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ERP for the Agriculture Sector in Nigeria Transforming Big Data into Big Value in the Agriculture Industry
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ERP FOR AGRICULTURE IN NIGERIA:
Transforming Big Data into Big Value in
the Agriculture Industry
Abstract
In agribusiness, there are strong tendencies
towards increasing the role of IT in creating
positive value, decreasing costs and ensuring
high quality food products to final recipients. At
the same time, the number of regulations
concerning the food market is on the increase,
including those associated with the necessity to
ensure the identification of the origin of
ingredients and semi-products in food supplied
to the market.
Another reason is the increasing scale of
production in food processing enterprises. The
specification of perishable products (such as best
before date and origin) is also strongly
emphasized. In the conditions of an increasing
number of trade contacts, efficient IT systems
are required to support the management of the
entire value chain in the agriculture sector. The
purpose of this white paper is to therefore
expatiate the importance of ERP Systems in the
Agriculture sector in Nigeria.
ERP (Enterprise Resource Planning):
OVERVIEW ERP provides an integrated real-time view of
core business processes, using common
databases maintained by a database
management system. ERP systems track
business resources—cash, raw materials,
production capacity—and the status of business
commitments: orders, purchase orders, and
payroll. The applications that make up the
system share data across the various
departments (manufacturing, purchasing, sales,
accounting, etc.) that entered the data. ERP
facilitates information flow between all business
functions, and manages connections to outside
stakeholders.
Organizations consider the ERP system a vital
organizational tool because it integrates varied
organizational systems and facilitates error-free
transactions and production. However, ERP
system development is different from traditional
systems development in that ERP systems run on
a variety of computer hardware and network
configurations, typically using a database as an
information repository.
ADVANTAGES ERP systems centralize business data from
different business processes in an organization,
which:
Eliminates the need to synchronize
changes between multiple systems
Brings legitimacy and transparency to
each bit of statistical data.
Facilitates standard product
naming/coding.
Provides a comprehensive enterprise
view (no "islands of information"),
making real–time information available
to make proper decisions.
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Protects sensitive data by consolidating
multiple security systems into a single
structure.
Benefits ERP can greatly improve quality and
efficiency of the business, by keeping a
company's internal business process
running smoothly.
ERP supports upper level management,
providing critical decision making
information.
ERP creates a more agile company that
better adapts to change. ERP makes a
company more flexible and less rigidly
structured so organization components
operate more cohesively.
ERP can improve information security. A
common control system, such as the
kind offered by ERP systems, allows
organizations the ability to more easily
ensure key company data is not
compromised.
ERP provides increased opportunities for
collaboration. ERP provides a
collaborative platform that lets
employees spend more time
collaborating on content rather than
mastering the learning curve of
communicating in various formats
across distributed systems.
The Role of IT in Agriculture: ERP
SYSTEMS IN THE AGRICULTURE
INDUSTRY The productivity gains in the agricultural sector
globally are directly attributable to the
technological advances and resulting efficiencies
that define today’s modern farmer. With the
world’s population expected to reach 9 billion by
2050, the UN estimates that food production will
need to grow by 70% to keep pace with demand.
The only way to meet this demand is through the
continued evolution and adoption of Agriculture
Technology and ERP Software is helping farmers
worldwide improve their business processes by
lowering costs and increasing productivity. In
building enterprises around agriculture in
Nigeria, you stand to affect the lives of the
average Nigerian.
Food and Beverage companies globally have to
face new challenges every day. Since they work
with fresh agriculture produce, they
quintessentially work against the clock to move
merchandise out of the warehouses. All
companies in agribusiness face the complexity of
managing their business processes. In this
context, technology has to be a support to
facilitate daily operations and improve strategic
decision making.
Some need to integrate long chains of
processes, ranging from agriculture inputs to
retail distribution. The perishable nature of
these type of products, makes value chain
management more complex.
Total traceability of all the processes across the
agriculture value chain is a mandatory
requirement in ERP systems in order to offer a
total guarantee to consumers i.e. the ability to
trace a produce right back to its source.
Production planning must be as close as possible
to the demand if losses are to be avoided on
products or materials.
Crops Management
A complete, integrated solution for an
organization dedicated to agriculture.
Integrated management of specific crop
processes, purchasing and
manufacturing with the remaining
modules of the standard solution
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(Finance, Commercial, Warehouse,
Production etc.)
