IN the current economic climate considered harsh by financial and economic experts including political watchers with its heavy toll on the nation and individual Nigerians and Corporate bodies alike, it has been complaints galore.
Why? Rising prices and inflation have put every one on new high grounds of learning how to change to newer ways of managing resources and still keeping life at a balance through productivity ingenuity. While lower crude oil prices are affecting the nation with its spiraling effect on performance index, resulting in a slowing economy, the problems of militancy in the Niger Delta and Boko Haram are indeed serious harmstrungs of their own.What is the way out?
That was why President Muhammadu Buhari when he assumed the reins of power on May 29, last year stressed the need to go back to the land. Who gears up the economy to a level that will be efficiently appreciable, perhaps the agricultural sector which is a bedrock of Nigeria’s finest investment potential to shore up our dwindling economic profile in the Comity of nations . Presidenr Buhari urged everyone including agricultural investors to look inwards and expand in this direction.
While everyone has expressed readiness to take up the challenges, especiallythe palm oil companies, the hurdles are proving difficult to surmount.. Scarce foreign exchange apart from constituting a clog to achieve success on the Buhari’s directive, rising prices of fuel and diesel have compounded the efforts
to succeed.
The Managing Director of Okomu Oil Palm PLC, Dr. Graham Hefer stands on a Plateau to highlight the quandary the Sector and his Company are facing and so far how it has been able to move ahead despite the seeming draw backs. Its problems were compounded recently when thieves of seedlings plants and illegal loggers removed already planted young rubber seedlings and also cut down logs , an act prohibited by the Enviromental law.
Besides, the company recently acquired over 11,000 hectares from the Edo State government as a boost to the President Muhammadu Buhari’s challenge, However, he says Governor Adams Oshiomhole of Edo State has already laid down the ground work for which further developments will be carried out in Edo State.
In this interview with our reporter, Dr. Hefer highlights the peculiar problems in the Agricultural sector with regard to the production processes.
Happy reading.
Excerpts.
Sir we heard that recently you lost some seedlings to rubber thieves who entered your planted area in the plantation to remove young rubber seedlings and some of them also carried out illegal logging in the plantation?
Yes, that is very true, unfortunately, earlier this week, we lost around 3,000 rubber stumps from our plantation. There are a lot of rubber plants that have been lost by the company, and it is very difficult for us at this time now to replant because we are moving away from the rainy season and don’t have any spare in our nursery. So it will delay us probably for a year before we can start again. So that is a big problem for us. We have also had of a late a number of incidents where the buffer zones that we have around our river sides which are there by law. The environmental law states that we are not allowed to plant any of our palm or rubber nearest to the river than 50 meters on either side and we have made our buffers bigger than that.. But what find now is that there are a lot of people coming in to cut the trees down illegally. I must say though that luckily we have a forestry officer who is doing a very good job with limited resources in assisting us to try and stop this illegal trade and I am hoping that he will have to get more resources now because it is becoming a worrying trend..
Have you informed the authority or the police?
Certainly, we have zero tolerance when it comes to theft, and theft even of our property, and also the illegal logging. We have reported them to the Police and there have been some suspects remanded in custody for the illegal logging and obviously, the law will now hopefully take its course and if they are found guilty the law will hopefully take its course so that they can be punished and sentenced by the Court.
How many of them were arrested?
As far as I am aware there are five suspected illegal loggers. They and their vehicle and their Motor Saw have been taken to the local police station where they have been all remanded.
What about the theft of 3,000 seedling?
Currently, we are still asking for anybody who has any information that could lead to the arrest of the thieves to come forward and give us information or to the police.. We have a whistle blower system where the people can remain confidential. They are able to call our lines and give us information that can lead to the capture and conviction of those people. We as a company will reward those people in confidence without anybody else being aware of it.
How many hectares of plantation do you have in rubber and palm trees?
The plantation is just over 33,000 hectare in different land areas. Currently we have just over 14,000 hectares of palm and we have just under 8,000 hectares of rubber.
