30 november 2020
Nigeria relies largely on imported food to feed its population. Some years ago, the Nigerian multinational Dangote decided to change this situation. It started by purchasing six rice mills that will become operational in the next 18 months. Dangote Rice has started restructuring the rice farming sector tells Robert Coleman, Agricultural Director of Dangote’s rice business in Nigeria. ‘I believe agriculture is the future of Africa.’
Dangote, one of the largest multinational companies in Africa is a global leader in cement production and trade in Nigeria and many other African countries. The conglomerate has a diverse portfolio including sugar, fertiliser, oil and gas. However, some years ago its founder and Group President Aliko Dangote, known as the richest man in Africa, decided to go into rice production in Nigeria.
Robert Coleman was born into a farming family in Zimbabwe and worked in agriculture from an early age. ‘I was born in Africa as were my parents and my grandparents. I have worked all over the world and have worked with Dangote as project director of its rice business in Nigeria for almost seven years. I would like to see Dangote championing the rice industry in Nigeria and Africa, and I am sure it will happen.’
Why did Dangote decide to go into rice production?
‘We were initially a trading company and later moved into cement production and refining of sugar and other commodities, but only very recently, in 2015, did we enter agriculture and the business of rice, and a little later tomatoes. It’s by no means our most profitable business because, although we are in business to make profit, our focus is to develop agriculture and create an opportunity for our burgeoning youth.
‘We know that every country needs to be self-sufficient in food, especially in staples; and rice is hugely important in our country. Because of this our president decided to get involved in this market segment. This will definitely do much to increase Nigeria’s ability to feed its population of over 200 million, achieve food self-sufficiency, and will create massive employment for young people. About 70% of the population in the Northern states of Nigeria, where our initial projects are based, are in some way involved in agriculture. This a huge percentage of the population in that area, and is where many of the poorest live. Once our operations are running smoothly, we’ll create a huge impact. Small-scale farming and agriculture as a whole in West Africa need to be re-structured and streamlined to become more effective and productive.’
How are you going about this?
‘Dangote Rice partnered with the Bill and Melinda Gates Foundation and invited the Sustainable Trade Initiative (IDH) from the Netherlands to help us re-organise and reshape small-scale rice production for our paddy rice. The models and processes we have developed work with small changes, also in other West African crops like cotton, maize, millet and soya
‘To be able to source rice sustainably, Dangote needs a continuous flow of high-quality paddy to feed its mills. To meet these requirements, farmers need to farm more professionally and the sector needs to be better structured. IDH and our local team analysed what is needed to lift farmers up to the level required – for example better use of fertiliser, or improved seed and farming techniques – and helped to organise the changes needed in the rice sector.
‘Six rice mills with a combined milling capacity of a million tons of paddy are being constructed in Nigeria as we speak. The first, in Jigwa, will be ready in June next year, and the ones in Sokoto and Zamfara soon after that. The rice mills were bought from a Swiss German company, Buhler, and are being installed by local construction companies. Once the mills are functional, we will have enough capacity to mill one million tons of commercial rice per annum. Dangote will process paddy produced by smallholder farmers. We will produce vitamin-fortified parboiled white rice, which we intend to sell in Nigerian markets.
‘Our aim is to have enough raw rice to process when the mills start operating, and we have started the farming process to meet that deadline. So far, we have carried out numerous rice farming pilots in four of the northern states. We also have a research station in Katsina State where we train farmers and leaders and trial varieties, and test fertiliser and chemical variants.’
How will farmers benefit?
‘Dangote will operate a massive outgrower programme in which farmers produce and deliver rice to the company mills. Farmers in our programs will get basic inputs like crop chemicals, fertiliser, seeds and bags as well as technical support, and the farmers also will have a secure market for their paddy rice.
‘Access to finance, mechanisation and irrigation services to enhance agricultural productivity are part of the package we intend to develop. We set up 5,000 hectares of rice last year, and once the mills are fully functional, we will have to expand our farming to 200-250 thousand hectares of rice per annum.
‘Until the mills start functioning, Dangote has been buying the rice paddy from the local farmers and selling it onto other millers. This has been done to get farmers used to our farming model and to iron out issues as they arise.’
You also work with young people?
‘We are working with two youth programs presently and they are doing very, very well. The biggest, Oduduwa Youths Rice Farm Scheme, is situated closed to Ibadan. They started with 50 hectares of rice and this has expanded to 300 hectares, and almost 100 young farming participants. And they are making good profits.
