Olam invests $49m to till Nigerian soils

It will set up a 6,000 hectare greenfield, fully integrated, mechanised and irrigated paddy farming and rice milling facility in one of Nigeria’s main rice growing belts.

The farming operations in Nasarawa State would be carried out over 6,000 hectares in a phased manner between FY 2013 and FY 2016. The farm at its peak is expected to yield 10 metric tonnes (MT) per hectare (over two annual crop cycles) thus providing 60,000 MT of paddy annually to the rice processing facility. The paddy would then get converted into 36,000 MT of milled rice and distributed through Olam’s existing network of distributors and dealers across Nigeria.

Olam said Nigeria consumes about 5.5 million MT of rice annually of which about 3.6 million MT is produced locally through subsistence farming operations and the balance 1.9 million MT is imported.

“Local production of paddy and its subsequent processing into rice is a fundamentally attractive industry given (a) the large size of the rice market in Nigeria, (b) the high incidence of duties and costs of importing rice and (c) favourable government policies to enhance local production and enhance food security,” said Olam.

The farming operations will commence in the last quarter of FY2012 and deliver an IRR of 28%.