Addressing quality control issues in Nigeria’s agricultural exports

Nigeria’s National Agency for Food and Drug Administration and Control expressed concerns over Nigerian food products rejected at the international market due to high pesticide residues. As the country strives to increase its revenue profile, ensuring agricultural exports meet international standards becomes pertinent. CNBC Africa’s Wole Famurewa spoke to Ada Osakwe, Founder, Agrolay Ventures, Akin Laoye, Executive Director, FTN Cocoa Processors and Akintunde Sawyer, Executive Secretary, Agric Fresh Produce Growers and Exporters Association on ways to ensure better quality control for Nigeria’s Agricultural exports

Looking at the implications of the EU ban on Nigeria’s bean export, we are now stuck in a situation where over the next three years we cannot export that product to the EU and obviously that means so many jobs are on the line and so much revenue that could come in unfortunately cannot. I want to start with you Akin. Maybe you could help us appreciate the challenge that Nigeria is facing in terms of the cost of low quality controls and the implications for the agricultural sector.
LAOYE: In any business you always have to understand what the market requires and that requirement might be in terms of quality, the other issue is the safety standard. So, the standards might not be quality related but the markets like to know what they are getting, they don’t want surprises. The truth is there are certain things that help you derive those quality standards. These include good farm practice, how you handle the products, how you package the products, how you determine expiration. All these become critically important when you are trying to sell to a market; whether that market is a local supermarket or a European market, they all have standard and quality requirement. They may be different but as a producer, you have to understand what the differences are. Those are the issues that we have failed to invest in and the cost to us is that our produce goes nowhere. Those markets are filled with products from other countries like Kenya, Senegal and Ethiopia.

Akin, maybe you can Move on to give us more perspective on the cost here because you are an exporter of processed cocoa products and from your standpoint, what are we losing by not getting the right standard and of course enforcing these standards?
LAOYE: We are losing revenue because once your products are not acceptable in the international market, you are closed. Secondly, we are losing growth in the industry itself because we can no longer sell to the outside world. Let me use cocoa processing as an example; if your product is rejected because of quality issues it is returned to you, that is if in some countries they are not burnt. That way, you have lost money which is also bad for your economy because if you are dealing with such situations, your companies will not grow or do well.

Cocoa is something that many will suggest should distinguish Nigeria, giving its history but unfortunately we have neighbouring countries like Cote d’Ivoire and Ghana leading the way in terms of exporting to the world. In terms of dollars, what exactly are we losing because we just don’t have the right standards?
LAOYE: For example, cocoa beans is doing about three thousand and twenty dollars this month and that is a lot if you imagine Nigeria producing like two hundred thousand tons, that is what we would be losing if we are banned. That is what should come in which is no longer coming in so we really have to be very careful and above that, when you have that kind of huge revenue, you have a potential for growth. So if you are banned because of your low quality, your growth potential is dead on arrival and you cannot move from where you are. It is a great damage and which is why we are clamouring that the government should have policies that will make us develop our industries rather than kill it at infancy.

Ada, perhaps you can contribute to this and tell us why you think the government needs to pay more attention. Unfortunately we have been banned from exporting beans to the European Union, what else could happen if we don’t take this seriously?
OSAKWE: You mentioned the beans earlier on and how the EU has closed our market and you think about the EU opening market to countries like Kenya. Kenya only went into the business of cut flowers about a decade and half ago but today Kenya is like the largest with about 38 percent market share to the EU sales globally. It is a billion dollar industry for them creating jobs of over 500,000. Governments like Ethiopia and Rwanda have asked Kenya to come in and show them how to become major exporters of similar things. In the same regard, our government has to define clear directives and focus on what needs to be done. We can do anything; all we need is the drive, the focus and the leadership to just give that firm directive to go ahead.

What will be your message from the association to the government in terms of how they should bring this issue around quality control and standards into the conversation of driving Nigeria’s agricultural sector forward?
SAWYER: I think it’s important to remember that nothing works everywhere in the world. Nigeria, Switzerland or wherever it might be. Nothing works except there are incentives; people have to be motivated to do things. The message I will like to give is simply this; if we are going to develop the fresh produce sector, we must understand the market and our policy should be market driven. They shouldn’t be foreign policies adopted because of its effectiveness in another country. They should be market driven; our market is different from that of another country and we derive our policies based on the needs of our market. As the market changes you have to change with it because if you don’t, the market leaves you behind. So, the critical thing is we need to start investing time in understanding what the market wants and we talked earlier about the issue of standards and quality in answer to your question. Every farm should have a standard that it operates by because the buyers in Europe, the US or even locally, want to know that they are giving their customers or populace the right food. Therefore, the source is important. Today, anybody can start a farm. I can start a farm, design my farm and use any chemical I want on the soil and the truth is if I am not regulated, I will produce food that may be good for some people and bad for others. We should try to understand that everything is standardized. We monitor the way cars move along the road through regulatory bodies like the FRSC, we have the vehicle inspection officers, LASTMA etc. but we have no regulation for farms and that is why we are where we are. So, if you don’t have that, today we can see good tomatoes and tomorrow bad tomatoes.

