Sam Diala examines the economic benefits of venturing into Agriculture by Transcorp, using its agric subsidiary, Terago Commodities, as special purpose vehicle
Through its subsidiary, Terago Commodities Limited, one of Nigeria’s rapidly expanding business organisations, Transcorp Corporation of Nigeria Plc (Transcorp), has ventured into Agriculture. This move will contribute immensely to diversifying the operations of the budding corporate giant. It will also boost its position from the perspective of capacity building and value chain enhancement.
Transcorp recently announced that Terago Commodities Limited, its agribusiness arm, had concluded plans to commence commercial farming in Benue State. Benue is known for its huge capacity for Agriculture, a posture that makes it to be widely referred to as Nigeria’s food basket.
Giving some details of the plan, the company disclosed that the development followed the agreement it had entered into with the Benue state government through singing of a memorandum of understanding (MoU). The MoU, according to the Transcorp, concerned the leasing of land to establish citrus farms in Ushongo, an agricultural area of Benue. Elated Benue Hon. Commissioner for Agriculture and Natural Resources, Donald Gbugho, who signed on behalf of the State Government alongside Permanent Secretary to the Minister of Agriculture Dr. Neeyum Tsavnum, saw ahead the huge benefit the venture would earn the land-locked state.
He commended the action of Transcorp and its subsidiary which he said would take Agriculture to the next level in Benue. Gbugho said, “They first addressed community and youth unemployment by creating jobs and now, the company is taking a step forward by beginning proper farming, through expert agricultural investors who are standing by with improved varieties of oranges, which the Ushongo people and Benue State at-large can benefit from. This is truly a significant step in the development of agriculture in Benue and in Nigeria.
The engagement of corporate organisations in agribusiness has altered the landscape of Agriculture as a support strategy to government’s determination to diversify the economy, boost non-oil revenue and create job opportunities. For instance, Nigerian Breweries (NB) has engaged in large scale production of Sorghum as raw material for its products. With a determination to look inwards and give government’s policy of backward integration a meaning, NB in the 80’s embarked on the development of Sorghum for commercial use in the production of its various beverage brands.
This followed Government’s call on Nigerian companies to look inwards for local generation of raw materials in an effort to conserve foreign exchange earnings, enhance domestic and commercial production and create viable employment opportunities. Sorghum is a local grain that is grown predominantly in the Northern part of the country.
The soil quality and temperature common in the semiarid savannah and grassland zone of the North makes the production of the nutritionally rich grain quite engaging and also motivating.
According to Nicolaas Vervelde, Nigerian Breweries Managing Director/ Chief Executive Officer, the company’s commitment to commercial production of sorghum, is among other things, to empower the people and the communities as well as improve the role of the company’s brands in society.
“Our commitment to the sustainable commercial production of sorghum is in line with part of our global Company’s long-term sustainability agenda of Brewing a Better Future (BaBF), which is to source a minimum of 60 per cent of raw materials used in our operations locally by 2020.
“The ambition is to continuously improve our environmental impact, empower our people and our communities as well as improve the role of our brands in society. The four focus areas for BaBF are to reduce water consumption, reduce Co, emission, improve local sourcing and deliver on industry commitments towards responsible consumption.” According to reports, NB has continued to achieve increased farm yield, resulting in harvest of tonnes per hectare of land. The farmers who are the direct cultivators of the grain are highly rewarded through increased revenue and support from Government. This is what the Transcorp venture into Agriculture will achieve, even more.
First, the Group has shown robust opportunity for capacity building and will ensure it ‘infuses’ this to its Agriculture subsidiary, Terago Commodities, as it makes inroad in Benue’s rich Agriculture basin where farming is not a mere occupation, but a profession that is given a business touch. Coming at a time government harps on quality corporate leadership and transparency in running business entities, Transcorp’s venture into Agriculture can be said to be most opportune.
Also, the operations of its Terago Commodities will earn the best attention in terms of resource management and corporate disclosure from those who will assume responsibility of its leadership.
The capacity building and value chain enhancement will take advantage of existing institutional and policy strategies. This include sectoral development funds like the small and medium enterprise development funds, agriculture development funds and real sector development funds.
Tapping into these funds will help the local farmers in the production of citrus items. According to the CBN, the states have made significant progress in the use of funds from the Commercial Agricultural Credit Scheme (CACS) and the Agricultural Credit Guarantee Scheme (ACGS). The N220 billion MSME Fund which President Jonathan flagged off in August last year and the recent launch of N300 billion Real Sector Support Fund (RSSF) are geared towards capacity building. Transcorp might play the role of guarantor to the farmers who will be involved in the production of citrus in Benue. The value added will be impactful.
Teragro Managing Director and CEO, Dupe Olusola, has confirmed that the venture would enable the Transcorp’s agric subsidiary to contribute to the growth of a diversified economy: “The untapped opportunities in agriculture are huge and we are committed to ensuring that Nigeria can once again generate high revenues from agriculture as it did before the discovery of oil. The new farming land will ensure we can do our part to bring those untapped opportunities to fruition.”
Transcorp Group President & Chief Operating Officer (CEO), Emmanuel Nnorom, in commended the role of the Benue state governor in making the project a reality, noted that the assistance the Benue State Governor, Gabriel Suswam, extended to Transcorp would create the needed synergy between Teragro and the local community where the project will be located.
“We are committed to the work we are doing in Benue and look forward to a continually harmonious working relationship”, Nnorom said. The international community has confirmed that Nigeria’s economy is on the growth path. Rating agencies like the International Monetary Fund (IMF), Standard & Poor’s (S&P), Moody and Fitch, confirm Nigeria’s as one of the fastest growing economies in the world, with a growth rate of between 4.8 and 5 per cent. S&P in a recent report on Nigeria commended “a series of reforms, including in agriculture, and the rapid growth of sectors such as telecoms and financial services,” which “have contributed to non-oil growth momentum.”
The agency also stated that the continued stable outlook “reflects our view that Nigeria’s non-oil economy will continue to support GDP growth …” The underlying themes of all the reports are the imperative of unlocking the vast opportunities identified in viable and fast-growing sectors which existence suffered under the opacity of over-concentration on the oil and gas sector.
Introducing effective policy framework to drive long-term and sustainable investments that create jobs, multiply value chain and reposition the economy for active diversification, became obviously imperative.
The official rebasing of the economy on April 5, 2014, triggered huge investment appetite that has seen foreign and domestic investors deepen their search for wealth-creating frontiers in the economy. This is what Transcorp has done through Teragro Commodities, its agric subsidiary, in exploiting the huge agric potential of Benue State.