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Obinna Chima writes on investments by BUA Foods Plc in the food sector in line with the company’s efforts to support the federal government’s food security drive.
The ongoing war in Ukraine and Russia has continued to pose as threat to food security across the globe, especially to import-dependent nations such as Nigeria and others in Africa. This threat was further highlighted in a recent report by the Food and Agriculture Organisation (FAO), which warned that about 19.4 million people might face food insecurity across Nigeria between June and August 2022, due to acute food and nutrition insecurity in the Sahel and West African region.
It also estimated that 21 states in the country and the Federal Capital Territory, including, 416,000 Internally Displaced Persons (IDPs) might be affected, noting also that high inflation which had led to soaring food prices, could be associated with an economic downturn that could contribute to the hunger crisis.
This concern was part of the reasons why private sector players in the food sector, such as BUA Foods Plc, formerly BUA Sugar Refinery Limited, have continued to intensify investments to support the federal government food security drive.
Part of this led to BUA Foods, a food business with well-diversified and scalable operations producing sugar, flour, pasta, rice and edible oil, recently taking delivery of its first of two shipping vessels to augment its sugar export operations to the West African market, which kicked off successfully earlier this year.
The company’s Director, Marketing & Corporate Communications, Adewunmi Desalu, explained that the Mitsubishi of Japan-built vessel is named MV Bundu – after the area in which the refinery is located.
In a notice on the Nigerian Exchange Limited (NGX), the company explained that the vessel would depart and berth at BUA’s port and terminal increasing export capacity while reducing operating cost.
It said, “BUA Food’s export of refined sugar will benefit the economy, providing alternative source of income, while significantly diversifying the company’s markets.
“The vessels cargo capacity is suited to enhance quick and sustainable delivery of more refined sugar in the face of growing export demand from across the African region.
“The refined sugar of high-grade quality is processed from BUA Foods’ ultra-modern sugar refinery located in Port Harcourt. This state-of-the-art refinery with a capacity of 750,000 metric tons, is also equipped to process all grades of sugar,” it added.
The principal activities of the BUA Group are processing, manufacturing, production and distribution of food materials such as sugar, flour, pasta, rice, and edible oils as well as packaged foods. These activities are conducted primarily in Nigeria.
The company’s five food businesses were last December merged into BUA Foods. They included BUA Sugar Refinery Limited, BUA Rice Limited, BUA Oil Mills Limited, IRS Flour and IRS Pasta.
The BUA Group had explained that the consolidation became necessary to maintain its market leadership in the agribusiness and food processing sector as well as take advantage of the growth opportunities in the economy and the export prospect presented by the African Continental Free Trade Area (AfCFTA) agreement and the company was listed on the Nigerian Exchange Limited (NGX) in January, 2022. Since then, it has continued to receive significant acceptance going by the volume of demand for its shares.
To the Chairman, BUA Foods Plc, Alhaji Abdul Samad Rabiu, as the company drives its businesses for growth with focus on sustainable returns and benefit to all its stakeholders and the Nigerian economy, owning a shipping vessel was an important step in BUA Foods strategy.
“We see an increased and continued demand for refined sugar across the region with attendant increase for logistics support to aid timely delivery, which is why it is important for us to strengthen our current capability with our own controlled asset as we advance further in our business strategy. These new vessels will create operational efficiencies in our business and open possibilities for new services,” Rabiu added.
The notice said with the acquisitions, BUA Foods has been well positioned to take advantage of the African Continental Free Trade Area agreement, considering its investments in the food sector over the years.
“Owning a vessel to export sugar is a crucial enabler of flexibility and agility in our total supply chain as it allows our customers to tackle time-critical fulfillment challenges due to timely availability of their goods,” the Managing Director, BUA Foods, Engr. Ayodele Abioye said.
“As we expand our customer base into the region, we strongly believe in working closely with them towards meeting and surpassing their needs in time and in full,” Abioye added.
The notice stated that to further strengthen its export drive, a second shipping vessel was expected to arrive by the end of the second quarter of 2022 to promote cross border trade to businesses across the West African region and other African countries.
On his part, the Group Executive Director, BUA Group, Kabiru Rabiu said: “BUA Foods is determined to explore the huge opportunities available in the agribusiness to promote food security and growth for Nigerians and Africans.
