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    Federal Ministry of Agriculture and Rural Development |

    Agricultural Transformation Agenda:Reposit ioning agriculture to drive Nigerias economy

    Dr. Akinwumi Adesina, PhD (Purdue, USA) CONHonourable Minister of Agriculture and RuralDevelopment

    November 2012

    0

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    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

    WheatWorlds largest importer

    of US hard red andwhite winter Wheat

    Nigerias top 4 food imports *

    Measure: Annual food imports in mllions of naira

    Nigerias import s

    Nigerias food imports are growing at anunsustainable rate of 11% per annum.

    Relying on the import of expensive food onglobal markets fuels domestic in flation.

    Excessive imports put ting high pressure onthe Naira and hur ting the economy

    Nigeria is importi ng what it can produce inabundance.

    Import dependency is hurting Nigerianfarmers, displacing local production andcreating rising unemployment.

    Import dependency is not acceptable, norsustainable fiscally, economically or politically.

    Key takeaways

    *CBN

    RiceWorlds #2 Importer

    $4bn @$11m per day

    $2bn @$6m d

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    Federal Ministry of Agriculture and Rural Development |

    Our Vision: Grow Nigerias 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

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    Our Vision: Grow Nigerias agricultural sector

    3

    To make Nigeria an agriculturally industrialized economy

    What we have started doing!

    Treating agriculture as a businessIntegrating food production, storage, food processing andindustrial manufacturing by value chains (farm to fork)Focusing on value chains where Nigeria has comparativeadvantageUsing agriculture to create jobs, wealth and ensure food securityInvestment-driven strategic partnerships with the private sectorInvestment drives to unlock potential of our States in agriculture(joint drives with State Governors)

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    New policies, institutions and financingstructures to drive sector growth:

    1. Deregulation of seed and fertilizer sectors2. Marketing reforms to structure markets3. Innovative financing for agriculture4. New agricultural investment framework

    Doreo

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

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    Government Distri buted

    Private SectorFertilizerSupplier

    FederalGovernment

    State

    Government

    All Farmers

    Private SectorFertilizerSupplier

    TargetedFarmers

    Federal&

    State Govt.

    Manufacturer/Suppliergets order from FG

    FG has manufacturerdeliver to states perindent from state at25% subsidy.

    State distributesfertilizer to farmers

    occasionally addingtheir own subsidy.

    Only 11% of fert ili zerreaches the intendedfarmers

    States and FGcoordinate todistribute fertilizervouchers to targetedfarmers.

    94% of actualfarmers receive thesubsidi zed fertilizerunder the voucherprogram.

    Private sector sellsfertilizer to farmers atmarket price minusthe fertilizer voucherdiscount provided bygovernment.

    Government distributed fertilizer support

    program

    Private Sector Distributed

    Private sector distr ibuted fertil izer

    support system, utili zing Input Vouchers

    Key takeaways

    Governmentdistribution systemis inefficient andwastes resources

    Governmentdistributionchannels subsidizecorruption

    ImplementedGrowthEnhancement

    Support Programto directly targetfamersGlobal BestPractice

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

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    97% of StatesImplemented GES 97% of LGAs

    Implemented GES

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    Success Stories

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    Farmer Redeeming His Fertilizer via GrowthEnhancement Support

    For the first time I get my seeds and fertilizers fastwithout 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 thankMr. President

    Mr. Omale, a benef ic iary in Kogi

    GES is a clear process, no corruption in it, nobodybetween me and my fertilizer and seeds

    Abdul lahi Ndastu the 1st beneficiary of GES, FCT.

    It is a happy day for us farmers and we feel honoured thatthe Minister and his entourage have come to deliverfertilizer to us which before now was beyond our reach

    Mr. Bassey, a benefic iary in Akwa Ibom State

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    Federal Ministry of Agriculture and Rural Development |

    Before RehabilitationBefore Rehabilitation

    Successful Foreign Investment in the Nigerian Fertil izer IndustryNotore 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 Fertil izer IndustryNotore Rebirth of the domestic fertilizer industry

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    Federal Ministry of Agriculture and Rural Development |

    NotoreSuccessful Foreign Investment in the Nigerian Fertilizer Industry

    In Joint Venture withMitsubishi, Notore isexpanding its capacity toover 2.75 Million MT/year

    Growth in Product ion(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 - 28 th of April 2012

    T f i K l d Al th Ch i

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    Federal Ministry of Agriculture and Rural Development |

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

    C S d Hi h Q li Ni i Ri R ll d O

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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 OutModern rice mill (30,000 MT) begins operations in Ebonyi State

