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Federal Ministry of Agriculture and Rural Development | Agricultural Transformation Agenda: Repositioning agriculture to drive Nigeria’s economy Dr. Akinwumi Adesina, PhD (Purdue, USA) CON Honourable Minister of Agriculture and Rural Development November 2012 0

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Page 1: Agricultural Transformation Agenda: Repositioning ... · Agricultural Transformation Agenda: Repositioning agriculture to drive Nigeria ... World’s largest importer of US hard

Federal Ministry of Agriculture and Rural Development |

Agricultural Transformation Agenda: Repositioning agriculture to drive Nigeria’s economy

Dr. Akinwumi Adesina, PhD (Purdue, USA) CON Honourable Minister of Agriculture and Rural Development November 2012

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Page 2: Agricultural Transformation Agenda: Repositioning ... · Agricultural Transformation Agenda: Repositioning agriculture to drive Nigeria ... World’s largest importer of US hard

Federal Ministry of Agriculture and Rural Development | 1

Nigeria Imports over 1.3 Trillion Naira in wheat, rice, sugar and fish every year

Sugar

Fish

Wheat World’s largest importer

of US hard red and white winter Wheat

Nigeria’s top 4 food imports * Measure: Annual food imports in mllions of naira

Nigeria’s imports Nigeria’s food imports are growing at an

unsustainable rate of 11% per annum. Relying on the import of expensive food on

global markets fuels domestic inflation. Excessive imports putting high pressure on

the Naira and hurting the economy Nigeria is importing what it can produce in

abundance. Import dependency is hurting Nigerian

farmers, displacing local production and creating rising unemployment. Import dependency is not acceptable, nor

sustainable fiscally, economically or politically.

Key takeaways

*CBN

Rice World’s #2 Importer

$4bn @ $11m per day

$2bn @ $6m d

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Federal Ministry of Agriculture and Rural Development |

Our Vision: Grow Nigeria’s agricultural sector

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“To make Nigeria an agriculturally industrialized economy” What we have stopped doing

× Treating agriculture as a development project

× Isolated projects that do not clearly grow the sector in a

clear and measurable way.

× Big government crowding out the private sector

Page 4: Agricultural Transformation Agenda: Repositioning ... · Agricultural Transformation Agenda: Repositioning agriculture to drive Nigeria ... World’s largest importer of US hard

Federal Ministry of Agriculture and Rural Development |

Our Vision: Grow Nigeria’s agricultural sector

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“To make Nigeria an agriculturally industrialized economy” What we have started doing! Treating agriculture as a business Integrating food production, storage, food processing and

industrial manufacturing by value chains (‘farm to fork’) Focusing on value chains where Nigeria has comparative

advantage Using agriculture to create jobs, wealth and ensure food security Investment-driven strategic partnerships with the private sector Investment drives to unlock potential of our States in agriculture

(joint drives with State Governors)

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Federal Ministry of Agriculture and Rural Development | 4

New policies, institutions and financing structures to drive sector growth:

1. Deregulation of seed and fertilizer sectors 2. Marketing reforms to structure markets 3. Innovative financing for agriculture 4. New agricultural investment framework

Doreo

Page 6: Agricultural Transformation Agenda: Repositioning ... · Agricultural Transformation Agenda: Repositioning agriculture to drive Nigeria ... World’s largest importer of US hard

Federal Ministry of Agriculture and Rural Development |

Government has fully deregulated the fertilizer and seed sector, and sanitized the fertilizer subsidy program

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Government Distributed

Private Sector Fertilizer Supplier

Federal Government

State Government

All Farmers

Private Sector Fertilizer Supplier

Targeted Farmers

Federal &

State Govt.

Manufacturer/Supplier gets order from FG

FG has manufacturer deliver to states per indent from state at 25% subsidy.

State “distributes” fertilizer to farmers occasionally adding their own subsidy.

Only 11% of fertilizer reaches the intended farmers

States and FG coordinate to distribute fertilizer vouchers to targeted farmers.

94% of actual farmers receive the subsidized fertilizer under the voucher program.

Private sector sells fertilizer to farmers at market price “minus” the fertilizer voucher discount provided by government.

Government distributed fertilizer support program

Private Sector Distributed

Private sector distributed fertilizer support system, utilizing Input Vouchers

Key takeaways

Government distribution system is inefficient and wastes resources

Government distribution channels subsidize corruption

Implemented Growth Enhancement Support Program to directly target famers

Global Best Practice

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Federal Ministry of Agriculture and Rural Development |

Growth Enhancement Support Reached: 880,000 Poor Farmers Reached Across 97% of Country

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97% of States Implemented GES 97% of LGA’s

Implemented GES

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Federal Ministry of Agriculture and Rural Development |

Success Stories

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Farmer Redeeming His Fertilizer via Growth Enhancement Support

“For the first time I get my seeds and fertilizers fast without any political interference”

- Nnenna, a female farmer in Abia State

“This is the first time we have this type of distribution (GES) to the farmers, it will eliminate poverty. We thank Mr. President”

– Mr. Omale, a beneficiary in Kogi

“GES is a clear process, no corruption in it, nobody between me and my fertilizer and seeds”

– Abdullahi Ndastu the 1st beneficiary of GES, FCT.

