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Agriculture in Nigeria


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There is need for Nigerians to go back to Agriculture.

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Agriculture in Nigeria

  1. 1. INNOVATE ...Change Your World.ENTREPRENEURIAL OPPORTUNITIES INAGRIFOOD SYSTEM IN NIGERIA.By:Dr Olatunde AgbatoPresidentAnimal Care Services Konsult (Nig. ) LtdOgere RemoOgun State.
  2. 2. PREAMBLE My utmost pleasure to be present here today. First time, but good impression. Why? ◦ The +ve impact the church is making in Nigeria – especially among the youth. ◦ The initial ambition of its founder to be a Veterinarian like myself. = “the Word works wonders @ Daystar - come. It is now a reality that the word of God works at Daystar. Thanks for inviting me to share my experience and inspire participants to take practical action in the area of my calling – agriculture. 2
  4. 4. What is Agrifood System? Encompasses the interlinked set of activities that run from “Seed to Table”. Includes agricultural input production and distribution, farm level production, raw agricultural product assembly, processing and marketing. Encompasses the value chains for different agricultural and food products and inputs and the linkages among them. 4
  5. 5. What is Agrifood System? Is also a shorthand term for agriculture and related agro industries. Refers essentially to “expanded agriculture” that produces food, and its analysis could also be extended equally to those parts of agriculture and agro industry that produce non-food products such as fibres and biofuels. 5
  7. 7. 1. Agriculture and the Economy Agriculture sector is central to Nigeria’s economy; accounting for 40% of GDP and providing 60% of employment. It is a major source of employment growth. Between 2001 – 2007, it accounted for 51% of job creation in Nigeria. In the 1960s, Nigeria had over 60% of global palm oil exports, 30% of global groundnut exports, 20-30% of global groundnut oil exports, and 15% of global Cocoa exports. 7
  8. 8. 2. Decline in Contribution of Agriculture to Export Since the 1960’s, Nigeria has lost a dominant position in exports of key crops such as Cocoa, groundnuts, groundnut oil and palm oil. By year 2000, Nigeria’s global share of exports of each of these crops was 5% or less. 8
  9. 9. NIGERIA’S AGRICULTURAL SECTORIS UNDERPERFORMING Cereal yields Tons per Hectare 7.5 3.8 3.5 2.1 1.7 +121% 1.6 Egypt South World ZambiaCôte Nigeria Africa Average dIvoire 9
  10. 10. Expenditure on agricultureLow % total budget expenditure on agricultureagriculturalfunding 8x 25.0 3.0 5.0 Nigeria Malaysia IndonesiaAgriculturalraw materialcontribution tomerchandise 5.04 50x 2.53exports is very 0.01low Nigeria Malaysia Indonesia Mechanization intensityLow Tractors/100 hamechanization 26x Nigeria Malaysia Indonesia Thailand Brazil USA Irrigation intensityLow irrigation % of arable landlevels 28.0 32x 12.4 0.8 4.8 4.4 Nigeria Malaysia Indonesia Thailand Brazil 10
  11. 11. Analysis▪ Nigeria is under investing in its agricultural sector on an aggregate level▪ Lack of overall investment limits capacity for adequate capital allocation to key inputs across the value chain▪ There are key policy changes that have potential to enable increased performance in the agricultural sector 11
  12. 12. Nigeria’s Natural Strengths Nigeria has many strengths: ◦ Our land is some of the most fertile in the world ◦ 79m ha of agricultural land of which 40m ha is arable ◦ Over 40% of arable land remains uncultivated ◦ Average precipitation 1,150mm/year, ◦ Potential to irrigate 3m ha. ◦ 14m farming families. ◦ Capable of growing almost all crops. 12
  13. 13. …but is not achieving itspotential Productivity of arable land (kg/ha 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Brazil China India Mexico Nigeria 13
  14. 14. Reasons for low productivity Small land holdings Uncoordinated aid projects Lack of storage facilities ◦ Inputs ◦ Mechanization ◦ Credit ◦ Irrigation ◦ Infrastructure ◦ Reach of extension network Non availability of proper entrepreneurial skills to harness available resources for maximum impact. 14
  15. 15. Current Yield Scenario Nigeriavs International Benchmark Maize – 1.5 tons/hectare against 7 – 8 tons Groundnut – 400kg/hectare against 2; 700kg in Turkey Onion – 4 metric tons/hectare against 120 tons in Yemen Tomatoes – 5 tons/hectare against 100tons in Israel Rice – 1.5tons/hectare against 20 tons in Thailand Cattle – Milk yield – 300 litres/lactation against 10,000 litres ◦ First calving – 4.5 years against 20 – 22 months ◦ Calving rate – 2 years average against annual ◦ Carcass weight at 3 years – 250kg against 1,500kg 15
  16. 16. 3. Nigeria now Imports Agricultural Produce Today, Nigeria is a net importer of agricultural produce with imports totaling NGN 630bn. Large import food product include ◦ Wheat (NGN, 165), ◦ Fish (NGN 105bn), ◦ Rice (NGN 75bn), and ◦ Sugar (NGN 60bn). 16
