1. INNOVATE
...Change Your World.
ENTREPRENEURIAL OPPORTUNITIES IN
AGRIFOOD SYSTEM IN NIGERIA.
By:
Dr Olatunde Agbato
President
Animal Care Services Konsult (Nig. ) Ltd
Ogere Remo
Ogun State.
2. PREAMBLE
My utmost pleasure to be present here today.
First time, but good impression. Why?
◦ The +ve impact the church is making in Nigeria –
especially among the youth.
◦ The initial ambition of its founder to be a Veterinarian
like myself.
www.daystar.com = “the Word works wonders @
Daystar - come. It is now a reality that the word of God
works at Daystar.
Thanks for inviting me to share my experience and
inspire participants to take practical action in the area
of my calling – agriculture.
2
3. Topic for the Day:
ENTREPRENEURAL
OPPORTUNITIES IN
AGRIFOOD SYSTEM IN
NIGERIA
4. What is Agrifood System?
Encompasses the interlinked set of
activities that run from “Seed to Table”.
Includes agricultural input production and
distribution, farm level production, raw
agricultural product assembly, processing
and marketing.
Encompasses the value chains for
different agricultural and food products
and inputs and the linkages among them.
4
5. What is Agrifood System?
Is also a shorthand term for agriculture
and related agro industries.
Refers essentially to “expanded
agriculture” that produces food, and its
analysis could also be extended equally to
those parts of agriculture and agro
industry that produce non-food products
such as fibres and biofuels.
5
7. 1. Agriculture and the Economy
Agriculture sector is central to Nigeria’s
economy; accounting for 40% of GDP and
providing 60% of employment.
It is a major source of employment growth.
Between 2001 – 2007, it accounted for 51%
of job creation in Nigeria.
In the 1960s, Nigeria had over 60% of global
palm oil exports, 30% of global groundnut
exports, 20-30% of global groundnut oil
exports, and 15% of global Cocoa exports.
7
8. 2. Decline in Contribution of
Agriculture to Export
Since the 1960’s, Nigeria has lost a
dominant position in exports of key crops
such as Cocoa, groundnuts, groundnut oil
and palm oil.
By year 2000, Nigeria’s global share of
exports of each of these crops was 5% or
less.
8
9. NIGERIA’S AGRICULTURAL SECTOR
IS UNDERPERFORMING
Cereal yields
Tons per Hectare
7.5
3.8 3.5
2.1 1.7 +121%
1.6
Egypt South World ZambiaCôte Nigeria
Africa Average d'Ivoire
9
10. Expenditure on agriculture
Low % total budget expenditure on agriculture
agricultural
funding 8x 25.0
3.0 5.0
Nigeria Malaysia Indonesia
Agricultural
raw material
contribution to
merchandise 5.04
50x 2.53
exports is very
0.01
low
Nigeria Malaysia Indonesia
Mechanization intensity
Low Tractors/100 ha
mechanization
26x
Nigeria Malaysia Indonesia Thailand Brazil USA
Irrigation intensity
Low irrigation % of arable land
levels 28.0
32x
12.4
0.8 4.8 4.4
Nigeria Malaysia Indonesia Thailand Brazil
10
11. Analysis
▪ Nigeria is under
investing in its
agricultural sector
on an aggregate
level
▪ Lack of overall
investment limits
capacity for
adequate capital
allocation to key
inputs across the
value chain
▪ There are key policy
changes that have
potential to enable
increased
performance in the
agricultural sector
11
12. Nigeria’s Natural Strengths
Nigeria has many strengths:
◦ Our land is some of the most fertile in the
world
◦ 79m ha of agricultural land of which 40m
ha is arable
◦ Over 40% of arable land remains
uncultivated
◦ Average precipitation 1,150mm/year,
◦ Potential to irrigate 3m ha.
◦ 14m farming families.
◦ Capable of growing almost all crops.
12
13. …but is not achieving its
potential
Productivity of arable land (kg/ha
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
Brazil China India Mexico Nigeria
13
14. Reasons for low productivity
Small land holdings
Uncoordinated aid projects
Lack of storage facilities
◦ Inputs
◦ Mechanization
◦ Credit
◦ Irrigation
◦ Infrastructure
◦ Reach of extension network
Non availability of proper entrepreneurial skills to
harness available resources for maximum impact.
