Flour Mill To Invest N200Bn In Agribusiness
ASIDE investing about $1billion in its agro-allied operations in the last five years, the Flour Mills of Nigeria Plc is set to plough an equivalent sum into its business in the next five years to remain a top player in the sector and create more jobs.
Mr. Paul Gbededo, Group Managing Director, Flour Mills of Nigeria (FMN Plc) revealed this in a chat with The Guardian as he spoke of the company’s current performance in light of the award received from the Lagos Chambers of Commerce and Industry (LCCI) for impactful contribution to economy through backward integration.’
The award is recognition of the company’s efforts spanning about a decade, when, in the organisation’s plan, backward integration was adjudged the only way to support its food business through local content addition, as well as improve food security in Nigeria.
Gbededo said the company acquired its 10,000ha Kaboji Farm in Niger State about 10years ago and has grown to become the biggest mechanized maize farm in the country, where it uses 4,000ha for growing maize.
He added that soybean is also grown, noting that this has been very helpful in its vertical integration, which deploys the produce in its feed mill operation in Ibadan and Calabar for production of feed.
The corn from Kaboji is converted to poultry feed for the poultry industry, while the soybean is used in the vegetable oil refinery with the soybean meal utilized in the feed mill.
On backward integration, he said the programme helps to support the group’s manufacturing and processing business. He added that the company is expanding its portfolio in the agro-allied space because that would grow the local content and help support the food business and strengthen the growth of agriculture, which would provide more jobs.
On the fall of the naira and impact on the business, Gbededo said there are two sides to the issue of the devaluation of the naira. “In a way, it has put a lot of stress on our ability to bring machinery and spares.
It increases the naira cost of those inputs and upsets our projections since we operate in a naira environment – it affects our ability to make profits,” he said.
However, he pointed out that on the other hand, there is a positive side. According to him, using maize for instance, the commodity sells about N45, 000 – N50, 000 per metric ton, making locally produced maize competitive globally, while importing the grain would be at about N60, 000, thus making export of surplus a possibility.
Gbededo revealed that it does not need to import maize now to run the operations of the processing plants that depend on it; rather, the company is now aggregating maize nationwide to help its 350,000 metric ton plants annually.
Except there is a shortfall in supply, we help boost the fortunes of Nigerian farmers in earning more,’ he said. On the new sugar mill being constructed in Sunti, Niger State, he said the target date of completion and commissioning in May 2016 is achievable being that plant and machinery required have already been imported.
This would be followed by a massive expansion in the cultivation of sugar cane in the 10,000ha land it acquired by the River Niger. Appreciating the award, Mr. Hugh Glyn-Jones, Managing Director of the agro-allied division said this aspect of the business has been built on the strength of the backward integration policy.
He said the decision is to ensure that the company gets its raw materials locally and not depend solely on imports. Based on the management foresight of its Chairman, Mr. John Coumantaros, the company has had to fall back on what is now largely profitable investment, especially at a time the economy is crestfallen. “Most of these businesses are now producing positive income and successful. They take a long time to develop and already operating to give us raw materials we are now having difficulty getting by importation,” Hugh said.