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August 30, 2008

Nigerian fertiliser manufacturer targets 2.4 million tonnes urea annually within five years

The Managing Director of Nigeria's Notore Chemical Industries, Mr. Onajite Okoloko, speaks on the importance of fertiliser to agricultural development in this interview with Sulaiman Adenekan.

Question: What is the state of agro allied and chemical industry in Nigeria?

Okoloko: There has been neither enough investment nor adequate funding. The available funds or subsidies do not get to the target value chain and the system is quite defective. Despite the tonnes of tomatoes we produce amongst other agricultural products, we still import canned tomatoes, coupled with poor infrastructural facilities. The epileptic state of the agro processing sector has also contributed to the farmers’ fragmented customer base, as there are no major processors.

Farmers are beginning to improve their processes but they still have a long way to go because of their subsistence lifestyle. They operate on a small scale level with little or no commercial mindset and an ageing group with an average age of 40-50 or over. Farmers have a very low rate or almost none-usage of improved seeds and a low rate of fertiliser usage compared to other developing countries. I will say that the state of the agro allied and chemical industry is still a long way off from being good.

Question: What is your opinion on the use of flared gas for the production of fertiliser in Nigeria?

Okoloko: Flared gas can be used for the production of fertiliser and for other gas utilisation projects. However, it cannot be used in the state in which it is flared at the different flare sites scattered all over the country. Significant financial investment is required.

Question: Is it true that high concentrations of cadmium in fertiliser used by rice farmers could cause cancer, diabetes and renal failure?

Okoloko: Cadmium is a micro component of fertiliser. The advantages of fertiliser usage far outweigh the disadvantages. Countries that have employed the massive usage of fertiliser have much longer life span than the average Nigerian. Fertiliser has been proven to be safe even when used in significant volumes.

Question: What is the role of fertiliser in increasing agricultural productivity in the country?

Okoloko: Fertiliser is critical to improving agricultural input. Fifty per cent of the total increased crop and agricultural output globally over the last five decades has been attributed to fertiliser usage. While improved seeds were the catalyst for the original green revolution, fertiliser was the fuel that drove the engine.. For every tonne of maize harvested, at least eight kilogrammes of nitrogen is lost from the soil thereby degrading the soil value. Inputs like fertiliser help replenish the soil, while boosting agricultural yields. Another critical importance for fertiliser usage is that Africa has the worst soil in the world.

Question: What is the production capacity for fertiliser in Nigeria?

Okoloko: Notore is the only manufacturer of urea in the country at the moment, so Nigeria‘s fertiliser production capacity can basically be judged by Notore‘s production output. The Notore plant will initially produce about 1,700 tonnes of urea per day or about 600,000 tonnes per year, but within the next five years, Notore plans to build two more plants and produce about 6,500 tonnes of urea daily, or 2.4million tonnes per year.

Question: What are the strategies and policies needed to increase the production capacity of fertiliser in the country?

Okoloko: About 60 to 70 per cent of fertiliser purchased in Nigeria is done by the government. The only way to have sustainable development is by private sector involvement, hence the coming of Notore. The market needs to be developed at the consumer level and Notore is working on this. Another strategy would be to keep subsidies in the fertiliser space. However, these subsidies should be channeled in a market-friendly way, by utilising a system of agricultural vouchers. The scheme has already been successfully piloted by two states in Nigeria, namely Kano and Bauchi.

Government can utilise Notore‘s vast distribution network as redemption points for these vouchers. Notore‘s network can distribute both seeds and fertilisers. Other policies should include creating an enabling environment by implementing policies that promote the adoption of high yield improved seeds varieties, promote increased investment in irrigation projects, development of a robust agro-processing industry and development and enforcement of strict quality regulation of agricultural inputs. We are also urging consistency of policies, for five to 10 years. Government should also truly prioritise agriculture in all aspects including its policy on gas, as gas is basic to fertiliser production.

Question: What is your company doing to increase fertilizer production in the country?

Okoloko: Notore owns the space. We are aggressively investing: over $400m have been invested in our plant to date and plans are on to establish two more plants. Meanwhile, another $1bn will be spent over the next three years.

Question: What are the problems facing the industry and the solutions?

Okoloko: Some of the major problems include government's direct subsidy on fertiliser, no enabling environment, poor infrastructure and network, poor or no agro input regulation, poor or no inputs and poor agro quality. We urge the government to partner with the private sector or to totally remove subsidies, create an enabling environment, improve infrastructure and network, improve agro input quality and regulation, strong regulation development and enforcement.

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