14
15. Current Yield Scenario Nigeria
vs International Benchmark
Maize – 1.5 tons/hectare against 7 – 8 tons
Groundnut – 400kg/hectare against 2; 700kg in
Turkey
Onion – 4 metric tons/hectare against 120
tons in Yemen
Tomatoes – 5 tons/hectare against 100tons in
Israel
Rice – 1.5tons/hectare against 20 tons in
Thailand
Cattle – Milk yield – 300 litres/lactation against
10,000 litres
◦ First calving – 4.5 years against 20 – 22 months
◦ Calving rate – 2 years average against annual
◦ Carcass weight at 3 years – 250kg against 1,500kg
15
16. 3. Nigeria now Imports Agricultural
Produce
Today, Nigeria is a net importer of
agricultural produce with imports totaling
NGN 630bn.
Large import food product include
◦ Wheat (NGN, 165),
◦ Fish (NGN 105bn),
◦ Rice (NGN 75bn), and
◦ Sugar (NGN 60bn).
16
17. …But has a huge Agricultural Growth
Potentials
Nigeria’s agriculture sector has enormous potential
with an opportunity to grow output by 160% from
USD 99 billion today to USD 256 billion by 2030.
This growth potential comes from potential to
◦ increase yields to 80 – 100% of benchmark
countries;
◦ increase acreage by 14m ha new agricultural land,
approximately 38% of Nigeria’s unused arable
land of 36.9m ha; and
◦ shift 20% of production to higher value
agricultural produce.
17
18. … With global Opportunities
Nigeria faces a large and growing global
agricultural market – rising commodity prices,
growing demand for food and opportunities in
bio-fuel, all present significant opportunities for
Nigeria.
For example, global cereal demand will grow by
between 31% and 150% by 2050 depending on
the region, and global commodity prices are in
their second spike in three years.
Agriculture can become the main driver for more
equitable income growth, compared to oil and gas
sector .
18
20. Agriculture now looking up in
Nigeria
Nigerian agriculture has shown good
growth rates in the recent past with
growth rates of 7.4%, 7.2% and 6.5% in
2006, 2007, and 2008 respectively.
Between 2003 and 2007 its average share
of national real GDP was 41.5% thus
underscoring its importance in the
livelihood of Nigerians.
20
21. Government Positive Initiatives at making
Agriculture key driver of the economy
Vision 2020
Agricultural Policy 2001
National Food Security
Programme (NFSP)
21
22. Other Positive
Developments & Initiatives
Continual rise in national population.
Improved stability in the polity.
Return and consistent increase of the middle
class (increased disposable income and
beneficial trends in food spending habits).
Nigeria remains a veritable destination for
investment because of the relatively high
ROI – attested to by increased influx of
international brands in the FMCG, fast food
and hospitality industries (some drivers of
agricultural value chain).
22
24. Using the same amount of land,
we could become a major global
crop producer …
24
25. … combining yield gains with
increasing harvested area has
a dramatic effect
25
26. Agriculture in Transition
While historically Africa has accounted for only
2% of global agricultural trade, shifts in global
demand for agricultural products now present a
tipping point opportunity for African countries
for the following reasons.
◦ Rising population
◦ Steady income growth
◦ Demand for high-value crops, dairy products, fruits
and vegetables;
◦ Rising demand for processed and semi-processed
food staples and
◦ Growth in demand for bio-fuel present new
opportunities.
26
27. Agriculture in Transition
The global food crisis clearly demonstrated that
food is more valuable than any other commodity.
Several major food producing countries have
reached their plateau in terms of food production
capacity. Many can no longer expand food
production without serious negative
environmental consequences.
Resource rich but water deficient countries (e.g.
Saudi Arabia, Qatar, UAE, etc.) are increasingly
looking outwards to import food given water
constraints.
Africa is where the opportunities exist to meet
global food demand.
27
28. FUNDING AND FINANCING
AGRICULTURE
The underdeveloped states of many
markets in developing countries like
Nigeria makes government involvement in
agricultural investment necessary.
To achieve the objectives of the NFSP,
funding will come from three major
sources – namely
◦ government,
◦ commercial banks and
◦ development partners.
28
29. FUNDING AND FINANCING
AGRICULTURE
Historically, government budgetary allocation to
agriculture has been at average of less than 3%.
However, there are some indications the government is
now improving on both the allocation and spending and
the federal government has also indicated its commitment
to achieving and exceeding the 10% Maputo target.
It has further designated its Natural Resources Fund (i.e.
1.68% of the federal account) to the funding of the
National Food Security Programme.