  17. 17. …But has a huge Agricultural GrowthPotentials Nigeria’s agriculture sector has enormous potential with an opportunity to grow output by 160% from USD 99 billion today to USD 256 billion by 2030. This growth potential comes from potential to ◦ increase yields to 80 – 100% of benchmark countries; ◦ increase acreage by 14m ha new agricultural land, approximately 38% of Nigeria’s unused arable land of 36.9m ha; and ◦ shift 20% of production to higher value agricultural produce. 17
  18. 18. … With global Opportunities Nigeria faces a large and growing global agricultural market – rising commodity prices, growing demand for food and opportunities in bio-fuel, all present significant opportunities for Nigeria. For example, global cereal demand will grow by between 31% and 150% by 2050 depending on the region, and global commodity prices are in their second spike in three years. Agriculture can become the main driver for more equitable income growth, compared to oil and gas sector . 18
  20. 20. Agriculture now looking up inNigeria Nigerian agriculture has shown good growth rates in the recent past with growth rates of 7.4%, 7.2% and 6.5% in 2006, 2007, and 2008 respectively. Between 2003 and 2007 its average share of national real GDP was 41.5% thus underscoring its importance in the livelihood of Nigerians. 20
  21. 21. Government Positive Initiatives at makingAgriculture key driver of the economy Vision 2020 Agricultural Policy 2001 National Food Security Programme (NFSP) 21
  22. 22. Other PositiveDevelopments & Initiatives Continual rise in national population. Improved stability in the polity. Return and consistent increase of the middle class (increased disposable income and beneficial trends in food spending habits). Nigeria remains a veritable destination for investment because of the relatively high ROI – attested to by increased influx of international brands in the FMCG, fast food and hospitality industries (some drivers of agricultural value chain). 22
  24. 24. Using the same amount of land,we could become a major globalcrop producer … 24
  25. 25. … combining yield gains withincreasing harvested area hasa dramatic effect 25
  26. 26. Agriculture in Transition While historically Africa has accounted for only 2% of global agricultural trade, shifts in global demand for agricultural products now present a tipping point opportunity for African countries for the following reasons. ◦ Rising population ◦ Steady income growth ◦ Demand for high-value crops, dairy products, fruits and vegetables; ◦ Rising demand for processed and semi-processed food staples and ◦ Growth in demand for bio-fuel present new opportunities. 26
  27. 27. Agriculture in Transition The global food crisis clearly demonstrated that food is more valuable than any other commodity. Several major food producing countries have reached their plateau in terms of food production capacity. Many can no longer expand food production without serious negative environmental consequences. Resource rich but water deficient countries (e.g. Saudi Arabia, Qatar, UAE, etc.) are increasingly looking outwards to import food given water constraints. Africa is where the opportunities exist to meet global food demand. 27
  28. 28. FUNDING AND FINANCINGAGRICULTURE The underdeveloped states of many markets in developing countries like Nigeria makes government involvement in agricultural investment necessary. To achieve the objectives of the NFSP, funding will come from three major sources – namely ◦ government, ◦ commercial banks and ◦ development partners. 28
  29. 29. FUNDING AND FINANCINGAGRICULTURE Historically, government budgetary allocation to agriculture has been at average of less than 3%. However, there are some indications the government is now improving on both the allocation and spending and the federal government has also indicated its commitment to achieving and exceeding the 10% Maputo target. It has further designated its Natural Resources Fund (i.e. 1.68% of the federal account) to the funding of the National Food Security Programme. The federal government has floated a N200 billion naira bond (Federal Government Intervention Bond Issue) to provide long-term credit to private sector organizations which is currently being facilitated by the Central Bank through the Commercial Banks. 29
  30. 30. CBN Intervention Irked by the disproportionate low level of credit to the agricultural sector by the banks (when compared to the total level of credit to the economy) despite all its previous interventions, the Central Bank recently launched a new scheme to promote increased finance to Agriculture. Previous schemes include ACGS, Presidential Agricultural Initiative, Bankers’ Committee Agric Loan Initiative, Interest Drawback Scheme, and the Commercial Agriculture Credit Scheme (CACS). Yet, the lending to Agriculture is about 1.4% of total lending in the economy (despite the fact that Agriculture contributes close to 42% of the GDP); New scheme is the Nigerian Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL). 30
