Harnessing the value chain in Ginger production

Ahead of the summit on ginger production scheduled for today facilitated by TAK integrated agriculture solutions limited, Kabir Usman, Managing Director of Tak speaks with Seyi Anjorin on some of the economic value chain of ginger production and the challenges, excerpts:

What is TAK presently up to?

Presently we are working on ginger, we ventured into ginger about three years ago with the hope of working with the entire value chain, somehow, we successfully cultivated ginger a couple of times and traded on it but we realized that there were so many challenges along the way and that was why we brought the idea of the summit.

What is the present economic outlook of ginger business?

Ginger is one of the non-oil export markets out of the Nigerian agricultural sector, it is the third non-oil largest export that we have and Nigeria is ranked as one of the highest exporters and suppliers of ginger in the world behind India and china, Nigeria is the largest exporter, we do a lot of ginger but we do not get so much value for it generally.

Why are we not making value in it?

Anything that is exported in its crudest form, you get the least in return for it. In most cases, if you cultivate anything, anybody who adds value to it end up getting the benefits behind just the farmers who is the least paid, so in the case of ginger, Nigeria produces a lot, we are always at the mercy of the people that are buying it because we do not do any serious value addition, if you see ginger being processed in Nigeria, it is either being processed into spices or ginger drink. There are efforts to process ginger in Nigeria on an industrial scale, Kaduna state has an industry where it is processed, but somehow, could not last so long, but there are other private initiative to process it locally, where the ginger oil could be extracted, and this is very valuable, but we have not been able to sustain this effort, somehow, they fissile out at the end, we can export powdered, dried ginger and most importantly we can get more value if we can improve the capacity to process ginger locally and use it more at home.

What do you intend to achieve at the ginger summit?

If you speak to a number of people, they will tell you that the summit is long overdue. We have a lot of activity around ginger but with little coordination, I can tell you that this because we have experienced the effect of this lack of proper coordination, because when we entered into ginger, we were expecting that things would run smoothly but if you don’t fix some of the gaps in the value chain, you will end up procuring loses in investment, so we are still farming ginger and a lot of farmers are doing a lot of work producing it, but there are so many challenges. We are bringing together everybody in the ginger value chain, we have identified the farmers organizations and they have been invited and also collaborating with the ginger growers association, of takers, those who serve as middlemen, practitioners, exporters, interested investors have been invited because we have noticed some with interest, rather than discouraging ginger production, the summit will help us in the direction with all issues of the table, to see how we can arrive at an harmonious ecosystem for ginger so that we can grow.

How would appraise government’s attitude to ginger production?

Ginger is a highly rated export crop for Nigeria, but government cannot do everything alone, they have done so much in the past, but if we still have problems now, then it means some of those efforts have not achieved their full results so, our input is a response to government’s call to the private sector to participate in developing the business. As a private player who is conversant with the Nigerian business environment and an enthusiastic in agriculture, we have a special interest to see that things are done differently, and we feel we will add that value. Most times when we discuss, people ask, what our interest is, we say it is because we can do it and we have the wherewithal to facilitate what is happening, why we have not been able to move forward; if you look at how other countries do things, ours is still not done properly, because we tend to rely on government and whenever government makes an effort, people just see where they can benefit from that, but if I am doing a summit, natural you would not see it as an opportunity to come and make money, but if you cannot fault, it is better you do something better than that or come and join us so that we can move it forward. If I facilitate this program and it comes to be, the agenda for moving forward would be set at the summit, it is not for me to say I have become the Nigerian ginger face, I am only a practitioner, I have suffered in the system and I do not want to see it continue. We got the idea of the summit at the suggestion of USAID because they have a program to facilitate value chain development, especially those that tend to lean towards trade, and we have discussed, they brought the idea, we looked at it and accepted it.

How can the gaps in the value chain get fixed?

