Maduka: Subsidy Should Be for Farmers, Not Fuel Importers

Coscharis Farms Limited recently unveiled its ultra-modern rice processing mill in Igbariam, Anambra State.  The President of Coscharis Group, Mr. Cosmas Maduka, in this interview, says the vision to establish the farm was conceived over three decades ago. He, however, notes that it was five years ago that he decided to key into the federal government’s agenda of de-emphasising importation. Maduka believes that no nation can grow without being able to feed its citizens. Obinna Chima provides the excerpts:

We have always known Coscharis to be a major player in the automobile industry, why the interest in the agricultural sector?

Well, unfortunately, a lot of people do think Coscharis derived its success from the auto industry. We have been around for 46 years and our experience in the auto industry is just about 20 years. Our core business can be regarded as the pharmaceutical of automobile. Anybody that drives a car in Nigeria is our customer and that is what is keeping us going. The automobile industry is good, but it is subjected to a lot of variables, such as government policies, etc. It would be a shock if I tell anybody that from January till now, I have not sold up to 30 Jaguar Land rover and I have not sold 30 units of BMW. But our principals can only testify because they ship the cars and they can tell you how many cars that they have shipped to Nigeria. That was why when we recently saw reports of Customs impounding smuggled vehicles, I said to myself that they were talking about another company, because I don’t see the benefit in me smuggling less than 30 cars and jeopardise the overall interest of our organisation. So, that was the joke of the century. But having said that, our investment in agriculture was not an accident. Coscharis as an organisation has been playing a major role in every sector of the economy. We are in pharmaceuticals, medical equipment, information technology, mobility services – we lease cars to corporate institutions such as the banks, oil companies and multinationals. There are so many things we do, including producing sachet water. We are involved in anything that is legitimate to earn money and what we would not do is anything that is illegal. So, the rice farm was not an accident. Coscharis as an organisation has never imported one grain of rice. So, we didn’t get into rice production by accident.

We planned this for the long-term. The piece of property where we are farming on now is about 32 years old. Late Commodore Emeka Omeruah was the Governor of Anambra State then, as a military administrator, when we purchased that property and when we got the Certificate of Occupancy. So, we have always known that this is what we are going to do. We always wait for opportunity to present itself and when it is ripe, we move into it. You don’t go into farming with borrowed capital all through, it would ground you. You may not be able to pay the interest and you may never come out of it. So, we had to make sure we built enough equity within our company and then we leveraged on borrowed funds. So, that was how we went into interested-agro industry; from mechanised farming to processing and packaging. We would grow seeds here and sell to other out-grower. We are going to be a fully integrated farm. To the glory of God, once you do something good and that is of international standard, it attracts the attention of the international community. We now have an international investor in the name of Sahel, who has brought in a lot of things into the board. In this company today, working with Sahel, we understand the need for compliance with how to run the plant, we have learnt about how to manage wastages and they brought in a lot of new ideas and how to ultimately make this business a success. Our ultimate desire is that in another five years, Coscharis Farms will be quoted on the Nigerian Stock Exchange and people would see the performance and what is going to come out from the farm. Our idea is to get Nigerians to share from the wealth we are creating. 

But Anambra also has comparative advantage in the production of vegetable, why are you not looking at investing in that area as well?

I think we have more comparative advantage in producing rice. If you look at Anambra, Imo, Abia, Ebonyi, Enugu and Delta States, are its surrounding states. If you understand that rice is a wheat that grows on the mud, all you need to do is to get a muddy area, which Anambra has generally – the state has a lot of riverine areas. The only thing is that we have tried to professionalise it by preparing the ground the way it should be. Rice grow well and better in Anambra State than anywhere else. You cut off the cost of transportation because you are milling the rice in Anambra and there is already a market for distribution. If you produce rice in Kano, to bring it to Anambra State, the cost of transporting it to Anambra State would be included. Rice is as heavy as cement and the cost of transportation play an important role in terms of its market price. So, in the future, we would do something around the South-west area to target that market. Once we perfect what we are doing in Anambra, then we can start talking about expansion. We have been given 20,000 hectares of land in Kogi State, but we would take it one step at a time. We would take the business to where value would be added. If you transport paddy from Sokoto or Kebbi to Anambra, the price of the paddy would affect the final price of the rice. So, our primary goal is to solve the food problem in Anambra State and its surrounding states. Once we do that, with our experience, we would replicate same thing in other parts of the country.

As a domestic rice producer, what is your opinion about the recent closure of the borders by the federal government?

Well, the government has reasons for whatever they do and it would be wrong for me to say it was a wrong decision if I wasn’t part of those that took the decision to close the borders. Until you hear their reasons behind it, then you will know whether   there are merits to it or not. But I think what we should do as Nigerians, is to work hard to foster the cooperation of West Africa Economic Cooperation, because Nigeria would benefit more from it, than any other country in the region. Germany and France were the forces behind the European Union and these were the strongest economies in Europe then and they galvanised other countries and encouraged free trade among each other. But like everything in life, there are advantages and disadvantages. The advantage of it today is that rice smuggling has reduced. But that has not stopped people to smuggle rice using motorcycles. Of course the government has made it difficult for the smugglers. So, what we need to do is for the government to support indigenous farmers to grow capacity. As capacity grows, the price of rice drops and as it drops, it becomes uncompetitive for smugglers to continue with their business. So, like I said earlier, the government has a better reason why it took the decision to close the borders. 

Speaking about pricing, that has been a major problem with local production. How are you addressing it?

We are selling our rice to our distributors today at N14,500; the foreign smuggled rice is selling at N25,000. 

Cuts in ….but its because of the border closure?