The federal government has floated a N200 billion naira
bond (Federal Government Intervention Bond Issue) to
provide long-term credit to private sector organizations
which is currently being facilitated by the Central Bank
through the Commercial Banks. 29
30. CBN Intervention
Irked by the disproportionate low level of credit to the
agricultural sector by the banks (when compared to the total
level of credit to the economy) despite all its previous
interventions, the Central Bank recently launched a new
scheme to promote increased finance to Agriculture.
Previous schemes include ACGS, Presidential Agricultural
Initiative, Bankers’ Committee Agric Loan Initiative, Interest
Drawback Scheme, and the Commercial Agriculture Credit
Scheme (CACS).
Yet, the lending to Agriculture is about 1.4% of total lending in
the economy (despite the fact that Agriculture contributes
close to 42% of the GDP);
New scheme is the Nigerian Incentive-Based Risk Sharing
System for Agricultural Lending (NIRSAL).
30
31. NIRSAL
According to the Central Bank, NIRSAL is
a financing initiative that will;
◦ Provide farmers with affordable financial
products
◦ Reduce the risk of granting bank loan to
farmers.
31
32. The Objectives of NIRSAL
Spark agricultural industrialization process
through increased production and processing
across the value chains.
Build capacities of Nigerian banks to lend to
agriculture
Deploy risk sharing instruments that will lower
the risks of lending
Provide technical assistance for farmers and
banks
Develop a bank rating scheme that will incentivize
and show case/situate banks based on their
capacities to lend to the agriculture sectors.
32
33. OPPORTUNITIES FOR
INVESTMENT IN THE
AGRIFOOD SYSTEM.
To effectively identify and profitably exploit business
opportunities within the agricultural value chain, you
must be ready for the challenges of an
ENTREPRENEUR.
33
34. WHO IS AN
ENTREPRENEUR?
The dictionary defines an entrepreneur as
one who organizes, operates, and assumes
the risk for a business venture.
An entrepreneur is a risk taker.
He is an adventurer.
He is someone who ventures out not
without fears, but in spite of them.
Courage is his trademark.
34
35. WHO IS AN
ENTREPRENEUR?
◦ He dreams of starting an enterprise and he dares to pursue and
actualize his dream. He is driven by his desires to venture out, to
explore, and to risk much security in an attempt to create a product or
a service that will be a solution to a problem in this world.
◦ He is never satisfied and will never be satisfied with his status quo. He
asks questions, queries the norm and he experiments.
◦ He is not a quitter – He hangs in there against all odds even if others
have quit or are quitting. When he falls, he rises again. He gets knocked
down several many times, but never stays down.
◦ He is a fighter – fights battles within and without. Within himself, he
must battle fear, doubts and anxieties. Outside of himself, he must battle
foes and ironically friends. His foes are motivated by their desire to see
his downfall; and his friends who oppose him are motivated by their
concern for his welfare. He usually finds the oppositions of friends much
tougher to overcome.
◦ He faces many tough days – days when cash is seriously lacking, days
when employees have to be paid but money is not enough, the days he
meets angry creditors, the days employees steal from him or
unexpectedly quit on him, the day he loses key clients, the days he just
doesn’t feel like continuing.
35
36. “PECULIAR MESS”
The Nigerian entrepreneur faces peculiar
problems. His battles are tougher, and his
obstacles are greater.
Apart from the usual battle every
entrepreneur fights, the Nigerian
entrepreneur has also to contend with:
◦ Poor power supply
◦ Corruption
◦ Poverty
◦ Poor infrastructure
◦ Unstable economic and political environment and
policies
36
37. FUNCTIONS OF THE
ENTREPRENEUR IN AGRIFOOD
SYSTEM IN NIGERIA
Perception of economic opportunities
within the Agriculture value chain
Providing technical and organizational
innovations or adapting technologies for
his own use to exploit identified
opportunities
Gaining command over other resources
Taking responsibilities for the internal
management and external advancement of
the enterprise.
37
38. OPPORTUNITIES
A business opportunity implies the
availability of NEED with guaranteed sales
volume at low enough cost.
The main and basic function of an
Entrepreneur is scanning the environment in
order to identify business opportunities for
profitable investments.
Do you see yourself as one?
There are many opportunities within the
Nigerian Agrifood System value chain for you
as an entrepreneur to identify and profitably
exploit.
38
39. THE DOOR TO OPPORTUNITY
Please note and observe the followings in your
search for opportunities.
Opportunities and motivation are connected. Motivated
people see opportunities and opportunities are often
what motivate people.
Great attitudes precede great opportunities. Who you are
determines what you are.
