Nucleus Estate Initiative and Agribusiness Dev't in Nigeria
By Emmanuel Ijewere
As a food-deficit country, Nigeria has over the years depended on food imports for the needs of its people. Though the agricultural sector contributes about 40 percent of the non-oil foreign exchange earnings and employs about 70 percent of the active labour force, the sector falls short of expectation in view of the rich natural and human resources which abound therein. However, there is a great national optimism that the current predicament would be reversed and Nigeria will soon return to being a major food basket and exporter in the region.
Part of the plight of the traditional Nigerian farmer is the loss of income resulting from wastage and spoilage occasioned b~ poor linkages to the processing, preservation and marketing chain. This has been a disincentive to the traditional farmer. Bs and large, food production and marketing in Nigeria has been left in the hands of millions of private operators of various sizes and categories. This system worked fairly well for some time in the past, but with the increasing monetization of the economy:, the task seems to have become too great for the traditional and largely- unregulated agricultural system to support. Lack of adequate infrastructure, poor marketing services, and inappropriate government regulator!- policies have combined to reduce productivity and marketing efficiency. In fact, loss of food and other agricultural commodities between the farmer and the consumer is enormous, and market co-ordinanon is generally poor. The consequences of these problems include, high market cost and low return on investment and high marketing risk for the farmers. Under these circumstances, the incentive to produce more food and other agricultural commodiues has weakened considerably.
There is hope, however, that a new generation of modern farmers is non appearing in the sector. Because of the size of their operations, the level of farm organization, and the type of clientele they serve, these new farmers seem more capable of regulating the marketing sN stem. In the course of time, they may probably free themselves from the clutches of middlemen and speculators, earn their due profits, and have more incentives to invest in food production.
with increasing market orientation, farming in Nigeria is becoming a better organized business. Unfortunately; the small traditional farmers who produce over 90 per cent of the countrys food and other agricultural commodities still operate in the age-old fashion. As a consequence, productivity- is very low
In an economy where decisions about food production are made b!- millions of very small, independent and subsistence farmers, an! rational plan for quantitative food balance over time and among geographical areas should involve strategies for improving the efficiency of production, as well as the price mechanism. One of the strategies is the Nucleus Estate Ininative (NEI).
The Nucleus Estate Ininative (NEI) is a programme which has been designed to achieve food security as well as the enhancement of the income of small scale farmers. The programme is being organised under the umbrella of the Agriculture and Food Security Policies Commission of the Nigeria Economic Summit Group (NESG).
NEI was one of the recommendations by the Agriculture and Food Security Policy Commission at the Tenth Nigerian Economic Summit (NES#10) in 2003. It was the main out come of several meetings and deliberations by members of the Commission at the Summit.
The NES#10 emphasized the adoption of the concept of Nucleus Estate as a strategy for accelerating the growth of competitive production, processing and marketing in the agriculture sector. The Nucleus Estate Initiative is an implementation strategy of developing industrial farmers using a network of several rural-based or low-income farmers and farming groups who are linked to a major farmer, processor or marketer as a central pool. It is an end-use out-grower strategy that is private sector driven.
The initiative is the private sector response to government's call for a private sector led agriculture/agribusiness. The mechanism is that of weaving small farmers around big industrial firms/farmers, which provide market for their produce at agreed/market prices and enhance their access to input, technology and market, as well as other monetized and non-monetized incentives.
Already some big companies that utilize agriculture products as primary raw materials have been employing this to some extent. For instance agro-processing companies such as Fumman Juice Company, Pamol, Okomu Oil, Presco Plc and the livestock and poultry sub-sectors have employed the system with appreciable success. Also companies such as Best Foods Global Nigeria Limited, Olam Nigeria Limited have recorded encouraging success. Besides, Cadbury through Stanmark Cocoa Processing Limited has been using this process to support sorghum and cocoa production to the mutual advantage of farmers and the company. This initiative is also applicable to food crops including fruits and vegetables, cash crops, tree crops, livestock and poultry, and fishery subsectors.
Framework Of The Nucleus Estate Initiative Features of NEI
The big farms/firms will serve as co-coordinating centers of a concentric of several small farmers that serve as the production and supply chain in the industry. Whereas the co-coordinating farms will provide inputs and other production incentives, the contract with the small holdings will ensure that they provide the right quality and quantity of produce, which the Nucleus Estate co-ordinating firms must buy off.
There is no tacit role for the government in this initiative. However, government is expected to give the scheme policy recognition and encouragement through sector-favourable policies (macroeconomics, sectoral, regulatory, legislative, etc) to boost investors' interests and productivity. The government is also expected to facilitate operators access to low interest credit to accelerate growth and development of the scheme.
