AGRICULTURAL SECTOR DEVELOPMENT

A BAIL OUT FROM NIGERIAN ECONOMIC RECESSION

The dreaded word starting with R-‘Recession’-is in the air as everyone including non-literate market woman seems to have become familiar with the word.

Like a child play, at the tail end of 2015, Mr. Bismarck J. Rewane, a respected Economist and CEO of Financial Derivatives Company Limited, rightly pointed out that the economy was slowing down and that a recession was imminent if the necessary steps were not taken to address it.

Traditionally, Economists define a recession as two successive quarters of decline in the growth of the Gross Domestic Product (GDP). Going by the report of the NBS, economic recession is upon us. The double quarter of negative growth, High levels of inflation, worsening purchasing power of the naira and the increasing levels of unemployment are all strong indicators that all is not well.

What could have caused this? What could have happened all of a sudden? In as much as casting aspersions won’t be of any good at this trying times, it is vital to know some of the causes of this imbroglio.

Majorly, our over reliance on OIL has comes back to haunt us ‘unexpectedly’. A significant drop in oil prices has depleted our revenue earnings and the effect is visible to all; less money for the government to spend and undue pressure on the available foreign exchange! As the country heavily depends on importations, this has been our albatross. Hence, the budget has now become unrealistic.

The Way Forward:

Realistically, a diversification of our economy and expansion of our revenue base to drive the country out of a mono economy is the only answer and bail out from the present predicament. Hence, the immediate answer that will bring a long term if not an everlasting solution is embracement and development of our Agricultural sector.

A man including animals must feed/eat to live. Without food, there is no life. Food is a necessity. Foods are products of Agriculture/Farming. In a nut shell farming is a necessity.

Business Support Academy was established fifteen years ago, as a Special Purpose Vehicle (SPV) with the sole purpose of creating, empowering and establishing farmers/farm businesses in Nigeria. However, this is done in technical partnership with the Central Bank of Nigeria, Federal Government of Nigeria, IITA and some local and international stakeholders.

BSA as a technical partner to the stakeholders stated above, it’s developing Agriculture through different faces of Farming. The present and immediate target is to establish and develop maize production in Nigeria.

 

MAIZE PRODUCTION

undisputedly, one of the fastest growing farm produce in terms of market demand/consumptions in the world is the maize market.

Maize farming and production business in Nigeria and the world at large is a high potential opportunity for Nigeria, Africa continent and the World.

Maize/corn is one of the most common and important food crops across Sahara  Africa.

Africa with a population a bit over a billion has over 900 million Africans that depend on maize. It is often cheaper than Rice, Wheat and host of other grains.

Africa continent produces over 50 million tons of maize yearly with Nigeria being the highest producer in Africa producing about 8 million tons yearly, while the world total maize production is over 785 million tons with United State of America contributing over 42% of the world maize produced.  Relatively, Africa contribution to the world production is about 6.5% and consumed 30% of the world maize produce, Africa is therefore the largest consumer of maize globally.

Africa import over 28% of maize consumed, therefore spending about $2 billion yearly. This is massive and does not survive any common sense because it can be avoided.

Maize production is cheaper in terms of pricing and affordability, easier in terms of weather and farming, and highly profitable in terms of return on investment. A seed of maize can give you over 500 kernels in return. This is an incredible return on investment. Maize needs just between 90 to 120 days to reach harvest after planting.

In Nigeria, IITA took a bold step to ensure that Nigerian maize meets international standard by providing a cure to the lingering fungi that affects maize in Nigeria. The fungus is called Aspergillus Flavus causing Aflatoxin and the antidote is called Aflasafe. In order to facilitate easy spread of the antidote among farmers, IITA has appointed BSA as a technical partner in this area in addition to its large-scale coverage of maize production in Nigeria.

BSA has carved a niche for itself by massively developing maize farming and production through the creation of a farm settlement called Aflasafe Corn City. This is the first of its kind in Nigeria, where Maize farmers are being aggregated and established in the same farm territory. This is fantastic and very special.

The company through its unique business features has created three class of Maize Farming Investors:

CLASS OF INVESTORS-

  1. SILVER INVESTORS
  2. GOLD INVESTORS
  3. DIAMOND INVESTORS

 

  1. SILVER INVESTORS: This are prospective investors ready to invest in the maize farming business either via land rental or outright land acquisition but can only afford 25% of the total cost of investment.

 

  1. GOLD INVESTORS: Those investors ready to invest in the maize farming business either via land rental or outright land acquisition but can only afford 50% of the total cost of investment are called Gold Investors.

 

DIAMOND INVESTORS: When an investor is not expecting any assistance in terms of facility i.e. able to provide 100% of the investment cost, such investor are referred to as a Diamond Investor.

PROFITABILITY ANALYSIS / LAND RENTAL

  1. REVENUE COMPOSITION:

 

  • At least 5 tons of maize per hectare per season
  • Prevailing Selling price of N125,000 per ton.
  • 2 hectares of land

 

*Amount (5 tons x N125, 000 X 2) = N1, 250,000

 

  1. INVESTMENT COST COMPOSITION (LAND RENTAL)

 

  • Land rental cost is N50,000 per hectare per annum
  • Planting, Harvesting cost etc per hectare per season N240,000

 

*Amount { (N50,000 X 1 season) + (N240,000 X 2 hectares)} = N50,000 + N480,000 = N530,000

*R O I = REVENUE LESS COST = N1, 250,000 – N530, 000 = N720, 000

Therefore return on investment when the land is on RENTAL: N720, 000/N1,250,000 X 100

                                                                                                = about 58%

 

 

 

 

PROFITABILITY ANALYSIS

LAND ACQUISITION

 

  1. REVENUE COMPOSITION:

 

  • 5 tons of maize per hectare per season
  • Selling price of N125,000 per ton
  • 2 hectares of land

 

*Amount (5 tons x N125, 000 X 2) = N1, 250,000

 

  1. INVESTMENT COST COMPOSITION (LAND ACQUISITION)

 

(a)Land Acquisition cost is N850,000 per hectare.

 

(b)Land clearing cost is N500,000

 

Finally, it is an undisputable fact that maize farming is one of the most profitable farm produce in the world. If well managed and well developed, the contribution to the GDP is massive. The right place to go and the right partner for this project is BSA (BUSINESS SUPPORT ACADEMY).