We are hoping that in the next two years we will have up to 20,000 hectares of palm and around 10,000 hectares of rubber. We also have a factory for rubber and oil mill in the same plantation.
In terms of security, do you leave enough on ground to oversee the very large plantation?
Obviously, it is a very big area and you cannot have enough people to look after the whole total area. The people that we do have are doing a pretty good job. You can never be an Island and unfortunately, these things do happen. We rely l a lot on our local police. we do have a number of police on site. We also have the army to stop militants coming in to kill our employees which they did last year if you recall and we are hoping that it will not happen again. We have contracted security Company that look after the gates, it is not easy. We also rely on our local neighbours and the community as well. We try and work together with them to ensure that we are happy and they are happy, and knowing that crime that hit us could also very well hit them. There are a number of cases where our local community have assisted us and we are very grateful for that and hope that we carry on.
Since renewed bombings in the Niger Delta started, have you had reinforcement of ARMY and Police?
We haven’t had any increases. We are hoping that the Army are taking cognizance of this problem surrounding us which we are pretty close to and that they will take all necessary measures to check the upsurge in the militancy that is currently occurring.
When president Muhammadu Buhari took over office, he charged the Agric Sector, particularly the investors to look inwards, how have you been coping with the directive?
We were very happy that the President said Agriculture is the new product that we should be concentrate on in the country. In that regard that is why over a year ago we bought about 11 and half thousand hectares in Ovia North East in order to rally to the cry of the president. The problem that we are having, and most people have is the lack of foreign exchange which has delayed our expansion plans to a degree because we are an unable to import items such as fertilizers and our planting seeds which are critical factors for us to be able to expand.
If we are able to get past these and see how the government can assist us, our Board has said that they are looking towards expansion in the near future. Agriculture unlike crude oil is a long term commodity and you cannot like crude oil put a spike on the ground and the oil comes out and you make money.
The trees take up to three years before they even start to yield value. It is a long term sustainable situation. In two years for instance on our new plantation we have employed up to a 1,000 people already. You can see that it was from zero to a thousand, within 24 months. It is a fairly good idea of what we as company can do.
If we able to get our seedlings and fertilizers, I can tell you that it will double in the next year. If we cannot, it will dwindle to zero again, because we won’t have the ability without those essential items to carry on expansion according to the government wishes. We are just hoping that they will recognize these issues and will come to our aid so that we can do what the government is requesting of us. That is to expand in agriculture, which is what we are trying to do.
On foreign and local content; How are you coping with other raw materials?
As I said earlier, some of our raw materials are currently sourced outside Nigeria, like our seeds and fertilizers. We cannot pay for them at the moment because of the shortage of foreign currency and not to talk of the fact that we now have a floating currency .We are very constrained and it is taking us months to get anything and we are still waiting for our fertilizers and seeds to be okayed and the seasons wait for no man.
We have to get those seeds ready on time and we have to get the fertilizers before the rains. If we don’t, we lose a whole year and that is our biggest problem. we are even mindful of the fact that we are sitting on a time bomb and that time bomb is the season, because once we get to the dry season everything ends. We can only look to next year. In fact in our case we will lose upto two years because we will have to plant the seeds next year and before it will be big enough it will be in 2018 .In fact that is the big headache that we are facing. Because of the limited foreign exchange, we are unable to get the critical raw materials.
I understand that we are not the only company that the government has said that we should expand on agriculture. If we are not able to do those things, we cannot help them to reach the goal of expanding on Agriculture in Nigeria.
Has your board written to the federal government for concession?
We have done what is necessary and we are still waiting for feedback and we are hoping that our letter reaches the right eyes and ears so that in the near future we will be seen as a priority and get the benefit, until then we just have to hope and pray.
How has the foreign Exchange difficulties impacted on your final product in the market?
With the current situation that we are facing in Nigeria, inflation is taking its toll, the cost has increased nearly a 100 percent. Unfortunately, we have no choice.