For everything to thrive in a business environment, people will need to know the policy focus or thrust of government on that product, ginger is only one commodity among several others and if you expect government to give special attention to ginger when it has not finished with rice which everyone eats; some of these things can be fixed on a case by case basis, that is the approach that I think will work, because when we look at everything together, and you expect one person to do it, nobody will be at every sector at the same time. So if I am in a sector, I would look for a way to make that sector work, the things I think government can do is to create an enabling environment through proper policy articulation, improve on creating enabling environment for investment to thrive, because, why we do not have the kind of powers or stability we want for the ginger ecosystem is because there is no local market. Most of the off take for ginger is overseas, the very little we use in local spices or drinks does not consume a fraction of a percent. Last year, for three quarters, we exported over N290million worth of ginger, if any commodity has that much of export capacity, it is something that should be given some considerable attention. You cannot expect in these days where government cannot do everything that you sit and fold your hands and wait for manna to fall. the solution to agriculture in Nigeria is not one that can be limited to only a segment, you have to fix the entire value chain, if you fix the production and you have so much production coming, and nobody is buying, there is a problem, but if you now say let us put money and buy all the ginger, you are going to trigger artificial scarcity because price inflation would set in. There would be so much money chasing ginger, price will hike, and if supposing we set up a reserve and buy as much ginger as we can, when you buy the ginger, what are you going to do with it? There is so much use for ginger in many places in the world, but there is so little for it in Nigeria, but whenever you have supply that outshines your own, you lose that attention. Last year, ginger sold per bag at N30 to N35, 000, this year, it is selling at N9, 500. imagine people that had invested, and they cannot sell it, it is not something you can mix anyhow, the person who uses it outside has not come calling, the day they will come calling, the price would go up, now that they are not coming, prices are at N9000, if you produce ginger with the intention of selling at a particular price, you are already in a big mess.

With this, how do you gain confidence of the farmers?

Ginger market is a seasonal market, when the demand comes, it comes with the people who are buying, when they give their orders, the agents or representatives come to Nigeria to buy ginger based on the order they have, and they too also target when the ginger had been harvested, when they give they give their order, there is an international price which is well known by everybody but at certain times, depending also on when your own ginger is ready, they can do a match of order and availability, then you make a sale, if ginger is selling for $1900 per bag and you have just harvested you ginger, for you to be able to sell the ginger that they are buying, it has to be dried, and you cannot dry it in July or august, so the ginger has calendar that you must follow, when you plant ginger, it takes between 7 and 9 months before you can harvest it, and you harvest it during the time when you can dry it, it is even preferred to be sundried. When you process it, that is cut it and dry it then bag, at that time you get a price that matches the demand, if there is a surplus supply, it will affect the price but if there is a scarcity and there is a high demand, it will affect it, so every day, there is always a running battle between availability and supply matching demand, if tomorrow, the person who buys from Nigeria does not buy, what do you do with your ginger, so you have a challenge which we intend to put on the table for discussion, which is how to ensure stability in ginger ecosystem

, if we stop exporting ginger in Nigeria which could happen, if there is alternative supply to the world market; fortunately for Nigeria, our ginger quality is very unique, and other countries have come and taken our samples to plant in their country, that ginger that is the backbone of the economy of the people growing it is under threat in so many ways, first there is a natural threat of the person who is buying, maybe not buying; then there is also the threat that there are other people coming into it, so if you do not have market threat or you are facing competition threat, over the fact that you may over produce, once it is a valuable commodity, it is something that is good demand, but we need to see that we have organized the system, where production will be done to specific demand, if we can stimulate interest for investment in local uptake, how do we stimulate local off take, if we are able to produce locally rather than exporting in crude, that will increase the shelf life and quality and also ensure that it can sell on a regular and consistent basis, but right now, there are too many incidence that can disrupt the market and affect the system.

What are some of the other challenges facing ginger production?

The production of ginger for the short period we have delved into it, we think that there is not much local research on it to make everything around it, it is a product of somebody’s effort to make life a little bit more comfortable. In all the years we have been cultivating ginger, there have not been any effort to simplify the process for the farmer, even the ginger we are farming is still in its original form unlike other crops. I would say if you are doing something and it is effective, you should see it in the result, if I want to go and buy ginger, I should be able to say this is a high yield variety, it can germinate within a particular period of time and you can harvest it within six months, but everything we have is the traditional one. We are talking about machinery, chemicals. If you want to keep ginger seedling, you harvest it and keep it under a shed for a couple of months, when you keep it till the raining season, it begins to germinate, or you could leave it under the ground, you will not harvest it, once it has matured, you shave off the leaves and do a protective covering with grass or leave it in the ground, at the first rain, you harvest it and then you can use it as seedling for planting, it is different from how you get other crops, that is one of the peculiarities in ginger. All these things are things that need proper coordination which includes discussion with government to talk about the needs and how financial institutions can come and assist so that we will know how best to protect and improve our practices.

What are the challenges involved in attracting financial institutions?

It is neither here nor there, because some of the banks are already financing ginger transactions, when it comes to exporting ginger, banks finance them every day, but if we coordinate the ginger ecosystem properly, we can engage banks based on their special peculiarities based on their peculiarities so that we can provide service for the industry. The phobia banks have for agricultural transactions is that they do not understand it, they may have even done one or two transactions that left a sour taste in their mouth and so it may be difficult to convince them that this one is different, so most times, there is need to have someone who knows what is at stake to create an understanding between the two parties. There is demand and a need for better financing, and this cannot work if there is no proper coordination.