Ade Adefeko is the vice president and government relations at Olam International. He spoke on how Olam is helping to secure wheat from India at subsidised rates on Arise Tv on Tuesday. Excerpt by Favour Ashinze.
What new approach to agriculture investing do we need to adopt in Nigeria?
It is interesting to note that we are facing a serious crisis and not just a food security crisis, but a supply chain crisis which, to a large extent, is occasioned by the Ukraine war, and if we aren’t careful, we might have a problem with Taiwan, China, and America.
We are talking about global conflicts affecting agriculture. Food security is very important and there are interventions coming from AFDB in terms of funding to catalyze.
For me, there are no new investments coming in because the fiscal and monetary policies are misaligned. Monetary policy misalignment in terms of the exchange rate issues.
For Example, Nigeria consumes about 4000-5000 metric tonnes of wheat but produces about 3000 metric tonnes of wheat, and the government at one point in time was considering banning wheat which is the major ingredient of bread, pasta, and the likes.
We can do cassava but we are talking about palette change, and palette change is a gradual thing, you cannot legislate it. You can initiate, nurture, and incentivise. However, to a large extent, we are doing well in the area of corn.
Wheat comes from Ukraine, Canada, Russia, and America, with the largest producer of wheat on the continent of Africa being South Africa, the distant second being Libya. But there are ways in which we are trying to do it. It’s not geometric, it’s arithmetic.
There needs to be a conversation between the governor of the central bank (monetary) and the minister of finance (fiscal). The minister of agriculture shouldn’t be a casual bystander but it seems like he is at this point.
We talk about exports but how much of it are we doing? Not much. There is no quantum leap; we have a long way to go. Are we doing well? Yes; can we do better? Of course, we can.
Where is a country like Singapore getting money to invest in agribusiness?
Singapore, you have to understand, is a city-state that has a sovereign wealth fund in respect to the quantum in excess of $300 billion. That’s a lot for a country or city-state with under 3 million people.
Olam is partly owned by Temasek which is the sovereign welfare of Singapore and we have common shareholders or companies, which are standard chartered, and Olam, who are members of the Temasek family.
There is a lot they’re doing but for them, it has been consistent over the years, and they have become a capital for capital. Capital is mobile but for us right now, there are too many contingent issues; power problems, and political instability, but right now we are going into transition due to upcoming elections.
Can we get foreign investments massively into agriculture the way Olam gets it?
We can only get foreign investments into agriculture where investment comes in and money can be moved out. For example, $450 million of airlines are trapped in the country.
Agricultural investment is patient capital that you put into 3 years to 7 years to 10 years. But that is not coming because there are no incentives and the landscape is very easy.
Do you think the new administration should focus on that? And how quickly should they rethink agricultural investment strategy?
Talking about any of the three candidates, we have to set the agenda and the agenda is competitiveness based on comparative advantage.
What do we have a comparative advantage in? -rice, corn, soya, cassava, and the likes; that we need to harness.
Olam International, through the intervention of the ministry of trade and investment in Nigeria, has been able to initiate a deal with India to supply wheat to Nigeria at subsidised rates.
Learning curve for Nigeria from Botswana
What is important to note is that Botswana is a small country doing big things, 2.3 million people, 3.3 million herds of cattle. But I joked, if Botswanan was to export all the beef they had to Nigeria, by the time our hotels and hospitality ventures take it, they will have no beef to it.
So what I suggest, bring experts into Nigeria, let’s have artificial insemination, and blended animal husbandry.
Do not forget that Botswana is the largest producer of diamonds by value but diamonds are not forever, and they have the second largest pension fund. They have something called a reset agenda. Previously, they were a bit closed but right now they are being encouraged.
