How Michael Aondoakaa’s rice business attracted America’s attention

The US Ambassador to Nigeria paid a visit to Miva Rice Mill in April 2014

As Attorney General of the Federation and Minister of Justice, Michael Aondoakaa attracted international attention as a key figure in the cabinet of President Umaru Yar’Adua who provided critical legal cover for the survival of a President plagued with ill-health.

Six years after he served as Nigeria’s number one judiciary officer, Mr. Aondoakaa has moved almost seamlessly into a billion naira rice business, which activities have attracted the attention of the US government.

On April 8, 2014, the US Ambassador to Nigeria, James Entwistle, paid an official visit to Miva Rice Mill located in Makurdi, Benue State. That visit remains a milestone for the rice processing mill founded only in 2011 by the former Attorney General.

PREMIUM TIMES went on a facility tour of Miva Rice Mill and met Michael Aondoaka brimming with confidence as he talked about his company’s backward integration activities, his joy working with over 10,000 farmers, support from the Central Bank, the growing popularity of Miva Rice with orders coming from neighbouring Cameroon, his mission to grow rice in other West African countries and his ultimate dream of continuing a family legacy started 35 years ago by his late uncle, Aper Aku, agovernor of Benue State in the Second Republic.

Aper Aku established the only integrated rice mill in the whole of Nigeria. The fact that Mr. Aondoakaa lived in the same house with Aper Aku explains what can be described as a burning passion for rice production in the family.

In the beginning

In 1982, Mr. Aondoakaa was an undergraduate of the University of Maiduguri when there was a students’ riot. In the aftermath, the university authorities imposed a fine on all students for damages done during the riot.

Mr. Aondoakaa returned home to his father who, having no money, gave him a measure of locally grown rice to sell in the market. The law student journeyed to a distant market in the city. He was however unable to get a good bargain because of the menace of middlemen. For many years he lived with that bitter experience of peasant farmers in the hands of market shylocks.

Miva Rice
Rice being produced at the Mill

When he was minister, he found out that the only business the constitution permitted a government official to do was farming. He reinvigorated Mikap Nigeria Limited, a company he had incorporated in 1990. Mikap was founded for the development of agricultural value chain, energy trading and development consulting.

Specifically, the company is aimed at promoting commercial agriculture, agro-processing and marketing. Since 2011, Mikap has invested in polished parboiled paddy rice processing, with a capacity of 8.5 metric tons per hour under the brand name ‘Miva Rice’.

Located at Kilometre 5, Gboko Road in Makurdi, the Benue State capital, the company has functionally engaged over 10,000 farming communities in Benue and Cross River States in diffusing improved methods of paddy rice production. These were made possible by working with the Central Bank of Nigeria (CBN) and the MARKETS II scheme of United States Agency for International Development (USAID).

Inside Miva Mill

Mikap’s initial investment in the rice value chain was the commissioning of 2.5-ton per hour (2.5TPH) rice processing mill in Year 2011.

The processing capacity of the plant was increased to 8.5TPH in 2003 within two years of its operation. The mill applies state-of-the-art technologies and implements international best practices of parboiled polished rice processing, packaging and marketing.

The plant delivers an upscale, export quality flagship product, ‘Miva Rice’ to the market. Miva Rice is a brand of quality parboiled polished sortexed rice that is processed from locally grown long-grain hybrid rice varieties of Farro 44 (sippi) & Farro 52 (Mars) and packaged into 50kg, 25kg, 10kg and 5kg bags, respectively.

At the moment, market outreach is the Nigerian market with target being the West African sub-region. Already viable and substantial commercial orders for Miva Rice have been received from the Republic of Cameroon.

Miva Rice
The Rice Mill

Total investment in machinery and land is N1.369 billion, made up of N869 million in equity contribution and a loan facility of N500 million under the Nigerian government Commercial Agriculture Credit Scheme (CACS).

Components of the investment include: two units of Steam Boilers from India (1st unit 2,000kg/hr and 2nd unit 6,000kg/hr); two units of raw paddy pre-cleaning machines (from India); three units of paddy rice parboiled plants (from India); two units each of 250t parboiled paddy storage silos (from Turkey); two units of Rice milling plants (1st line 2.5MT/hr from S. Korea and the 2nd line 6MT/hr from India); a 60-ton Road Weighbridge (from Italy); and locally-sourced vehicles, 2Nos. 250KVA diesel generating sets, 1No. 500KVA diesel generating set, 1No. 100kVA diesel generating set, main factory building, raw paddy warehouse, finished product warehouse, administration block, water works and fuel storage dump.

