact that our
land is green, it’s still very green, the air is still very good and not
polluted as you have in China or any part of the world. So, it means that we
don’t need too many genetically-manufactured crops, so we can grow organic
foods and export. So we can compete very well. The only challenge that might
arise after harvest is how to preserve the products.
Government Intervention
I think government is already doing a lot of things in
putting agric in the direction where it belongs. I only feel that there is need
for government to link up more with key players, we must go to the grassroots.
So with all these issues, I think the contribution of agric is very huge.. I
think when you compare to how much we export oil and how much agric product we
export, I think agric contributes up to 40 per cent of Nigeria’s GDP.
Tractor Hiring Services
The whole idea for us is that we must be able to increase
the tractor density in Nigeria to be able to increase the food production level
in Nigeria and also to create more farmers in Nigeria. If you have more farmers
in Nigeria, give them the required tools, I mean you can’t tell a graduate to
go farming and take the hoe that his grandfather used to farm. That is the
challenge, the theory is that you bring tractors and then they will farm. If
you get the land they will farm.
We are selling tractors, assembling tractors in Nigeria and
then we said, fine, for those who don’t have money to buy, we can also allow
them to hire our tractors if they are in clusters. So if you have a cluster of
hundred farmers, instead of buying tractors and they say, fine every year we
need your tractors for a number of days then we give them tractors to use.
Origin Group Specialty
I think I’m more of a businessman but again I think I’m a
psychologist, because I do believe that you have to understand the total human
mind to be able to work with people and also to deliver the right kind of
products to that.
The challenge is that most times when you have goals, you
tend to believe that everybody should take it just buy into it so that is one
of the big mistakes. I think they should believe that everybody has their own
mindset, their own goals, they have their own target. Realigning this, my own
goals, targets to get people to buy in and ensure that we carry other people
along and define their own goal within your own goal is one of the greatest
challenges that I have faced in my life.
The second one is the fact that when you are doing what
other people have not dared to do then most of the time, you look like a mad
man. It’s the way it is and nobody wants to believe you until they see it
happen. Sometime it’s challenging when you fight alone.
Rate of Success
Well, I think we are doing very well now, because it is
getting clearer, and by the grace of God we are sure we will be okay.
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