Supply Chain Management
Integration and direct communication
with automated warehouses
Optimizing the total cost of storage.
Sales and Distribution.
Full traceability from the plantation
management or purchase of raw
materials to product delivery.
Maintenance Module for machinery.
Possibility of direct communication
between their machines and the ERP.
Wide range of products categories.
Manufacturing and Quality Control.
Full traceability from plantation
management to product delivery.
Line-level planning of the agricultural
processes.
Module maintenance of machinery with
the possibility of direct communication
between machines.
Wide range of products categorized.
AGRICULTURE IN NIGERIA: OVERVIEW Agriculture is a very wide industry covering
forestry, hunting, fishing, crop cultivation and
livestock raring.
While “Food” is predominantly what we are
talking about here, agriculture goes past food.
Every home uses some lumber, leather bags
from cow hide, paper from processed plants etc.
So much of our lives depends on agriculture that
without it you will very quickly realize the
unimportance of even a cellphone.
In Nigeria, there exist 170 million people who
consume imported agricultural goods. This is a
sad development especially when one factors in
the fact that imported food negatively impacts
many aspects of Nigerian life.
1st, imported food are typically more
expensive and economically tasking on
the Nigerian family because of the
customs tariff, transportation cost,
exchange rate burdens and multi-level
price increases attached to imports.
2nd, imported food is detrimental to
employment in this country because it
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requires extremely less labor force to
import a ship load of wheat as opposed
to the labor needs of a 1000 Hectare
farm.
3rd imported food diminish the value of
our foreign exchange as they apply high
pressure to our currency system.
Yet in a country with vast expanses of farmable
land, generously divined water resources and a
cheap labor force we are yet to actualize speedy
development through farming.
REASONS FOR AGRICULTURAL
PRODUCT DEFICIT IN NIGERIA 1. Bad governance
2. Unrealistic goals and self-indulgence
3. Infrastructure deficit
4. Lack of skilled labor pool
5. Inability to manage large scale
operations
6. Limited access to financing
ECONOMIC OPPORTUNITIES Population: Success in Nigeria means access to
170 million customers within the country,
therefore a ready market if you can capture their
interest with reasonable price points.
Resources: Nigeria is extremely conducive for
agriculture, with a combination of 88% arable
land, adequate water supply by rain, rivers and
other bodies of water and a young labor force.
Location: It is a great access point to all of sub-
Saharan African. It also has massive ocean access
which can facilitate trade to neighboring African
countries and global markets.
Import Dependence: It is estimated that Nigeria
imported N635 billion worth of wheat, N356
billion worth of rice, N217 billion worth of sugar
and despite its huge marine resources N97
billion worth of fish in 2010. While these
estimates are alarming, what’s interesting is that
this import dependence creates a lot of room for
local producers, processors and distributors. This
is because Nigeria has every one of these items
in ample supply.
The areas of interest in Nigeria today
are: Production: Rice, Wheat, Sugar, Millet, poultry,
Fish, Cassava, Palm and related items, Cattle etc.
Distribution: Generally the distribution of
produce in Nigeria is in need of resuscitation as
it is mostly done as general transport with no
tailored approach.
Processing: Opportunities abound as the
majority of processed food in Nigeria is
imported.
RECENT STRIDES IN THE NIGERIAN
AGRICULTURE SECTOR. Agriculture continues to contribute about 40% to
Nigeria’s GDP in 2010-2011 (this is based on
Nigeria’s National Bureau of Statistics Economic
Outlook 2012 Report). Agriculture is
predominantly practiced in the rural areas of the
country; hence, there is the need to ensure that
farmers in the rural areas get access to farm
input such as fertilizers, seeds and information
to enhance their productivity.
In July 2012, the Nigerian federal government
introduced the Growth Enhancement Support
Scheme (GES). The GES Initiative, a scheme of
Agriculture Transformation Agenda (ATA) was
designed to deliver government subsidized farm
inputs directly to farmers via GSM phones. The
GEES scheme is powered by the e-Wallet, an
electronic distribution channel which provides
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an efficient and transparent system for the
purchase and distribution of agricultural inputs
based on a voucher system. The scheme
guarantees registered farmers e-Wallet
vouchers with which they can redeem fertilizers,
seeds and other agricultural inputs from agro-
dealers at half the cost, the other half being
borne by the federal government and state
government in equal proportions. As part of the
GES Scheme, the Federal Ministry of Agriculture
led by the Minister Dr.Akinwumi Adesina,
recently announced that the Ministry will equip
millions of farmers in the rural areas with mobile
phones. According to the Minister, the project
will link farmers directly to government and vice-
versa so that government will be able to monitor
the progress of farmers as well as disseminate
valuable information to them.
