Nigeria’s food processing industry is valued at $10 billion. It also provides an estimated 10 million direct jobs. Despite being one of the world’s largest producers of agricultural products, Nigeria has failed to derive maximum benefit from the industry. Experts blame this on logistics and storage issues, which, according to them, have led to waste over the years. DANIEL ESSIET looks at the prospects and problems of an industry that holds promises of driving growth.
As the search for Nigeria’s economic recovery intensifies, not a few experts believe that the nation’s rich resource base, particularly in the agricultural sector, has the greatest capacity to sustainably return the economy to the recovery path. They cite Nigeria’s agro climatic condition, which is suitable for commercial agriculture, as an added advantage.
The experts are, however, quick to point out that, despite Nigeria’s comparative advantage in agric, lack of a vibrant food processing sector, which is a significant component of the agro industry, has continued to deny the country the benefits from agric.
Easysauces Nigeria Limited Chief Executive Officer, Dr. Jide Adedeji, put the disturbing situation in perspective when he said Nigeria’s level of food processing and value addition were very low. This, he lamented, is despite that the food processing sector has huge potential to create jobs.
Adedeji, whose firm manufactures sauce and tomato paste, among others, also said with a vibrant food processing industry, the agro industry was capable of contributing substantially to the Gross Domestic Product (GDP), and boosting the manufacturing sector as the majority of input in manufacturing are principally agricultural products.
Indeed, Nigeria produces millions of tonnes of raw food materials from plants and animals that can be refined, stored and transformed into various usable products for local and export markets.
A robust food processing sector also enhances the development of industries utilising produce such as rice, maize, oilseeds, fruits, vegetables and sugarcane. It also increases the seasonal availability of foods and extends their shelf life.
Adedeji and other agro-experts, however, expressed concern that Nigeria’s food processing industry lacked adequate post-harvest infrastructural facilities and technologies, such as proper transportation and storage facilities, which result to enormous wastage of produce, particularly perishable commodities.
The National President, Federation of Agricultural Commodity Association of Nigeria (FACAN), Dr. Victor Iyama, lamented the disturbing level of wastage of agriculture produce due to poor processing, noting that this was happening at a time an estimated 200 million population needed to be fed annually.
He observed that the high wastage level was a clear indication that the processing sector’s infrastructure can’t cope with crop surpluses. Noting that the perishability was high in key sectors, such as fruits & vegetables, he said supply chain improvements were required if the industry must tap into the opportunities the sub-sectors offer.
A Lagos Business School Industry Report accessed by The Nation also identified poor processing as a challenge across the sub-sectors in agric. According to the report, this has led to rejection and wastage of various agricultural products. It added that the challenge was traceable to poor preservation techniques.
According to experts in the agro industry, the resultant huge loss of revenues to Nigeria and severe hardship inflicted on farmers and consumers meant that Nigeria has so failed to derive benefits from her food processing industry (FPI) estimated at $10 billion.
Other limiting factors
Nigeria’s food sector’s regulatory environment has also been identified as a major factor slowing down food processing. There has been incoherence and inconsistency in the regulatory environment where multiple administering authorities have led to a complex regulatory system.
For the sector to grow, Country Manager, Harvest Plus Nigeria, Dr. Paul Ilona, said the regulatory system must be industry-friendly, simplified and well integrated without additional burden on various operators in the value chain.
Ilona pointed out that it was important that the government gives more concessions to the food industry, especially to Small and Medium Enterprises (SMEs), to boost their potential to create jobs.
Apart from the challenge of regulation, the industry also lacks the required investment. The heavy post-harvest losses of farm products has been due to the shortage of suitable infrastructure such as cold chain, packaging centres, value adding centres, and modernised abattoirs, among others, which require huge investment.
Stakeholders say lack of safe and efficient storage system to ensure continuous supply of agricultural commodities in the market is an issue.
For instance, the Project Director, Cassava Adding Value to Africa (CAVA), Prof Kola Adebayo, stressed that storage and processing were critical in ensuring that the commodities produced at a particular period are available for consumption whenever and wherever they are required.
He observed that, in most parts of the country, significant quantities of products harvested are lost to lack of storage and processing facilities.