Today is the best day for an opportunity. Opportunity
always takes “now” for an answer.
Opportunities are the result of pluck, not luck. The
people who succeed seek out opportunities, and if they
can’t find them, they create them.
39
40. THE DOOR TO OPPORTUNITY ctd
Opportunities don’t present themselves in ideal
circumstances. If you wait for the lights light to turn green,
you will never leave your driveway.
Opportunity without commitment will be lost.
Abandoned opportunities are simply pursued by the
competitors.
Opportunity is birthed out of problems. If you are looking
for a big opportunity, find a big problem.
Opportunities either multiply or disappear. The more
opportunities you pursue, the more you find behind
them.
Opportunities must be nourished if they are to survive.
As Peter Drucker, the father of modern management says,
“feed an opportunity, starve a problem.
40
41. OPPORTUNITY SPHERE IN THE
AGRICULTURE VALUE CHAIN.
Agriculture value chain
Industrial
Input Agro Agro Trade
Farmers manu-
producers Dealers processors and exports
facturers
41
42. Input producers
e.g.
- Fertilizers
- Agrochemical
- Poultry feed
- Medicaments and Vaccines, etc.
42
43. Farming
e.g.
- Arable Crops
- Poultry and Livestock
- Fisheries, etc.
43
47. Value Chain Maps - Soybean
Soybean
Meal/Cake
* Animal feed
* Protein foods
Input industry Farmer Industrial
Processor * Texturised bag
Seed and other Combines
inputs inputs to Transforms
Soybeans soybeans into
products
Household
process to
local foods Soybean * Coking oil
Oil
* Lubricants
* Paints, inks
* Textile
Finisher, etc
ff
47
48. EXPLOITING IDENTIFIED
OPPORTUNTIES
Having identified the opportunity, you as the
Entrepreneur, would now have to start a business
organization to profitably exploit the opportunity.
Before you start the business venture, it is very
important that you rate your personal capabilities and
qualities to run the business efficiently. Such qualities
include your
◦ Personal drive and initiative
◦ Creative thinking ability
◦ Communicative ability
◦ Leadership and responsibility; and
◦ Above all, technical know-how
A knowledge of book-keeping will be of immense
advantage in running the business concern.
48
49. FORMS OF ORGANISATION
The business could be organized as:
A Sole Proprietorship company or
A Partnership with other entrepreneurs
or
A Limited Liability Company
49
50. BUSINESS LOCATION
After deciding on the type of business
organization to start with, you would have to
select the location of the business. In selecting a
location, you have to consider factors such as:
◦ Availability of inputs for your operations;
◦ Market for the goods and services
◦ Understanding of the culture of people of that
location
◦ Availability of labour for the business
◦ Availability of necessary infrastructure that are
required for the smooth operation of the
business e.g. good access roads,
telecommunications, electricity, water etc.
50
51. THE FEASIBILITY STUDY
The feasibility study in itself gives details on
the financial, materials, machinery and
manpower requirements of the proposed
business concern.
The expected sales volume/revenue and
return on capital employed/return on
investment are also to be incorporated into
the feasibility study.
A good feasibility study is essential for the
successful take-off of the business as it
would act as a guide in the implementation
of the project.
51
52. CAPITAL
2 major sources:
◦ Personal Savings – (P.S.)
◦ Other people’s money - (O.P.M.)
Other peoples’ money could be made
available to you as:
◦ Loans, advances, grants and gifts from family,
friends relations, and philanthropic organization;
◦ Loans from Financial Institutions e.g. Commercial
Banks, Microfinance Institutions, Development
Banks, Insurance Companies, Finance Houses.
◦ Aids from Government agencies such as National
Directorate of Employment.
52
53. CAPITAL
You must carefully estimate your capital needs. Luke 14:28
If you have collateral security, you may be able to borrow
from financial institutions such as Banks.
It could be initially difficult to secure other peoples’ fund
when you are first starting the new business because of lack
of track record and guarantee of success at the beginning.
In short, you need a small budget that spells out into details
the breakdown of your expenses and capital requirements.
The capital need will vary according to the type of business
within the value chain you want to get involved in.
On acquisition of enough financial resources to profitably
exploit the business opportunity, you are now ready to
execute the project.
53
54. MANAGEMENT
Now, having set up the business, you as
the Entrepreneur would have to harness
all the resources employed for profitable
operation; and this you can only do
through efficient management.
54
55. VISION and MISSION
Your Vision is the statement of goals and objectives in very
clear perspective i.e. the dreams of the organization.