Mr. Aondoakaa told PREMIUM TIMES that one of his key intentions is to add value to local foods and create sustainable wealth that will provide employment by making agriculture posh and attractive to the youth population. To this end, Mikap has committed to developing markets and adding value to locally grown rice as a way of boosting food and agricultural production for wealth creation and employment generation. Interactions with various stakeholders, including marketers, distribution chains, consumers and farmers themselves have been beneficial in honing the mastery of rice processing technology.

Partnership with USAID

The integrated mill established by Aper Aku was not used by successive governments for 25 years after he left office. A major agro player, Olam Nigeria Limited, took over the mill and they operated an out-grower scheme supported by US government.

Explaining further, Aondoakaa said:

“For reasons bothering on communal issues and preferences, Olam left the scheme in 2011. When they left, the US government became stranded because they had secured approval of the State Department to fund the scheme until 2018. So they were looking for somebody else and that was how I came in. They said I had to pay 30 per cent contribution while they pay 70 per cent. I complained about my ability to pay the 30 per cent. The ambassador said they will work it out. Eventually we signed the first agreement in 2012.

Miva Rice
Equipment at the rice mill

“We started the out-grower scheme market tool in 2013. The following year 2014 was when the US ambassador gave notice he will come and see our operation; that is accountability to the US, to see how the project is going. So on the 8th of April, 2014 he was here with his team to have direct discussion with the farmers for the market tool. He spent about two and half hours talking to the farmers about their needs. I pleaded with the Ambassador that the out-grower scheme should continue, so we now enlisted Cross River State. We realised the proximity of Cross River to Benue is just two hours or so, and Cross River already have got a very good Fadama land. The Ambassador advised that I should expand. We wanted to expand to Taraba but the crisis in Taraba was a challenge. He had got approval from the State Department for the expansion of the scheme for me, so we now expanded to Cross River. Now the agreement is signed for Benue and Cross River to train the local farmers.

“So we have about 10,000 farmers working with us. That is how we became the first company to have a large farm cluster on rice supported by US government through the USAID Market Tool. They started training the farmers. They brought milling consultant from US because these people cannot give you money without consultant to manage it. The US government sent a team that came from Washington. Among them was a director from the State Department on Market Tool for Development. We signed the agreement for 2014, we signed the agreement 2015 and we have now signed for 2016. Annually they bring the agreement for me to sign.

“I think they were able to influence Bill Gate Foundation which later came here and offered to develop rice scheme in Benue for $100 million. But up till now we have not been able to access the money. There are things people are supposed to do before they can benefit but all these people from government just wanted to be a member of the committee. I was scared as the chairman of the committee so I am doing things more cautiously because these white people don’t joke with their money. We are still discussing and putting up structures because I don’t want anybody to hold me at the end and say the $100 million was not well utilized.”

CBN Anchor Borrower’s Programme

At the national level, Miva Rice has received support from the Central Bank of Nigeria through the CBN Rice Farmer Anchor Borrower’s programme. The CBN, based on its findings selected Umza Rice Mill in Kano and Miva for the programme modelled after the farming method in India.

Again, Aondoakaa explained how it works:

“In India you cannot own land more than two hectares because the population is over one billion. They have developed perfect clusters. The Indians have farm clusters for wheat, farm clusters for rice, farm clusters for tomatoes, etc. If farming is in clusters, it is easier for farm inputs to be distributed; it is easier for them to access credit and it’s easier for them to market their produce. So the CBN said look, we will develop the farm cluster for rice. You will be the anchor; you need the farmers to grow the rice paddy before you can mill.

Miva Rice
Rice ready for supply

“Before now, the CBN had had challenges in disbursing money to these farmers. There were issues of collateral, insurance and access to fertilizers. Now, with the anchor programme, the farmers working in cooperatives of not more than fifty members, sign the anchor agreement with us, the CBN and the banks. You also do cross guarantee among the cooperative members. So this is the first time credit is being given to the farmers without collateral. And we are able to link the farmers to inputs supply like fertilizer. They are given adequate training on improved seedlings and through these clusters like the ones in Gboko, Katsina Ala, Agatu and Otupko, fertilizers are delivered to their doorsteps.

“Through this approach, farm yield has improved over three-fold from 1.5 metric tonnes of rice per hectare to over 5 metric tonnes over the same acreage. Working through the CBN’s Rice Farmer Anchor Borrower’s programme, we are expanding our rice-farmer support to also cover Nassarawa, Kogi and Taraba States of Nigeria and hope to achieve the yield of 8 metric tonnes per hectare during the 2016 cropping season. Five additional rice processing companies have enrolled in this scheme of CBN anchor programme so we are hoping that in two to three years the national supply gap of 1.5million metric tons will be no more so Nigeria won’t need to import rice,” the former Minister said.