“It is a happy day for us farmers and we feel honoured that the Minister and his entourage have come to deliver fertilizer to us which before now was beyond our reach”

– Mr. Bassey, a beneficiary in Akwa Ibom State

Page 9: Agricultural Transformation Agenda: Repositioning ... · Agricultural Transformation Agenda: Repositioning agriculture to drive Nigeria ... World’s largest importer of US hard

Federal Ministry of Agriculture and Rural Development |

Before Rehabilitation Before Rehabilitation

Successful Foreign Investment in the Nigerian Fertilizer Industry Notore – Rebirth of the domestic fertilizer industry

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Federal Ministry of Agriculture and Rural Development |

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After Rehabilitation

Successful Foreign Investment in the Nigerian Fertilizer Industry Notore – Rebirth of the domestic fertilizer industry

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Federal Ministry of Agriculture and Rural Development |

Notore Successful Foreign Investment in the Nigerian Fertilizer Industry

▪ In Joint Venture with Mitsubishi, Notore is expanding its capacity to over 2.75 Million MT/year

Growth in Production (Thousands of Metric Tons of Urea)

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Federal Ministry of Agriculture and Rural Development | 11

Mr. President Launches UTC and Butterfield Commercialized Cassava Bread - 28th of April 2012

Page 13: Agricultural Transformation Agenda: Repositioning ... · Agricultural Transformation Agenda: Repositioning agriculture to drive Nigeria ... World’s largest importer of US hard

Federal Ministry of Agriculture and Rural Development |

Transferring Knowledge Along the Chain MD of UTC (1st Commercial Producer of Cassava Bread) holds training session with Master Bakers.

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Federal Ministry of Agriculture and Rural Development |

High Quality Nigerian Rice: EBONY Rice, Ebonyi

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Case Study: High Quality Nigerian Rice Rolled Out Modern rice mill (30,000 MT) begins operations in Ebonyi State

Status Ministry working with entrepreneur to develop out-grower program and access

additional finance to expand operations.

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Federal Ministry of Agriculture and Rural Development |

Government new rice policies are paying off – a very good sign 210,000 Metric Tons of New Rice Capacity (10% of current imports) executed in the past 1 year of Mr. President’s Administration

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Company State Capacity MT/Yr Status

Atahi Rice Jigawa 60,000 In Process

Ashi Feeds Benue 10,000 Started Post June 2012

Mikap Benue 10,000 Started Post June 2012

Dominion Taraba 10,000 In Process

Gauri Bauchi 10,000 In Process

Clysters Nasarawa 10,000 In Process Umza Kano 60,000 New Line Started Post June 2012

Omor Anambra 10,000 In Process

Kare Hi-Tech Zamfara 9,000 In Process

Oni-MP farms Cross River 8,000 In Process

Al-Uma Taraba 8,000 In Process

Ebony Agro Ebonyi 30,000 Started Post June 2012

Lagos Lagos 5,000 Started Post June 2012

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Federal Ministry of Agriculture and Rural Development | 15

Case Study: Successfully Leveraged Private Sector to Establish Largest Rice Farm in Nigeria Largest rice producer and processor in Kenya “Dominion Farms” invests in 30,000 Ha Community Rice Project in Taraba State

Status Attracted additional local Nigerian investor First set of 50 young commercial farmers from Taraba trained for 5 months in

Kenya. Initial rice mill of 10,000MT/yr ordered Land clearing in process, initial planting to begin in Dec 2012.

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Federal Ministry of Agriculture and Rural Development | 16

Massive demand by farmers for new Cocoa Hybrids

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Federal Ministry of Agriculture and Rural Development | 17

New High Yielding Cocoa Hybrids Developed by Nigerian Scientists Launches a Cocoa Revolution

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Federal Ministry of Agriculture and Rural Development | 18

Doreo

Horticulture Transformation

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Federal Ministry of Agriculture and Rural Development |

Food processing and manufacturing from local staple crops Rapid urbanization, rising middle class

incomes, supermarkets and demand for "ease to prepare foods”.