ERP SYSTEMS: DATA CHALLENGES IN
A DEVELOPING AGRICULTURE
INDUSTRY Information and data is an essential ingredient in
agricultural development programs but Nigerian
farmers seldom feel the impact of agricultural
innovations either because they have no access
to such vital information or because it is poorly
disseminated. As often happens, agricultural
information and data is not integrated with
other development programs to address the
numerous related problems that face farmers.
The information provided is exclusively focused
on policy makers and those who manage policy
decisions with scant attention paid to the
information needs of the targeted beneficiaries
of the policy decisions. The non-provision of
agricultural information is a key factor that has
greatly limited agricultural development in
developing countries.
INFORMATION NEEDS OF SMALL
SCALE FARMERS No one can categorically claim to know all the
information needs of farmers especially in an
information dependent sector like agriculture
where there are new and rather complex
problems facing farmers every day. The
information needs may be grouped into four
headings: extension education; agricultural
technology; agricultural credit and inputs; and
marketing. Modern farm inputs are needed to
raise small farm productivity.
1. Extension Education: The general lack of
awareness among small scale farmers
can be attributed to their high level of
illiteracy. This contributes to the low
level of adoption of agricultural
production technology
2. Agricultural Technology: Agricultural
technology for the small scale farmer
must help minimize the hard labor of
farm chores. It should be labor-saving,
labor-enhancing and labor-enlarging.
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3. Agricultural Credit: Agricultural credit
encompasses all loans and advances
granted borrowers to finance and
service production activities relating to
agriculture, fisheries and forestry and
also for processing, marketing, storage
and distribution of products resulting
from these activities.
4. Marketing: The farmer's market
information needs are those that enable
him make rational and relevant
decisions. Market information services
have the function of collecting and
processing market data systematically
and continuously, and of making it
available to market participants in a
form relevant to their decision making.
INFORMATION NEEDS OF THE
MINISTRY OF AGRICULTURE 1. Geographical Coverage: The Ministry of
Agriculture does not have accurate data
on the number of available farmlands in
the country and coverage areas.
2. Expenditure and Spending: Because
data on subnational expenditure in
specific sectors including agriculture are
not readily available from a central
source, data on federal, state and local
government expenditure must be
collected at the state and local
government area (LGA) levels. For
effective distribution of funds to
appropriate projects, government must
have real time and accurate data on all
current expenditures in the agriculture
sector
3. Number of Farmers in the Scheme:
Number of registered farmers in the
scheme to know the exact amount of
farmers and avoid uneven and
inaccurate distribution of credit facilities
to Ghost Farmers.
4. Data from other parties involved in the
scheme: Financial Data from the banks
and Credit facilities, information from
the telecom operators, social media and
so on are also relevant to the ministry in
order to make effective business
decisions. Every data is as important to
the success of any industry.
SOLUTION: ERP FOR AGRICULTURE:
Seeking compliance and control
without complexities The Agriculture industry needs flexible, industry-
specific business solutions to help it improve its
competitiveness, efficiencies and keep pace with
ever-changing technology improvements.
Recognizing the breadth of agricultural barriers,
these farmers have varying needs in dealing with
complexities, the key features that will drive the
success of an ERP implementation in an
agricultural environment include:
Powerful agricultural process cost
calculations to ensure accurate costing,
forecasting as needed.
Comparison of inter ratios and
performance delivered via Business
Intelligence reporting anywhere,
anytime with drill down analysis.
Management, reporting and comparison
of farmer and contractor production and
performance levels.
Warehouse management which ensures
proper goods received allowing complex
packing procedures on shipment and
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reporting that will maximize available
space and inventory turnaround.
Integration to on site capital equipment
such as sprinklers and graders to deliver
true cost of farming.
Suitable for all agri-business including
fruit, livestock, poultry, milling, forestry
and all associated businesses.
Management of formulae and recipes,
potency, by-products, multiple
packaging units per product, shelf-life,
lost control and traceability, specific
gravity, weight calculations.
