local sourcing remains sustainable option to reduce dependence on importation of raw materials -MAN

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MAN President, Dr. Frank Jacobs affirmed that activities in the real sector have continued to expand noting that MAN data aligns with the position of the apex bank on the Manufacturing Purchasing Managers’ Index (PMI).

The Nigeria local producers are exploring partnerships with research institutes , investors and engineers as part of measures to mitigate another crisis in the real sector notwithstanding the commitment by the Central Bank of Nigeria (CBN) to supply manufacturers with foreign exchange for importation of critical raw materials and machinery.

The President of Manufacturers Association of Nigeria (MAN) said local sourcing of raw materials remains the only sustainable option for them in ensuring that they operate optimally and reduce dependence on importation for raw materials.

The MAN President, Dr. Frank Jacobs stated that activities in the real sector have continued to expand noting that MAN data aligns with the position of the apex bank on the Manufacturing Purchasing Managers’ Index (PMI).

According to Manufacturers Association of Nigeria (MAN), local sourcing of raw-materials gained momentum in 2016 following the keying-in of manufacturers into the resource-based industrialization and backward integration agenda of the Government.

The President Dr Jacobs stated this in the Executive Summary of second half reports released showed that the local sourcing of raw-materials averaged 63.2 percent in 2017 as against 53.1 percent in 2016; thereby indicating 10.1 percentage point increase over the period.

The MAN pointed out that local sourcing of raw-materials continued to trend up among manufacturers in the second half of 2017. The movement was linked to the implementation of resource-based industrialization and backward integration policy as contained in Nigeria’s Industrial Revolution Plan (NIRP).

MAN President stated that the Local raw-material utilization increased to 59.98 percent in the  period under review  from 51.88 percent recorded in the corresponding half of 2015; thereby indicating 8.1 percentage point increase over the period. It also increased by 13.68 percentage point when compared with 46.3 percent recording in the preceding half.   Local sourcing of raw-materials averaged 53.14 percent in 2016 against 48.77 percent recorded in 2015; thereby indicating 4.37 percentage point increase over the period.


In the same vein, it also noted that the sorghum, cassava farmers are many in number and operate largely on a small scale basis and as micro farming enterprises. And to facilitate their engagement and proper management, the farmers are grouped into clusters under the supervision of Regional Production Coordinators (RPCs), also known as nucleus farmers said the report. The RPCs manage the small groups in the clusters and facilitate the buyback of grains from the farmers and the supply of purchased grains to maltsters.

The report disclosed that the management of these micro enterprise farmers through Regional Production Coordinators has a view of sorghum farms enabled the Company to promote bonding among them so that they can share experiences. It also offers them opportunities to reap higher returns from their farm yields.

The report revealed that Nigerian Breweries as one of the beneficiary is actively engaging these small scale farmers and micro farming enterprises in our hybrid sorghum development programme because we believe they are the engine of growth and economic advancement for a developing economy like Nigeria. The empowerment of these farmers in the sorghum supply chain is stimulating economic growth and poverty alleviation in Nigeria which is one of the Millennium Development Goals of the country.

The demands by breweries companies for good quality sorghum with good malting and brewing characteristics, as well as the need for the grain by other industrial users, have stimulated research into the production of improved quality grains that offer higher farm yields. The use of local seeds by local farmers yields less than I metric tonne per hectare of land, it was noted.

“However, the introduction of the open pollinated varieties, CSR-01 and CSR-02, by our Company has improved farm yield up to 2.0 – 2.5 metric tonnes per hectare. With the new hybrids, CSR-03H and CSR-04H, farmers will enjoy yields up to 4 metric tonnes per hectare. This improved variety, therefore, enhances productivity and will enable local farmers to increase supply and derive much more benefits from their efforts. Protecting Interest of Farmers has 20,000 farmers in its database while the food, agro and allied industries that also use sorghum for their operations have additional 5,000 farmers. The 25,000 farmers are those documented.

The introduction of the hybrid by Nigerian Breweries is in line with Nigeria’s plan to realize its ambition to make agriculture a big business and build a proper value chain where all players add value and share benefits. It will also help to provide some control in the system.

According to the report under the buy-back scheme, we promise to pay market price plus 10% premium to the farmer, and this is guaranteed. A village grains collector, however, who is not a farmer but has the financial muscle which enables him to provide bridging finance to settle poor farmers’ domestic needs, can offer them money in advance of their grains harvest. This reduces the amount available for buy-back and the revenue accruable to the farmers.

“An effective communication with farmers and a proper working of the buy-back system can stem the activities of middlemen.”

According to the report, the Nigerian Breweries has entered into supply agreements with local cassava starch processors and sorghum smallholder farmers whose activities have impacted positively in the communities where they operate. According to the term of agreement the company has adopted offtake arrangement with another multinational company that has huge investment in sugarcane value chain. This is aimed at replacing imported sugar in our recipe with a local substitute.Sorghum Grains

Inline with Heneiken’s commitment to sourcing sustainably, a Memorandum of Understanding with a Nigerian company was signed, Psaltry International Company limited and a Dutch NGO, 2SCALE, to facilitate expansion of sourcing of cassava-based inputs thereby strengthening the participation of smallholder of farmers in the local economy. According to source, the plant in Psaltry has an installed capacity of 10, 000 metric tonnes per annum but currently producing 6000 metric tonnes where about 60 percent of its production capacity goes to the Nigerian Breweries alone.

Also signed was a Memorandum of Understanding with the Federal Ministry of Agriculture and Rural Development on sorghum development in Nigeria. These initiatives are inline with the Agricultural Transformation Agenda championed by the Federal Republic of Nigeria.

Almost 100% of our packaging materials are sourced locally and we are committed to the full compliance of our Supplier Code procedure as per industrial policy.

In the same vein: the Nigerian Breweries company, in conjunction with Heneiken supply chain BV of the Netherland and other Heneiken companies, is involved in activities aimed at development of new Hybrid Sorghum Varieties with the potential of increasing the yield/output of sorghum famers as well as improving the quality of sorghum malt which is a major material input in our operations.

The report revealed that the two High-yielding hybrid sorghum varieties have been developed and registered by the company; the process of commercialising their production is on-going.  The company has a subsisting consultancy agreement with a Nigerian Professor on the development of sorghum seeds.

Although NB is very visible in promoting research into the production of high-yield sorghum, the impact of such efforts will be limited in the absence of consistent government policies and support for the development of the sector.

The greatest threat to the use of local raw materials in beer brewing in Nigeria is the inconsistent Government policies, especially with respect to protecting and encouraging local agricultural production.

Dr Jacbos solicits for improve local sourcing of raw-materials through effective development of agriculture, solid minerals and the petro-chemical sectors




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