Why fertilizer price remains high – CEO Barbedos Group
As part of President Muhammadu Buhari’s visit to Kaduna State last week, he embarked on a facility tour of Barbedos Fertilizer Plant, which he commissioned.
The private sector owned plant is expected to contribute immensely to the Federal Government’s agenda towards achieving food sufficiency for Nigeria by making available high quality and affordable fertilizer. In this interview with Chesa Chesa, president and Chief Executive Officer of Barbedos Group, the parent company of the plant, Alhaji Kashim Shettima, spoke about what informed the decision to set it up, what government can do more to energise the agriculture sector and how the insecurity challenge can be tackled for the benefit of farmers and entrepreneurs. Excerpts
*How did you come about Barbedos Fertiliser Plant?
The fertiliser plant is one of the subsidiaries of Barbedos Group of Companies. Under the group we have companies engaged in oil and gas, and car sales, among other services.
During the facility tour of the fertilizer plant, I told Mr. President that he knows me as a car dealer; and that was how I started off, as my bread and butter business. I went into oil and gas and then I started to import fertilizer. I used to be a major importer of fertilizer in Nigeria. And I distribute my fertilizers to various States, especially across the Northwest. My clients are the State governments.
During the time of Adesina as Agriculture Minister, then came the GPS program, which I didn’t really believe in. And of course, at the end of the day, it is what I was expecting to happen. It failed at some point. Then that was when I stopped importing and this blending plant, which is an offshoot of President Buhari’s initiative in encouraging fertilizer blending in the country, came on board. Even at that I didn’t believe in it initially.
And I did mention this to President Buhari; I said I am emotionally attached to this project. And it’s a project that is his own initiative because it was his Chief if Staff, late Mallam Abba Kyari, who invited me and said he realized that he has seen a document where I was a major importer of fertilizer. So what am I doing now? I said well I’m not doing anything. And he asked me: why are you not doing blending plant? I said well is almost the same thing.
Mallam Kyari took his time for almost one and a half hours and convinced me that I must do a blending plant. And when I was convinced, I promised him that I will put up a blending plant and he would come to see it. Unfortunately, we lost Mallam Kyari (in 2020) before we finished the project.
I have sited the plant in Kaduna because I am impressed with the infrastructure developments initiated by Governor of Kaduna State, Mallam Nasir El Rufai. Many people think I’m crazy but I’m investing money in Kaduna because there is a future for Kaduna. I knew Kaduna would get a facelift. Kaduna hasn’t seen this kind of infrastructure and you know, infrastructure is key to the economy. That is the way you grow the economy. All my investments are here in Kaduna and I’m going to do more. And that is why when we see people like El-Rufai, it motivates us.
My own is to provide good fertilizers to the farmers, because the future of this country is agriculture, whether we like it or not. Nigeria has about 200 million people and we cannot do without agriculture, otherwise, we cannot sustain the population. We have to do something that is self sustainable for us. That’s why I’m more motivated now to put more industries. I’m going to keep building more industries in Kaduna.
*What has it cost you to put up this plant?
This plant has cost me huge amount of money, including the basic infrastructure and everything. Probably on the physical structure alone there, I’ve spent over N3 billion, then on the machinery and plants and the rest, almost $2 million to $3 million. And we’re doing a second plant now, which is going to do 200 tonnes per hour. By the end of this year, it will be up 290 tonnes per hour.
*Nigerian farmers still complain of high cost of fertiliser. How can your fertiliser plant help reduce the price of the product, and how soon?
First of all, my product is well known all over the Northwest, mostly because of its good quality. We try as much as possible to make good quality fertiliser available to farmers at a very good price. Of course, we know that globally, price of everything has gone up, including fertilizer prices, and of course, the raw materials.
As you know, the fertilizer revolution is Mr. President’s initiative, and he was able to get use his relationship with the King of Morocco to get us raw materials at discounted rate initially. He also spoke to the Russians, as we were getting our raw materials there too. But you know, globally, with the Covid-19 pandemic, prices have gone haywire. So, but we’ll do our best to make local prices as low as commercially possible.
The cost of fertilizer is also driven by the raw materials we get. Now, you see, anything that is good, must be costly. I can decide to give a farmer fertilizer at a very cheap price. But then it means I’m not giving him the quality fertilizer I’m supposed to give. We will try our best but this depends on what we get as a raw materials.
Also, logistics can be costly. Last year alone, I spent N600 million moving 20,000 metric tonnes of raw materials to Kaduna that is just transportation logistics. We’re not talking about the raw materials which are dollar-based. We got the President who spoke to the Moroccan team and got us a good discounted price. But the Moroccans are now saying that for that discounted price they gave us they’ve lost almost $100 million. I don’t know whether Mr. President will still intervene again to the King of Morocco. If we are getting the raw materials cheap, we will give the fertilizer cheap to the farmers but the farmers also need to understand they need to know the quality of fertilizer they are getting. It is very, very important. I can beat my chest that I will not compromise one bit on the quality of my fertilizer, because the food they produce is the same food I’m going to eat. So why would I want to give them low quality. We will do our best but this is something determined by the international market. Today, urea out of Indorama firm is selling for about N14,500 or N15,500. The prices of urea and other raw materials are skyrocketing, and that is our challenge.