‘We have provided basic farming inputs and good agricultural training. This is something we want to roll out in other states. We are doing it slowly and carefully and putting processes in place. We are proud of this achievement and want to help these youth. However, we are not doing it for charity. All the money we have given them to start up, everything, has been repaid to us.’
How many people will gain employment in rice farming with Dangote?
‘Let’s talk projections. We are currently focusing on six mills, each of which will employ directly or indirectly 3,000 people. So, with the six of them, we are looking at employing up to 20,000 people. And then there are the farmers. The smallholders in our programme generally own 0.5-1 hectare of land and we will need at least 200-300 thousand hectares of rice grown per year – so we should impact on 200-300,000 farmers per year. These are big numbers.
‘Nevertheless, there’s a lot of work to be done. The farmers are generally still very unstructured and there’s a lot of poverty. Some of them don’t even have a bank account or card. We are busy working with the Central Bank of Nigeria and commercial banks on this. These are the little building blocks to get them to work more effectively, and we are starting to see success.
‘Farmers typically get about 2 tons of rice per hectare. With correct interventions it’s possible to raise yields to 6-8 tons per hectare, by improving fertiliser, seeds and agricultural practices. The greatest impact will happen when we are able to get a cash loans to these farmers, so that they can arrange their own inputs. Presently for every hectare, a farmer needs a loan of 150,000 naira (€330) for this. That will enable them to produce 2-3 tons more than they did before, which they can sell for 250,000 naira (€550) per ton, so they’ll be making a lot more money. The more we work with them, the more we can influence how they manage their affairs and organise their farming. And the more effective they get, the better it becomes for their families and other Nigerians.´
´To engage farmers we generally work through the state governments. For example in Jigawa State, the Governor has linked us with his agricultural team, and they in turn have put us in touch with farm leaders and cooperatives.’
To what extent has Dangote’s dominance affected other Nigerian rice producers?
´Let’s go back a step. Five or six years ago, there was not enough processing and milling capacity for the amount of paddy being grown and produced in Nigeria. After Dangote obtained the mills, many other businesspeople copied him so now there is too much milling capacity in the country and paddy is in high demand.
‘Some basic facts: Nigeria consumes 8M tons of rice per year. The country produces 3-4 M tons and the rest is imported. Our strategy at Dangote is to initially produce one million tons, so approximately 15% of the country’s requirements.’
What are the challenges?
‘We need to become more effective and more profitable to perform globally. Growing rice in Nigeria is very expensive. We don’t have organised irrigation systems; electricity is expensive, and we have to import most fertiliser.
‘A ton of rice in Thailand costs about USD 460. We are selling the same rice in the market today at USD 1,300 a ton – a huge difference. Asian countries can produce and sell rice for a third of what we can grow and sell it for.
‘We need to make sure farmers achieve better yields, and that inputs are cheaper or subsidised, and irrigation is made more available and more widely used, so that we can bring down the cost and compete with rice from abroad. In addition, we have the threat of cheap rice being smuggled in across the border.
‘Another real threat we face now is climate change. We have recently seen a lot of flooding in the last few seasons.’
So, how will Dangote be successful?
‘Typically, most of the big projects that Dangote ventures into are successful. We will bring superior varieties of rice to the farmers, we will help and encourage farming, and the result is we will be able to sell superior products, that is what we are aiming for. Our President’s vision is not only for Nigeria, it is for West Africa and Africa as a whole.’
Lastly, how will Nigerians benefit from Dangote rice?
‘In the last forty years, we in Nigeria have ridden on the wave of oil. However, the recent crisis has impacted us in so many detrimental ways and has forced us to look into other resources. I believe the future is in agriculture and mining, and this is what we should be focusing on.
‘In Nigeria we have highly intelligent, well-educated young people, of whom the vast majority are unemployed. These people are very unhappy. I would encourage the youth and Government to look toward structured agriculture, farming that makes profits. In 2020 people should not be tilling or planting their fields by hand, we should be looking at things like mechanisation, harvesting using machinery. For sure I think we should be looking at growing our own food in this country.
‘For Dangote, I would like to see six mills running and the company championing the rice industry in Nigeria and Africa. I am sure it can happen. I believe agriculture is the future of Africa.’
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