Two blog post ago, I did a write-up on value chains and said we were going to discuss opportunities in various value chains. Please understand that the purpose of this blog is for us to share ideas and maybe do a little bit of brainstorming.
Just as a reminder…As agripreneurs we seek to solve a problem or meet a need through a business model that is scalable, replicable, and profitable with a positive social impact. Therefore every idea we come up with has to be aligned with this criteria.
In Nigeria the Agriculture Transformation Agenda (ATA) is focused on key crops, livestock and building 14 staple crop processing zones (SCPZ). These crops and livestock include rice, sorghum, cassava, cocoa, cotton, maize, oil palm, onions, soya beans, tomatoes, fisheries and live stock.
Rice is one of the key areas that the government is focusing on and hopes to make Nigeria a self-sufficient nation in rice in a manner that grows the agricultural sector and also generates employment. In addition to this we know that Nigeria is the second largest importer of rice. With government policy support and existence of a large market we can hypothetically say that there is a strong market demand for rice (the value chain must always be demand driven). Let’s look at the rice value chain in a little bit of detail and try to identify where opportunities exists for agripreneurs.
The rice value chain tends to consist of INPUTS, PRODUCERS, PROCESSORS, TRANSPORTERS & MARKETERS
Input: This part of the value chain relates to the provision of improved seeds, fertilizer etc. The government has made significant improvements in the distribution of fertilizer however farmers still face challenges in accessing seeds. A report written in 2012 stated that most of the certified seeds are sold to the government for distribution to farmers under a subsidized support systems. Often these seeds arrives too late to be effectively distributed and farmers lose out. Due to the manner in which it is stored, by the time it would be distributed for the next crop, the germination could become questionable. There is an opportunity for agripreneurs to understand the planting cycle and make the right type and quality of seeds available to farmers at the right time and price.
Producers: These are the farmers. Currently most of the management is manual and farmers don’t have the time and dietary energy to effectively grow rice or other crops in a timely manner for the optimal yields possible with their physical environment. There have been government initiatives to mechanize the process but the uptake has been relatively low for various reasons. Majority of the mechanised equipments provided by governments lay idle in certain parts of the country. There is an opportunity for agripreneurs to understand why this is the case and develop a sound solution bearing in mind some cultural factors. While at it, it would be good to figure out a solution that makes use of the existing equipments on grounds.
Processors: Post par-boiling, farmers bring their rice to the milling factories. There has been a strong drive by the government to build rice milling factories in the drive to become self-sufficient in rice. However they are not running to full capacity, some have argued that this process is best managed by the private sector as opposed to the government. As agripreneurs we need to figure out why full capacity is not yet met, could it be that production targets are not being met or farmers have challenges getting their rice to the milling plants etc? Can we figure out a way of transitioning management from government to the private sector? A viable solution has to be developed.
Transporters: They are responsible for getting the final product to the end-user. The processor or the marketer could be responsible for handling the logistics. Transporting of these goods tends to be very expensive and this cost is usually passed to consumers therefore making the finished product comparatively expensive and therefore not a good substitute for imported rice. Agripreneurs should try to find innovative ways of addressing this major challenge of transport.
Marketers: They are responsible for getting the finished product to the end users. They could also repackage the products to suit the market. This value-add activity will impact the price and marketers must ensure that the end-user is willing to pay the extra cost. Therefore marketers must have access to market information and possess the ability to translate it to market intelligence. Most marketers lack the skill of turning market information to market intelligence and this is a gap an agripreneur can fill. Also there is also an opportunity in the repackaging of rice which agripreneurs can tap into.
Please note that the key purpose of this blog post is to jump-start the process of thinking creatively and innovatively about potential opportunities for us to add value. These are just my thoughts.
Thank you for taking time out to read this post. Look forward to your thoughts and comments.
http://www.unaab.edu.ng/attachments/Agricultural%20Transformation%20Blue%20Print.pdf
http://merid.org/en/value-chain-innovations/Examples.aspx
http://pmreviewng.com/editions/PMreview_edition_1.pdf
Special thanks to the ‘Prince’ 🙂
3 Comments
ljblazer
July 4, 2013What sort of opportunities do you see in the ‘input’ sector? Would it have to involve partnering with the government (essentially taking over their process as they can’t seem to get it right at this stage); which may be less of a motivating factor? Or do you see it more with private institutions partnering jointly with local farmers to provide access to quality seeds in a timely manner?I think in an effort to reduce the barriers to entry for outsiders looking in which of the two above would lead to a quick ROI and thus a more attractive pitch to potential investors?I didn’t mention the other sectors because i believe those to be already developed, though not at peak performance and could likely do better simply from some consulting versus investments?
Kofo Durosinmi-Etti
July 7, 2013Due to the nature of Agribusinesses it is usually best to find a way to collaborate. Public-Private Partnership (PPP) is an area the African governments are keen to engage in. The governments’ role will be to create an enabling environment to attract private investors. However the execution of the business idea will be managed majorly by private investors. However if this engagement is unsuccessful, as you have rightly suggested private institutions can work directly with farmers/out growers under mutually beneficial contract terms. This method however is not without its challenges.Unfortunately there is unlikely to be a quick ROI, rice needs patient capital :-). The key selling point for investors will be the fact that Africa spends an estimated US$3.5billion on importing rice annually. This represents a substantial market opportunity for import substitution.Unfortunately other parts of the value chain have not progressed to the stage where it only needs to be fine tuned and not need substantial amounts of investments. There is still need for a significant amount of investments if we are to meet the growing demand for rice.Hope this answers your questions, if not let me know :-). It’s always good to hear from you. Thanks!
Lj
July 9, 2013Thanks for the response.Sounds like we’ve got alot of work to do. Nonetheless The opportunity is there; just need to find the right resource pool intellectually and otherwise to drive the development and growth.