Response to Nairametrics

On the 18th August, 2022 Nairametrics published a Report about delayed payments associated with our Organisation.
We are not afraid or ashamed of our challenges. We pride ourselves as among the few Agribusiness projects standing with regards our battles. We have made mistakes, we were naive and offered insane rates that are not sustainable, we are learning and making the project better by building value and we will get our heads above water soon.
This is our reply sent to Nairametrics to set the records straight. We have sent this to them on the 21st August, 2022 and making it public today.
Regards!

Battling to Make Agribusiness Work in Nigeria:

A Response written by Retson ‘Akpos’ Tedheke

Surviving and Battling

With About N1billion at an average rate of 10%, The farm focused mostly on upgrades, repaying some debts, procurement of what is necessary and stabilization. This process has been ongoing with their own challenges. Most of our investors where paid. The Farm paid more than N250million of this N1billion to investors and asked for time. The Made in Nigeria Machines we bought gave us hell in Nigeria but we continued to work harder to make the process work.

 Knowing it was going to be more challenging, we focused on raising stabilization funds. How can Commercial Farmers in Nigeria be going to Banks for survival and are offered 15-25% Interest rates; zero to 6 months moratorium, between 1-3 years tenure and we are expected to create the capacity to survive when we are still going to be faced with the burden of Infrastructure, security, market, warehousing, community development, research etc?

 In late 2021, we started seeking equity investors to help take 45% of the farm, raise fresh funds and inject the right liquidity to stabilize the farm, provide the platform to be stable and give the Farm Management the room to work better.

 For those still interested in raising crowdfunds, this is when NORMALIZATION RATES set in. This is when you have crossed the red seas and you can see clearer. This is when you begin to ask the question, how did I offer 100%, 50%, 40% when what I should have reasonably offered was 20% or less and for a minimum of 3-5years for the return of Capital? The facts are simple. When you are seeking investments, almost all funds are good funds even when the devil offered it. When you are attempting to build value, nothing offered is too bad until when you are ready to repay. Too many investors in Nigeria operate with the miracle mindset.

The Pandemic Epidemic

The Stabilization process initiated between 2018 and 2019 was to come to an abrupt halt or to be put it, the paced slowed considerable in 2020 and 2021.

The Cattle Program that was helping to stabilize the Farm Collapsed with the Lockdown and The Rice Mill had to be Shutdown after about 5 truckload of rice was destroyed due to Rain and Lockdown.

It was the worst of year in the Most difficult of times.

When the Farm was faced with the option of shutting down or keeping the project going. We opted for staying the cause and taking the Bullets coming from Investors around late 2020.

Meanwhile, an Investor offered to take N500million Equity in the Farm in 2019 and just before the pandemic in 2020, I submitted it for deliberations and it was flatly rejected because how can one big man come to take the glory of small time investors. Today, everyone who was against that plan is calling me names.

NFGCS Farm Estate is in Gaate, Kokona Local Government Area in Nasarawa State. We are sitting on over 1,000 hectares today, with a Farm Estate, Sport Facilities, Processing Mills for Rice, Garri, Cassava etc. We have a feed mill, coldroom, poultry for layers and broilers, goat pen, a  working ranch, 5000 palm trees, about 1,000 surviving cashew, guava, oranges, mangoes, pine Trees, dogoyaro trees, umbrella trees, masquerade trees etc. About 25 staff currently call the farm as their home including myself.

In late 2020, the intervention lifeline came but we could not access it until end of first quarter 2021. I did not need N734million plus another N150million. I needed N2billion because our efforts had moved the farm to about N3billion valuation this time. By late 2020, we redirected all active investments to long term investments.

Those battling understand what it takes to survive when you do not want to quit. That is usually when the SURVIVAL RATES sets in. Surviving the naivety rates and the distress rates will mean your tenacity is legendary. It has nothing to do with your business knowledge, it has everything to do with commitment, dedication and insane optimism. Survival rate s are usually half of the naivety rates and way lower than the distress rates. This phase of your agribusiness would have seen significant value addition, process understanding and more importantly management confidence in the direction of your agribusiness.

It is survival rates does not mean you have survived. The critically important point to note here is that the killer investors will become uncomfortable when you get here. They will move on to start-ups offering the naivety rates and this is why I always say that not all agribusinesses that go belly-up do that intentionally.

Surviving and Battling

With About N1billion at an average rate of 10%, The farm focused mostly on upgrades, repaying some debts, procurement of what is necessary and stabilization. This process has been ongoing with their own challenges. Most of our investors where paid. The Farm paid more than N250million of this N1billion to investors and asked for time. The Made in Nigeria Machines we bought gave us hell in Nigeria but we continued to work harder to make the process work.

