Nestlé’s strategic investment in agribusiness yielding viable results
by OMOSOMI OMOMIA
April 27, 2018 | 12:50 am| | | Start Conversation
With a contribution of about 22 to 25 percent to Nigeria’s GDP, Nigeria’s agricultural sector is yet to deliver as much output and wealth as counterpart sectors. Oil & gas for instance, plays a crucial role in the economy, even though it barely contributes 10 percent of GDP. There is overwhelming evidence that lack of structure in the sector, limited modern farming skills, lack of affordable financing, supply insecurities, inconsistencies in government policies and regulations are top among constraints facing agribusiness investments in Nigeria.
The uncertainties of accessing a market at the right time and at the right price, is a very discouraging element for agribusiness investment in Nigeria. Post-harvest losses remain of serious concern to producers and other players in the agriculture value chain. Furthermore, the process from farm to market is an added hurdle, due to storage and transport infrastructure deficiencies.
Nigeria’s agricultural sector is highly fragmented and predominantly characterised by smallholder farms mainly engaged in subsistence agriculture. This model has resulted in poor farming practices, low crop yields and post-harvest losses leading to food security challenges.
Overall, the challenges confronting agribusiness in Nigeria are as enormous as the potential for prosperity if they are resolved.
Nigeria’s leading food and beverage company, Nestlé is helping to address these issues through its focus on increasing local sourcing for the past 7 years. Working alongside partners, the company has significantly transformed farming models across segments of the agribusiness value-chain connected to its business in the country.
According to Mauricio Alarcon, Nestlé’s Managing Director/CEO, “The Industry has huge needs and we must help farmers improve their yields to meet them. To achieve real success with connecting farmers to industry, a 360 degree approach which will include the aggregators, processors, and logistics suppliers must be considered within this value chain.”
The company has successfully realised tangible results through strategic programs and plans aimed at enhancing local sourcing of raw material inputs for its production processes. The significant support toward ensuring increased agricultural productivity in Nigeria is part of Nestlé’s commitment to contribute to society while ensuring the long-term success of its business, a principle called Creating Shared Value (CSV). To achieve this objective, the company fosters collaboration and cooperation along its value-chain to achieve mutual growth and success for the food giant’s stakeholders.
As a result of the manufacturer’s local sourcing strategies, an average of 80 percent of raw materials (comprising maize, sorghum, millet, soya, cassava starch, cocoa powder, palm olein) are now being supplied by over 41,600 Nigerian farmers and processors for the Company’s products and brands.
One of the programs, Nestlé Cereals Plan currently has over 30,000 farmers who supply 100% of the grain requirement for GOLDEN MORN Maize. Another is the Sorghum and Millet in the Sahel (SMS) project, now called (Nestlé Nigeria & IFDC / 2Scale Project Sorghum & Millet) aimed at strengthening and improving the resilience of millet/sorghum farming systems by empowering smallholder farmers on sustainable farming practices. The program, which is in its second year, includes over 10,671 participating farmers with 2943 of them also benefiting from business training programs on organizational skills, group dynamics and leadership skills.
In the last 2 years, Nestlé has helped the farmers through SMS, to see agriculture as a business. The farmers come together in clusters to foster co-learning and better coordination. Training programs are not just targeted at farmers but also extends to all the participants along the value-chain including the chemical spray technicians, aggregators, transporters, distributors, among others.
“Our experience has shown that grouping smallholder farmers into co-operatives or via Aggregators makes it easier to work with them. Aggregation facilitates the farming process from distribution of high quality seeds, to training farmers on good farming practices and post-harvest handling to improve crop quality and reduce losses,” says Nestlé’s MD/CEO, Mr. Mauricio Alarcon.
The program has successfully facilitated access to finance for the farmers via LAPO Microfinance Bank. 729 farmers were granted input loans amounting to N30.728 Million.
Beneficial outcomes for the participants in the SMS program include increased yield and improved quality of their produce, a steady source of income, sustainable supply of high quality grains and cereals to Nestlé; giving farmers more confidence to expand their farms and adopt the best practices they learn under the program. Ultimately, the farmers are an integral part of Nestlé’s success story.
Overall, farmers in the SMS project have witnessed 38 percent productivity increase in sorghum yields and farmer household income has increased by 27 percent.
According to a representative of one of the aggregators, “The presence of IFDC/Nestle partnership has encouraged small holder farmers in Soba to invest more in white sorghum production.” “We no longer have to suffer in the open market before we sell or produce,” said Ibrahim Suleiman, a farmer.
Another beneficiary, Saadatu Sani said that her family had been farming for 5 years without making commensurate income to justify all the hard work. Thanks to her participation in the SMS project, the yield from their farm increased from less than 1 ton/hctr to more than 2 tons/hctr in one year.
The next phase of the SMS program will comprise achieving measurable results in gender inclusion, youth development and support.
Despite the record successes of the SMS program, Nestlé is not resting on its oars in its quest to increase the percentage of local sourcing in its production. In October 2017, the food producer launched another project tagged the Maize Quality Improvement Program (M-QIP), in partnership with USAIDVEGA and CNFA.
Over the next 3 years, the program will build the capacity of local associations and 150 local youth volunteers to train more than 20,000 smallholder farmers – 40 percent of them – women.
Nestlé Nigeria has collaborated with BusinessDay to organize the second edition of Nigeria’s largest Agribusiness Summit, themed Evolving Actionable Models to make Agribusiness more viable holding today, Friday, April 27, at the Landmark Centre in VI, Lagos.
Speaking on the company’s expectations, Nestlé’s MD/CEO said, “We believe that this Summit provides a great opportunity for all stakeholders to review the agriculture value-chain from end to end to develop viable plans to close the gaps. We look forward to coming out of this summit with a roadmap to improve the agricultural sector significantly.”
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