Target commodities are maize, soybeans,

rice, yams, cassava, sweet potatoes, sorghum

Nigerian Agriculture Sector Investment Opportunities

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Federal Ministry of Agriculture and Rural Development |

SCPZs are Highly Attractive to Investors Local and international firms are beginning to engage with the Federal Government as Anchor investors

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Federal Ministry of Agriculture and Rural Development | 21

14 Staple Crop Processing Zone sites around the Country

Key Takeaways

• Sites are intended for the production and processing of priority Agricultural products under the ATA; Rice, Sorghum, Cassava, Livestock, Fisheries Cocoa, Cotton, Maize, Oil Palm, Onions, Soyabean and Tomato.

• Additional SCPZ sites will be designated to cover Livestock, Oil Palm, Cotton, Cocoa, etc.

• Development finance institutions

such as the World Bank and the African Development Bank, have pledged support.

.

Staple Crop Processing Zones (SCPZ) 14 sites selected across Nigeria for the first set of SCPZs

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Federal Ministry of Agriculture and Rural Development |

Rice We have Identified the Anchor States for Rice SCPZs

S/N LOCATION STATE ANCHOR INVESTOR

1. KADAWA VALLEY KANO STATE DANGOTE IS CORE INVESTOR.

2. BIDDA-BADEGGI NIGER STATE INDICATIVE INTEREST FROM FLOUR

MILLS OF NIGERIA

3. IKWO EBONYI STATE EBONY RICE, EBONYI GOVT., UNDP,

SME’S

4. GASSOL TARABA STATE DOMINION FARMS

5. SOKOTO/KEBBI SOKOTO & KEBBI STATES NO CORE INVESTOR FOR NOW.

Cassava SCPZ has been Designated in the State (Ososa LGA)

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Federal Ministry of Agriculture and Rural Development |

Horticulture We have Identified the Anchor States for Horticulture SCPZs

S/N LOCATION STATE REMARKS

1. KADAWA VALLEY (TOMATO) KANO DANGOTE GROUP IS THE CORE

INVESTOR

2. WANUNNE (CITRUS,

TOMATO, MANGO)

BENUE NO STRONG COMMITMENT.

POTENTIALLY, DEL MONTE FOODS

3 CALABAR ( PINE-APPLE) CROSS-RIVER DANGOTE GROUP IS THE CORE

INVESTOR

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Federal Ministry of Agriculture and Rural Development |

Over $8bn in Commitments from 17 Local and Foreign Investors Over the Past Year

Adamawa

Akwa Ibom

Bauchi

Baye-

lsa

Benue

Borno

Cross River

Delta

Ebonyi

Edo

Ekiti

Enugu

FCT1)

Gombe

Imo

Jigawa

Kaduna

Kano

Katsina

Kebbi

Kogi

Kwara

Lagos

Nasarawa

Niger

Ogun Ondo

Osun

Oyo

Plateau

Rivers

Sokoto

Taraba

Yobe Zamfara

Abia

Ana- mbra

Cassava Starch & Sweeteners

Livestock In the Northern Region Mechanization &

Training across all SCPZs

Tomato processing, Horticulture, Sorghum

Fruit Concentrate processing

Cassava Starch and sweeteners

Parboiled white rice

processing

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Federal Ministry of Agriculture and Rural Development |

Sample Rates of Returns to Agricultural Investments in Nigeria

Crop Modeled Investment Theme

Start Up Capital (Fixed Assets)

IRR Payback Period

Tomato • Tomato paste and related products plant to replace imported Chinese paste

• $3.9M for plant with 15,000 tons/annum

20% • ~ 4years

Cassava • Cassava chips processing for export to Northeast Asia

• $3.5M for plant with 115,000 tons/annum plant

19% • 4.5 years

Cotton • Cotton production and ginning into lint for export and domestic markets

• $3.2M for a 30,000 ton /annum ginnery

20% • 3.5 years

Maize • Processing into animal feed to serve fast growing livestock market

• $3.5M for a 50,000 ton/annum plant

30%

• ~3.6 years

Rice • Rice production and milling to serve large domestic demand

• $6.1M on a 45,000 ton/annum rice mill

33%

• 3.5 years

Soya Beans

• Processing into animal feeds, industrial supplements and oil for domestic markets

• $10M on a 100,000 ton plant

106%

• 4.5 years

Source: Monitor Analysis; Interviews with Processors; NIRSAL Analysis

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Federal Ministry of Agriculture and Rural Development |

1. New fiscal incentives to encourage domestic import substitution 2. Removal of restrictions on areas of investment and maximum equity

ownership in investment by foreign investors

3. No currency exchange controls – free transfer of Capital, Profits and Dividends

4. Constitutional guarantees against nationalization/expropriation of investments

5. Zero percent (0 %) duty on agricultural machinery and equipment imports

6. Pioneer Tax Holiday for agricultural investments

7. Duty Waivers and other industry related incentives e.g., based on use of local raw materials, export orientation etc.

Government incentives to support investors in agriculture

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Federal Ministry of Agriculture and Rural Development | 27