What we want to see is the government laying down the rules and enforcing them. What kind of investment will be needed to put into the agencies that will make such enforcements? In a time when resources are very scarce in Nigeria making budgetary allocations for these agencies may be a challenge for the government. Ada, please speak to this point.
OSAKWE: There are many ways to think through it and be innovative. It might not be the government agencies that oversee it. It could be a private organization. We have the Good Agricultural Practices (GAP) and some others. If there are private organizations that the government can give a directive or mandate by giving them certain certifications or standards to carry out regulatory checks, it will be a lesser burden on the government. I think the issue of packaging and quality is so important and we need to be able to package nicely, have the right labels, and make our products look attractive, safe and appealing to consumers. When looking at the quality of agricultural products, we need to not only look at raw produce but also at processing and packaging.

Earlier on I spoke about the issue of self-preservation. I mentioned that the government doesn’t seem to have gotten its act together in terms of process standards especially for agriculture. So, is there a case for maybe a subset of the larger agricultural sector that you’re in the cocoa processors association? Could there be an alternative for that association to set and enforce its own standards within its members. Do you think that is an alternative?
LAOYE: Yes, it is but we still need the government’s backing because of the way Nigeria is. For over a long time, we do not always follow our rule of law and that is affecting a lot of things. There must be statement by the government, they should rollout a policy that everyone must follow so if you want to do cocoa, you must register with the association and if you are not going to register then you cannot process cocoa. I think it can work and that is the best way to go about it at the point we are right now in this country.

So you are saying that’s an alternative but you still need the government to get involved at some point? Do you want to share your perspective on this?
OSAKWE: Yes, Self-regulation is important and the power of government’s statement should work too. I also think that there will be development in many ways if the consumer is educated because today, the consumer has so much power. They are the ones buying the products out there be it locally or abroad and the reason why we are talking about standards when it comes to exports is because there is a market that demands certain things over there but what are we demanding here? If we are demanding something we have to have the knowledge and the power to do that so I believe that regulation can work if we always go on a campaign to let consumers know that you need to buy products with certain marks or seals as that is the only way the cocoa association has put a mark of authenticity. So if we do that, the consumer then has the power. There is a big role that that market has to play in driving things and if that happens, I almost feel that regulation can even work without the government.

LAOYE: Like the way it is abroad, if the government says ‘it’s our country and we have to defend it, we must make sure there are standards’. If you are bringing in electronics to the United States or the United Kingdom, it needs to have certain standards. So we would say the government set up a policy and then the association insists they see to the enforceability and makes sure that everyone meets it. They are the ones to even teach the government what to do because sometimes, government officials do not even know what to look out for so the association enlightens them and at the end of the day, we are helping ourselves build our nation because with the way things are, the beans issue is a signal of what is going to happen to Nigeria. We don’t have respect for standards here and that is why today the way we package our goods have not changed.

In terms of the government getting its act together here, I think about what many will call the success of the NAFDAC especially over the last twenty years. It’s still tough, banned drugs still get out there but I think they have made a lot of progress. So in terms of the institutions which are supposed to help enforce this, I am just thinking about the importance of that. Maybe you can speak to that point?
SAWYER: I think it’s important that we have industry self-regulation. With that comes industry investment. The other side of it is when someone errs or goes the wrong way; you must have some sort of sanction; the association might not be able to apply. For example there was a central African country that was making quite a lot of money exporting smoked fish. this was a national export and the country was booming from exporting smoked fish to Europe and then somebody in the country got ‘smart’ and decided on a new idea. ‘why don’t we smoke the fish with tyres?’ and they started smoking the fish with tyres but as soon as the market in Europe understood that this is what was going on, they banned the entire country. It is only the government that can sanction that individual and then prove to the outside world that they have taken the right action. So back to the question you asked me about NAFDAC and about standards, NAFDAC is an inbound regulatory authority so if you want to feed Nigerians with food, drugs, anything that touches the human body, you have to meet the standards set by that organization.

We talk NAFDAC because all the other countries have their own regulatory bodies. If we really want to get into the export game, we have to align with those bodies externally, work with them in terms of standards and show them that we can regulate the standards from this end so that the produce can actually go out. Back to the other point around in-country standards, there are generally multiple standards in those countries. There is a minimum standard that the country says you must meet. If you are going to take a pineapple into Europe, you must meet Europe’s standards. The individual companies that buy in that country then have their own standards which may be higher. Once we’ve got a standard that works, then the industry can start saying that’s good but actually, this is where we want to play because we are selling to much higher markets.
I know you have been working with policy makers in the past, maybe you can speak to the importance of embedding something like this in the agricultural strategy.

OSAKWE: This is a part that many policy makers typically forget or they feel it is not important now. They get carried away with other thoughts as getting seeds across to their farmers. So I think it is an area we need to focus on. You also talked about NAFDAC, we spent months going through a process with NAFDAC trying to make sure we got the relevant certifications. We got our certification, we were selling and we were talking about it to people. Did it really help? Did the consumers really start differentiating ours from others? Maybe, maybe not. People were still buying others that were in the market that were ‘contraband’.

LAOYE: To support what you just said, it starts from our home. From the market here, Let us say this is the way we want our presentation. Sometime ago in Lagos state, livestock being moved from the abattoir was a terrible sight how they were moved on bicycles and motor bikes but when Governor Fashola came, he set a standard and now you no longer see that. These things can be changed and it also helps the government in that it reduces healthcare budget. When you are able to address standards, the way we package and present things, the way we buy it. When we start this, it won’t be a problem for us otherwise we will find ourselves in a situation where we segment the market again. The one for export, we will take care of it while the one for local consumption will be ignored. Let us just set a standard that will be all inclusive.