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.
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.
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.
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