Monday, March 4

To improve productivity in the agriculture sector, we need to scale up technology – Kenneth Obiajulu, Agricorp founder

The prices of food and commodities have continued to jump, climbing as high as 100% and beyond since the pandemic period. Even as normal activities has gradually returned, the price appears to continue heading northward with little hope for fixed-wage/salary earners who have to cut down on some of their expenses to meet their basic need.

But will this end soon or continue into the next year and beyond? This is a question that many has sought answers to lately.

In this interview with Nairametrics, Kenneth Obiajulu, co-founder; Agricorp, an agricultural technology firm seeking to be the largest spices exporter on the continent, the ex-innovation consultant of the World Bank highlights factors responsible for rising prices of goods and commodities, what’s in play in the agritech space and what to expect in future.

In recent years, agritech space is starting to leap towards growth. In your view, what are the factors responsible for the growth?

I think it’s a combination of various factors; the challenges in the space and the opportunities that present themselves are the major levers for this growth. As a way to increase productivity, tech companies led by youth entrepreneurs are beginning to take up the challenges in completely different ways.

Flip it to the other side as well you will see that the growing numbers and food is one major thing to consider. The world bank estimates that the African food market is set to hit $1 trillion by 2030. That statistics in itself a major driver for entrepreneurs to be able to take these opportunities and see where they are able to peach their tent.

In essence, growth is a function of the entrepreneurs that are able to capture the opportunities and ensure that what they are doing is commercially viable.  Also, looking at the level of investment coming into the agricultural space year on year, it is enough for a lot of entrepreneurs to begin to think through how they can recreate or create from scratch, a new system that allows them to take up these opportunities.

Finally, you look at the factor of production; land is readily available in a country like Nigeria and Africa generally, labour is very cheap, there is entrepreneurship in abundance, but for access to finance which is one of the big issues, we have seen creative ways in which entrepreneurs have been able to work around these challenges.

Lately, the prices of food products and commodities have continued to skyrocket despite efforts to ensure food surplus in Nigeria. What factors are responsible for this and how can the problem best be addressed?

The principle of cobweb theory applies very much in agricultural space where the supply of produce for the current year is a function of the production of the previous year. What that means is what you are consuming this year was cultivated the previous year.

Even in 2020 when the price of foodstuffs started going up, it was in anticipation of what was going to happen in 2021 so you look at general inflation numbers for 2020 and compare with 2021 you will see that there is a difference. Also, there is a huge difference when you look at the food inflation number for 2020 and that of 2021 as that of 2021 far outpaces that of 2020 which shows that of truth, the principle of cobweb works perfectly.

It’s about to happen again because what happened with the pandemic was that farmers didn’t have access to their farmlands and yet they were declared as essential workers but agricultural input that would have been required to be provided to the farmers were not readily available. A couple of these inputs like the certified seeds, chemicals and core potential products and the likes, were meant to have been imported into the country were not available. The issues around the distribution of fertilizers to the rural areas during the heat of the pandemic when there was travel restriction and the lockdown were the major issue that affected the production for 2020 and this affected the supply for 2021.

Now in 2021, we are also seeing things around insecurity and farmers being scared of going to their farmlands for fear of being killed, and things around bandits raiding farms, burning them and all of those and these would affect the supply for 2022 if nothing is done.

When you talk about food security, remember that it has four layers; availability, accessibility, utilization and sustainability/stability. Food can be available with productivity being high or medium but it might not be accessible.

Also, in terms of utilization, it can be available, accessible and it’s not fit for use. These are the things that we are struggling with. Commodities like maize and soya are major raw materials for the livestock industry. The prices are skyrocketing because the demand by far exceeds the supply of these things.

It’s an issue that requires a multi-stakeholder approach from a policy level, regulatory level, a private sector level and the security point as well because one needs to be able to provide adequate security for farmers to be able to go back to their farms to cultivate.

Government should be able to put in place these interventions that allow or encourage those that are able to cultivate crops in the dry seasons by providing irrigation services and irrigation facilities.

What is the role of insurance in ensuring the availability of food across the continent?

Insurance plays a critical role in derisking agriculture, that’s the major role that is played as a financial institution.  And derisking agriculture opens up agriculture to investors because one of the biggest challenges that investors see in agriculture is that they perceive that it is high risk. It is the job of insurance companies to be able to derisk the perceived risk in agriculture and then allows for the sector to attract investors as much as possible.

Agritech firms are securing funds to scale agriculture across the region. Agricorp recently raised the sum of $17.5 million. To what extent would the funds help to position these agritechs for expansion?

Money is important in every business and agricultural business, and raising these funds helps to expand the scope and enable us to diversify slightly into other areas.

Just recently, Agricorp acquired one of the recent poultry facilities in the country with an annual capacity of producing about 4 million birds with full capacity; this in itself solves one of the biggest challenges in the poultry industry which is smuggling and importation of poultry birds into the country.

Nigeria has a poultry industry estimated at about N1.4 to 1.6 trillion depending on specific statistics, and about 60 to 70% of these market is estimated to be small holdings in the country; this means that most of these companies have not gotten the capacity to be able to produce all that is required, therefore, funding like this help to expand local production, processing and carrying out activities to support the entire industry.

It’s a big win for businesses that are raising funds for their capital to be injected in the agricultural sector. Our business is one of those and we are super excited about the growth that this funding had created for us. Our business is on track to increase its capacity to over 5x. The past three years have seen us even grow our revenues by 5x and this injection allows us to be able to produce and process as much as possible and also take a look at the international market as well.

How would you describe the future of agritech in Nigeria?

We are still at the infancy stage and there is a whole lot of fascination about how we are able to align tech to agriculture. For now, what we have seen is a lot of technology-based companies that just focus on the software part of agriculture, registration, connecting farmers and market, but I think we are evolving into core technology.

This implies there is a need to improve productivity by scaling technology and tech in this sense could be in the form of mechanization which involves things like using tractors for land preparation, planting activities and harvesting activities.

The use of tractors can fuel pre-planting activities from about 30 man-hours to less than two man-hours. If you are using the right tools planting can be dropped from about 6 hours to less than 30 minutes, harvesting can be done using one-tenth of the amount of time you would normally use in other traditional application.

I think agritech would play a major role in expanding these opportunities in Africa because Africa is still very new to the use of technology in this industry. I think the next ten to twenty years will be a boom especially for those that are able to get it now and add value to the system.