Fast Moving Consumer Goods (FMCGs) are likely to be among the major drivers of growth for the agricultural sector this year, as major companies opt to increase local sourcing of agro based raw materials.
BusinessDay findings show that companies like Nigerian Breweries PLC, Dangote Flour Mills, Honeywell Flour mills, Nestle etc. are already intensifying their efforts to source for their raw materials locally. For instance, Nigerian Breweries has announced plans to increase its local sourcing of raw materials to 60 per cent this year.
“Our global target is to achieve 60 per cent by 2020, but we have said to ourselves that by 2018 we can achieve that target.” said Patrick Olowokere, manager, Corporate Communications and Brand Public Relations of NB Plc, earlier last year.
He also said that the company was already sourcing about 57 per cent of its raw materials locally, and that it had started partnering with local farmers in different parts of the country to increase the percentage.
In September 2017, Dangote Group made plans with the Plateau State government to acquire land in the state for the purpose of cultivating wheat, the major raw material needed by Dangote for its manufacturing companies in Nigeria.
“The idea to cultivate wheat in Jos by Dangote is to source the raw material locally and to save the investor the rigour and huge cost of importing it from Europe.” said Ezekiel Danju, Plateau State Commissioner for Commerce and Industry.
Honeywell Flour Mills also plans to utilise local grains, tubers and oil seeds as raw materials for its manufacturing activities, a move expected to boost farming activities as the country executes its backward integration and import substitution strategy.
Victoria Uwadoka, Nestlé’s Corporate Communications and Public Affairs Manager, said during the launch of a new food seasoning cube in 2017, that the company is “committed to creating more value for the society and the community by increasing local sourcing. These commitments respond to the preference of today’s consumers for products with more familiar and common ingredients, natural or organic, with minimal processing.”
African farmer Mogaji, consultant at X-ray Farms Consulting noted that “Other FMCGs companies don’t have a choice; in order for them to survive they must source their raw materials locally because they are not going to (only) boost the economy but to benefit themselves (too).”
Mogaji also believes there will be a lot of investments but not from the big players of the industry but from the small players because the big players depend on the budget which may be passed late.
“Farmers will come together to form clusters but it take will time and the new farmers will come into clusters than the old farmers because more educated farmers are coming into the agricultural sector,” Mogaji said.
For Henry Akintoye, national president, Horticulture Society of Nigeria, “if FMCGs keep on importing raw materials from other countries, they are keeping those farmers on their jobs while they are discouraging local farmers. For example Nigerian Breweries should be encouraged to source for guinea corn from Nigeria, since we have the climatic Agro ecology that can support the production of this crop which the breweries use for production”.
Akintoye also added that the government should allow farmers to form cooperatives that they can assist in terms of finances, it may not be liquid cash it can be finances in terms of inputs, land preparation etc. and also create high demand for farm produce as this will encourage farmers especially the youths to go into farming.