20/05/2015 (THISDAY Live) -  In this interview with Crusoe Osagie, the Chairman of Presco Oil Palm Plc, Pierre Vandebeeck, stresses the need for the incoming administration to pursue the advancement of the local vegetable oil industry and end importation. Excerpts:

Impression about Nigeria's economy and prospects

I will start by saying that the worst never happens in Nigeria and let us hope that the best will happen this time with the change in leadership in the country. But Nigeria is showing a lot of maturity that we can go through such tedious periods during the campaigns and the election. A couple of weeks ago, we all thought that a time bomb was ticking but finally, it ended very well and nobody could have expected it to go that well. So, we are back with the generals we must admit. Personally‎, I have a very fresh souvenir for General Buhari, whom I had occasion to meet several times in his first stint. At that time, in one occasion,  we were commissioning four oil mills and at the end he asked me what was the secret of my success and I told him not to tell anybody, I built a factory and also have plantations to feed the factory with raw materials. There was another question he asked me, saying that with all these mills that are now operating, he hoped he would be invited when we export our first ship load of palm oil. My answer to him was that I hope God will grant him long life  and this has been given. At the time I was interacting with him as he was the then Head of State and Nigeria was importing about 200,000 tonnes of palm oil yearly and today we are importing an excess of 1 million tonnes. His ambition was obviously to be self sufficient in palm oil and also export. This time around, when I have the opportunity to see him, I will wait until he has assumed office and remind him of what I told him that God should grant him a very long life before we can export palm oil.

The import  gap has widened and why has the gap widened, because nobody has implemented a proper protectionist development policy for oil palm and agriculture in general. This is my point. I have been agitating for the harmonisation of import duties in the ECOWAS region and finally I understand that last december, the Heads of States accepted it to be implemented. The decisions taken have not been perfect but I am sure it will improve the situation. I realised that I should stop talking about Nigerian protection. We have to start talking regionally protection and this is why I switched over to ECOWAS saying that they must harmonise their duty structure in the ECOWAS-Nigeria region so that imports will become more difficult. The Jonathan regime did well,  but the one that is responsible for the market protection was the Obasanjo regime, we have to admit that . I was instrumental to putting in place that 35 per cent duty structure but we discussed some of the situations but it never cleared.

They have so many categories now, crude, processed, unprocessed  and the likes.  Today the Asians are exporting what they call 'crude refined Olein' to Nigeria, such a category of palm oil does not exist. It is just a coinage to undermine the system in place to protect Nigeria's indigenous vegetable oil sector. It is a new 'product' but the word crude gives them the advantage to export from Malaysia and indonesia and gives them a double advantage here because on crude palm oil, you pay no duty or less duty on refined products.

So, in my submission to the ECOWAS secretariat, I made it clear that I cannot meet up with the oil palm because I am sure that there are other many agricultural products that suffer the same fate.

I think we have gone a big step forward and if General Buhari has not changed too much, if he has not matured too much, I think he will bring some sanity to the system which is necessary. We are very confident in Nigeria and we have had our board meetings looking into our investment programme, we have decided to build a new refinery which is five times bigger than what we have today. We also need to build a new oil mill in our Ologbo plantation which is our new project and we are starting our green project in Sakponba a 14,000 hectares plantation and also, we are trying to get a little more lands here and there because we believe the Nigerian market will always be insatiable and one day, a government will come, which understands that in order to progress, you have to empower your people to stop importation. Why do we have to import from Indonesia or Malaysia, are we going to fight poverty there. It is here we must fight poverty and make sure that the operators and the small farmers can make money and invest more to produce more. That is it.

Nigeria's economy according to World Bank would hit about $1 trillion dollars in  2030‎. What share of this growth will be real growth in the productive sectors of the economy

I do not believe so much of these projections of the World Bank and some other gurus but I believe one thing is that Nigeria has the people and the land and as a climate, if we ‎unite these things together, you will make it. You need good governance, you do not need oil price at 100 dollars per barrel, you do not need World Bank money. Nigeria is strong enough to create a growth rate of 5 to 6 per cent per annum.

Next planting season is about to come, what are you seeing in your business?

