Srivathsan Venkataramani

How has Olam grown across Africa since its establishment in Nigeria?

Olam started in Nigeria in 1989 as a trading house buying cashews and other commodities from farmers and exporting to Asia. Over a 15 years period, we expanded our operations across North Africa and into Southeast Asia in countries like Indonesia and became a farm-to-fork company. In 2005, we strategically moved our headquarters from the UK to Singapore to grow in this part of the world and became listed on the Singapore Stock Exchange. Today, our value chain spans over 60 countries, 24 of which are in Africa and includes farming, processing and distribution operations, as well as a sourcing network of an estimated 5 million farmers. In Africa, we are one of the largest employers with over 30,000 full-time and part-time employees. In 2021, Olam was certified a top employer by the Top Employer Institute in Africa as well as our operations in Cote d’Ívoire, Ghana, Nigeria, South Africa, and Netherlands were also separately awarded for their HR best practices. Olam is a leading food and agri-business supplying food, ingredients, feed and fibre to 17,300 customers worldwide. Some of our customers includes but not limited to Nestle, Hershey’s, Ferrero Rocher, and Starbucks. We source directly from farmers and do a great deal of processing ourselves, as we own our own private labels. We are the largest supplier of cocoa beans in the world; one in three chocolate bars is made from cocoa supplied by Olam. We do not produce coffee in Nigeria, though globally we are a major player in the coffee space; in fact, we are the largest coffee shipper in the world, and we supply all the large coffee houses, including Nespresso. One in every five cups of coffee comes from coffee beans supplied by Olam.

Is Olam still considered a Nigerian company?

We were established in Nigeria and have been here for as long as the company has existed. Although we are global now, when I joined over 20 years ago, Olam was only present in Nigeria. This makes us very passionate about the country as it’s our alma mater. We have an extremely strong connection to Nigeria and Africa as a whole. Over the last 5 fives, most of our executive board members have visited our operations in Nigeria and other parts of Africa to establish that rapport with the country governments. Though Nigeria does not grow much coffee, we do packaging and processing. We have also been growing our manufacturing and processing businesses in Ghana, Cameroon, and Senegal. In 30 years, we have grown to a complete supply chain, added-value agribusiness company.

What have been your biggest investments in the Nigerian economy?

Until 2005, Olam’s growth was organic. After the exchange listing, we had a great deal of inorganic growth too, through acquisitions. We made our first major acquisition in Nigeria, Crown Flour Mills, in 2010. In 2016, we acquired BUA Group’s wheat milling asset, and in 2019 we bought Dangote Flour. Another large investment is in our animal feed and protein segment, which is a completely organic, greenfield factory. We set up two large factories, one in Kaduna and another in Ilorin. The Kaduna one, a USD150-million investment, is one of the largest DOC poultry facilities in sub-Saharan Africa. Another large investment was the 5,000-ha mechanized and irrigated rice fields in Lafia, the largest mechanized rice farm in Africa. We also acquired OK foods, the biscuit producer, in 2012, for USD167 million. Our investment in Nigeria amounts to more than USD1 billion.

How did you fund all your investments and acquisitions?

Temasek Holdings, Singapore’s sovereign fund, owns the majority of Olam’s shares, while Japan’s Mitsubishi Group owns 18%, and the promoter Chanrai Group owns 3.5%. The sovereign fund, as a shareholder, invested part of the money; however, our investments could not come solely from the company itself, so we have banks and development institutions as financiers. Some of the investments in the animal food project received support from the Bank of Industry and the Central Bank. Therefore, it has been a combination of internally generated revenue and the debt market. We also issue bonds in Singapore and other markets.

Nigeria is endowed with agricultural resources, though the inadequate infrastructure means the country ends up exporting its raw material and importing end products. What is your contribution to import substitution and retaining value within the Nigerian agricultural chain?

Nigeria produces around 280,000 tons of cashew, and it used to export them to India and Vietnam, where they were processed. We set up a facility to process cashews in Ilorin, where we employ 2,000 people, mostly women, because it involves a great deal of manual work and skill. With a combination of technology and skills, we have been able to replicate the processing done in India and Vietnam. We brought in workers from India to train the local workforce. We also use technology, and the process is half mechanized and half manual. We have also dramatically reduced the carbon footprint of cashews. In 1994, Nigeria was also a major exporter of sesame seeds to Japan. Today, we have a modern factory in Iganmu, where we process the sesame. As a result, Nigeria no longer imports processed cashew and sesame. As for our animal protein business, Nigeria used to be one of the largest importers of frozen chicken, and today we have the capacity to produce 1.8 billion chicks per week. The government has also banned imports of frozen chicken, and even the illegal cross-border flow from neighboring countries has stopped, because we are now able to produce fresh and high-quality chicken that is competitive cost wise thanks to our size. Nigeria also used to be the largest importer of parboiled rice on the continent, with 4.5 million tons coming from India and Southeast Asia. Olam was the first to set up a rice farm and mill, and Nigeria now saves some USD1 billion from rice imports. We also work with 40,000 farmers, whom we train and buy products from. Olam’s model has always been to nurture farmers. Before partnering with us, farmers would reap less than a ton per hectare; today, their yields have tripled. We have the same program with sesame and cocoa.

Nigeria’s agricultural sector performed well during the pandemic and helped lift the country out of recession. What is your outlook for Nigeria’s agriculture in the coming years?

Nigeria and Africa acted swiftly, perhaps due to their experience with Ebola, and were some of the first countries to close airports and enforce lockdowns. Containment was key. They also ensured that essential services such as water, electricity, and the food sector, including manufacturing facilities, continued to operate. The government took the right steps and ensured that the agricultural sector was not affected. During this period, we were able to grow, and there was no food scarcity. Nigeria is blessed with many natural resources. The agricultural sector should focus on food security and self-sufficiency as well as increasing its exports thanks to the Africa Free Trade Area (AfCFTA). The agricultural sector can easily record double-digit growth in the coming years. The government is doing the right thing. It should fast track infrastructure, so that the ports become a reality and road connectivity is improved. Nigeria could soon become a manufacturing hub and the China of the continent.