Food and commodity prices have continued to climb, reaching up to 100% and beyond since the pandemic period. Even though normal activities have gradually returned, the price seems to continue to move north with little hope for fixed-wage workers who have to cut some of their expenses to meet their basic needs.
But will it end soon or will it continue into the next year and beyond? This is a question many have sought answers to lately.
In this interview with Nairametrics, Kenneth Obiajulu, co-founder; Agricorp, an agricultural technology company seeking to be the continent’s largest spice exporter, former World Bank innovation consultant highlights factors responsible for rising prices for goods and commodities, what’s playing out in the agrotech space and what to expect in the future.
In recent years, the agrotech space has started to leap towards growth. What do you think are the factors responsible for growth?
I think it’s a combination of various factors; the challenges of space and the opportunities that arise are the major levers of this growth. In order to increase productivity, tech companies run by young entrepreneurs are starting to tackle challenges in completely different ways.
Turn it over to the other side as well, you will see that the increasing number and food is an important thing to consider. The World Bank estimates that the African food market is expected to reach $ 1 trillion by 2030. This statistic in itself is a major driver for entrepreneurs to seize these opportunities and see where they can catch their tent.
Essentially, growth depends on entrepreneurs who are able to seize opportunities and ensure that what they do is commercially viable. Moreover, looking at the level of investment in the agricultural space from year to year, it is enough for many entrepreneurs to start thinking about how they can recreate or create from scratch a new one. system that allows them to seize these opportunities. .
Finally, you look at the factor of production; land is readily available in a country like Nigeria and Africa in general, labor is very cheap, there is entrepreneurship in abundance, but for access to finance that is one big problems, we saw creative ways that entrepreneurs were able to work around these challenges.
Lately, food and raw material prices have continued to skyrocket despite efforts to secure a food surplus in Nigeria. What factors are responsible for this and how can the problem be best dealt with?
The principle of the spider’s web theory applies a lot in agricultural space where the supply of products for the current year is a function of the production of the previous year. This means that what you consume this year was cultivated the year before.
Even in 2020, when the price of food started to rise, that was in anticipation of what was going to happen in 2021, so you look at the general inflation numbers for 2020 and compare with 2021, you will see that there is a difference. Also, there is a huge difference when we look at the food inflation figure for 2020 and that of 2021 because that of 2021 far exceeds that of 2020 which shows that in truth, the principle of the spider’s web works. perfectly.
This is about to happen again because what happened with the pandemic is that the farmers did not have access to their farmland and yet they were declared essential workers, but the agricultural inputs that would have had to be provided to farmers were not readily available. Some of these inputs, such as certified seeds, chemicals and potential commodities, etc., that were believed to have been imported into the country were not available. Problems with the distribution of fertilizers to rural areas during the heat of the pandemic, when there were travel restrictions and the lockdown, was the major issue affecting production for 2020 and this affected supply for 2021.
Now in 2021 we also see things around insecurity and farmers are afraid to go to their farmlands for fear of being killed, and things around bandits looting farms, burning them and all that. and that would affect the supply for 2022 if nothing is finished.
When you talk about food security, remember that it has four levels; availability, accessibility, use and durability / stability. Food may be available with high or medium productivity, but it may not be accessible.
This is an issue that requires a multi-stakeholder approach from the political, regulatory, private sector and security point as well, as one has to be able to provide adequate security to farmers to be able to return to their farms to cultivate.
The government should be able to put in place those interventions that allow or encourage those who are able to cultivate 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 an essential role in reducing the risks of agriculture, it is the major role that is played as a financial institution. And reducing the risks of farming opens up farming to investors because one of the biggest challenges investors see in farming is that they perceive it to be high risk. It is the job of insurance companies to be able to reduce the perceived risk in agriculture and then allow the sector to attract as many investors as possible.
Agrotechnology companies obtain funds to develop agriculture throughout the region. Agricorp recently raised $ 17.5 million. To what extent would the funds help position these agrotechs for expansion?
Money is important in every business and farming business, and raising these funds helps broaden the reach and allows us to diversify slightly into other areas.
Most recently, Agricorp acquired one of the country’s recent poultry facilities with an annual capacity to produce approximately 4 million poultry at full capacity; this in itself solves one of the biggest challenges of the poultry industry which is the smuggling and importing of poultry birds into the country.
Nigeria has an estimated poultry industry of around 1.4 to 1.6 trillion naira according to specific statistics, and around 60 to 70% of this market is estimated to be small farms in the country; this means that most of these companies do not have the capacity to produce everything that is needed. Therefore, funding like this helps develop local production, processing and carrying out activities to support the whole industry.
This is a great victory for companies that raise funds to have their capital injected into the agricultural sector. Our company is one of them and we are very excited about the growth this funding has created for us. Our company is on the way to increase its capacity to more than 5 times. In the last three years we have even multiplied our income by 5 and this injection allows us to produce and process as much as possible and also to have an overview of the international market.
How would you describe the future of agritech in Nigeria?
We are still in the infancy stage and there is a lot of fascination with how we can align technology with agriculture. So far what we’ve seen is a lot of tech companies that are just focusing on the software part of farming, recording, connecting farmers and the market, but I think we’re moving towards a core technology.
This implies that there is a need to improve productivity by advancing technology and the technology in this direction could take the form of mechanization which involves things like the use of tractors for land preparation, soil cultivation activities. planting and harvesting activities.
The use of tractors can supply pre-planting activities from about 30 man-hours to less than two man-hours. If you use the right tools planting can go from about 6 hours to under 30 minutes, harvesting can be done using a tenth of the time you would normally use in another traditional application.
I think agritech would play a major role in expanding these opportunities in Africa, as Africa is still very new to using technology in this industry. I think the next ten to twenty years will be a boom, especially for those who are able to get it now and add value to the system.