  31. 31. NIRSAL According to the Central Bank, NIRSAL is a financing initiative that will; ◦ Provide farmers with affordable financial products ◦ Reduce the risk of granting bank loan to farmers. 31
  32. 32. The Objectives of NIRSAL Spark agricultural industrialization process through increased production and processing across the value chains. Build capacities of Nigerian banks to lend to agriculture Deploy risk sharing instruments that will lower the risks of lending Provide technical assistance for farmers and banks Develop a bank rating scheme that will incentivize and show case/situate banks based on their capacities to lend to the agriculture sectors. 32
  33. 33. OPPORTUNITIES FOR INVESTMENT IN THE AGRIFOOD SYSTEM.To effectively identify and profitably exploit businessopportunities within the agricultural value chain, youmust be ready for the challenges of anENTREPRENEUR. 33
  34. 34. WHO IS ANENTREPRENEUR? The dictionary defines an entrepreneur as one who organizes, operates, and assumes the risk for a business venture. An entrepreneur is a risk taker. He is an adventurer. He is someone who ventures out not without fears, but in spite of them. Courage is his trademark. 34
  35. 35. WHO IS ANENTREPRENEUR? ◦ He dreams of starting an enterprise and he dares to pursue and actualize his dream. He is driven by his desires to venture out, to explore, and to risk much security in an attempt to create a product or a service that will be a solution to a problem in this world. ◦ He is never satisfied and will never be satisfied with his status quo. He asks questions, queries the norm and he experiments. ◦ He is not a quitter – He hangs in there against all odds even if others have quit or are quitting. When he falls, he rises again. He gets knocked down several many times, but never stays down. ◦ He is a fighter – fights battles within and without. Within himself, he must battle fear, doubts and anxieties. Outside of himself, he must battle foes and ironically friends. His foes are motivated by their desire to see his downfall; and his friends who oppose him are motivated by their concern for his welfare. He usually finds the oppositions of friends much tougher to overcome. ◦ He faces many tough days – days when cash is seriously lacking, days when employees have to be paid but money is not enough, the days he meets angry creditors, the days employees steal from him or unexpectedly quit on him, the day he loses key clients, the days he just doesn’t feel like continuing. 35
  36. 36. “PECULIAR MESS” The Nigerian entrepreneur faces peculiar problems. His battles are tougher, and his obstacles are greater. Apart from the usual battle every entrepreneur fights, the Nigerian entrepreneur has also to contend with: ◦ Poor power supply ◦ Corruption ◦ Poverty ◦ Poor infrastructure ◦ Unstable economic and political environment and policies 36
  37. 37. FUNCTIONS OF THEENTREPRENEUR IN AGRIFOODSYSTEM IN NIGERIA Perception of economic opportunities within the Agriculture value chain Providing technical and organizational innovations or adapting technologies for his own use to exploit identified opportunities Gaining command over other resources Taking responsibilities for the internal management and external advancement of the enterprise. 37
  38. 38. OPPORTUNITIES A business opportunity implies the availability of NEED with guaranteed sales volume at low enough cost. The main and basic function of an Entrepreneur is scanning the environment in order to identify business opportunities for profitable investments. Do you see yourself as one? There are many opportunities within the Nigerian Agrifood System value chain for you as an entrepreneur to identify and profitably exploit. 38
  39. 39. THE DOOR TO OPPORTUNITYPlease note and observe the followings in your search for opportunities. Opportunities and motivation are connected. Motivated people see opportunities and opportunities are often what motivate people. Great attitudes precede great opportunities. Who you are determines what you are. Today is the best day for an opportunity. Opportunity always takes “now” for an answer. Opportunities are the result of pluck, not luck. The people who succeed seek out opportunities, and if they can’t find them, they create them. 39
  40. 40. THE DOOR TO OPPORTUNITY ctd Opportunities don’t present themselves in ideal circumstances. If you wait for the lights light to turn green, you will never leave your driveway. Opportunity without commitment will be lost. Abandoned opportunities are simply pursued by the competitors. Opportunity is birthed out of problems. If you are looking for a big opportunity, find a big problem. Opportunities either multiply or disappear. The more opportunities you pursue, the more you find behind them. Opportunities must be nourished if they are to survive. As Peter Drucker, the father of modern management says, “feed an opportunity, starve a problem. 40
