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ENTREPRENEURIAL OPPORTUNITIES IN AGRIFOOD SYSTEM IN NIGERIA.

By:

Dr Olatunde Agbato President

Animal Care Services Konsult (Nig. ) Ltd

Ogere Remo

Ogun State.

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.

www.daystar.com = “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.

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ENTREPRENEURAL

OPPORTUNITIES IN

AGRIFOOD SYSTEM IN

NIGERIA

Topic for the Day:

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

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.

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OVERVIEW OF “EXPANDED AGRICULTURE” IN NIGERIA

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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.

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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.

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NIGERIA’S AGRICULTURAL SECTOR

IS UNDERPERFORMING

Cereal yields

Tons per Hectare

1.61.72.1

3.53.8

7.5

Egypt NigeriaCôte

d'Ivoire

ZambiaWorld

Average

South

Africa

+121%

9

Low

agricultural

funding

Agricultural

raw material

contribution to

merchandise

exports is very

low

Low

mechanization

Low irrigation

levels

Expenditure on agriculture

% total budget expenditure on agriculture

5.0

25.0

3.0

IndonesiaMalaysiaNigeria

8x

Mechanization intensity

Tractors/100 ha

Thailand Brazil USANigeria IndonesiaMalaysia

26x

Irrigation intensity

% of arable land

4.4

28.012.4

4.80.8

Nigeria IndonesiaMalaysia Thailand Brazil

32x

5.042.53

0.01

Nigeria IndonesiaMalaysia

50x

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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

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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.

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…but is not achieving its

potential

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

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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.

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Current Yield Scenario Nigeria

vs 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

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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).

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…But has a huge Agricultural Growth

Potentials

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.

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… 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 .

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OPPORTUNITIES,

POSITIVE INITIATIVES

AND SOLUTIONS TO

CHALLENGES IN THE

AGRICULTURE SECTOR IN

NIGERIA.

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Agriculture now looking up in

Nigeria 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.

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Government Positive Initiatives at making

Agriculture key driver of the economy

Vision 2020

Agricultural Policy 2001

National Food Security

Programme (NFSP)

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Other Positive

Developments & 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).

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NIGERIA’S AGRICULTURAL POTENTIAL

23

Using the same amount of land,

we could become a major global

crop producer …

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… combining yield gains with

increasing harvested area has

a dramatic effect

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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.

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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.

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FUNDING AND FINANCING

AGRICULTURE 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.

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FUNDING AND FINANCING

AGRICULTURE 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

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).

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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.

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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

OPPORTUNITIES FOR

INVESTMENT IN THE

AGRIFOOD SYSTEM.

To effectively identify and profitably exploit business opportunities within the agricultural value chain, you must be ready for the challenges of an ENTREPRENEUR.

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WHO IS AN

ENTREPRENEUR? 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

WHO IS AN

ENTREPRENEUR? ◦ 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.

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“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

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FUNCTIONS OF THE

ENTREPRENEUR IN AGRIFOOD

SYSTEM 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.

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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.

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THE DOOR TO OPPORTUNITY

Please 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.

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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

OPPORTUNITY SPHERE IN THE

AGRICULTURE VALUE CHAIN.

Agriculture value chain

FarmersAgro Dealers

Input producers

Agro processors

Industrial manu-facturers

Tradeand exports

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Input producers

e.g.

- Fertilizers

- Agrochemical

- Poultry feed

- Medicaments and Vaccines, etc.

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Farming

e.g.

- Arable Crops

- Poultry and Livestock

- Fisheries, etc.

43

Agro Dealers

e.g.

- Grain merchants

- Egg Marketers, etc.

44

Agro Processors

- Feedmillers

- Flourmillers

- Tomato puree production

- Egg Breaking

- Cereal Meats production, etc.

45

Trades and Export

Processed agric products merchandising,

etc.

46

Value Chain Maps - Soybean

Soybean Meal/Cake

Soybean Oil

Household process to local foods

Farmer

Combines inputs to Soybeans

Industrial Processor

Transforms soybeans into products

Input industry

Seed and other inputs

* Animal feed

* Protein foods

* Texturised bag

* Coking oil

* Lubricants

* Paints, inks

* Textile

Finisher, etc

ff 47

EXPLOITING IDENTIFIED

OPPORTUNTIES 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.

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FORMS OF ORGANISATION

The business could be organized as:

A Sole Proprietorship company or

A Partnership with other entrepreneurs

or

A Limited Liability Company

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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.

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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.

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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

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.

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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.

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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

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.

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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.

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INGREDIENTS OF SUCCESS

AS AN ENTREPRENEUR Passion

Time Management

Courageous Persistence

Integrity

Competitive Edge

Action

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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.

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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.

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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

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.

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MY PERSONAL STORY

To the glory of God, I am a living example of the fact that you can stay in this country and be a simple farmer and actualize your dream.

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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

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.

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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.

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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!

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Thank you & God bless you. Olatunde Aiyedun Agbato

olatundeagbato@yahoo.com

08022902318