EDITOR’S NOTE- It is important that as young entrepreneurs we learn from older ones and mentors. In this month of July, we kick off with the story of Psaltry International Limited owned by Mrs Oluyemisi Iranloye a biochemist by training but whom has proven to be an agro-preneur. Her farm converts cassava to starch on a large scale. More importantly is the method she has employed in empowering the farmers around her while making profit and providing jobs. Also are practical lessons one can learn as a growing agro-entrepreneur when it comes to training, experience and funding.
More and more of today’s entrepreneurs are taking the opportunities inherent in the agricultural sector to create wealth for themselves, jobs for skilled and unskilled labour, decent incomes for farmers and rural infrastructure. The successes of these businesses depend strongly on the success of the farmers; therefore, such a company’s strategy entails empowering farmers.
These entrepreneurs, the owners of the businesses, are becoming the drivers of rural development, growth for the agricultural sector and the country’s hope of stemming the tide of brain drain as they provide jobs directly and indirectly for even professionals whose qualifications may not be agro-based.
Psaltery International Limited, located in Alayide village near Iseyin in Oyo State, is one of such entrepreneurial firms. The firm, which produces premium quality food grade starch and high quality cassava flour started a few years ago. The most vital raw material is cassava and therefore the business ensures that farmers in the community keep producing.
OluyemisI Iranloye, managing director/CEO, Psaltery International Limited, is a biochemist. Combining her biochemistry skills with her passion for farming, she decided to situate her company in the heart of a village. The production is in the rural area but the market is for industries, most of whom are situated in cities. There is market for these products domestically and internationally. The flour mills buy the high quality cassava flour and mix with wheat flour.
According to Iranloye, many confectioners now buy cassava flour and mix on their own, as cassava flour is now cheaper than wheat flour due to the increase in import tariffs of wheat. Pharmaceutical companies, glue production companies, breweries, and food companies producing spaghetti, noodles and related foods use food grade starch. The domestic demand is still far higher than supply, so starch producers still have their hands full servicing the domestic market. Meanwhile, farmers’ incomes are increasing as a result.
Iranloye says: “Before our company established in this area, the total income about 500 farmers in Alayide village realised from cassava was just about N2 million annually. There are 50 hamlets making up the village, and they have about 5,000 hectares of farmland altogether which were underused. But after we came and started buying from them, they have expanded their production and the total income realised yearly is about N50 million. Yet, these farmers are only able to provide us 20 percent of the total cassava that our company needs for production. So, we also buy from other villages about 50 kilometres radius North, South, East and West of our factory. We have a well laid out out-growers scheme, which is highly successful. We give support to the farmers, our company has agric extension staff that visit the farmers regularly. Our company single-handedly provided the support for the farmers last year.”
So this year, First Bank, which funded our company project is also providing backup funding for the farmers to expand their production. We buy the cassava from the farmers and pay through the First Bank account, the bank takes its own money and the farmers take theirs. Meanwhile, we continue to support the farmers with extension services. When our company provided the support last year, we were able to test the loyalty of the farmers to contracts and their response was beautiful. So, for keeping to the terms of the contract, they are now expanding their production with First Bank support. I have been able to prove that Nigerian farmers are not bad. The notion that farmers default in loan repayment is wrong. Many banks do not understand how to fund farmers. They possibly funded ghost farmers; farmers who emerged because they heard the Central Bank of Nigeria is giving money to agriculture through commercial banks or that the government is giving fertilisers free. Those are the ones that do not pay back.
Also, bankers sit in their office and attempt to support agriculture. When farmers apply for loan, the bank may release the money at the end of the planting season, in November or December. Such money could be diverted. Loans have to be given at the beginning or still early during the planting season. If we truly understand their operations, farmers would respond appropriately.
The firm has also brought about infrastructure development. Iranloye says, “When our firm started here, we provided bore-hole water, as part of our giving back to the society. They now have water to enhance their farming operations. We also have plans of building a school because there are about 1,000 children of farmers who are not able to go to school, because the nearest school is too far.”
We buy palm kernel shells and also charcoal from producers, we use these to generate our power in the factory. We have transporters, vulcanisers, tractor operators and so on, that benefit from our business. Psaltery International also has a backup farm where we train farmers and grow cassava stems to distribute to the farmers.
We have engineers, biochemists, agric extension officers, managers, scientists, farm hands, a total of 140 staff. The skilled staff came from Lagos and some of the unskilled staff are from the community. We currently house our 140 staff on this farm.
In the next two years, we are going to expand production because demand is still very much higher than supply.
I was working in a glucose syrup company as a chemist, and I am passionate about agriculture. So, it was easy for me to combine both.
I got funding at 9 percent, but even that is high because in Thailand and other agro-based countries, lending to agro businesses is at 3 percent. So, internationally it would be difficult for Nigeria’s agro-based products to compete.
Supply of fertilisers to peasant farmers through the e-wallet system is good but what about the big companies engaged in farming. Fertiliser companies should be supported by the government and allowed to have their own distribution channels so that anybody that needs more than the two bags of fertiliser the government subsidises for farmers yearly can easily go and buy.
Due to inflation, one may write a proposal to a bank and the funds come out six months later and the prices of things needed have increased. The bank will not give one the difference.
Also, government infrastructure support for industries is still very small. We run generators, we sank bore-hole, we constructed the road to the factory. No bank will give a manufacturer funds to construct roads. So, there are infrastructure expenses that a company has to bear that is not included in the credit given by the banks.
The solution is for government to give grants to companies that take the bold step of establishing businesses in the rural areas and invest in infrastructure development. The road my company built to its factory is now serving thousands of people, the water is not only used by farmers but the entire village. These are things that can be easily verified and to encourage businesses to invest in the rural areas, grants should be given, it could just be a percentage of the entire money the company has spent on infrastructure. I must commend the Oyo State ministry of agriculture that has been supportive of our business.