‘Why farmers must cultivate according to offtakers’ preffered standards’
Mr Dayo Olunowo, Managing Director, Agricapital Ltd, Ibadan, in this interview with some journalists, posits that agribusiness can only be sustainable if farmers can plant according to offtakers’ product standand, specification and packaging method. He also argues that the market gap between the farmers and produce end users when bridged can save millions of dollars yearly from import substitution. NURUDEEN ALIMI brings excerpts:
WHY are you into agribusiness?
We run an out-grower scheme where we act as an aggregator from the farmers to off-takers. The off-takers tell us what they want and we get the farmers to plant what the off-takers want following their specific standards and specifications.
What kind of crops are you aggregating?
Currently, we plant thyme, Orange-Flesh Sweet Potatoes (OFSP), white onions, Ginger, Turmeric, maize and cassava.
Why do you specialise in seasoning leaves instead of food crops?
We specialise in these because they are demanded by our off-takers. They look at the market and they are innovating, with the aim of import substitution. For example, Nigeria imports thyme and no major player is cultivating it.
Importing thyme into Nigeria yearly costs about $50 million. We have off-takers to buy thyme leaves now. Our farmers plant and off-takers buy.
Who are the off-takers?
We have Sano Foods who buys orange-flesh sweet potatoe, thyme and turmeric. They use them for bread, cookies and other products. Integrated Feeds Limited also off-take yellow maize, cassava and other products, among many other off-takers.
What makes your services better for farmers? Why must they enroll here when they have associations?
What differentiates us is that we do not just aggregate, we train our farmers in good agricultural practice and currently we have two farm assurers certified by GLOBALGAP in our team. This enable them to meet the requirement of offtake standard, increases yield and encourages business continuity among parties. We also have programmes for the welfare of the farmers and their families. The first one is the farmers’ medical programme. When the farmer or any of the family member is sick, we have provision for medical care loans. At the end of the production cycle, we deduct the loan from their produce sales.
We also have a farmer housing programme, in partnership with a company, which is aimed at building affordable houses for farmers. But the challenge is that farmers have not been keeping record or financially included. So, we assist to arrange their books, partner with banks to get them included financially by opening accounts for them and getting them BVNs in preparation for the housing scheme.
Family education scheme for farmers are also there. Any of the farmers may want to buy books, pay school fees, we have provision for loans to take care of that. The loans for farmers are affordable, between 2 and 5 per cent interest rate.
We also have a farmers’ extension networking. If farmers do not have land but they want to farm, we network them with people that have the land. We also have farmers’ access cards, a form of credit card that farmers can use to buy food and groceries at major stores. We run these services so that farmers can concentrate on their farm operations.
How many farmers are involved and their location in the out-growers’ scheme?
We have about 7,850 farmers in the scheme. They are located in Ibadan, Oyo, Fiditi, Ilora, Ogbomoso, Ibarapa, all in Oyo State for now.
Apart from off-take agreement, have farmers keyed in to other services?
Some have keyed in, because we are just rolling out other services. Test-running has started, and would become fully operational by the next planting season.
Farmers do default in loan repayment most times. How is your experience with farmers in the scheme?
What we do is that we pay them on delivery of the produce. We also spend a lot of time and other resources monitoring the farm businesses. We do not sit in the office and assume that everything is well. We gave some farmers, for example, seedlings but they failed to plant it. In the process of visiting every farm, we detected that early. So, we monitor when it is time to prepare land, plant, apply fertiliser or pesticide. We supply all the inputs to them and the balance is remitted to them after the sale of their produce.
So, because we monitor them well, we are able to ensure delivery. We tie them to groups. We do not do isolated cases. We do it in a way they can guarantee one another and check defaults.
How do you handle insecurity and herdsmen’s clashes with farmers?
These are parts of the risk assessment we do carry out ab initio. We take soil samples, check the environment, check history of clashes and other risk factors before engaging farmers in certain areas. Our plan is that each farmer should not be more than five kilometres from another. This assists in risk management. We work with farmers’ association which helps us as well.
Are you participating in Anchor Borrowers’ scheme?
No, but we will be more involved in the programme during the next planting season.
Two years on, what has been your challenges?
Introducing good agricultural practice to farmers and getting them to follow new process of crop cultivation is really challenging. The offtake partner’s requirement and guideline must be adhered to.
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