 Knowing it was going to be more challenging, we focused on raising stabilization funds. How can Commercial Farmers in Nigeria be going to Banks for survival and are offered 15-25% Interest rates; zero to 6 months moratorium, between 1-3 years tenure and we are expected to create the capacity to survive when we are still going to be faced with the burden of Infrastructure, security, market, warehousing, community development, research etc?

 In late 2021, we started seeking equity investors to help take 45% of the farm, raise fresh funds and inject the right liquidity to stabilize the farm, provide the platform to be stable and give the Farm Management the room to work better.

 For those still interested in raising crowdfunds, this is when NORMALIZATION RATES set in. This is when you have crossed the red seas and you can see clearer. This is when you begin to ask the question, how did I offer 100%, 50%, 40% when what I should have reasonably offered was 20% or less and for a minimum of 3-5years for the return of Capital? The facts are simple. When you are seeking investments, almost all funds are good funds even when the devil offered it. When you are attempting to build value, nothing offered is too bad until when you are ready to repay. Too many investors in Nigeria operate with the miracle mindset.

2022, The Present & Equity Sales

Until Governments at all Levels Show real seriousness in supporting real farm project like the NFGCS Farms Estates, we will keep struggling with insecurity and massive social challenges. 2022 has not been very different from all the other years. Our Rice Production process and other processing projects are battling with liquidity.

But we have been able to shift the focus from just Government Interventions and Supporting to the sale of equity. Several interested parties indicated interest in being a part of our story. The farm is currently valued at over N8.3billion. We are selling 45% for an amount which should take care of all outstanding liabilities as well as position the Farm for increased growth. Payment is expected within the next 45days. Because we built value, the Farm can stand tall and seek equity Investors. There is Currently no Agricultural Project in Nigeria today that is not challenged.

 As a Nigerian Farm Project, you are a bank seeking and providing your own funds for survival, you are security working tirelessly to ensure that all your laboured for is secured, you are an engineer constructing your own road and other Infrastructure, and most importantly, you are the Government for the local people. What then is Government Really doing to make Agriculture and Agribusiness work in Nigeria?

 It is important for governments at all levels, especially the State and Local Governments to invest in infrastructure so that agribusinesses owners don’t have that burden. It is important for governments to lend at below 5% so Agribusinesses will not be going for rates that are demonic. Lastly, it is not every agribusiness that is struggling that are not sincere. The challenges of doing business in Nigeria can be generally distressing but with Opportunities.

 

As James Clear noted perfectly; You can either be a genius or you can be patient’.

 

Knowing it was going to be more challenging, we focused on raising stabilization funds. How can Commercial Farmers in Nigeria be going to Banks for survival and are offered 15-25% Interest rates; zero to 6 months moratorium, between 1-3 years tenure and we are expected to create the capacity to survive when we are still going to be faced with the burden of Infrastructure, security, market, warehousing, community development, research etc?

In late 2021, we started seeking equity investors to help take 45% of the farm, raise fresh funds and inject the right liquidity to stabilize the farm, provide the platform to be stable and give the Farm Management the room to work better.

For those still interested in raising crowdfunds, this is when NORMALIZATION RATES set in. This is when you have crossed the red seas and you can see clearer. This is when you begin to ask the question, how did I offer 100%, 50%, 40% when what I should have reasonably offered was 20% or less and for a minimum of 3-5years for the return of Capital? The facts are simple. When you are seeking investments, almost all funds are good funds even when the devil offered it. When you are attempting to build value, nothing offered is too bad until when you are ready to repay. Too many investors in Nigeria operate with the miracle mindset.

Government Agric Interventions

The issue of Government Intervention came up in the article and so I must address it very clearly here. Government Interventions are good if they are not as demanding as they get and I am speaking from experience.

 The Intervention was fantastic but it became an albatross the farm. All government interventions have needs, demands, request, desires and dreams of several players who have no desire in farming. Collaterals are either from Abuja or Lagos. These are all well and good except you have a project which is not located in any of these locations and are sincere about building value. 

However, if reverse is the case, then you must conform to renting properties from landlords in either Abuja or Lagos who either asks for a significant portion of the loans as rent or a share of the funds before releasing his property for the loan in view. Beyond this, there are several other loopholes which are part of the application process that creates an unfavourable position for an applicant with genuine intentions for use of funds. Most significantly, the loans for 3-5 years tenure with six months moratorium is ignorant of the real work that must go into funds utilization.

 How can you access an Intervention of N1billion and you will most likely use N250million to ensure that your paper works are proper? Then your investors want you to give them the remaining the N750million because you must pay them and DIE. Even when you pay from the left over with explanations, you will most likely be termed a Ponzi Scheme.

The Miracle Mentality

The Nigeria Agribusiness system is generally designed to fail the Commercial Farmers. Let me be clear, #AGRIBUSINESS can’t  pay monthly, quarterly, half yearly or even annually. Even if half yearly and annually was possible, 2020 made a mess of that window. Processing can do quarterly, but require real building of value yesterday, today and tomorrow, particularly when you have no financial muscle. Most Nigerian Commercial farmers don’t have financial muscle.

