The economic diversification drives of the federal government have stimulated wider actions across multiple sectors. The drives aim to promote growth in the real sector of the economy by stimulating and facilitating the development of value chains and encouraging maximum use of local resources and human capital in the production of goods and services.
Private businesses in the country are therefore rejigging their supply chain and operating models to tactically execute extensive backward linkages in line with the new national policy drive.
The results have been outstandingly impressive amongst businesses that prioritize improved national economic performance. Olam Nigeria, an agribusiness firm, is one of the few private firms which prioritize backward linkages as a means of accelerating inclusive growth/ shared prosperity through expansive capacity building, production-level support and greater use of local resources in its processing segments.
Leveraging on its impressive scale, global experience and enviable performance rating, the top agribusiness conglomerate continues to work directly and through strategic partnerships with an appreciable number of local smallholder farmers in the rice, wheat, tomato, dairy, and animal feed value chains where it has established a footprint and an unmatched competence. Across these multiple sectors, the firm is deepening local engagement in a bid to help Nigeria achieve food security and self-sufficiency in agriculture.
Between the years 2014 and 2020, Olam injected N3 billion into the rice production value chain, in support of FG initiated Value Chain Development Programme (VCDP). In partnership with the International Fund for Agricultural Development (IFAD), the fund massively improved smallholder farmers’ outputs across the rice-producing belt of Nigeria. An estimated 35,000 smallholder farmers benefited from the grand investment.
While the larger percentage of the farmers recorded a geometric rise in incomes, the ripple effect would be felt across the economy in the forms of new local jobs created in the farms, a healthy supply of the food staple and more buoyant household incomes in the rice farming communities.
The business is replicating an almost similar value chain development model in the dairy sector. Working with the 12,000-membered Kano Dairy Union, through Outspan, a subsidiary company, Olam is reinvigorating the local milk production value chain by ensuring smallholder dairy farmers have access to cold-storage facilities to prolong the life-span of freshly sourced milk. The cold storage infrastructure also reduces production losses.
The firm also supplies the healthier premix feed which contains essentially cereals and dry Napier grass sourced from sugarcane plantation to the smallholder dairy farmers to meet the dietary needs of the herds.
Besides, the agribusiness leader is also creating efficient market linkages and a smooth transportation system for the fresh milk produced by the smallholder dairy farmers. The availability of a ready market to sell fresh milk, in addition to the availability of an efficient milk transportation system, have eliminated the previous long-distance trek to distance villages by the wives of smallholder dairy farmers to peddle fresh milk.
While the wives can stay home to nurture the children, the improved household revenues coming from the fast sales of fresh milk mean smallholder farmers can live a more qualitative life. They are also able to afford quality education for their children for the first time.
Olam’s valuable economic contribution through quality backward integration in the agriculture sector cut across several other vital Agric sub-sectors. Through its subsidiary company, Caraway Africa Nigeria, the top agribusiness firm has revived the tomato farming value chain. Currently, tomato harvest yields per hectare in Kano and Jigawa States have risen from 7.5 metric tons to over 30 metric tons of tomato per hectare – thanks to a partnership agreement signed by Olam with the World Vegetable Centre, a global research institute to supply 18 variants of high-yielding tomato seeds to over 1,000 smallholder tomato farmers that are participating in its out-grower programme.
Speaking about the evolving impact of Olam’s various backward integration programmes, Mr. Ade Adefeko, Vice President, Government & Corporate Relations at Olam Nigeria, said: “Our robust BIP underline the confidence we have in Nigeria’s quest for self-sufficiency in food production. We are committed to supporting the various Federal Government agricultural development efforts by consistently scaling our research and seed trial efforts along the value chain.”
Another profound testament of the scaled BIP efforts of the agribusiness conglomerate is the quick turnaround being experienced in the wheat value chain. A previously weakened, less efficient value chain has been reinvigorated by a consistent injection of research and seed trial funds by Olam and its partners which are the Federal Ministry of Agriculture and Rural Development (FMARD) and the Flour Milling Association of Nigeria (FMAN). As well, national agriculture research institutes have been receiving sound support from the partners to try new high-yielding wheat seed varieties. Further partnerships with developmental organisations such as Oxfam and ICARDA are also being explored to stimulate local wheat harvest levels. As of June 2021, close to the end of the wheat harvest season, as much as 847 metric tonnes of local wheat harvest has been off-taken by millers.
Aggressively pursuing growth in the local animal/ aquafeed and hatchery value chain, Olam directly ploughed $150 million into revamping the local feed and hatchery infrastructure in Kaduna and Kwara states. The infrastructural revamp which berthed Nigeria’s first state-of-the-art animal feed production factory is uncovering new values in the animal feed and protein segment with greater impact on the livelihood of poultry farmers and the entire national population which depends on the consistent supply of affordable protein-rich, poultry foods to live a healthy life.
The various quality backward integration interventions that are undertaken by Olam subtly served as an economic shock-proof as the lockdown effects of the COVID-19 viral outbreak threatened the food production value chains in Nigeria and the rest of the world. The 35,000 smallholder farmers engaged in the rice value chain and an N110 million grant made available to select farmers in Benue State are crucial support resources that also served as a timely cushion in a most trying period for the nation.
The robust local BIP initiatives by Olam are expected to sustainability improve the local food production value chain, engender more employment opportunities and compel more private businesses to pursue the Federal Government Agricultural Promotion Policy drive. By focuses on expanding the utilization of local inputs, Olam, through its investments in the agricultural sector is spearheading Nigeria’s economic diversification agenda and spurring the country towards achieving self-sufficiency in food production.