We have tried to keep the loss down as much as possible, but there are some which we have no hold over, for instance the AGO,(diesel) it went up from a N106 earlier in the beginning of year to N210 and N220. So you can just imagine the situation we are in. We don’t have power here, we have to use AGO for our generators. It is badly affecting the ability to keep prices low for our consumers and customers.
In other big companies like PRESCO, they run their own power, are you considering the same thing?
We are working in a similar manner with PRESCO, the difference is that they generate their power from the effluent points .We don’t have that system, unfortunately at the moment, because the higher the AGO goes, the greater the other options look. There are many options,
we are looking at the option of using photocells, we are also looking at gas. There are a number of other options, we have diesel generators and you cannot change them as quickly as we want.
It comes back to the problem mentioned earlier. In trying to get gen. sets at the moment in Nigeria, you cannot. They cannot import the gen. sets easily.
We don’t use small generators, we use very big ones the people who sell the gen. sets also find it difficult to get spares for the same reasons. It is a vicious circle, definitely we will look at alternatives.
How are your workers coping with these pressures ?
Of course, every person is undue pressure, it is not just Nigeria but the whole world is under stress. The world has slowed down.
In terms of rubber prices how do you make profit if your price is more than that of 20 years ago. It is very difficult because costs have increased. I have about I, 500 workers in our rubber section, do I let them go.. We have to look at that. Right now, we are limping through, it is something we may have to look at in the future if prices continue to decline. We are hoping that it is not going to be the case.
The workers are all under pressure as well, because it does tell on them.
How competitive internationally are your products ?
Our products are very much wanted but our the world market price is currently at the 1998 level. What it means is that we are not going to get a higher price even if our quality is excellent. It is a very difficult position to be in because you have no way of influencing the price, we are price takers(price dictated by the buyer) that is the problem that we are facing currently.
The Governor Oshiomhole administration will be over in November, what are the final wrap ups you hope the government can do for you?
He has laid a very good ground work for Edo State to move forward with..
In that regard he has a made a very good start and the new government that will come will have to build on that in earnest.
If you don’t have roads you cannot interact—- that to me was a very good start. For our company per se, he has allowed us to take over the plantation in Ovia North East for expansion purposes, it is worth it, because it employed the people in that area and in that regard, I am hoping that the last thing he will do in October is to commission the plantation. We have requested him to do that and we are expecting a positive response from him to do the commissioning and we are looking forward to seeing him.
Your expectations?
We are hoping that the coming government will perform even better…
We rely on government to give us a good facilitation in terms of the rules, the laws etc.. If anything, I will like the new government to be forward looking and pull us in, because we are stakeholder together with them, if we develop together we will be both win.
Illegal tolls are all over the roads, it does not go down well for investments. They should not allow that, yet the police are not doing anything. Government should do something about multiple taxation. It is one of the things we have to get rid of, if we can get rid of them, you don’t have to subsidize investors.
I thank the governor very well for what he has done and the new government that is underway can do more.
How about your corporate social responsibility?
We make sure that our corporate social responsibility is a very important part of our company’s ethics..
We assist them with projects such as boreholes . It is a win-win situation. We also assist students of the community with bursary awards.
We are not an Island, we all have to live together, in relationship building between ourselves and our community.
Do investors have a forum to articulate their ideas and challenges?
We have the forum called the Plantation Forum Owners Association of Nigeria through which we marshal out our minds to government and that is our get together forum when we speak with one voice.
Our of the issues which the forum dealt with was the land use charge. The government wanted to introduce the land use charge on industrial basis. The commissioner for Urban Development and planning was invited to the forum. The idea was to find a rate that would work for rural plantations such as ours, where we do not get the benefits, like having our dump sites. We put boreholes and fix the schools introduce clinic, among others. We don’t have tarred roads and street lights. He promised that government will look at the new rate for rural plantation. We know that we must pay a rate.
But there are other issues we hope that in the future we will get their policy statements to make sure that agriculture moves forward.