 Capital invested need time, so while ROI can work annually, capital has to be for a minimum of 10years. This is experience speaking. Unfortunately, the miracle mindset makes it easy for Nigerians to be swayed with monthly, quarterly and half-yearly returns.

 Even the commercial Banks and several Government programs like the Anchor Borrowers’ Program has this same miracle minded problem.  How can you give farmers money and expect them to pay back in six months to one year? How is that possible after what 2020 did to Farmers Worldwide? Farmers provide their own roads, their own electricity, their own water, dams, their own infrastructure and you expect them to perform miracles??

 I sleep in the Farm with 50% of my farm managers, monitoring, updating, building, hoping and getting our hands dirty. We are battling to ensure that tomorrow is better for investors to be paid because of our naivety of yesterday.  When you hear that we are not doing enough to make investors happier, you just know that those who make noise about how wonderful Agribusiness is in the short-term are Audio Farmers with no form of experience on how farmers are battling. Again, I have been there. I KNOW, because I TRIED, FAILED & LEARNT my Lesson.

The Burden of Nationalism

The difficult challenges experienced by agribusinesses in 2020 will take a while to overcome. Crop cultivation is only profitable with govt subsidies not otherwise. There is no farmer in the world who is govt, banker, PHCN, waterboard and Minister of labour that can make profit. There are no hybrid seedlings or hybrid animals that can bring in profit when the agribusinesses managers have to provide everything they need to survive in any climate.

Road and rail infrastructure support farmers with access to market. Loan and funding infrastructure support farmers with liquidity and power infrastructure support farmers with mechanization and enhances fabrication. Agribusinesses without farms are a major problem to those who are in the field trying to build real value. Uber needs people & physical cars; WhatsApp needs human beings and smartphones. When you have agribusinesses domiciled in Abuja and Lagos without land, you have a problem.

 There is nothing wrong with debts if it has value attached. There is no problem with borrowing if you are building value. There is nothing bad if investors payments are delayed if those delays are tied to present & future value capable of real growth not speculative growth. We are focused on real local productivity not export of raw materials that destroyed this nation. there is nothing cultivated in Nigeria that cannot be processed in Nigeria. We must process or die!

 Let’s focus on exporting finished goods and importing machineries and raw materials for real production from rural Nigeria. It is the only model that can grow Nigeria. The problem with that model is that it requires major sacrifices & things will be hard in the short run but what is life without hardship? What is life without struggles? A struggling nation or business is not a failed nation or business. You only have nations or businesses without struggles on social media.

 As the manager of Nigeria Farmers Group & Cooperative Society, I can tell you that the battles almost broke me. You deal with Nigerians who believe you shouldn’t have problems because you are progressive; who sees every business as a Ponzi Scheme and want out as soon as they start or believe that name calling on the internet solves problems! By May, 2021 with all our challenges as a farm, a 45tons a day automated rice mill was installed. A 10,000 bird poultry began operation. A 1,000 cattle holding facility with a 53 feet cold-room was commissioned. A 10 unit greenhouse began operation. A 100 hectares irrigation vegetable farm was activated. groundnut oil is being processed. Garri is currently being processed. Cassava and yam flour is being processed. Maize flour being processed.

Conclusion

NFGCS Farm Estate is owing About N2billion to Bankers, Investors and Private Lenders. Since 2017, we have paid well over N1.8billion Since we started operation in 2017.

The Farm is Currently valued at N8.3billion Today. We are on the verge of closing the sale of 45% equity of the Farm. Investors will be paid expectedly in 2022 after the completion of the sales of equity to liquidate majority of our financial debts, investors funds/ROIs as well as other financial obligations. These are not processes that are concluded at the snap of the finger. This takes time.

 Let me repeat that the Nigeria Farmer is battling and struggling to make it today in any farming cycle due to several militating factors. Crop cultivation in Nigeria today is not profitable. Seed yield is mostly below average, fertilizers are not prime, agric extemsion services are non-existent and Government, especially the State and Local Governments are not helpful. Most importantly, the Market is unstructured.

 It can be demanding and challenging when the Farmer is a seed producer, as well as fertilizer and chemical producer, and most importantly has to become a Banker or raise funds at rates that are impossible, all the while generating power, and building warehouses to hold the little harvest until price is right and then seeks Market.

 The cost of production is currently insane and interventions need to do more. We have suffered Learning the ropes; we however expect that to be helpful for the farm and a generation of farmers who will be inspired to dare to farm.

Get In Touch or Visit The Farm Anytime 

We are an Integrated Agricultural Project doing our best to ensure that Nigeria achieves food sufficiency and security.

(+234) 0814 957 5522
info@nigeriafarmersgroup.org