Olam’s out-grower program rewards successful farmers, sets standard for increased local sourcing
Local farmers are often unable to scale up their production, with many struggling with poverty due to a combination of factors including low productivity, poor market access, and lack of training in Good Agricultural Practices (GAP).
They also often struggle with inadequate or no mechanization, poor storage, high post-harvest losses, inadequate input supplies and access to finance, and fixing all of these as seen through some out grower models, often shows remarkable difference.
Addressing these challenges, the United Nation and International Fund for Agricultural Development (IFAD) in partnership with the Federal Government and Olam Nigeria Limited developed the Value Chain Development Programme (VCDP) for rice in 2015. Under the programme, rural farmers formed cooperatives and were supplied inputs, granted access to financing, storage and logistics for transporting their produce to the buying centres, trained in Good Agricultural Practices (GAP) and guaranteed buyback of their produce.
Last week, the company celebrated some of the farmers on the programme, recognising their efforts and commitment in supplying paddy rice, which the company in turn mills. Outstanding farmers were presented with certificates and cash prizes, for their hard work in the previous season.
One of the recipients was Martha Zemehe, a law graduate of Kogi State University and a former bank staff, who emerged the best female supplier of paddy rice. “When you’re producing, you are anxious on who will buy your product,” said Zemehe, but with the VCDP, “the buyer is already there”.
Reji George, vice president, Olam Out-grower Program explained that the biggest advantage of the program is its decentralized location model where the company has “taken the market access very close to the farmers’ villages.”
He explained the company under the programme, decentralized locations for of all inputs, procurement of paddy or any other commodities very close to the farm gate, removing the burden of finding markets from the farmers’ concerns. By doing this, he said farmers’ productivity has more than doubled, and annual income of the farmers has equally doubled since the program started.
Olam’s farm coordinators at remote villages covering a cluster of cooperatives manage the decentralized procurement model. These Farm Coordinators (Agricultural Science Graduates) who are 30 in all, open Bank accounts for each farmer, facilitate storage and logistics access, deliver inputs and the GAP training module developed by GIZ to Farmer Cooperatives. They also help to avoid the diversion of the produce as well as prevent middlemen who usually exploit the farmers on weights and prices.
According to Olam, the operations of the VCDP has seen rice productivity increase to 3.68MT/Ha as against the baseline of 2MT in 2015. Income generation and net profitability per hectare have also increased to US $1,115/Ha and US $673/Ha respectively to rural farmers. In 2018, it generated 47,418MT of quality rice paddy for Olam’s Rice Mill.
The VCDP, which started in 2015 with 475 farmers, is currently working with 22,734 farmers and looking to scale up to 35,000 farmers in the year 2020. In 2015, the program registered 106 female farmers, this number has increased to 5,336 in 2019. The number of participating Farmer Cooperatives has also increased to 1,164 from 30 in 2015.
Aondongu Saaku, chairman, All Farmers Association of Nigeria (AFAN), Benue state chapter, noted it is important to “aggregate more farmers and introduce them to the program”, in order to be trained on the best agricultural practices to run sustainable farm operations. With this training and inputs provided to them, farmers will be able to increase their production, earning more income, and supplying more raw materials to companies like Olam.