From Olanrewaju Lawal, Birnin Kebbi
Labana Rice Mills, is the first indigenous rice processing company in Kebbi State. It currently has over 7,500 rice farmers, who harvest and directly supply it with rice, which it mills into the finished product. The General Manager of the company, Alhaji Abdullahi Idris Zuru, in this interview with Sunday Sun gives insight to how the company has been coping with the economic recession. He also sheds light on the training of Kebbi graduates as rice processing professionals.
How was the idea of establishing Labana Rice Mills conceived?
The idea was conceived by our proprietor, Senator Adamu Aliero, former governor of Kebbi State and former FCT Minister, sometime in 2004 when he was the Governor of Kebbi State. He introduced a fast track agriculture programme called Kebbi Agriculture Transformation and Self Help Initiative (KATESI). The essence of the program was to encourage farmers to cultivate a variety of crops on their farms and government would buy the harvest from them.
Many farmers went back to their farms and they produced rice, sorghum, wheat and groundnut in abundance and government then bought the produce from them. There was abundant rice then because many farmers cued-in into rice farming more than other crops. We have excess paddy rice and don’t forget too that Argungu people were known for rice farming; this also contributed to production of paddy rice by our farmers in excess then. As they were producing, the administration of Senator Aliero bought the produce from them. Many farmers who were into cultivation of other crops diverted their farm land to rice cultivation. But when Senator Aliero left, the programme was abandoned and farmers produced at lost. Whenever Senator Aliero came home these farmers always lodged their complaints and when this persisted, he established Labana Rice Mills to ensure that there was ready market for paddy rice that our farmers were producing.
How did Labana Rice Mills start-off?
It was quite challenging because we are the first indigenous, commercial rice mill in the state. The industry was established basically to provide employment for our people – both skilled and unskilled; provide ready market for rice farmers to sell their paddy rice and we as company have over 7,500 rice farmers working under us directly. They don’t have to search for buyers. They supply the totality of their produce directly to us. Through our existence, the economy of the state improved, our people are getting good income while others become distributors, retailers within and outside Kebbi State. There is no state in Nigeria we don’t have a distributor and glory be to God today that Labana has been adjudged the most healthy parboiled rice mills company in Nigeria by SON, which certified that our product could be exported to other countries.
What were your challenges at the initial stage?
We had the challenge of who would operate our machines. We invited consultants and Senator Aliero told us to mobilize mechanical engineering graduates from different tertiary institutions and integrate them to the system. So, we recruited them and they were part of the team that handled installation of machines and also operated them. This really helped us to achieve our priority of creating jobs for indigenes. If we had brought expatriates from India to do the job for us, our vision of creating employment for our people would have been defeated. Today, these graduates are part and parcel of Labana and some of them are planning to go somewhere else to share their experience.
Does that mean Labana is planning to open new rice mills outside Kebbi State?
No. Some of these operators whom we have trained and turned into professionals are being invited by these upcoming rice mills to work for them and operate their machines. These new companies have realized the quality of our parboiled rice due to professional work done by these young operators.
So, they are trying to snatch them away from us. Another challenge is power. I don’t need to emphasize on this because every Nigerian knows what we are passing through in the country because of epileptic power supply. But we are very lucky that we are located near Niger Republic, where Nigeria is supplying them electricity. We keyed in into the substation that supplies Niger Republic power and we are paying through our nose. But it is better than relying on generators. We also faced the challenge of how to get raw materials.
Because our farmers produce different varieties of paddy rice, both long and short paddy rice which are not good enough for the production of parboiled rice. Thereafter, we employed agricultural extension agents through Kebbi Agricultural Development Authority (KADA). They were taught how to plant good breeds, remove the stones and shafts during harvesting. So, initially, we found it difficult to meet up with our target of eight tones per hour and we have two plants with combined installed capacity of 16 tonnes per hour which is 320 tonnes per day.
And we are required to produce 150,000 metric tonnes per annual. But farmers were not fully supported after Senator Aliero left government as Kebbi State Governor until Labana Rice Mills was established.
To what extent has the firm increased its capacity to meet up with market demand?
In the recent past, we were operating at between 50 and 60 per cent. But when President Muhammadu Buhari introduced the Anchored Borrowers Scheme, our production capacity increased to 80 percentage. In this business, when you start, profit should not be your immediate target but how to sustain your production, stabilise it, pay workers’ salaries, maintain your machines and pay all your bills. Even, our proprietor told us not to bother about profit for now but that we must ensure we pay our staff salaries, sustain our production and pay our bills. We are three years old now and we have laid the foundation and forging ahead.