Habakkuk 2:2 – write the vision, make it plain on tablets.
If your vision does not scare you, then it is not big enough.
Your goals must be clearly spelt out, and you must make
yourself accountable for its realization.
Your mission must be the statement of strategies or
systematic plan of actions for the accomplishment of the
defined objectives of the company set out in the Vision
statement.
These set goals, objectives, and strategies for actualizing
them for the organization must never be subordinated to
any other desires within the organization, including your
personal desire if different from that of the organization.
55
56. PROBLEMS
Various problems will emerge in the course of
your managing the business, and these problems
always vary according to the type of business you
operate. Each of these problems will need a
special treatment, and the problem solved before
success is assured. Problem brings experience,
and experience brings wisdom.
Rather than allowing problems or adversity to
break you down, you should see and use it as
opportunity to break new grounds and records.
Every problem has the seeds of its own solution.
In all problems is buried some great opportunity.
56
57. RECORD KEEPING
Good record-keeping is very essential in
successful management
The Entrepreneur will have to install good
mechanism for keeping records of all
transactions within the organisation.
No job is completed until it is recorded.
57
58. INGREDIENTS OF SUCCESS
AS AN ENTREPRENEUR
Passion
Time Management
Courageous Persistence
Integrity
Competitive Edge
Action
58
59. The Seven Secrets of Success
◦ There is no secret of success
◦ Success is for every one
◦ Your life becomes better only when you
become better
◦ There is no success without sacrifice
◦ Success is achieved in inches not miles
◦ The greatest enemy of tomorrow’s success is
today’s success.
◦ No advice on success works unless you do.
59
60. Continuous Prayers
All the above ingredients must be backed
up with continual prayers with firm and
unshaken understanding and belief in the
role of the Almighty God in achieving
defined objectives.
Through prayers, barriers and constraints
are supernaturally and mysteriously
removed.
You must find time to pray.
60
61. Towards Achieving Fulfillment
The proper applications of the ingredients of
success earlier discussed are very key and
fundamental for achievement of fulfillment.
These are all time-tested principles that will
enable you achieve your visions.
More importantly, you must pay attention to
the principles of God. While it is necessary
to be ambitious in life, it is not virtue to be
in so much hurry as to take short cuts.
61
62. Respect Processes
We must be earnest; but we must have respect for processes.
Meanwhile, processes take time (however short) and those
who cannot wait usually end up truncating divine processes
in their lives.
Mark 4:26-32 – The two parables of our Lord Jesus Christ
in the text show us a few things about growth or success or
building a thing;
◦ Success takes time
◦ Success follows a process
◦ Success is multi-stage
◦ Success is tangible and measurable
◦ Success has rewards
◦ The process that leads to success is guided divinely. 62
63. MY
PERSONAL
STORY
To the glory of God, I am a living example of
the fact that you can stay in this country and
be a simple farmer and actualize your dream.
63
64. CLOSING REMARK
Making a career in the Nigerian Agrifood System
– the Expanded Agriculture is good and
rewarding.
Agricultural productivity is generally low in Nigeria,
but where there are many skilled entrepreneurs; who
know what to do, and where to get relevant
information and technology to improve their
productivity, things can only improve.
We must take agriculture from the present
subsistence level to commercial, and industrial; and it
is only through the entrepreneurial initiatives and
involvements of young people like you who are
gathered here that we can achieve this.
64
65. CLOSING REMARK
In the last four decades, countries such as Brazil, Malaysia,
and Thailand have been able to achieve global
competitiveness in agribusiness through initiatives
spearheaded by the private sector with the commitment
of public resources. We can do the same here in Nigeria.
Government has expressed its readiness to commit public
resources to create the enabling environment .
The private sector must key into this agenda for the
development and global competitiveness of the agrifood
system in Nigeria.
*This is my message at this conference*
It is the way to go, not just for its value to the nation; but
also for the value it has for personal success and
fulfillment. 65
66. CLOSING REMARK
It would be my joy to see many of
you become farmers and operators
in the agriculture value chain very
soon,
Or that those of you already in the
chain deepen your stake in the
business.
66
67. CLOSING REMARK
However, whether or not you choose to
join us in the agriculture value chain,
please just make a positive impact in your
little corner.
Remember that slogan – “It begins with
you”.
Can our country Nigeria be better than
what it is now?
Yes, it can; but it begins with you!
67
68. Thank you & God bless you.
Olatunde Aiyedun Agbato
olatundeagbato@yahoo.com
08022902318
