Integrated farming, backward integration as sustainable agribusiness strategies
Integrated farming and backward integration are interrelated agricultural and business strategies that most of the strong and prosperous agro-allied businesses have used to still the storms and stay afloat.
Integrated farming, also known as mixed farming, is a system of simultaneous farming activities involving crops and animals.
The purpose of integrated farming is to maximise derivable component support, reduce cost and engender stability of inputs and smooth operation.
A poultry farmer can use the manure generated on his farm to cultivate maize, an ingredient that takes over 50% of poultry feeds.
This way, the farmer converts its waste to a cost-reduction means by cheaply producing maize used for the feeds.
This drastically reduces the production cost, and boosts profitability and business sustainability.
The same farmer may rear goats, using the folder from maize production to supplement goat feeding, hence compounding profit by adopting zero-waste principle.
A pig farmer can also combine fish and rice farming, using earthen ponds.
He uses pig excreta to breed maggots to feed the fish, and uses the same water in the pond to produce lowland rice by making an elevated platform in the middle of the pond.
The same water, pond and energy are used to rear fish and cultivate rice, saving cost on the feeds of fish with maggots.
Professors Emmanuel Ajani and Bamidele Omitoyin, Department of Fisheries and Aquaculture, University of Ibadan, in their research on integration of poultry, fish farming and rice cultivation, found, for instance, the manures generated as wastes from the poultry were used to generate maggots and the maggots are either fed directly to the fish or processed into maggot meal which is used as part of ingredients in the fish diets.
The wastes generated in the pond, they added, served as sources of nutrients for the rice planted.
Visceral produced from the processed fish are further processed into fish meals and oil which constitute part of the poultry and fish feeds ingredients, thus resulting in significant reduction in the fish and poultry diets cost which form over 70% of the operating costs.
Ajani and Omitoyin said integration of fish and rice allows three harvest of rice yearly.
Similarly, backward integration is a process in which a consumer of a raw material acquires its suppliers or sets up its own facilities to ensure a more reliable or cost-effective supply of inputs for its production.
Advantages include control of value chain in a more efficient manner and costs can be considerably controlled all along the distribution process.
Nigerian Eagle Flour Mill & Premier Feeds
EAGLES Flour Mills Plc, Ibadan, uses wheat bran, a by-product from wheat flour processing, as a major ingredient in the production of animal feeds by its subsidiary, Premier Feeds Mill, producer of Topfeed brands.
Wheat bran takes 20 per cent in poultry formulation.
The group adopts integrated model and compounds its profit by adding value to wheat bran, rather than selling it off.
This brings production efficiency, making the feeds brand one of the most acceptable in the sector.
Olam Rice Processing Mills and rice farm
OLAM Rice Mill is located at Rukubbi, Nasarawa State.
To secure adequate and quality paddies for its state-of-the-art mill, it goes into rice cultivation on 10,000 hectares of rice farmland with irrigation system from water inlet from River Benue.
Olam uses helicopters to apply fertiliser, herbicides and insecticides on the massive rice farmland, apart from thousands of farmers as out-growers supplying paddies to the company.
Olam Group operates feed mills in Ilorin, Kwara State, and at Chikum Village, Kaduna State.
Rice bran is used as a substitute to wheat bran in animal feeds production, and the group readily secures part of its own raw materials from the rice mills, reducing cost and boosting production efficiency using backward integration and integrated farming models.
Chi Limited and Ajanla Farms
CHI Ltd is a household name in the agro-allied industry in the country.
From poultry to beverages, milk and confectioneries, the group has diversified its product based using the economic potentialities of backward integration and integrated farming models.
Chi Ltd produces chicken, uses the intestine as part of protein requirements for aquaculture, produces animals feeds for its use, and uses its fish as part of fish meal required in animal feeds production, just to mention a few, sustaining the system automatically.
From end to end, the company has zero tolerance for waste, and realizes the economy of scale engendered by such a system.
Ajanla Farms, an ancillary company to Chi Limited, is involved in several agro-allied ventures such as production of several types of fruit crops used as raw material for fruit juice processing, distribution of equipment, drugs, vaccines & disinfectants, as well as provision of training and technical support services in Nigeria
Ajanla Farms Limited has been in business for close to three decades and has grown steadily and dramatically to strengthen and diversify its product ranges and services in poultry, aquaculture, fish feed, cattle breeding and fattening, meat and meat processing, using the economic power derivable from truly integrated farming and backward integration.
No doubt, the group is one of the silent but well established business conglomerates in the country.
Slabmark Oil and palm plantation
SLABMARK Group was incorporated in 1997 and commenced operations in 2000 with the commissioning of a 100 tonnes per day Solvent Extraction Plant in Oyo State.
The company’s core business is oil seed processing into edible oils and fats.
The company has grown in the agro-allied sector with backward integration by investing in the oil palm plantations to lower its cost and ensure reliability of raw materials to the edible oil refinery it operates.
Red oil and seed oil from palm kernel emanating from its plantations are far cheaper raw materials helping the company to survive even in times of economic crises.
The Managing Director, Mr Tunde Kuku, revealed that to survive the hard economic environment in the country, integration was expedient and rational.
Okomu Oil and Palm plantation
OKOMU Oil Palm Company Plc is a Nigeria-based company engaged in cultivation of oil palm, processing of fresh fruit bunches into crude palm oil for resale, rubber plantation and processing of rubber lumps to rubber cake for export.
The company operates through two segments: Palm oil products and rubber products.
The company produces cooking oil and natural rubber products.
The plantation carries on the business of oil palm and rubber cultivation while it also refines edible oil, processing kernel and engaging in seedling multiplications and sale.
It takes full advantage of integrated farming, and backward integration.
Flour Mills Nigeria
FLOUR Mills Nigeria Plc, founded in Nigeria by George Stravos Coumantaros in September 1960, engages in farming, livestock feeds, edible oil refining, flour milling and production of pasta, noodles and refined sugar.
It operates through the following food, agro-allied and packaging segments.
The food segment manufactures and trades rice, flour, pasta, snacks, sugar, and noodles.
The agro-allied segment cultivates maize, cassava, soya, sugar cane, and oil palm to feed the processing facilities, while the packaging segment produces and markets laminated woven polypropylene sacks.
The company also operates an out-grower scheme that pools produce from numerous farmers to ensure stable supplies of raw materials to the processing sections.
It has survived hurdles with integrated farming and overcame storms with backward integration, with thousands of hectares as grain production farmland in Niger and states.
Professor Ajani said if integrated farming works for big players, it is more so for small and medium scale farmers as the research has indicated, urging farmers in Nigeria and Africa with limited resources to take full advantage of various combinations of agricultural businesses to reduce cost, produce more and make more income with the same resources.
Statistics has shown that about 80 per cent of small and medium enterprises in Nigeria fail within the first three to five years of their existence due difficult business environment peculiar to the country, and other factors such as lack of experience and poor financial base, throat-cutting competition and wrong business practices.
Considering the foregoing, integrated farming and backward integration can also help new start-ups in agriculture to cut cost, diversify product base, maximise limited resources more judiciously and survive the stormy years of start-ups.
Professor Omitoyin said farmer education should be given priority by creating awareness through various farmers’ associations and cooperatives to take advantage of the benefits of integrated farming, as research had proved beyond doubt that it was a sustainable means of increasing productivity, improving household income and eradicating hunger.
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