BRACED states and opportunities in agricultural value chain ...

Reduction of international trade barriers such as tariffs, export fees, import quotas as well as the global distribution of goods and services has led to growing integration of world markets, creating a highly competitive business environment which stifles businesses in poor countries that cannot compete adequately because of diseconomies of scale. To achieve competitive advantage, businesses in poor countries are increasingly adopting the value chain model. For example, small holder agricultural producers in Honduras that were disenfranchised by the sheer force of globalisation leveraged the model to attain integration with international partners, thereby attaining global competitiveness. The value chain model improved agricultural processes, productivity and profitability among small agricultural producers in the South American country.

The model is premised on the fact that a product is rarely directly consumed at the place of its production; it is processed, combined with other products, transported, packaged, displayed, and so on until it reaches the final consumer. In this process, the raw materials, intermediate products and final products are owned by various players who are linked by trade and services, and each adds value to the product. Various types of public and private services, such as business development services, electricity, transport, financial services, are as important as favourable framework conditions, i.e. laws, regulations and their enforcement. The value chain model estimates the value each particular activity adds to a product or service, and in so doing, manages the linkages between these activities to achieve competitive advantage.

The feat achieved in Honduras can be replicated in Nigeria through the development of regional agricultural value chains that would enhance investment, trade, marketing and food security. Developing regional value chains and markets is both feasible and important given the country?s high population and income growth rates, which have led to increasing demand for high-value food commodities such as wheat, dairy and meat products and processed food commodities, a trend that is expected to continue. More so, recent increases in food prices have created pressures and opened up opportunities for the country and its geopolitical zones to carefully assess the potential benefits of implementing the food production and agribusiness value chain strategy.

Using the BRACED states (Bayelsa, Rivers, Akwa Ibom, Cross River, Edo and Delta) as a model, steps such as identifying and mapping potential supply chains must be taken by member states to enable the zone to develop a competitive and all-inclusive agricultural value chain. For instance, Edo State is rich in cassava, while Delta State is highly industrialised and has skilled workforce which may better suit cassava processing. Going further down the value chain, Rivers State has good intermodal transport system and networks for domestic and international distribution which makes it a good location for sales and distribution. An interstate value chain like this will improve productivity level, business processes, know-how and profit, which will better the lives of agricultural producers, especially small holders in the region.

Identifying and evaluating opportunities among partnering states will provide valuable perspectives on the strengths, limitations and opportunities for member states in the value chain. A number of conditions are necessary for selecting production and/or processing areas, the main one being proximity to the user. Owing to the bulkiness of cassava and the need, at times, to process freshly harvested cassava, the distance between production and processing points may become a critical decision factor.

A study carried out in 2004 by the International Fund for Agricultural Development suggested that states with low population and village density may have greater opportunities for cassava production expansion and perhaps larger contiguous blocks of land. Production and price variables are also considered in the selection process. It is suggested that states with higher than average yields (greater than 12 tonnes/hectares) were better locations for increasing cassava production. Low absolute root prices (less than N8, 000) and root prices below the 80 per cent maize threshold price were also interpreted as indicators of competitively priced cassava and good producing states.

Edo State is ideal for cassava production. It has a relatively low population, not the lowest out of the BRACED states but low enough to give maximum utility coupled with cassava root prices (which historically stood at N4,000-N8,000) as well as the fact that agriculture remains the predominant occupation for people within the state. All these together create a good environment for cassava production. Bayelsa and Cross River states also fit into the cassava production group.

On the other hand, the availability of good road networks is beneficial to new industries, both in terms of their sourcing of raw material and their ability to move their products to markets. The existence of industries that are potential cassava users (animal feed, flour and starch) is also a positive indicator. Delta State fits into this group for a variety of reasons. Primarily, better infrastructure and a skilled workforce are in place here as well as a large poultry density that can serve as off takers situated close to the source. Finally, the ability to distribute and trade with partners globally will greatly serve the value chain. Rivers State with a large port situated at Port Harcourt can serve this purpose within the value chain.

Once an existing value chain is in place, business partners (BRACED states) will have to go a step further in order to sustain development. This will involve a lot of self-assessment and answers to questions such as, what are you doing well? What would you like to improve? This will prove vital in determining where the greatest opportunities are for value chain development such as product quality, system efficiency or differentiated or specialised products.

Last but not the least in the value chain development is the need to build vital business relationships between different segments in the value chain. Successful value chain managers report that relationships are the most important element of a successful value chain. Successful value chains are built on relationship strength which includes the following elements: a common vision, communication, cooperation, trust, adaptability, interdependence and commitment. This is what makes forums and commissions such as the BRACED Commission vitally important to the development of each of the member states. Each can come together, share ideas, and develop a common goal/strategy in order to drive economic growth.

- Taylor is the Head of Specialised Banking at Stanbic IBTC Bank.

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