View
223
Download
1
Category
Preview:
Citation preview
1
Emerging Opportunities in the Agriculture Sector
LBS Breakfast Club
Private and confidential
1 Macro Trends in
Agriculture
2 Identified Gaps in the
Sector
3 Emerging Opportunities
in Agriculture- Horticulture
- Cocoa
- Rice
4 How Can We Harness
These Opportunities
5 AFEX’s Story
6 Closing
Outline…
Agriculture has been a major contributor to Nigeria’s
GDP, and the largest employer of labor
3
IndustryConstruction
Trade
ServicesCrop
Production
Livestock
Forestry
Fishing
Other
2015 GDP, % Nominal Prices
Crop Production has driven the growth in the Agricultural Sector, with CAGR of about 10% in last 15 years
N17 Trillion
Crop, 2015 GDP,
% Nominal Prices
0
50
100
150
200
250
300
350
0
20
40
60
80
100
120
1961 1966 1971 1976 1981 1986 1991 1996 2001 2006 2011
Nigeria Major Food Production Per Capita (Kg per Person)
Maize Millet Sorghum
Soybeans Cassava
Have we really produced more food?
4
0
50
100
150
200
250
300
350
0
10
20
30
40
50
60
70
80
2004 2007 2010 2013
Cas
sava
Oth
er C
rop
s
MaizeMilletSorghumSoybeansCassava
0
10
20
30
40
50
60
0
2
4
6
8
10
12
1961 1966 1971 1976 1981 1986 1991 1996 2001 2006 2011
Cas
sava
Oth
e C
rop
s
Nigeria Food Production (Million MT)
Production - Maize Production - Millet
Production - Sorghum Production - Soybeans
Production - Cassava
Data: FAO Stat
We have remained at, or below our export levels
since independence.
5
1.43
0.86
0.25
0.0
0.5
1.0
1.5
2.0
1961 1966 1971 1976 1981 1986 1991 1996 2001 2006 2011
Cocoa Production (Million MT)
Production - Côte d'Ivoire
Production - Ghana
Production - Nigeria
0
2000
4000
6000
8000
1961 1966 1971 1976 1981 1986 1991 1996 2001 2006 2011
Cocoa Yield (Hg per Ha)Yield - Côte d'Ivoire
Yield - Ghana
Yield - Nigeria
Data: FAO Stat
0.0
0.5
1.0
1.5
1961 1966 1971 1976 1981 1986 1991 1996 2001 2006 2011
Production of Major Export Crops (Million MT)
Production - Cocoa, beans Production - Cotton lint
Production - Oil, palm Production - Sesame seed
0.0
0.5
1.0
1.5
2005 2008 2011 2014
Mill
ion
s
6
Gaps and Opportunities across Value Chains
Both productivity and technology adoption gaps will
require creative funding solutions.
7
Food requirement in Africa is fast outpacing our per
capita food production; creating a supply gap
8
- While the recent trend in lending to the agriculture fund is positive, it is far from historical levels
- We need to urgently activate risk sharing mechanisms (NIRSAL) and incentivize lending by DMBs
- To augment lending from DMBs, we need to expand our support to MFBs to reach rural communities and
stimulate access to patient capital from the capital market for agro-industrialization.
Who do we blame? Have we done our part by
providing funding to the agriculture sector?
9
4.45%3.97%
0%
1%
2%
3%
4%
5%
Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14
DMB Loans to Agriculture as a % of Total Loans
19.6%
10.0%
1.4%
3.5%
0%
5%
10%
15%
20%
25%
1981 1986 1991 1996 2001 2006 2011
DMB Loans to Agriculture as a % of Total Loans
2014
Data: CBN Stat; CBN Statistical Bulletin
668.19
1,114
2,227
5,568
Credit to Agriculture- % of Total
Credit to Priv. Sector N’ Bill
Today
??
10
3.5% of Total Credit
5% of Total Credit
10% of Total Credit
25% of
Total
Credit
Rice Maize & Soy
Current Production (MT) 4,000,000 9,600,000
Additional Requirement (MT)
3,000,000 3,400,000
Avg Size - Large Mill50,000
100,000
#New Mills60
34
CAPEX Cost per Mill (N'Mill)1,500
500
CAPEX (N'Mill)90,000
17,000
Working Capital (N'Mill)187,500
170,000
Production (N'Mill)350,000
520,000
Total New Investments (N’ Million)
N 627,500 N 707,000
11
Emerging Opportunities in Agriculture
Horticulture, Rice, Cocoa
Horticulture – Cut Flower
13
USD 8.35 Billion
Global Cut Flower Trade (USD' Million); Challenger Nations are Gaining Market Share, Kenya is the Top Gainer
3,527 , 42%
$1,303.33
$760.88
654 , 8%
606 , 7%
$147.45$121.20
$105.16
Netherlands
Colombia
Ecuador
Kenya
Ethiopia
Belgium
Isreal
Malaysia
Italy
China
Thailand
Others
$
$
14
Cut Flower - $8.35 Billion
Cut Flowers are also known as roses, lilies, tulips, pansies
Cut Flowers are the 338th most traded product and the 1124th most complex product according to the Product Complexity Index
The top exporters of Cut Flowers are the Netherlands ($3.53B), Colombia ($1.3B), Ecuador ($760M), Kenya ($653M) and Ethiopia ($605M)
The top importers are the United States ($1.55B), the Netherlands ($1.23B), Germany ($1.17B), the United Kingdom ($1.01B) and Russia ($496M)
In Kenya horticulture is a leading agricultural sector in terms of foreign exchange, food security, employment creation and poverty alleviation
The Kenyan horticulture industry contributes 27.3% to GDP and employs 500,000 Kenyans directly and indirectly
Nigeria has comparative advantage for production of flowers nationwide for domestic and export uses. States with good soil include: Plateau, Cross River, Taraba, Enugu, Ogun, Rivers, Lagos, Kaduna and FCT
There is a high demand for Nigerian roses in the international market – FMARD, NEPC
Nigeria has a National Horticulture Research Institute (NIHORT) Ibadan and Federal College of Horticulture Dadinkowa in addition to IITA etc.