Partnership
The scheme is a public-private sector partnership. While the private sector drives the initiative, the government provides the enabling policy and regulatory environment favourable for agricultural production, processing and marketing enterprise. It would also channel supportive incentives through the formal market system and fund research activities adequately.
The partnership will facilitate increased agricultural production and productivity, extension of innovation and new technology to farmers, guaranteed product quality and prices and reduced importation. This will ultimately accelerate employment generation and wealth creation.
Policy Target/Objectives
The target of the Nucleus Estate strategy is the development of private sector engineered productivity in all the chains and sub sectors of agriculture. The implementation will raise the production, processing and marketing competitiveness in all the sub sectors, direct government intervention strategies and also lead to the development of efficient regulatory and legislative support framework to hasten sector growth.
Benefits
1.Commitment to enhancing and growing agribusiness opportunities for small holder producers;
2.Value-adding competitiveness: The greatest benefit of the strategy is that while increasing output and productivity of farming and agribusiness in Nigeria, every producer automatically enters into the primary stages of processing and/or marketing.
3.Reduced diversion of fund/incentives by the public sector as funds meant to develop infrastructure for agriculture will be better utilized;
4.Large pool of high quality and standardized agro-product raw materials base to support domestic industrialization;
5.Funds needed for social and physical infrastructure development will be conserved;
6.The development of competitiveness across the chains will reduce unemplosment and attract more domestic and foreign investments into the sector.
7.The NEI as packaged would make Farming and Agribusiness more attractive to the vouth.
8.Accelerated rural development would result as more Agric based
Industries, infrastructure and markets would spring up in the rural areas thereby reducing rural-urban migration and stimulating employment generation and povertN reduction.
Implementation Framework Major sector operators that have the capacity to serve as nucleus estates will be identified and contacted by the NESG. Thev will include big producers/farmers (crops, livestock, fishery) and agro-allied operators- processors and marketers. Basic Requirement for NEI companies
For a company to be considered as a Nucleus Estate, it would meet the basic requirements set out beloNv:
An Incorporated company with a formal board of directors and management structure
An enduring stake in the agric business sector (Farming, Manufacturing, Marketing, and Processing)
A visible operating base and officc
Technical competence
NGOs and Consultancy firms will provide technical back up to the Nucleus Estate. Presently fourteen companies have been identified as shown below.
Nucleus Estate Initiative
FUMMAN was established in 1954 from the former Lafia Canning Factory and employs ah`'ut 100 worl:ers. It organizes farmers to grow oranges, pineapples and provides farmers with seedlings and soft loans. Jurisdiction extends to Osun, Ondo and part of O!o states. The model farm is still undergoing development. However, the compan! has its own plantation with large number of employees. The company is encouraging the farmers through involvement in community services and introduction of differen farming products to them. Also the compan! by wa! of polic!; buys any quantity of fruits the farmers supply This is to malce sure that the farmers are motivated to produce.
Pamol: The company was established in 1999. As a result of raw material shortage, the factory went sourcing by incorporating out-growers into their production scheme. The objective is to source rubber latex from small farmers to complement the supply in the firm. Farmers are consulted and technical advice as well as inputs are supplied to them. This is in addition to creating market for their products.
Olam: The firm was incorporated as a private company in 19c�,9 but commenced operations in 1990. At present the company employs directly about 200 Nigerians and provides employment and business opportunities to more than 3000 Nigerian families. It is registered as an exporter of agro commodities which include cashew, cocoa, cotton and sesame. OLAM provides inputs/ technical advises to growers towards farming and quality production of cocoa, sesame and cotton. It also distributes seeds to sesame and cotton farmers. Also the firm has special interest in promoting quality in all the crops they are involved in by means of instituting Quality Awards to enhance good market price for export.
Stanmark Cocoa: It was established in 1991 as a fall out of government's policy to ban raw cocoa export. The company, a subsidiary of Cadbury Nigeria PLC, processes cocoa beans into cocoa products. It supplies Cadbury with cocoa powder and exports other products to the international market. The resulting foreign exchange is used by Cadbury to import the much needed raw materials. Stanmark is involved in out grower scheme by organizing cocoa farmers in 4 states and 32 farmer work, groups or cooperatives, across these states. The scheme enhances the company's capacity utilization and assures good quality inputs. The company trains the farmers on good farming techniques and supplies them with farm inputs and micro credit.
Best Foods: This Company was established in 2000. It deals on cattle slaughter and modern abattoir. The company is also into poultry meat production. Presently 185 farmers are organized and are involved in the production of poultry meat. The people involved are more or less retirees, unemployed graduates and a good number of other people who have shown interest.
