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July 5, 2021

Food-affiliated industries in Nigeria can get best ingredients, flavors without FOREX – Freddy Hirsch Nigeria CEO

Food-affiliated industries in Nigeria can get best ingredients, flavors without FOREX – Freddy Hirsch Nigeria CEO

In this interview, Kojo Brifo, Managing Director of Freddy Hirsch Nigeria and West Africa speaks on food insecurity, the impact of AFCFTA on food sustainability, and the supply chain vulnerabilities of food manufacturers in Nigeria and advises patronage of indigenous ingredients distributors.

1.            You play in the food industry across Africa. Can you share what you think are the challenges of food security in Nigeria?

Food Security is very critical for the socio-economic development growth of any country. In Nigeria, the current state of a high reliance on food imports, erratic food supply, and supply shocks due to crisis, for instance in the North and the high costs of food reveals the vulnerability of the country to food insecurity. We have to find a way to improve that. There are impliedly several gaps to tackle; last-mile, supply side, distribution, marketplace, logistics, and others.

There is also the lack of infrastructure, limited rural development, credit, and land for farming. A key challenge across the entire food chain is the lack of resources to modernize our current agricultural production process. We need to adopt technology and mechanization more, as, without technology, we would not be able to increase productivity. Our value chains need to be integrated.

A significant challenge is our lack of manufacturing firms that can process raw materials into value-added products. For instance, the BirdsEye Chili is grown in West Africa, yet it is exported to countries that process it and turn it into products like chili extracts, oleoresin peppers, and otherflavors used to make hot chili sauces; this is then sold back to West Africa at a higher cost value. The Nigerian ginger is the most dynamic in the world as its attributes are many. Yet we export the raw ginger which is transformed outside the continent and used for commercial products that are sold back to us. Without value-adding firms, we cannot guarantee food security.

Thanks to inadequate storage systems, inaccessible road networks and dysfunctional agricultural value chains, 50% (230 million tonnes) of agricultural produce is wasted in Sub-Saharan Africa annually. For Nigeria and the rest of Africa to improve its food security, it has to urgently tackle these issues.

2.            COVID-19 has impacted almost all industries, some positively, some inversely. How has COVID-19 impacted food security in Nigeria?

One of the major economic implications of COVID-19 is the weakened levels of food security in many countries. Global hunger numbers that were already dire before the outbreak of COVID-19, underline how desperate the situation has become. World hunger had been rising before the pandemic, increased significantly: for instance, the World Food Programme (WFP) estimated the number of undernourished people in the 35 countries within which it works increased a whopping 60 percent within a year, from 177m to over 296m. With its vulnerable agricultural food chain, several countries in Africa were severely affected by the pandemic, with huge supply chain disruptions. In Nigeria, food insecurity in Nigeria has been aggravated by myriad factors, including communal conflicts, the presence of militant groups like Boko Haram, violent clashes between herders and farmers, and COVID-19.

Specifically, COVID-induced border closures and lockdowns reduced food access, reduced production as manyagro process companies were unable to manufacture due to a shortage of resources such as raw materials, process equipment parts, etc. So, COVID-19 impacted Nigeria like other African countries.

3.            What are the opportunities for food security in African countries? What are the similarities you see across countries?

The opportunities lie in the ability of West Africa to enter food production, processing, and distribution. We have good land to cultivate produce. The opportunities lie in manufacturing and adding value to the product.  We must develop the competence to transform our agricultural systems into profitable and sustainable systems and introduce some form of end-to-end processing from raw materials to finished goods.

We can increase the federal allocation for agriculture and rural developmentfrom <3% to about 10% of the national budget, as specified in the 2003 Maputo Declaration, and develop an institutional framework across stakeholders to support subsidies, credit financing, and insurance for small and rural farmers. We must also create an enabling environment for more marge-scale investors to create state-of-the-art processing firms, good roads, and irrigation systems.

Also, thanks to the African Continental Free Trade Area (AfCFTA) and its potential to lift millions of people out of poverty and end chronic food insecurity in Africa, African nations can improve food security by developing inclusive regional value chains around priority commodities, led by a dynamic and diverse private sector of smallholders, commercial farmers, processors, and service providers. It is expected that strengthening national food production capacities and linkages to regional markets will provide a strong basis for countries to boost regional trade. The increased integration of stakeholders along agricultural value chains, from farmers to processors, transporters to retailers, is likely to create sustainable jobs and improve long-term agricultural productivity and, ultimately, food security and nutrition.

