OLAM invests $10 million on rice out-grower project in Nigeria

Olam has invested about $10 million as capital investment on a farmer out-grower programme in Nigeria, according to company executive Mr. Satya. Olam is a global supply chain manager of agricultural products and food ingredients. He stated that the company is also relocating the rice mill at Iganmu to Makurdi, Benue, adding that this action would signal to farmers in the area "our willingness and capability to be able to buy their entire paddy produce.'

Satya explained that the relocation of the rice mill from Iganmu would entail a further investment of abour $1 million. "We are investing a further $500,000 in upgrading the Agro Miller Rice Mill at Makurdi," he said.

"We have very ambitious plans to scale up the programme to reach out to larger number of farmers and make a regional/national impact. We are very confident that we will achieve a complete transformation in rice production in the Benue/Taraba/Nassarwa/Niger region within the next three years and roll it out to achieve a pan-Nigeria reach and impact over the further three years," he said.

"Our challenge is how to keep our factory/investments productive. As you are aware, a modern rice mill needs uniform quality of paddy as raw material. The existing practice amongst farmers of planting mixed (non-certified) seeds renders the paddy produced unsuitable for processing as it creates abnormally high brokens (20% or more) and poor quality because different types of grains in the mixed supply respond differently to the processing. Nigerian consumers have always patronised the highest quality of imported rice and therefore inferior quality rice has no demand in the market except at a very steep discount (30% or more) which results in losses for the rice mill," he explained.

He mentioned that their action had created a situation where using the existing available ordinary paddy at the rice mill results in poor quality rice production at a very high cost, which renders the venture of milling local mixed paddy economically unviable.

At the same time, the rice farmers need to see the rice mill operating regularly at capacity to have the confidence that they will have a ready outlet/market/buyer for their produce and for them to adopt the new technology/practices. "As a company and business from the private sector, we need to be financially viable to be able to continue to fund the farmers’ out-grower programme, which requires substantial expenditure," Satya said.

"At this stage of local production availability in regards to our processing capacity in the rice mill we need government support for a period of the next three years," said Satya. "We have demonstrated successfully both our capability and willingness to develop and execute a strategy for enhancing rice production in Nigeria for two years running, at grassroots farmer level."

The Vanguard