Well, it could be part of it. The truth is that for Nigeria to record sustainable economic development, we need to look inwards. All other countries did that. For instance, in the automobile industry, South Africa closed its borders and banned out rightly, all forms of used cars. I hope our government one day would wake up and decide to start manufacturing cars. So, we must encourage local rice producers. I have made a demand of additional land in Anambra State, and the governor has committed to doing that. There are many things that we have done on our farm, which ordinary are infrastructure that ought to be provided by the government. For instance, we spent about N3 billion on irrigation here in our farm. Irrigation should be government project, to support the farm. We shouldn’t use our money that we borrowed from the Central Bank of Nigeria, to do things like irrigation. So, if the government will always provide the basic infrastructure, then as investors, we would be happy because with irrigation we can grow dry season crops. So, with the right infrastructure, we would improve our production capacity and as the capacity increases, the price would come down. We are planning to install as second rice mill on our farm that would be about 80,000 metric tonnes. We are doing that because we are smart. We could have install only one mill of 120,000 metric tonnes, but when it shuts down, there might be a problem and it might affect our production. But if we have two mills, if one shuts down, we would be working with the other one until we get it working again. Also, everything needs maintenance. There could be a time we might need to shut this mill down to maintain it. It is like automobile; it cannot run forever. But with two different mills, we would produce rice every day in the year and we would never be out of stock. 

But there are reports that you don’t easily find local rice available in the market. What is responsible for that?

We stopped two of our dealers from carrying out any transaction with us. They would carry our rice and re-bag them into a foreign bag and sell. So, you may not be seeing our brand in the market because of things like this. The other thing we heard is that there is something they use in piercing bags of rice to remove some bowls from each bag and still sell the rice that is not up to 50kg to a customer as 50kg. So, for our bags, if you pierce it, it would tear. So, because they can’t do such with our rice, they make sure they re-bag. But I am advising our customers to insist on buying only Coscharis rice. When you insist on that, then you can be confident that when you are buying 50kg, what you get would exactly be 50kg. About 90 per cent of what people are buying as 50kg rice are less than what they paid for. 

What type of reforms would you want to see the federal government come up with to achieve self-sufficiency in rice production?

There are policies that have been put in place by the government today that are working. The government has supported out-growers and has provided funds for serious investors like us. We have accessed about N6 billion loan from the Central Bank at single-digit of nine per cent. It is far better than borrowing today at 19 or 20 per cent to invest in agriculture. I think the government should not ask for more than five per cent interest. That would be a way to support agriculture and farmers to breakthrough. That would be like a subsidy. If we can spend the amount of money we spend today in subsidising petroleum, we should even give loans without interest to genuine farmers. That would be a way to counter competition from foreigners. When you know you are borrowing money to import rice and the local manufacturers are producing at zero interest rate, you won’t want to continue smuggling rice. That should be a subsidy to encourage food production. No nation grows without being able to feed its own people. Look at the trillions of naira we are spending on petroleum subsidy; does it make any sense? People who want to drive cars should pay for fuelling their cars and nobody would complain that you didn’t give them petrol, but people would complain that you didn’t give them food. The government should do more in the area of education, agriculture and realign its priorities. 

The federal government has been driving rice production through the Anchor Borrowers’ Programme (ABP). In your assessment, how will you say the ABP has performed since it was introduced by the CBN in 2015?

I was made to understand that in some areas it is not working perfectly as it ought to be, but in Anambra State, it is working perfectly. It is all about the individuals involved. There are people you will give loan and they would go and marry a second wife; there are those that would get it and decide to go on vacation. But there are people with entrepreneurial skills that would want to invest the money into the business. So, the ABP in Anambra State, should be a model that other states would emulate. It is working. But, what we are trying to do now is to further partner with the people to sign contract before farming; whereby we give them high yield seeds. But we would off-take whatever they produce to support our rice mill. They would be our feeder. But we wouldn’t want to give them our seeds that would increase their yields and later they go and sell it to someone else. So, that is why they would need to sign the agreement with us. So, that is something we are working on. Our team here is on top of it and hopefully it would be a successful partnership. 

What are the other challenges you are facing in the sector?

We have suffered a great problem on this farm which I took up with the Governor and Minister of Agriculture. Last year, very unprecedented, we left work on Friday and came back on Monday and our farm was overtaken by flood. The Vice President came to assess the situation and flew in with helicopter, but he couldn’t land. He toured and saw the situation of things. Our crops were damaged; some of our equipment were damaged and suffered loss of over N2 billion. The Vice President made some promise and even said the federal government was going to intervene and support those affected. We later learnt and read in the newspaper that N7 billion was budgeted and approved by the Federal Executive Council, but Coscharis did not get anything out of that amount. So, we are still asking who got out of that money? When we were the major player in the sector, who in responding to the clarion call of the federal government decided to invest massively in rice production. Agricultural insurance only insures the inputs, that is the seeds, it doesn’t the fertiliser with which you plant; it doesn’t insure your yield and we burn 33,000 litres of diesel every seven days. All those went into the drain and we didn’t get anything from the federal government. That didn’t show partnership. And who got the money that was approved? Another challenge has to do with some few community issues. But in Anambra State, we are enjoying security more than any other state. Weather is also another challenge, but that is something beyond our control. That is why we are so excited that we are about starting dry season farming. That is because it is only the crops that you have during dry season that you have control over. You give the seed the amount of water it requires. So, it is within your control and the sun is always available to give it the energy needed to grow. But when you are farming during rainy season, a lot of things are under the control of nature. The area where our farm is situated is a flood-prone area and it is a very difficult terrain.