Nigerian banks are not financing agriculture--- Badmus

The Federal Government recently signed a Memorandum of Understanding, MoU, with Tuns Farms Limited for the National Egg Production, NEGPRO, scheme. The scheme to be financed by the Bank of Industry, BoI, is worth N25 billion .

The Minister of Agriculture and Rural Development, Chief Audu Ogbeh, signed on behalf of the federal government while the Chairman, Tuns Farms Limited, Asiwaju Olatunde Badmus, signed for his company.

In this interview with Jimoh Babatunde in his farm in Osogbo, Osun state, Asiwaju Olatunde Badmus talks about what the agreement set to achieve, plans to create one million employment through the scheme and produce 50 million table eggs daily by 2018 and other issues. Here is an excerpt from the interview.

On government's focus on agriculture

It is not just that the government is interested in agriculture , it is the circumstance it has found itself today that has made it imperative for the government to be more serious in developing agriculture because there is need to diversify the economy from reliance on oil alone .

God has given us in this country mineral resources and fertile land for agriculture . The government is not only interested but committed in making sure that we are able to feed ourselves, by producing enough food to feed about 180 million Nigerians as against the previous governments lip service to agriculture.

This time does not call for lip service as the reality on ground favours agriculture. To the best of my knowledge, this government is fully committed to agriculture.

On what needed to be put on ground for smooth take off of agriculture

what the government needs to do is to look at the issue of funding for the sector which to me is number one priority. It is another thing for the federal government to earmark money for agriculture , but it another thing for the banks to dispense.

L-R -Minister of state, Agriculture , Heineken Lokpobiri, Chairman Tuns Farms Nigeria Limited, Asiwaju Tunde Badmos with the Minister of Agriculture, Audu Ogbeh during the signing of the MOU in Abuja recently.

The problem all along has been with commercial banks as most of them are not sincere about developing agriculture. They are not concern about the success of the business. They claim to be funding agriculture, but the type of funding they are into is trading and not agriculture.

Banks are after processors of finished agriculture products to finance, because it is buying and selling , but if you want to plant cocoa today in Nigeria and approach any bank none will be willing to do that .
So they are not really into agriculture , they are more or less looking at the trading aspect of agricultural products rather than investing in the real sector itself.

Of all the banks we have in Nigeria today, hardly can you find three or four financing the real sector of agriculture, the banks give you money today and want you to return it tomorrow .

They don’t know that agriculture is a long time investment. If you want to plant palm tree, it takes years to grow , these are some of the things we are saying.

Again if they see some one going into pineapple cultivation they will jump at it because it takes three months for them to get their money. This is not the type of agriculture we are saying, we are talking about real sector .

If you want to save money in the banks in Nigeria today the maximum they can offer is 6-7% interest , but if you want to borrow they will ask for 18% interest. The issue here is that the government earmark lots of money for agriculture, they are there in Central Bank , any of the bank that will access it will also have a mark up.

Another thing I think the bankers are also worried about is if the federal government says we give you N10m for so and so farm , go and lend to the farmers, at the same time the central bank will take equity of the same amount from the banks and that will stand against their books.

Until the federal government too decides to share in the risk by saying go and lend to agriculture as we will hold unto your assets by 50%, but where the banks have to part away with that huge amount they have to be worried.

So, they will look for where their money will be safe and that will be for short time lending and they will not finance something like cocoa.

If they take N5m from CBN, the CBN will will take an equity of same from their account so at the end of the year the CBN is holding to that money on their deposit as cocoa will not grow in three years.

So the funding of agriculture is a three way something , the real entrepreneur, not the trader. There was a time the government release huge money for warehousing agricultural products. But where are the products they were supposed to warehouse. Those involved were big men who were supposed to be involved in real agriculture they want to mop up what others had produce . They have the money they know the money was not producing for the country.

These are some of the policies that are bad, If you are interested in agriculture you must be willing to go to the grass root, like the recent agreement we signed with the government on the National Egg Production, NEGPRO, scheme , they asked us to go to the grass root .

Grass root in what way?

We were asked to go the 774 local government areas in the country and set up a poultry farm as we are supposed to generate about one million jobs at full capacity, empower as many farmers as possible, increase contribution of poultry sector to GDP of Nigeria and increase Internally Generated Revenues to the Federal Government of Nigeria.

So we are going to sell a minimum of 20,000 birds for them to produce eggs for the school feeding programme of the government.

It is every local government we are going to now and we will not give more than 2,000 birds to one person. 2,000 birds is enough for anybody to manage within a family and feed for one year. So at the end of the day, the person will pay back and have something to feed the family and also have the market for their eggs.

So, we are going to all the 774 local government in the country. This is not going to be one day as it has to be gradual.

On where they are starting from

We will focus on the regions that are not producing eggs currently, there are areas in the country that are self sufficient in egg production , it is not all local government that is self sufficient, there are some areas where one farm alone can supply all the eggs the state needs .

We will start from areas that are not producing now so that the children there can have access to at least one egg in the school feeding program in a week. But the government is saying at least two eggs per week because of the nutrient values inherent in eggs .

You can see the seriousness of this type of program as the government is serious about it and asking me to start from the grass root and not asking me to stay in Abuja to buy the products for ware housing .

On the company take on the MOU

For us as a company, we have the track records and which we believe informed why the Federal government decided to have us on.

Today, Tuns Farms ranks amongst the top three producers of broiler meat in the country and is a leading figure in the poultry industry in Nigeria which it operates with modern poultry production technologies comparable to what is obtainable in the developed world.

In Osun state, when Governor Rauf Aregbesola's government came he said he wanted to empower farmers , we told him our area of specialization is in poultry.