    StatusMinistry working with entrepreneur to develop out-grower program and accessadditional 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 sign210,000 Metric Tons of New Rice Capacity (10% of curr ent imports) executed in the past 1 year of Mr.Presidents Administration

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    Company State

    Capacity

    MT/Yr StatusAtahi 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 ProcessClysters Nasarawa 10,000 In ProcessUmza 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

    Case Study: Successful ly Leveraged Private Sector to Establish Largest Rice

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    Federal Ministry of Agriculture and Rural Development | 15

    Case Study: Successful ly Leveraged Private Sector to Establish Largest RiceFarm in NigeriaLargest rice producer and processor in Kenya Dominion Farms invests in 30,000 Ha CommunityRice Project in Taraba State

    Status Attracted additional local Nigerian investorFirst set of 50 young commercial farmers from Taraba trained for 5 months inKenya.

    Initial rice mill of 10,000MT/yr orderedLand clearing in process, ini tial 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 byNigerian Scientists Launches a Cocoa Revolution

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    Federal Ministry of Agriculture and Rural Development | 18

    Doreo

    Horticulture Transformation

    Nigerian Agriculture Sector Investment Opportunities

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    Federal Ministry of Agriculture and Rural Development |

    Food processing and manufacturing fromlocal 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

    SCPZs are Highly Attractive to Investors

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    Federal Ministry of Agriculture and Rural Development |

    SCPZs are Highly Attractive to InvestorsLocal and international firms are beginning to engage with the FederalGovernment as Anchor investors

    Staple Crop Processing Zones (SCPZ)

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    Federal Ministry of Agriculture and Rural Development | 21

    14 Staple Crop Processing Zone sites around the Count ry

    Key Takeaways

    Sites are intended for theproduction and processing ofpriority Agricultural productsunder the ATA; Rice , Sorghum,Cassava, Livestock, FisheriesCocoa, Cotton, Maize, Oil Palm,Onions , Soyabean and Tomato .

    Additional SCPZ sites will bedesignated to cover Livestock,Oil Palm, Cotton, Cocoa, etc.

    Development finance institutions

    such as the World Bank and theAfrican Development Bank, havepledged support.

    .

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

    Rice

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    Federal Ministry of Agriculture and Rural Development |

    RiceWe 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,SMES

    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)

    Horticulture

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    Federal Ministry of Agriculture and Rural Development |

    HorticultureWe 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

    Over $8bn in Commitments from 17 Local and Foreign

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    Federal Ministry of Agriculture and Rural Development |

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

    Adamawa

    AkwaIbom

    Bauchi

    Baye-lsa

    Benue

    Borno

    CrossRiverDelta

    EbonyiEdo

    Ekiti

    Enugu

    FCT1)

    Gombe

    Imo

    Jigawa

    Kaduna

    Kano

    Katsina

    Kebbi

    Kogi

    Kwara

    Lagos

    Nasarawa

    Niger

    OgunOndo

    Osun

    Oyo

    Plateau

    Rivers

    Sokoto

    Taraba

    YobeZamfara

    Abia

    Ana-mbra

    Cassava Starch& Sweeteners

    LivestockIn the NorthernRegion Mechanization &

    Training across allSCPZs

    Tomato processing,Horticulture, Sorghum

    Fruit Concentrateprocessing

    Cassava Starchand sweeteners

    Parboiledwhite rice

    processing

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    Federal Ministry of Agriculture and Rural Development |

    Sample Rates of Returns to Agricultural Investments inNigeria

    Crop Modeled Investment

    Theme

    Start Up Capital

    (Fixed Assets)

    IRR Payback

    PeriodTomato Tomato paste and related

    products plant to replaceimported Chinese paste

    $3.9M for plant with15,000 tons/annum

    20% ~ 4years

    Cassava Cassava chips processing forexport to Northeast Asia

    $3.5M for plant with115,000 tons/annum plant

    19% 4.5 years

    Cotton Cotton production and ginninginto lint for export and domesticmarkets

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

    20% 3.5 years

    Maize Processing into animal feed toserve fast growing livestockmarket

    $3.5M for a 50,000ton/annum plant

    30% ~3.6 years

    Rice Rice production and milling toserve large domestic demand

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

    33% 3.5 years

    SoyaBeans

    Processing into animal feeds,industrial supplements and oilfor domestic markets

    $10M on a 100,000 tonplant

    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 substitution2. 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 andDividends

    4. Consti tutional guarantees against nationalization/expropriation ofinvestments

    5. Zero percent (0 %) duty on agricu ltural machinery and equipmentimports

    6. Pioneer Tax Holiday for agricultural investments

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

    Government incentives to support investors in agriculture

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    Federal Ministry of Agriculture and Rural Development | 27