We should not lie to our people. Government may decide to do subsidy, but this is beyond us when it comes to the international market prices.
*Talking about building more factories, we learn that you want to venture into rice milling. Why are you doing this and how far have you gone to achieve this?
Before venturing into rice milling, my first concern was where to get the paddy. I monitored and watched to see whether, when and how to get sufficient paddy, because the success of a rice mill is the paddy. If you don’t have a party, you don’t have a rice mill. And for me, I don’t do things to fail. Failure is not an option for me. I chatted with one of the biggest millers in the country and he asked me to come and see come and see his plant and encouraged to do the business.
Besides, food is key. If you fly into Europe, anytime you descend, the only thing you see there is the farmlands. So even in the Western world, they know the benefit of food. So food, you can’t go wrong with it.
So, my rice mill is coming on stream soon. I’m hoping that by the end of this year, I’m going to launch my 200 tonnes per day, rice mill. That was what I was showing Mr. President during his visit – the concept of the rice mill we’re doing.
The machinery is here, including the imported ones. We would have started but we wanted to put some finishing touches on this fertilizer plant. Logistics is key, so we just imported 100 trucks. This is the first batch because we’re going to bring in another 100 trucks.
Also, because we are in an IT world, we shall be doing many things digitally and while also providing jobs for the youth of our host communities. Nigeria is big, and we can take a lot of people, youngsters off the streets and give them employment. You can see how much employment I have created. And all the people you’ve seen in my factory are from that locality. They need to secure and protect the business like their own. I’m employing people from within that locality so that they can they know they have something of value for them.
*Where does the government come into the mix? And how do your efforts and those of government converge?
One thing is that we will want to ask government to support industrialists with capacity like credit facilities. There is hardly no way you can grow any business without a credit. Now, banks have become the engine here, and they are in individual’s hands. As long as you are not wining and dining with them, you don’t get credit. And a lot of people don’t have access to credit, whereas credit is very, very important. I know some people default; but I think there are also good people.
The Central Bank of Nigeria is doing a lot for rice farmers, and you can see that is how they achieved their Abuja pyramid. I think the government also needs to look at good entrepreneurs that will need support today. Today, Dangote is the richest man in Africa. But once upon a time, he got also support from government, so we can create more of him, and we’ll take some burden off the government.
For instance, all this insecurity, if you have people engaged or you use them jobs, you think they’re going to be fighting and be killing people? They will not. Insecurity is a challenge and I’m sure by the grace of God we will overcome this insecurity. Today if not because of insecurity, I will go to the farm myself because you have to be at the farm yourself. If you say want to sit down and merely employ people, it will not work. So, we’ll start with the rice mill and it will provide for poor people and I’ll make sure I give the best quality rice.
*And when can we have cheaper rice in this country?
We will have to take a little bit of heat now. And I think we will have to endure that for some time. We need to have more farmers, and get them have access to fertilizers cheap too. Then price will come down, but obviously from the start, it will go up.
Again, when there’s so much competition, that will force the price down; just like it is argued in favour of removal of petroleum subsidy. It is going to be a market of competition, and prices will balance.
When more people go into farms and more people into rice milling, it will be in abundance and once it is in abundance, you will see the prices coming down itself. I think it will come by but it will take a little bit of time. You know, we’ve done things wrongly for a very long time. So we should not expect miracle overnight. I don’t think that will happen. But if we’re on the right platform, we’ll get there.
- You talked about insecurity just a a while ago; how will you advise the government to tackle this big challenge?
I have my own views about insecurity. But you know, one needs to be also mindful of what you say to public. In any case, I believe government should make more efforts. I believe it’s all about intelligence, and information gathering, while the personnel need to be well looked after. Information is key to anything. That’s why they say information is power. All these bad guys that are doing all these things, you need to know where to get them. We need to use information.
Unfortunately, you know, the lives of Fulani herdsmen revolve around their cattle, and these incidents of cattle rustling started happening, and most of them suffered from that. And then of course, sadly I don’t know, I don’t know who to blame; and somehow, this banditry was created. You create a monster, and you can no longer control it. I’m always praying for this government to find a way to get a solution to this insecurity because killing innocent people is not it.
One of the things that is making me to do what I’m doing now is to take jobless people off the streets to give them livelihood, so that they have a sense of belonging. You cannot sit down and be seeing or hearing 40, 30, 50 people have been killed almost everyday. They are sons, daughters, wives, brothers, of some other people. It could be your own. So how would you feel?
If we have to request for help, why not? Some countries have better technology to tackle this kind of problem. If it has become imminent that we must request for this type of intelligence technology, ok then. To get these bad guys is not rocket science. If we put our mind to it, I think we will succeed. But I still believe we have hope; and I’m sure this government is doing its best. I’m sure Mr. President will not sleep until he sees the end to this insecurity that is a big challenge to us. And he’s actually very mindful of things affecting agriculture. This year, not many people have gone too farms because of insecurity. So, that also is going to push prices of food up but I’m hoping this year government will do a lot to tackle this insecurity.