AkinwumiAdesina

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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

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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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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


4/28Federal 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 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)


5/28Federal Ministry of Agriculture and Rural Development | 4

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



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



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



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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Before RehabilitationBefore Rehabilitation

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


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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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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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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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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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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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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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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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Massive demand by farmers for new Cocoa Hybrids


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New High Yielding Cocoa Hybrids Developed byNigerian Scientists Launches a Cocoa Revolution


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Doreo

Horticulture Transformation

Nigerian Agriculture Sector Investment Opportunities


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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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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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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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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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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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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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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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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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