A: We are investing more and more every year. For the past five years, we have been planting about 1,540 hectare a year. We have invested in the expansion of our factory and we also saw the reasons to invest in a new factory. This year, we are going to do much more oil palm fruits and in two years from now, if we have no new mill, we will not be able to process our fruits. We are going to plant about 5,000 hectares more every year. I was calculating our projections ten years from now. This year we are going to produce more palm oil . We  are eyeing a couple of other associates in the area. We will produce about 250,000 tonnes of palm oil which is a quarter of what we are importing today. So there should be 4 or 5 more big companies like us to go the same way in order to make us self-sufficient in oil palm in 15 years from now.

How do you handle the competition

We are selling oil to our competitors but I do not really like selling oil to our competitors, but the market is so huge for many to operate. We are learning Africa the way it is but it is not so simple because if you do not know the people here, acquiring land is not so easy. This is the first thing and also the major thing. I think that is where they got things mixed up. They acquired two small estates

Wilmar is a giant oil palm company, the biggest in the world in oil palm. What they want is to import, that was their first objective. But we say you do not build your house the Wilmar way. They build their rooms before the foundation. They built a huge refinery of about 1000 tonnes a day,without any oil palm plantation to supply the raw materials. whereas, we have been planting and extending our refineries for the past ten years and it is now we have decided to build a much bigger refinery.That is the difference in approach.

Their objective is to capture the West African palm oil market and not to produce massively locally but to import. Today, West Africa imports 2 million tonnes and in the year 2020, it will be 5 million tonnes.

That is what they want, to capture the West African market. They are business people and the biggest producer of palm oil in the world. They are producing about 2.5 million tonnes of palm oil per annum and they are eyeing the market in West Africa. The head of Wilmar told me "I have $1billion to lose in West Africa". They are intent on capturing this market. Whether that is beneficial to the country, is a different matter and it is up to the government to decide.

Benchmark your investment in ‎Nigeria against other countries

We are anytime number one by far‎ and people cannot comprehend it, they ask how we cope in Nigeria saying the country is a very lousy place to be, but I always say to them that if you are not in Nigeria, you are not in Africa because the game changer is Nigeria. Nigerians are much more business-minded and business-friendly than any other country. People think that Ghana is the Eldorado. But now many people who were transferred to Ghana from Nigeria, after two years, have asked that they would like to return to Nigeria

Factors that give Nigeria an edge over its counterparts

First of all is the human capital. Nigerians are hardworking people. You show them the money and they are ready to work, but in other countries when you show them your money, nobody comes to you. Here, you wave your hand with money in it and people work for you. This is the very first thing. They are hardworking and well educated. We have a ‎crop of fantastic members in our management team. We are about 27 with just three expatriates, while the large majority are Nigerians and a couple of Ghanaians. This gives me the biggest satisfaction that we have a team of good people. And when I compare our company in other countries I have visited, this place is by far the best and when I go round, it gives me satisfaction that we have a team of good people.  People think corruption is a great challenge in the country but I tell them we don't delve into politics.


What drives innovation in your company and what else do you have ‎to offer to Nigeria?

Innovation is something that is a matter of survival and indeed it is very important to us. Cost and efficiency that means investing in better equipment, cheaper energy and no pollution, now we have ‎ just began a new chapter in our company where we acquired a biotechnology company in Belgium through which we are going to be producing high performing planting materials. We are the only company in this industry in the world that has succeeded  in cloning rubber trees. We started two years ago and will be planting our first cloned rubber trees in Ivory Coast and Ghana because we believe through this system we will be increasing the rubber yields by about 30 per cent per hectares from 2 tonnes to 3 tonnes, but I believe it will be more.

