One might find it odd to hear that Nigeria imports thousands of litres of canned ginger drink annually, yet the country is the third-largest producer of ginger in the world. The crop is widely grown by small-scale farmers and despite its many uses in food and beverage, cosmetics and pharmaceutical industries; little processing is done locally.

One company is advocating for commercial production of ginger in rural Nigeria. South African-born entrepreneur, Litlhare Sarki, runs a food and beverages company that works with the rural farmers in Kaduna State to increase quality and production of ginger, and to promote proper post-harvest handling and processing techniques. The ultimate objective is to get higher prices in domestic and international markets.

In 2008, Litlhare and four like-minded partners set up Kenyi Castor & Jatropha Multi-Purpose Co-operative Society Ltd. to produce and promote quality export-standard ginger under the brand name, Sarki Spices. However, due to the difficult operating environment for most small-scale farmers in Nigeria, the company struggled to reach its potential.

After decades of neglect, agriculture is once again in the limelight due to global food shortages and the federal government is now diversifying the economny to curb the large amounts of foreign exchange spent on imported food.

“The lack of value addition in agriculture is troubling,” says Litlhare whose company operates in an environment where food production is still crude, manual, traditional and tedious. “The farmers are poor and therefore anxiously dispose of their produce with little or no value addition, meaning they earn very little."

The shortfall in processing capacity is one of the key structural deficiencies in the agricultural economy. “There is huge economic opportunity in value addition for ginger and other major crops. We aim to exploit the gaps by investing in modern equipment and techniques,” says Litlhare.

The same obstacles affecting other sectors of the economy - a lack of stability, infrastructure and funding - limit the agriculture sector. Nigeria’s large population and the high demand for food magnify these problems.

For entrepreneurs like Litlhare who are trying to build profitable agribusinesses, each problem is caused by either limited infrastructure (roads, irrigation or storage facilities), lack of research solutions and resource management; inefficient markets; or inefficient financing. Yet, arable land is abundant – roughly 71.1 million hectares out of the total 98.3 million hectares. Only half of this capacity is being utilised, according to a study by academics from the Michael Okpara University of Agriculture in Abia State. Additionally, only about 1% of arable land is irrigated.

Kenyi Castor & Jatropha Multi-Purpose Co-operative has managed to modernise production and processing modestly, and invested in its own source of reliable supply of water, electricity and modern equipment that are fabricated locally for easy maintenance. The company intends to achieve large-scale production of high-grade 100% natural ginger for the export market in the next three years.

Not many small-scale farmers have similar stories as they are struggling to cope, says Litlhare. The yields are low because despite the hard working culture of farmers, they can barely access agricultural inputs and government services. The solution for increasing food production does not have to lie solely on commercial farms, but rather in improving smallholder ones. Up to 70% of the country’s workforce is involved in agriculture directly or indirectly.

According to Litlhare, the lack of access to credit stifles worthy ventures particularly those owned by  women.

“Women-owned businesses rely on non-formal sources of finance and microfinance banks, which can only legally disburse up to $3 000. The big banks are definitely not friendly to this group; they always attend our workshops, dangle a carrot for the women to open savings accounts and then deny them loans for lack of collateral,” says Litlhare.

Despite the difficulties, there is great potential in Nigeria’s agriculture sector, from primary production to processing and marketing. The onus is now on the government to make it happen. Several initiatives have been put in place with two broad goals: to alleviate rural poverty and to provide food security. These include financial incentives, subsidies and research initiatives into improved crop utilisation.

The question is whether the initiatives have had tangible effect on the ground. “The success of ex-Zimbabwean farmers in Kwara State is a testament that with the right support and training, small-scale farmers can farm profitably.”

Some of the short-term investment opportunities in Kaduna State include land clearing services, equipment leasing, supply of locally fabricated processing and packaging machines, and supply of affordable inputs and loans.

The use of tech innovations to access key information related to, for instance, prices and markets is popular in many African countries.

“Ideally the marketing of products should start from farm sites, and the use of IT should be the option. However, there are many problems, for instance, the political will, lack of infrastructure such as power, and illiteracy. In a nutshell, electronic marketing for rural farmers who are the majority players is yet to take off in Nigeria,” says Emmanuel Ezeonyasi, the New Business Development Strategist at Kenyi Castor & Jatropha Multi-purpose Co-operative Society Ltd.

“Getting the farm produce to the market involves more than passable roads, farmers need affordable means of transport and storage facilities. From the farm-gate, the small village farmers walk to the market with the products on the head. One can only sell what they can carry to the market considering the availability of transport, storage and other facilities,” says Emmanuel.

Nigeria’s burgeoning fast-food business requires a constant and reliable supply of produce, and so do the many local quick service restaurants. Groups like Chicken Republic say the supply of chicken cannot meet the demand of consumers in fast food restaurants countrywide, and want government to fund mass production.

Even though there are deficiencies in production, it is not the real problem. “There is serious scarcity of a product in one part of the country, and less than 100kms radius away, there is a surplus or a glut. The real issue here is lack of information, logistics and value addition. Serious financiers should be thinking about value-chain financing. Value addition stimulates production,” says Emmanuel.

Emmanuel is driving the company’s marketing efforts. Kenyi Castor is exploiting the gap created by the low quality of exported split and dry ginger in the world markets by producing dry ginger that meets international specifications and standards.

Says the quality control director, David Sarki: “Our dry ginger is free from dust, sand, stones, dead insects, mould, microbes and defects. This innovative approach, though tedious and cost effective, gave us an edge over other existing players.”

Buyers of Sarki Spices are mostly agents for exporting companies based in Lagos City, or from other states in Nigeria who eventually sell to the exporters. Since implementing quality control measures, the company’s domestic market share has increased: it recorded 120MT orders per month in 2012, up from 30MT in the previous year. The company intends to export the product directly, and is seeking investors to provide capital for expansion.

Future plans include building a bottling plant for a ginger soft drink (non-alcoholic) to supply the fast-growing local beverages industry. Another potential product in the pipeline is ginger herbal tea. “We should not be importing ginger drinks from Jamaica and South Africa when we are among the top producers of the crop,” says Litlhare.