Post-Harvest
Cooling Technology
Grading &
Packaging
Packaging &
Labelling Materials
Refrigerated Trucks
& Logistics
Freight Forwarders
Clearing and
Forwarding Agents
Air Carriers,
Commercial
Charters
Plant Stock
Greenhouse,
Shading Structures
Irrigation
Technologies
Pre-Cooling
Technologies
Fertilizers, Pesticides,
Herbicides
Agricultural Clusters
Horticultural Clusters (Fruits &
Vegetables)
Flower FarmingPost-Harvest
Handling; Transport & Logistics
Tourism Cluster
Government Agencies, Non-Profits Cooperatives and Industrial
Associations
Education, Innovation, Research, Quality Control and Standardization
16
Cocoa – Our Past Glory
17
USD 8.35 Billion
Cote D'ivore,
$3,748 , 39%
Ghana,
$1,976 , 21%
Ecuador,
$742 , 8%
Cameroon,
$579 , 6%
Nigeria,
$504 , 5%
Others,
$1,950 , 21%Cote D'ivore
Ghana
Ecuador
Cameroon
Nigeria
Others0
500
1000
1500
2000
2500
3000
1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013
Cocoa Production Value (US$ Million)
Ghana
Ivory Coast
Nigeria
2015
18
Cocoa – $9.5 Billion
The top exporters of Cocoa Beans are Coted'Ivoire ($3.75B), Ghana ($1.98B),
Ecuador ($742M), Cameroon ($578M) and Nigeria ($504M)
The top importers are the Netherlands ($2.2B), the United States ($1.39B),
Germany ($886M), Belgium-Luxembourg ($856M) and Malaysia ($728M)
Cocoa production is geographically concentrated in Southern Nigeria and 64% of
production occurs in 3 states: Osun – 20%, Ondo – 25% and Cross River – 19%
Just above 5% of cocoa produced in Nigeria is processed beyond cocoa beans;
West Africa remains a net importer of chocolate, despite producing over 72% of
global cocoa production
Improved Varieties with 3 years to production now locally available
Chocolate - $25.4 Billion
The top exporters of Chocolate are Germany ($4.21B), Belgium-Luxembourg
($2.89B), Italy ($1.78B), the United States ($1.59B) and the Netherlands ($1.51B)
The top importers are the United States ($2.47B), the United Kingdom ($2.07B),
Germany($2.05B), France ($2.03B) and the Netherlands ($1.14B)
19
Rice – Can we feed ourselves?
20
0.0
1.0
2.0
3.0
4.0
5.0
6.0
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
196
1
196
3
196
5
196
7
196
9
197
1
197
3
197
5
197
7
197
9
198
1
198
3
198
5
198
7
198
9
199
1
199
3
199
5
199
7
199
9
200
1
200
3
200
5
200
7
200
9
201
1
201
3
Do
me
stic
Su
pp
ly
Imp
ort
& P
rod
uc
tio
n
Nigeria - Rice Trade Flows Mill MT, Milled Eq)
Import Quantity
Production
Domestic supply
quantity
-
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Nigeria - Imports by Origin (Mill MT, Milled Eq)
Thailand India Brazil Others
21
0
100
200
300
400
500
600
700
800
900
Input – 23%
Input Trade – 2%
Cultivation – 39%
Logistics & Trade3% 3%
Processing – 24%
Wholesale – 3%
Retail – 3%
Process Value Addition
Input Trade Irrigation Punp (depreciation) + Seed + CPPs + Fertilizer + Labor
Input Trade 10% Trade Margins
Cultivation Yield of 4MT per Ha; Selling Price of N125,000 per MT
Trading & Aggregation -Paddy
5% Trade Margin
Logistics N5,000 per MT
Processing 60% Recovery yield; N15,000 per bag of rice
Wholesale & Distribution
N500 per bag of rice
Retail N500 per bag of rice
22
How can we move from Opportunities to Profit
We need a robust strategy, with the right financing,
skills and efficiency…
23
FOF
[Trustee]
Input Financing Programs,
Commercial Farms
Government Strategic Food
Reserve, School Feeding
Program, Relief Programs
Blue Chip Corporates, SMEs
with Forward Contracts
Credit, Bonds, Loans Commodity Backed Warrants Repos, Forwards & Futures
$500 Million Food Security Fund
24
Ag Funds and Impact Investors
Capital Market Operators
Investment Banks, Financial
Institutions
SWF – Sovereign Wealth Fund; DFI – Development Finance Institutions; PF – Pension Funds; RI – Retail Investors
SWF DFIs PFs RITA
Fund Investment
Committee
25
Recommended