  41. 41. OPPORTUNITY SPHERE IN THE AGRICULTURE VALUE CHAIN. Agriculture value chain IndustrialInput Agro Agro Trade Farmers manu-producers Dealers processors and exports facturers 41
  42. 42. Input producers e.g. - Fertilizers - Agrochemical - Poultry feed - Medicaments and Vaccines, etc. 42
  43. 43. Farming e.g. - Arable Crops - Poultry and Livestock - Fisheries, etc. 43
  44. 44. Agro Dealers e.g. - Grain merchants - Egg Marketers, etc. 44
  45. 45. Agro Processors- Feedmillers- Flourmillers- Tomato puree production- Egg Breaking- Cereal Meats production, etc. 45
  46. 46. Trades and Export Processed agric products merchandising, etc. 46
  47. 47. Value Chain Maps - Soybean Soybean Meal/Cake * Animal feed * Protein foodsInput industry Farmer Industrial Processor * Texturised bagSeed and other Combinesinputs inputs to Transforms Soybeans soybeans into products Household process to local foods Soybean * Coking oil Oil * Lubricants * Paints, inks * Textile Finisher, etc ff 47
  48. 48. EXPLOITING IDENTIFIEDOPPORTUNTIES Having identified the opportunity, you as the Entrepreneur, would now have to start a business organization to profitably exploit the opportunity. Before you start the business venture, it is very important that you rate your personal capabilities and qualities to run the business efficiently. Such qualities include your ◦ Personal drive and initiative ◦ Creative thinking ability ◦ Communicative ability ◦ Leadership and responsibility; and ◦ Above all, technical know-how A knowledge of book-keeping will be of immense advantage in running the business concern. 48
  49. 49. FORMS OF ORGANISATIONThe business could be organized as: A Sole Proprietorship company or A Partnership with other entrepreneurs or A Limited Liability Company 49
  50. 50. BUSINESS LOCATION After deciding on the type of business organization to start with, you would have to select the location of the business. In selecting a location, you have to consider factors such as: ◦ Availability of inputs for your operations; ◦ Market for the goods and services ◦ Understanding of the culture of people of that location ◦ Availability of labour for the business ◦ Availability of necessary infrastructure that are required for the smooth operation of the business e.g. good access roads, telecommunications, electricity, water etc. 50
  51. 51. THE FEASIBILITY STUDY The feasibility study in itself gives details on the financial, materials, machinery and manpower requirements of the proposed business concern. The expected sales volume/revenue and return on capital employed/return on investment are also to be incorporated into the feasibility study. A good feasibility study is essential for the successful take-off of the business as it would act as a guide in the implementation of the project. 51
  52. 52. CAPITAL 2 major sources: ◦ Personal Savings – (P.S.) ◦ Other people’s money - (O.P.M.) Other peoples’ money could be made available to you as: ◦ Loans, advances, grants and gifts from family, friends relations, and philanthropic organization; ◦ Loans from Financial Institutions e.g. Commercial Banks, Microfinance Institutions, Development Banks, Insurance Companies, Finance Houses. ◦ Aids from Government agencies such as National Directorate of Employment. 52
  53. 53. CAPITAL You must carefully estimate your capital needs. Luke 14:28 If you have collateral security, you may be able to borrow from financial institutions such as Banks. It could be initially difficult to secure other peoples’ fund when you are first starting the new business because of lack of track record and guarantee of success at the beginning. In short, you need a small budget that spells out into details the breakdown of your expenses and capital requirements. The capital need will vary according to the type of business within the value chain you want to get involved in. On acquisition of enough financial resources to profitably exploit the business opportunity, you are now ready to execute the project. 53
  54. 54. MANAGEMENT Now, having set up the business, you as the Entrepreneur would have to harness all the resources employed for profitable operation; and this you can only do through efficient management. 54
  55. 55. VISION and MISSION Your Vision is the statement of goals and objectives in very clear perspective i.e. the dreams of the organization. Habakkuk 2:2 – write the vision, make it plain on tablets. If your vision does not scare you, then it is not big enough. Your goals must be clearly spelt out, and you must make yourself accountable for its realization. Your mission must be the statement of strategies or systematic plan of actions for the accomplishment of the defined objectives of the company set out in the Vision statement. These set goals, objectives, and strategies for actualizing them for the organization must never be subordinated to any other desires within the organization, including your personal desire if different from that of the organization. 55