“The population of Nigeria is over 200million and our food production capacity is still not enough to meet current demands. As a country, we have agricultural resources coupled with human capital to harness needed raw materials to produce what we need for our consumption, and develop our nation.
“We are positioning our brand to take advantage of export opportunities through our strategically located plants from which foreign exchange can be generated both for the company and economy.”
These investments by the company are certainly reflecting in its financial statement as its recently released annual report for the year ended 31 December 2021, showed that it recorded 97.05 per cent growth in group profit after tax to N69.768 billion, up from the N35.407 billion it posted in 2020. The group revenue also increased to N333.272 billion from N192.860 billion in 2020.
Owing to the positive results, BUA Foods’ Directors recommended for the approval of shareholders a payment of N3.50k dividend per one ordinary share of 50 kobo each, out of the profits declared.
The company’s Chairman further noted that BUA’s heritage as an indigenous and fully integrated food conglomerate undoubtedly places an obligation of sorts on it to play a leading role in the developmental drive of the Nigerian economy, which he said is a goal the company is pursuing with vigor and determination.
“To underscore this commitment as well as tap into the diversification agenda of government, BUA Group recently restructured its business model to enable it take advantage of existing opportunities while contributing to the food security drive of the nation,” he added.
He pointed out that, “BUA Group is one of the largest indigenous conglomerates in Africa and we have continued to invest heavily in the nation’s food industry, and have built eight ultra-modern factories across the country where we refine and process sugar, flour, pasta products, edible oils, and rice.
“We have a refining capacity of 1.5 million metric tonnes of sugar yearly from our two automated sugar refineries in Lagos and Port Harcourt. Our flour milling and pasta processing factories have a milling capacity of 576,000 metric tonnes and 250,000 tonnes total production yearly, respectively.
“By middle of next year, we will commission our new lines in Port Harcourt, and with that we will have a total of 850,000 tonnes of flour and another 250,000 tonnes of pasta. That will give us a total of 1.4 million tonnes of flour milling and 500,000 tonnes of pasta from next year.
“Our rice mill, one of the largest in the country, has a capacity to produce 200,000 tonnes yearly. We are working on rice plantation that will change the face of rice production in Nigeria.”
He added that, “We have also continued to invest in and help drive government’s backward integration policy by investing in large scale estates within the country to help deepen local sugar production.
“These investments in the food industry have not only helped move the nation towards food security, thousands of jobs have also been created through these efforts.”
He also emphasised that the company would continue to empower individuals and households as well as boost government incomes through its operations while reducing the foreign exchange pressures on the economy.
Rabiu, had during the launch of BUA Foods in Lagos, said there are opportunities for growth and development in the nation’s agriculture and food processing value chains.
He said that to tap into the economic diversification agenda of the federal government, BUA Group recently restructured its business model to enable it take advantage of existing business opportunities while contributing to the food security drive of the nation.
“We are also working on a rice plantation that would change the face of rice production in Nigeria. From a business stand point, our resolve remains to produce high quality products for the widest customer base at reasonable prices and as a group we have already set the ball rolling as underscored in the business restructuring that birth the consolidation of our food operations aimed at strengthening our market position.
“This will no doubt help our group to maintain its leadership position in our food business and other aspects of our operations.”
He specifically said: “The way forward is to look for areas where we can grow whatever we need because with a population of about 200 million people, it is so important that we are able to feed ourselves.
“We have everything in Nigeria here that will make it work. We need to come together to be able to do more. We cannot meet the demand of the nation because of the size of the population.”
Rabiu commended the federal government’s effort in developing the agricultural sector to make Nigeria self-sufficient in rice production, saying that the country is currently producing almost all the rice it needed.
He said that BUA Foods has also continued to invest in modern technology for efficient food production, innovating and expanding with strategic partners across the value chain.
The company, according to him is also well positioned to leverage significant export potentials across West Africa and the larger African continent.
“We have perhaps the largest food business in Nigeria and the West African sub-region. To realise our full potential as a business as we drive the food security needs of the country, we recently consolidated our food businesses under a single entity to be known as BUA Foods,” said Abdul Samad Rabiu.
Clearly, as the country contends with measures to guarantee food security, the investment from organisations such as BUA Foods would go a long way in supporting the federal government’s efforts.