How has the company been coping with recession?
The secret is not far from the vision of our proprietor. He was not interested in immediate profits but sustaining the company’s operations and creating more employment opportunities for our youths. It would be an embarrassment to us to fold up after one and half years.
So, how will Labana cope with the entrance of competitors into rice milling business in the state?
To start with, Labana believes in the diversification of the economy. We don’t see new rice mills as competitors but partners in business. It is good for our nation’s economy that many of them are coming up. It will reduce poverty, create more employment opportunities for our youths and provide ready market for farmers to sell their paddy rice. We are supporting the new ones because it will also help us to feed the nation as well as creating avenues for us to export our parboiled rice to other countries. We have put in our best in this business and our quality production is speaking for us everywhere. We are in the front lane in this business and as I am talking to you we have distributors across Nigeria including Sokoto, Kaduna, Kano, Ilorin, Zamfara. We even wanted to establish in Borno state but the insecurity in the state prevented us.
As soon as security if restored, we shall be there. That is why, we are not threatened by the new rice mills coming up. For your information, SON, few weeks ago after understudying us for more than year, certified our product as good enough to be exporting to other countries.
We are discussing with business partners under ECOWAS which include Niger, Benin, Mali, and others. Many of them have visited Labana to discuss with us and they were confused and ready to partner with us because of our product standard.
May be I should say this too: it is our pride that WACOT Rice Mills in Argungu is coming on board. When they wanted to start, they came here and discussed with us and we told them that they should not see us as competitors but partners in business. It is our pride that WACOT is coming to Kebbi State. Because it will create jobs for our youths, graduates and market for our rice farmers. Again, their coming would also add positive value to Kebbi state economy. So there is no rivalry between us; they are using their investment to help our people.
What benefit has Labana derived from LAKE Rice sold to Lagos state government through Kebbi state government?
Though I am not the spokesman of Kebbi State Governor Abubakar Atiku Bagudu but his initiative to sign the Memorandum of Understanding (MoU) with Lagos State government helped our people a lot. Labana was just in the middle on the agreement to just produce parboiled rice and supply to Lagos State government. Governor Bagudu realised that he must continue with the agriculture initiative of Senator Adamu Aliero, his brother. Governor Bagudu studied this initiative and today, Kebbi is known as the largest producer of rice in Nigeria. The Kebbi partnership with Lagos benefited our farmers a lot. Lagos has large number of consumers, Kebbi has largest number of rice farmers, so the collaboration worked out perfectly to the extent that other states have been coming to Kebbi to learn the secret of the successful partnership. In short, as the farmers produce excess paddy rice, we package it and supply to Lagos state and we don’t have any wastage anymore.
Why is it that locally made rice costs more than foreign ones?
Indigenous rice mills are paying taxes and other bills but foreign rice is smuggled into the country free of charge. If you look at the price indigenous rice mills purchase paddy rice from farmers, we buy it at a price that gives value and enables farmers to make profits and expand their farms. At a time, a metric tonne of paddy rice cost N130,000, it was later reduced to N100,000. In fact, we once bought it at the cost of N160,000 per metric tonne and we use three bags of paddy rice to produce two bags of parboiled rice. By the time one adds the production cost and other expenditures, your profit on a bag of parboiled rice would not be more than N500.
For imported rice, after staying on the sea for years and expiring, they would smuggle it into Nigeria without duties. Oftentimes, the rice from Thailand and India would be given to smugglers free of charge and they were usually told to pay after they have been able to sell it off. At a time, foreign rice could be given at the price of N10,000 while smugglers could sell it at N13,000 or less.
Since they didn’t pay duties or taxes, they could not incur any loss. We, the indigenous rice mills, could not compete with them because, if we do our farmers would not be able to earn real value on their paddy, make profit and expand the acreage cultivated. If we compete with them, we might not be able to pay staff salaries, maintain our operations and pay taxes.
Can Nigeria feed its citizens without importation?
Yes we can. When President Muhammadu Buhari launched the Anchor Borrowers Scheme in 2015, the programme encouraged farmers to produce more paddy rice. In 2016 alone we recorded 300 per cent increase in paddy rice production in the 2015/2016 dry and raining seasons.
If Kebbi State can produce enough paddy rice in that year alone, that means that if other states join, Nigeria would have enough to eat and have reserve for exportation. In addition, if other states are producing paddy rice, more rice mills would spring up and the price of locally made parboiled rice will fall.
We are appealing to other philanthropic Nigerians like Senator Aliero to invest in agriculture, not only in rice processing but processing of other crops like sorghum, tomatoes so that Nigeria could say end hunger and poverty.