Estimating Nigeria’s post-harvest produce losses at 40 percent, Adebayo attributed poor infrastructure to government’s neglect, lack of finance and poor maintenance culture.
The Lagos Business School Industry Report also said access to credit is a major issue. The report said due to the nature of the industry, creditors found it a high risk to invest in the agricultural sector. “Where available, credit comes at very high rate, which erodes the farmer’s margin and defeats the purpose of the investment,” the report stated.
Worst hit by lack of access to credit are SMEs, which form the bulk of operators in the food processing sector. According to the President, Association of Micro Entrepreneurs of Nigeria (AMEN), Prince Saviour Iche, SMEs find it difficult to access government incentives and finances.
He said this hampers their growth and the quality of their produce as well as their adherence to global quality and standards. It also makes marketing of Nigeria-made processed foods less competitive in overseas markets particularly in developed countries where loans are at longer terms.
Indeed, loans for infrastructure projects in the food processing sector are usually given at longer tenures or terms in the rest of the world. But in Nigeria, such loans are given at short terms, most times at timeline of five-10 years. This means that the entire loan needs to be paid back in five years.
Besides, Adebayo pointed out that some agric processing projects are not like traditional infrastructure projects, as the promoters have to deal with issues such as environmental and climatic conditions, which are not in their control. According to him, the gestation period is much longer compared to other sectors.
As if these are not enough to discourage operators in the sector, perceived lack of trust has made it difficult to market Nigerian processed foods across developed markets.
For instance, Prof. Stephen Fapohunda of the Department of Biosciences and Biotechnology, Babcock University, Ogun State, noted that operators needed to cooperate with government to enable them comply with the requirements for the certification system for processed foods that are aligned with global standards.
Lack of skills also a sore point
Although the local food processing industry boasts large workforce, its level of education remains low, translating into low skills. Stakeholders complain that the industry has been experiencing acute shortage of skilled and trained manpower, which is a critical factor negatively impacting its competitiveness.
Adedeji admitted that the potential of the food processing industry is huge and that what is required to reposition it to contribute to economic recovery and growth is highly skilled manpower and innovation in raw materials sourcing and marketing as well as investments in technology and Research and Development (R&D).
While reiterating that the market for processed food is huge, the expert emphasised that the biggest challenge is finding people with the right skills set. He noted that although there are research institutions in agriculture and food sector, there is scarcity of industry specific hands.
Experts list ways to revitalise food processing sector
Changing consumer trend, which tends to favour the consumption of locally sourced foods is said to be creating opportunities for farmers to bring their products to the market and ultimately, encourage operators in the food processing industry. With Nigeria producing surplus food that is raw material for processed food, the experts consider the potential of the local food processing industry to be huge.
But to realise this potential, experts say that there is the need to vigorously implement the Federal Government’s Green Alternative, which is a road map towards diversifying the country’s economy through agriculture.
The Minister of Agriculture and Rural Development, Mr. Audu Ogbeh, had explained that the policy objective of the document, which has a four-year implementation period (2016 to 2020), was to make agriculture the biggest alternative to oil and gas business in the bid to diversify the economy.
He said the government was aware of the sufferings of many families caused by food shortage. Ogbeh, however, stated that government was working hard to reverse the situation through the implementation of various agricultural programmes.
This, experts say, could be done by strengthening farm–market linkages and leveraging on the potential of the food processing sector.
Ilona, suggests, for instance, that the government should shortlist key produce segments with specific growth opportunities based on production strengths and competitive advantages. According to him, the nation’s high consumption rate encourages the growth of the food processing industry.
For Iyama, a partnership between the government and the private sector would dramatically transform the food processing sector and contribute to economic recovery. He added that apart from improving rural livelihood, it will also bridge the rural-urban divide.
Unfettered access to FDI
Allowing Foreign Direct Investment (FDI) into the sector, according to Ilona, will also boost its productivity by reducing post-harvest wastage and helping crop diversification. He, therefore, said there is the need to open the floodgate of FDI for the sector to thrive.
Besides, Ilona and other experts called on the government to revitalise the Staple Crop Processing Zones (SCPZs) introduced by the former Agriculture Minister, Dr. Akinwumi Adesina, to develop common infrastructure for food processing units, similar to special economic zones (SEZs).