Growing acceptance for local rice

Not too long ago, local rice found in Nigerian markets were totally produced by peasant farmers. Though more nutritious than imported rice, it was not the favourite of the middleclass and the elites. The grains were short with stones in them. With the coming of upscale entrepreneurs and the establishment of rice mill equipped with sophisticated technology such as optical colour sorter, the story has changed. The overall quality strategy targets ISO, SON & NAFDAC specifications. In addition, brands like Miva Rice have done a lot of work on product packaging, making local rice not only attractive to the Nigerian consumers but foreigners as well.

Mr. Aondoakaa’s mill got an order from Cameroon he could not meet. Speaking on the experience he said:

“It was for 25,000MT. I think some of our Nigerian brothers took our rice to that country; they ate it only to come back here with an order. I cannot even satisfy local demands in the country, how can I think of export? But time will come when we can export. Of course if we have quality rice and surplus quantity, why would Ghana go to Thailand to buy rice and incur more cost because it takes the ships long time to arrive from Thailand. But with Nigeria, you can place your order today and it will arrive Ghana tomorrow.

Time will come when we can export tomatoes; time will come when we can export; our food is tropical which is much better.

“We only need to improve our quality so that we can be more competitive. We must make sure our standard meets the international standard; and if our production cost goes down like by solving the electricity problem, it would not make business sense for any importer to journey to Thailand to import rice, get a ship to carry the rice, worry about insurance and worry about customs duties when that importer can get what he wants here locally. Local rice is healthier and more nutritious. Many consumers are not aware that virtually all the imported rice from Thailand and other places are not fresh rice. They are old stocks that had been kept for as many as eight to ten years in that country’s food reserve. They cannot sell new rice to you. Some of the imported rice are expired and have lost nutritional value,” Mr. Aondoakaa explained.

Bridging national supply gap

Former Minister of Agriculture, now President of the African Development Bank, Dr. Akinwunmi Adesina, had in 2014 worked out Nigeria’s national supply gap in rice to be 1.5 million metric tonnes. This, Aondoakaa said can be bridged in four to five years if current momentum in local rice production is sustained.

PREMIUM TIMES expressed doubt over his five-year projection, pointing out that some of the capacities claimed by some mill owners have been found to be misleading. But Mr. Aondoakaa argued that the true local capacities cannot be measured by the installed capacities of existing rice mills. He said:

“The capacity doesn’t mean the capacity of the machines but the capacity of the farmers to give us the quality paddy. The machines are there; we have up to 24 integrated rice farms in Nigeria but where is the paddy? That is the problem. There was a pyramid of paddy outside this mill.

“If I am milling at full capacity, the whole of my two warehouses, I can finish the paddy in less than one month. So where is the paddy if I am supposed to run three shifts, I am just doing two shifts until when I have enough paddy.

“We are hoping that by 2018 the farmers would have had sufficient training to produce more paddy. The anchor program of CBN coupled with what I am doing with USAID Market Tool and what others millers are doing, we are hopeful that we can get there. Mali has attained self-sufficiency in rice production. Nigeria can do same. I am the President of West Africa Rice Investors Association and we are telling other West African countries to start local rice production. I am working towards growing Miva Rice in Cameroon and Sierra Leone as well.

“However, the major problem is insecurity in the Middle Belt region, especially in Benue popularly referred to as the food basket of the nation. Go to Kogi, go to Taraba, the Fulani-Farmers conflict is harming local rice production. Agatu area used to be a major supplier of rice paddy but since this year I haven’t got one pin from that area. We invested there, through the US market tool; the rice is there in the bush but I can’t go there; the farmers can’t go in there. So whatever we did in terms of training, in terms of seeds assistance to farmers is lost; I am not getting any compensation. Any time you want to go there you have to meet the commissioner of police to get 12 mobile police men to go with you and spend three days. You can imagine maintaining 12 mobile policemen for three days just to harvest how much quantity of rice,” Aondoakaa regretted.

CHALLENGES:

As Miva Rice continues in its quest to someday become a global brand, Mr. Aondoakaa says the challenges are multifarious. A combination of different species of paddy by farmers creates considerable difficulties in the parboiling process throwing up soaking temperature and overcooking challenges. Paddy supplies are also not thoroughly cleaned by farmers. Paddy usually contains large amount of chaff, dust and immature grains which generate Black Rice and overload the mill’s optical sorter.

Miva Rice
Michael Aondoakaa

Large scale rice milling is water intensive. As a result, the Miva Mill is currently spending considerable capital on water purchase. Other major challenges facing investment in the rice value chain are capital mobilization, lack of basic mechanization, and seasonal availability of paddy.

Complete reliance on rain for cultivation and primitive planting methods in Benue State results in single cropping per year by farmers. Because paddy is only available for a short period of 90 days at harvest time once a year, this has imposed on the company the need for long periods of stock-holding.

But all these Aondoakaa assured will be surmounted as he strives to someday be remembered by history as a major contributor in the diversification of the Nigerian economy.

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