EXAMPLE OF ERP SYSTEM
APPLICATION IN THE AGRICULTURE
SECTOR
myAGRI FOR INTEGRATED FARM
MANAGEMENT myAgri ERP for Agriculture is an example of an
integrated farm management software, easy to
operate, record, evaluate, analyze & control the
farm operations and inventory control. Utilizing
SAP’s extensive versatility for gathering and
capturing non aggregated data, myAgri®
centralizes data execution from many different
agriculture processes and automatically
generates controlling, quality, planning and
maintenance information.
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Eliminating the on-going challenge of expensive
and inconsistent data entry, myAgri® empowers
management and farmers to set common goals
and establish a shared vision through the
interpretation of real-time harmonized data
while increasing end user productivity.
You can get complete details of crops in the
following areas
Operations:
Details of Job categories (Field
preparation, Planting, Irrigation etc.)
Details of Input categories (Seeds/
planting materials, Fertilizers, Manure)
Pesticides, Tools & machineries, packing
material, other consumables, etc.
History of fertilizer, pesticide
application.
Production:
Expenses & Jobs done in production.
Complete track of production life cycle.
Cumulative and different stock reports
from farm items and outside items.
Sales:
Order booking and Packing List module.
Export Invoice with full details covering
FOB and Bank Certificate.
Date wise realization of foreign
currency.
Country, currency and departmental
sales reports.
Market and sales report for
commodities.
Accounting:
Purchase accounting
Sales billing
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E-wallet Voucher creations (Payment &
Receipt)
Payment & Banking details
Reports cash flow & trial balance
Profit, turnover & return ratios
ERP SYSTEMS: FINE TUNING THE
SUPPLY CHAIN IN THE AGRICULTURE
INDUSTRY The Agriculture Value Chain of an organization is
a set of business processes that occur in the
agriculture industry from the planting of the
food crops right down to distribution to the end
consumers. The supply process of the value
chain is very key. This process is the determinant
of how effective goods reach the intended
consumers.
It is impossible to achieve an effective supply
chain in the agriculture value chain without
information and communication technology
(ICT). The beneficial effects are heavily
dependent on the ability to integrate
information systems appropriately from all
processes across the agriculture value chain. In
this sense, ERP systems implementation and
integration of the extended value chain
addresses both internal (the business processes
within the organization) and external (business
relationship with other organizations)
integration. The bottom line is efficiency and
effectiveness to manage all data from systems in
order to gain competitive advantage locally and
globally
An Integrated Value Chain
For most distribution companies the
implementation of ERP systems is now standard
practice for helping to maximize efficiency. ERP
systems can help boost inventory optimization,
aid high-level critical decision making and help
business agility.
A typical business case of the effectiveness of the
ERP System in the Supply Chain is the use of SAP
ERP software to address the supply challenges of
Ghanaian cashew Farmers. SAP, the global
leader in ERP and business application software
is engaging with the African Cashew Initiative
(ACI) to solve the often long supply process a
cashew farmer has to go through before his
goods get to the end consumer.
SAP explored the opportunities for an ERP
system by bringing in mobile business
applications that support small scale cashew
farmers by bringing cashew nuts to the market
faster and on time.
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Using SAP ERP Software running on a smart
phone, the local buyer is able to record single
buying transactions. Each bag is labelled with a
barcode. By scanning the bar code on the bags of
cashew nuts, the system can track every bag. The
phone collects the data and sends it directly to
the farmers’ cooperative. The cooperative
controls the daily pricing for cashew nuts and
this information is also sent to all buyers’ smart
phones
The benefits of the system has enabled farmers
to avoid long paper works involved in the supply
chain process in the past. It has also increased
the revenue of the cashew farmers and reduced
the time spent in processing bags of cashew for
each small scale farmer.
SIMILAR CASES OF HOW E-WALLET
CAN BE USED EFFECTIVELY WITH AN
ERP CASE 1
APPLICATION: Applied Data Logix and Octagon
Data Systems Ltd
COUNTRY: India and Kenya
DESCRIPTION: These two partners have
developed applications that use digital scales to
collect data on a farmer’s yields at tea and dairy
community aggregation centers in Kenya.