For the past ten years, we have been investing in what we call a genetic bloc of oil palm where we have over 200 different  crosses ‎from the whole world, the best crosses that exist which we shall propagate and make available to anyone who is prepared to pay the price. We have the first result for this and five years after planting, we added much more. With an extraction rate of 29 per cent and this means we are doubling the oil yields per hectare of what is coming now. We are doing the same thing ‎for cocoa because personally I believe in three tree crops which are rubber, oil palm and cocoa. For cocoa, we are going to produce high performing clones that are disease resistant. This is an investment that is gulping a lot of money. We have the best scientist working on this project. We are  making this project  available not only for our plantations because  I consider our company as a commercial entity where we have our presence  in different parts of the continent, growing platforms to produce top planting materials for whoever wants to buy it. I have always said that ‎ many research institutes are doing agriculture research with the aim of producing doctors and they have never given any of their findings to the farmers. My contention is, between research and the field there is a gap and that gap is what we are going to fill and by that, we are not only  going to advance the production of our own estates. This is what I want to do for mankind and it is going to  revolutionise agriculture in Africa. However sometimes when I consider our innovations, I wonder and say we are going to give Ferrari vehicles to farmers that can hardly drive and have no good roads to drive the cars. So how are we going to solve that problem.  We will make available to them, good planting material and when you have good planting materials, you have to look after it very well and you also have to feed it very well. For me, this is the only question mark that remains with me in that approach. We can only do this having good planting materials available. Today, we sell our seedlings from the nurseries and it disappears. People are fighting to get it at a token of N1,000 per seedling. It is not free. People are fighting to get it because they know the value of the planting material. This is what we want to do going into the future and with that, my question is are the governments going to understand that they have to assist the farmers with fertilisers and advise for them to enable the good planting material express its potentials.

Profit margins for 2015 and what will drive it?

We are looking at 40 per cent. God willing, we are looking at a profit margin of about N4 billion this year‎.  For 2014, we declared a dividend and our company's policy is 50 per cent of the net policy is declared as dividend. So if we are making a profit of N3 billion, we are going to have N1.5 billion dividend and the other money, we invest in new projects. We have 2,000 hectares  in Sokponba and a 14,500 hectares new project, finishing in Ologbo. Here we are planning a new refinery and oil mill.

I have not done the feasibility yet but the cost estimate for the oil mill  is about $20 million and the refinery is $10 million summing up to a $30 million investment. A hectare of new plantation costs about $6000 to plant, so multiply that to know how much we are investing every year. We are not stopping. We are like a vehicle driving very fast  all the time, although I do say should we not slow down a bit, but there are so many opportunities that come up that we do not want to miss and therefore you are more or less pushed to continue investing.

Any other thing you will like to add?

I think you have asked me why a Nigerian as the Managing Director, this country is the most exciting place as far as I am concerned. I was called by the President of Congo Brazzaville ‎sometime ago and he asked what I was doing in Nigeria and Gabon wasting my time. Today, we have our biggest investment in Gabon, but Nigeria is our game changer,  Ivory coast is number two and we are also going to Liberia soon and from here I go to Abidjan and next week I am in Liberia, but at the onset I have said that Nigeria is the biggest place to be but how big is the risk and we do not want to lay all our eggs in the same basket and this is why we diversified in many other countries, but I always come back here to say this is where we can make things happen. One other thing I will like to add is the lesson to be learnt from the drop in petroleum prices in the market, even though the Nigerian market is insatiable for palm oil products, we have to think about foreign exchange generation and that is why we are going into rubber and cocoa. No matter how much Naira we will make, one day we will have to go to the bank because I have to pay dividends to international investors and I have to buy new machines and I have to pay for  the oil mills and the rest. We are going to diversify our crops into cash crops for export and palm products for the local market.
This is not to say that we will put less money into oil palm ‎because this is what makes money and it is also the money spinner. We also have to think about how we are going to get all the dollars that we need because a concern like this gulps a lot of dollars because we need spare parts, machineries and what we are experiencing today and I did not know  that it was so serious, today in Nigeria, it is not easy to get dollars. There are no more dollars in the banking system and a year ago, I warned them about something like this saying that a time will come there will be a dollar crunch.

Do you need a power license to generate your power?

No, we are generating on our own power from waste in our Biogas plant and doing what we have to do. When I was in Ologbo there was this huge gas field flaring gas and I said what a waste because they have three huge flares. Put a turbine there of about 10 mega watts and you will supply the whole of Delta State and Edo State all the power they need.