The Governor asked what he can do to increase broilers production in the state and what it will cost him . I told him with N350m that he will get the results, which made us to sign an MOU.

He invested N350 million in poultry farming and we divided the responsibilities into three.

The money deposited by the government was for the feeds, we were to provide the chicks and the Poultry Association to provide the vaccines.

The government went beyond that initially by saying they wanted to jump start the program by giving N100 for every chick we gave to the farmers to run the business. The N100 was meant for labour and any other thing needed to raise the birds That was done in the first year.

And we started with nine farmers , but today we have 550 farmers in the project. But the N100 incentives is no longer there and the farmers have stabilized and making profits . We have paid about N600 million as profits to farmers in Osun state.

This was what the federal government saw and said they believe in us to handle this school feeding program, but this time around it is not going to be broilers but eggs. If you go for broilers, you must have processors who will process and it is not easy now.

During my tenure as the President of the Poultry Farmers Association in collaboration with then President Obasanjo and Audu Ogbeh we drew the road map for the industry in the country. As most poultry farms then doubled their production more than 200 %.

The focus then was on broilers, the meat, but this time around it is on the eggs and how to make sure it gets to all parts of Nigeria. . So, we have to be in all local government now.

What we are producing now is about 10% of our national requirements, and under this MOU we will not have glut again in this county , every time we produce eggs in excess, we are going to process into egg powder as we are going to have six egg powered machines in each zone of the country. That will consume about 100,000 eggs every hour that will turn them into powder and instead of importing egg powder from India or anywhere, we are going to be producing egg powder for children meal .

You can see that this is one of the real sector the government has intervened now and as I said it is based on our track records in Osun where you can verify those who have benefited from the project.

On how long will it take the company to fill the egg gap in the country

The MOU is to run for 4 years and the target is for us to produce 50million table eggs per day in this country by 2018 . So to move forward we need to have people interested in what we are doing. We have received invitation from at least six governors who want to us to start from their states. In that case we will give priority to such states as the governors will give supports to what the farmers need there.

Because the money earmark for the program is not meant to be shared to the farmers , it is meant for those who have enough security to have access to that money. In that case, there is money for anybody who wants to invest in that line, but must meet up with the bank requirements.

So any state we are going into, there is need to have the supports of the government as one of the terms of the MOU is for us to go through the cooperative societies .Any farmer interested will need to go through the ministry of co-operative in the states , in that case there is going to be assistance to be rendered by the government of the states.

Already, we have received about six invitation from the states, but the major stakeholders are meeting on Friday . The major stakeholders are the national inputs suppliers , who are to supply day old chicks; those who will supply the feeds; those who will supply the vaccines and those who will supply the cage & housing. We have designed cage and housing that can take 2,000 birds.

There are some states that might want to designed this for their farmers so as to encourage their farmers or provide loans for them.

The major stakeholders are the four key partners mentioned and the officials of the ministry, our company and the Bank of Industry , the financial institution that is to manage and disburse the N25 billion CBN Anchor Borrower Scheme to eligible entrepreneurs.

Since the first year is going to be a pilot scheme for 6-10 states, so these states will be know when we meet the governors of the states formally.

We were supposed to write to the states, but if some of them are writing to us already that show they are interested in the scheme.

After the meeting of the stakeholders, they will know where to take their money and what responsibilities given to them then the next thing is to go to the states that are ready. The state are expected to have entrepreneur as all those materials that will be supplied by the stakeholders will be given to the states entrepreneur.

On the risk involved in poultry business

We are facing challenges with imported chicken from from south Africa, whereas there are companies here that can produce to world standard, unfortunately we still import eggs, frozen chicken.

The minister of industry, who is a banker does not know anything about manufacturing . But he believes in giving license for importation. He gave a Brazilian firm license to be bringing in chicken, we are not saying don’t import things, but they must follow due process. If you are bringing in chicken into the country, tell us the condition . For you to do that it must be the same standard with what we produce here, it means you have to fly the chicken here .

Locally produced chicken will be consumed within one week here without preservative which causes cancer, so if you want to compete with us let NAFDAC give you a certificate and say bring it and they give you the time for the production of the chicken and the time for them to arrive here .

If you are ready to pay the duties and the air freight that will bring the chicken here, we are ready to compete, but you now send the chicken through the sea, you need to see the way they land here. Instead of coming here they land in Benin republic and our boarder is porous. The custom is compromised and when they show you on television that they are destroying seized chicken, it is just 1% of what they confiscated . The others go through the back door to the market.

On maize as part of the feed

The issue of aflatoxin has to do with the way you preserve your maize. You need to have dried maize and this is why no major poultry farmer will use any maize around this time. We will not use it until around October and don’t forget that maize have started coming out and in livestock business you get your result immediately.

If you give your birds bad feed, you see them by tomorrow reacting to the bad feed immediately and if you give them the right feed they likewise react immediately. Poultry farmers are wiser now and they don’t rush into buying maize.

It might be expensive in October when we buy but it is good.

On the price, it is circumstance that made the prices high today, the option would have been to import, but that is not good as we should also encourage our farmers to grow and by the time things stabilize you will see the price falling.

It is to the advantage of the farmers now as demand and supply is determining the price, so those of us in the poultry sector have no choice as maize form 60-68% composition of the feed

the painful aspect is that the real farmers are not benefiting from high price, but the middle men who have bought the maize from farmers and stored in their warehouse. They are the one benefiting.

The middlemen also invested in the farmers by buying them fertilizers now and other inputs at the end of the day they sell back to the middle men.

But here we don’t deal with middle men we deal with real farmers and the MOU we just signed is to is meant to empower the real farmers too as that is the aim is to empower the real as it to keep them in the rural areas.