Agricultural product is weighed on a digital scale,
and then data uploaded to a central repository
which is an ERP System. The data is aggregated
in the ERP System each month and the farmers
are paid according to the records. This ensures
that the farmers are paid their stipulated fee
CASE 2
APPLICATION: Cropster
REGION: Latin America
DESCRIPTION: This application provides online
tools for sustainable supply chains – including
producers, traders and processors of agricultural
products. It also has a Monitoring & Evaluation
tool embedded in the ERP Software, enabling
efficient data collection and exchange within
producer groups and between producer groups
and NGOs or commercial partners. This tool is
not a classical M & E platform, where data is only
available to the questionnaire managers, but
also to the people who are providing their
answers and valuable insights. The tool also
combines data generated through commercial
processes (production, quality, and price) with
questionnaire data.
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CASE STUDIES OF SUCCESSFUL USE OF
AN ERP SYSTEM IN THE AGRICULTURE
INDUSTRY 1. Central Castilla Sugar Mill – Colombia
Organization Profile:
The Company was built on 1945 for just sugar
cane production. By 1958 it processed 4.000 tons
of sugar cane daily. By 1966 the business growth
in machinery and started processing 7.000 tons
of sugar cane daily.
Situation: By 2003 the company had the need to
integrate and automate their business processes
with their field and harvest operational tasks to
save time, resources and costs. On January 2005,
Central Castilla started the SIO Project
(Information & Operation System) with SAP ERP
and myAgri® implementation.
Solution: myAgri ERP Integrated with SAP
Business Intelligence
Results: The Company achieved the automation
and control of their field and production
operational activities reducing costs in their
resources management. The Company has
improved the flow of product through the
processing plants, allowing for much better
execution and management of the growing and
harvesting processes. By planning different
business scenarios, they reduced their
uncertainty to almost zero.
2. AB Agri – United Kingdom
Organization Profile:
AB Agri, a subsidiary of global enterprise,
Associated British Foods (ABF), operates in 60
countries around the globe to provide
agricultural products and supporting services to
a large variety of businesses in the food, drink,
and biofuel industry supply chain.
Situation:
AB Agri sought to gain greater agility in
responding to rapidly changing customer needs
and manage its global growth efficiently while
controlling costs.
SOLUTION: Microsoft Dynamics AX ERP
AB Agri implemented Microsoft Dynamics AX for
its operations in the United Kingdom. Today, 650
AB Agri employees use the solution. By
implementing Microsoft Dynamics AX, AB Agri
took an important step in building a unified
business infrastructure that facilitates an
unimpeded flow of information.
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Benefits for AB Agri
Efficiently Supports a Growing, Global
Manufacturing and Distribution
Business.
Satisfy Customer Needs Promptly and
Cost-Effectively.
Generate Efficiencies and Savings
throughout their Operations.
Realize Profitable Business Strategy.
Reduce the Cost of Technology
Ownership (TCO).
CONCLUSIONS The implementation of ERP in agriculture
business enterprises is a requirement resulting
from the progress of information technology,
BIG DATA and economic globalization. This is a
method of not only improving the business
processes in the agriculture industry but also a
source of obtaining competitive advantage on
the market, which leads to an improved financial
situation of the industry. Analysis shows that
there is significant internal variation within the
scope of the food production sector with
reference to the scope of IT system use in
management of agricultural produce. However,
without doubt the agriculture industry is a field
in which the implementation, range and pace of
ERP system implementation will be increasing.
Due to the influence of ERP systems in obtaining
a competitive advantage of enterprises, their
implementation is highly recommended for the
agriculture sector. Countries are now moving
from the small subsistence farming to the
industrialized and mechanized form of farming
to meet growing population demands. However,
attention should be paid to the appropriate
adjustment of systems to the needs of the
enterprise, depending on its size (less
complicated and cheaper systems can support
the development of micro and small enterprises
without them incurring high costs).
Author’s Profile
Charles Esumeh is a SAP consultant at Signal
Alliance. He is a graduate of Electrical &
Electronics Engineering from KNUST, Ghana.
About Signal Alliance Founded in 1996, Signal Alliance is an end-to-end
IT Company which specializes in systems
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With solid industry experience spanning across
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Enterprise Applications and Service Assurance.
Signal Alliance boasts of highly skilled and
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Microsoft, Cisco and CA Technologies. The
company prides itself on its ability to gain a
thorough understanding of clients’ businesses
and using appropriate technology as a bridge
between where the client is and where it wants
to go.
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