4.            You mentioned the African Continental Free Trade Area (AFCFTA); how will it improve food security in Africa?

The African continental free trade agreement is welcoming news for the African continent. It aims to expand intra-African trade and boost economic growth. Africa depends on exports of agricultural commodities such as cocoa, coffee, cotton, and spices. However, we are also a huge importer of finished food products such as chocolate, sauces, dairy, and oil which is a huge concern. Total trade between African countries is very low, under 2%.

The AFCFTA can change the dynamics, increasing free trade among Africa countries at low or no tariffs will improve the flow of goods and services across the countries. The potential is huge. The policymakers should expedite this agreement. In the agric processing sector, each part of the continent should identify strategic commodities that can be harvested and processed, and exchange within the regions. This will accelerate Africa’s economy.

5.            As a leading African provider of extracts for spices, ingredients, and flavors, you provide essential services to food manufacturers in Africa. What are the challenges you see in the food flavor and food manufacturing industry?

There is some reliance by manufacturers on foreign items. In producing food ingredients and flavors, there are 2 components; the local component, which involves the items you have or can procure locally, and the imported component. During COVID-19, up till now, we have seen the Nigerian Naira being devalued to other currencies and a FOREX shortage. To order from abroad, you need FOREX, which is unavailable. This has placed a huge challenge on local manufacturers who now have to spend more to produce the same product in our quite elastic market.

The current state of the affairs has also affected the supply chain. The ports are congested and it takes a long time to get your goods from/to the port via sea. The other option is airfreight which is about 4xthe cost of sea freight.

Food ingredients businesses have complex supply chains with many unique characteristics: tight margins, fresh products that may spoil, expiration dates on products, complicated inbound requirements, and more. Getting the right volume of products at the right time, and at the right location, is no easy task. These supply chain vulnerabilities are more pronounced in African countries, with ineffective logistics and transportation systems and so on.

6.            You mentioned Supply Chain Vulnerabilities as critical issues for food manufacturers: can you shed more light on this?

Our suppliers give us lead times of 6 to 8weeks when we place an order; to avoid disappointments, we typically add an average of 3 to 4 weeks as the transit time for the goods, followed by about 2 to 3 weeks for clearing at the ports. Things have changed, the transit time and clearing times have increased. You can now do 6 months waiting for a food ingredient, with most of the timeat local ports. Another challenge is also land transportation to our warehouse. The road network in the port creates huge traffic.  At Freddy Hirsch Nigeria, we have to overcome these bottlenecks by placing emphasis on planning and looking at local solutions in the ingredients business.

To satisfy our customers, and achieve our vision of creating authentic African flavors and tastes, we have invested in a Research, Development, and Application laboratory and a manufacturing facility with world-class quality management systems, in Nigeria, where our experts develop flavors for various application areas, especially savory foods, sweet applications, and beverages tailored to the African market.

These facilities allow us to tap into the pulse and gain valuable insights from our customers, meet the unique taste preferences of the regional market and develop competitive solutions in culinary, bakery, confectionery, and dairy. With these competencies, we can offer cost and FOREX savings with best in class in-country food ingredients and flavors to reduce capital flight, drive job growth and improve the lives of our teeming youth population.

7.            How is the pandemic affecting consumers’ food and flavor interests?

We have seen consumer trends shifting towards clean labels and natural products; health and wellness. This has created additional opportunities for innovation that can boost health. This immunity-type product comes with a taste challenge. Our role is to provide food ingredients and flavors that taste good, We know that Taste is King. Our team creates systems that improve health as well as enhance taste.

For our customers, we have made a difference in the supply chain management, They are looking for ingredients and flavors companies like Freddy Hirsch which is based in Nigeria who are flexible, require low minimum order quantities, short lead times, and also trade in Naira as compared to huge FOREX costs.

Freddy Hirsch is uniquely focused on providing local solutions with speed and agility.  We are passionate about what we do and partner with our customers to provide winning solutions. Our customers are looking for end-to-end solutions post-Covid 19 and we have become an extension of our customers, thanks to our research and development capabilities and so on. At Freddy Hirsch Nigeria, we understand the taste ofWest Africa and our goal is to create customized taste solutions for the regional market.