PRESCO Plc: Presco was incorporated in Nigeria in 1991.This company is into oil palm development and is the only fully integrated oil palm establishment in the country. The company is involved in oil palm production right from the nursery stage of seedlings production to milling and refining of palm oil to produce special oils and fats for the local industrial market. It has about 8,300 hectare of oil palm and employs about 1,400 farmers. Regarding the nucleus estate initiative, the farm is already into partnership with Edo State Government and has an out growers programme for the host communities involving over 100 farmers. PRESCO sells seedlings to out growers at subsidised price and then buys fruits for processing from them.
AFCOTT started in 1986 with its headquarters in Yola- Adamawa State. Currently it covers 6 states - Adamawa, Taraba, Gombe, Borno,Yobe, Bauchi and more than 30,000 farm families are involved in cotton growing under its ambit. Afcott supplies all inputs - some of it are on credit through the association of farmers. It also procures their raw materials, processes and markets same in the domestic and international markets. The whole system comprises its nucleus and demonstration farms strategy. Afcott has developed and operated the Nucleus strategy for over the last 18 years with remarkable success. Not only has it helped North Eastern Nigerian farmers to improve the quality of their productions but it has contributed immensely to increased to cotton production in the North Eastern region. It has also changed the ground rules of "Agric input markets". Through its interventions, overall input prices have been reduced by 30 to 40 percent compared to earlier high input prices from multinational companies.
Gacon Nig. Ltd (Gum Arabic Co. Ltd): was incorporated in 1999 as a limited liability company. Among its line of business is the export of all grades of Gum Arabic, as well as consultancy services in the same product. The NEI in Gum Arabic is already receiving support from the International community to establish out growers in two states namely Yobe, and Borno States in partnership with a group in Europe. Gum Arabic is used in the food and pharmaceutical industries as emulsifying, binding and gellyfying agent. Nigeria is the second world largest producer of gum Arabic after Sudan. Gum Arabic is collected from the wild forest by nomads. GACON Ltd is organizing the nomads and farmers into groups to world: under the NEI under which it will supply the out growers with improved seedlings and technical support.
Murtala Foundation Botanical Garden: was incorporated on 13'h of February 1988 and started as a research organisation. It has since then progressed into fruit and flowers production and tree belt development and provides seedlings to communities for planting as well as reproduction of seeds/seedling for fruits and flowers. The ban on flower importation will further enhance the foundation to enlarge its scope of operation.
African Solace Foundation: The company was established in 1999. It started as a cooperative outfit that gives loans to women in Lafia in Nassarawa State. It presently engages in the supply! of cassava cuttings to women groups.
Risonpalm Ltd: The oil palm was established in 1975. It is the largest palm oil factory in Nigeria and is involved in the development of small holder schemes. The firm was formerly owned b! the Rivers State Government and later became partially privatized. Presently it employs over 5000 workers and is reorganizing out growers as well as rehabilitating oil palm plantation.
Dangote Sugar: Dangote Group was incorporated in 1985, but Dangote Sugar refiner:- started production in 1999, after the group bought the defunct Savannah sugar company and the Savannah valley project, both of which can produce about 220,000 tonnes of raw sugar cane annually. Savannah valley has over one million traditional farmers.
Ajanla Farms: They produce citrus and make use of out growers. They have agricultural experts that advise farmers on how to harvest and also regenerate old plantation.
West African Cotton: The factory is in Katsina State. It has a ginnery and involves out growers in its programme. Cotton is bought from the farmers at determined market prices.
Felimar Aquaculture Centre: was incorporated in 1997 for the purpose of producing fish fingerlings to adult size on commercial basis. The company is involved in fish breeding, fish farming, and fish feeds. Also it renders training to prospective fish farmers and extension services and support to over 200 fish farmers. The farm started With about 1() concrete ponds in 1998 and had since expanded to c86 concrete ponds of various sizes on 3 hectares of land, with 17 wings of Nlodern Hatchery in Ijebu-Ode. Today, it produces 100 tons of outgrown catfish.
Bigfish Limited: was incorporated in 1990. Bigfish Ltd is an aquaculture company that specializes in production, sales and supply of catfish fingerlings to Nigerian fish farmers. The company! is capable of producing 100 tons of table size catfish per year and it utilizes tanks of approximately 10m that is integrated in a recirculation system with a sedimentation unit which takes care of the fish waste.
Nucleus Estates Activities
Appointed estates are expected to:
1.Organise smaLI scale operators in its chain of business;
2.Hold productivity meetings with them as agreed by, or expedient to,members;
3.Link them to the Polic! Commission to facilitate research and advocacy cooperation.
Support
As a means of furthering the public-private partnership in agricultural development and increasing Nigeria's agricultural productivity, the initiative is expected to receive the support of the following through the promotional and advocacy activities of the Policy Commission:
Emmanuel Ijewere is the Chairman of the Nigeria Economic Summit Group's (NESG) Agribusiness development programme called Nucleus Estate Initiative NEI
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