  56. 56. PROBLEMS Various problems will emerge in the course of your managing the business, and these problems always vary according to the type of business you operate. Each of these problems will need a special treatment, and the problem solved before success is assured. Problem brings experience, and experience brings wisdom. Rather than allowing problems or adversity to break you down, you should see and use it as opportunity to break new grounds and records. Every problem has the seeds of its own solution. In all problems is buried some great opportunity. 56
  57. 57. RECORD KEEPING Good record-keeping is very essential in successful management The Entrepreneur will have to install good mechanism for keeping records of all transactions within the organisation. No job is completed until it is recorded. 57
  58. 58. INGREDIENTS OF SUCCESSAS AN ENTREPRENEUR Passion Time Management Courageous Persistence Integrity Competitive Edge Action 58
  59. 59. The Seven Secrets of Success ◦ There is no secret of success ◦ Success is for every one ◦ Your life becomes better only when you become better ◦ There is no success without sacrifice ◦ Success is achieved in inches not miles ◦ The greatest enemy of tomorrow’s success is today’s success. ◦ No advice on success works unless you do. 59
  60. 60. Continuous Prayers All the above ingredients must be backed up with continual prayers with firm and unshaken understanding and belief in the role of the Almighty God in achieving defined objectives. Through prayers, barriers and constraints are supernaturally and mysteriously removed. You must find time to pray. 60
  61. 61. Towards Achieving Fulfillment The proper applications of the ingredients of success earlier discussed are very key and fundamental for achievement of fulfillment. These are all time-tested principles that will enable you achieve your visions. More importantly, you must pay attention to the principles of God. While it is necessary to be ambitious in life, it is not virtue to be in so much hurry as to take short cuts. 61
  62. 62. Respect Processes We must be earnest; but we must have respect for processes. Meanwhile, processes take time (however short) and those who cannot wait usually end up truncating divine processes in their lives. Mark 4:26-32 – The two parables of our Lord Jesus Christ in the text show us a few things about growth or success or building a thing; ◦ Success takes time ◦ Success follows a process ◦ Success is multi-stage ◦ Success is tangible and measurable ◦ Success has rewards ◦ The process that leads to success is guided divinely. 62
  63. 63. MYPERSONALSTORYTo the glory of God, I am a living example ofthe fact that you can stay in this country andbe a simple farmer and actualize your dream. 63
  64. 64. CLOSING REMARK Making a career in the Nigerian Agrifood System – the Expanded Agriculture is good and rewarding. Agricultural productivity is generally low in Nigeria, but where there are many skilled entrepreneurs; who know what to do, and where to get relevant information and technology to improve their productivity, things can only improve. We must take agriculture from the present subsistence level to commercial, and industrial; and it is only through the entrepreneurial initiatives and involvements of young people like you who are gathered here that we can achieve this. 64
  65. 65. CLOSING REMARK In the last four decades, countries such as Brazil, Malaysia, and Thailand have been able to achieve global competitiveness in agribusiness through initiatives spearheaded by the private sector with the commitment of public resources. We can do the same here in Nigeria. Government has expressed its readiness to commit public resources to create the enabling environment . The private sector must key into this agenda for the development and global competitiveness of the agrifood system in Nigeria. *This is my message at this conference* It is the way to go, not just for its value to the nation; but also for the value it has for personal success and fulfillment. 65
  66. 66. CLOSING REMARK It would be my joy to see many of you become farmers and operators in the agriculture value chain very soon, Or that those of you already in the chain deepen your stake in the business. 66
  67. 67. CLOSING REMARK However, whether or not you choose to join us in the agriculture value chain, please just make a positive impact in your little corner. Remember that slogan – “It begins with you”. Can our country Nigeria be better than what it is now? Yes, it can; but it begins with you! 67
  68. 68. Thank you & God bless you.Olatunde Aiyedun Agbatoolatundeagbato@yahoo.com08022902318