Envirogro Farms -lessons from female agri-preneurs in Nigeria

Reflections from meeting with Nkiru Okpareke, CEO and Emeraba Tony-Uzoebo, Finance and Business Development of Envirogro Farms

August 2, 2016

Finding a farm in the countryside of Nigeria is tricky.  In fact, finding many of our meeting locations has been anything but straightforward given that street signs, markings, building numbers, and any type of formal address can be scarce.  Even asking the Okada (motorbike) drivers often turns up blank stares and “I don’t know” when we are right there in the correct neighborhood.  So, imagine trying to find a road with the directions, “Turn left on a dirt road at the two NEPA (National Electric Power Authority or commonly referred to as “Never Expect Power Again”) electric poles near the plantain grove” on a long road with plenty of electric poles and from my untrained eye, what looked to be dozens and dozens of plantain groves along the way.  However, our driver, Paddy and his fearless human GPS guide, Dolapo, my Eisenhower Fellowship coordinator, got us there and we knew we had arrived at Envirogro Farms when we saw the professional greenhouse structures set off in the distance among fields of pasture, tropical grasses, grazing cows, and plenty of land filled with overgrown tropical “bush.”  We pull up and the generator is humming and there are several large shipping containers parked in front of the greenhouses.  A “security guard” greets us and shows us the way to meet with Nkiru Okpareke, CEO and Co-founder of Envirogro Farms and her business partner, Co-founder, and finance director, Emeraba Tony-Uzoebo.  They were chatting away under a nice open cabana, made from wooden posts, slatted bamboo, and covered with leafy thatch material.  It looked as though they could be sipping piña coladas and enjoying a nice day in the countryside, but these women were talking business.  “Welcome to our office!” they greeted us.

Envirogro Farms was first registered as a business in 2011, but it took over three years to actually begin operations until the women could secure financing in 2014.  They then purchased all of their infrastructure and inputs (which were all imported from overseas, the Netherlands mostly), and began planting in mid-2015.  To finance the startup, they used personal funds, leveraged their savings and retirement plans, borrowed from friends and family, and are now working with two equity investors.

We immediately walked over to tour the large, connected greenhouses situated on half  of a hectare (5,000 square meters under cover) and I was intrigued by the drainage system outside the houses and the nice, low-growing creeping plant material that looked like it had intentionally been planted along the edge.  I asked what it was and Nkiru explained that the ditch and cover plant was placed there to keep people away from the edge of the house, which was covered with a very fine mesh to keep insects out.  Apparently, curious passersby who get too close could easily tear a hole or otherwise perforate the nylon mesh and the separation and planting was a protective measure.   Another protective measure they put in place was the sink and handwashing station positioned just outside the greenhouse.  We were instructed to wash our hands with soap and water before entering, so we don’t bring any diseases inside the house.  I was already impressed with the level of biosecurity here and then we had to pass our shoes through a concrete foot dip filled with disinfectant and water as we entered the structure through a central passage way that led immediately into their irrigation and fertilizer mixing room.  The fertilizer injectors, dosatrons, and irrigation tanks were all controlled by a high-tech panel of controls – all imported technology.  They had to dig their own bore holes (an irrigation well) and the water tested very clean.  They use soluble fertilizers to feed the plants and this was a big challenge sourcing the correct types of fertilizer needed since most of the fertilizer available (and controlled by the Nigerian Government) is granular bagged concentrates.  Unfortunately, the soluble fertilizer, minerals, and micronutrients recommended for their fertility program is not available in country, so they are constantly tweaking the program trying to see what works. The women collaborate with a Dutch partner and send out for soil analysis and water samples to labs in the Netherlands.

We walked into the first bay of the greenhouse and there were mile-high pepper plants growing in plastic “grow bags” with coco peat medium.  They had gotten so tall and were trellised along long nylon strings, that it was tough to see which plant belonged to which coco peat bag since the stems had been pruned and they were practically laying down across the rows of peat bags.  Nkiru explained that this was a variety that never stopped growing and they were now experimenting with shorter varieties.  They also use a retractable dark shade net on the roof of the greenhouse to avoid sun scald and they installed fans to keep the temperatures from soaring to the extremes.  They installed a micro drip irrigation system that reaches each plant which provides both water and the necessary fertility as scheduled by the programmable fertilizer injection system.  They are also on a preventive spray program and are continually applying pesticides and fungicides after harvest to make sure they are controlling pests and disease.

The farm produces two and a half cycles of tomatoes per year through continual succession plantings.  They also grow an abundance of peppers, both habañero and sweet bell peppers (green, red, orange, yellow).  They harvest the peppers January through August.  All the produce is harvested at first blush into black stackable plastic bins and delivered straight to markets, they do not have a post-harvest wash station or cold storage.  It was clear there was visible spray residue on the peppers, so I asked how that was cleaned prior to shipping orders and they wipe the fruit by hand.

I asked how they learned how to set up this system and figure out the complexity of the operation.  The women visited a lot of farms in Nigeria and abroad in the Netherlands.  They are working with a trained expat agronomist and paying his salary in US dollars.  Everything they are doing is currently an experiment in bringing this type of greenhouse technology to Nigeria.  All the coco peat is imported.  The nylon grow bags are imported, though they are currently testing a local plastic grow bag made domestically in Nigeria and had the company punch drainage holes in them per their specifications, but they are learning whether or not they will hold up as they were not necessarily designed to be UV stable compared to the imported bags that could last up to five years.  They are currently reusing the imported bags for their succession plantings by sterilizing them between uses.  All the drip lines – tubing, emitters, shut off valves, etc. are also imported.

Seed and variety sourcing has been a huge challenge to figure out what grows well and produces the yields their business plan projected in the Nigerian climate.  Some of their seeds are coming from Argentina and Chile because they have developed fusarium wilt-resistant varieties.  Yield is not where they hoped it will be yet until they nail down varieties that work with seeds adapted for this environment and in the meantime, they are losing crop productivity and time in figuring it out.  They both laughed and said this should really be a “research farm” since they are doing such intensive work on variety trials trying to figure out what works best.  There really are not many improved seed resistant varieties of these crops available bred for the West African climate, more work has been done in Kenya, but those varieties don’t always work well in Nigeria.  I asked if they had done any grafting since that seems to be a more common practice among tomato greenhouse production in the Northeastern US, and they have not gotten that far yet.  They do heavily prune the plants, but no grafting.

Another big challenge is in hiring skilled and knowledgeable labor and technicians to help run the operation.  The fluctuating Nigerian currency crisis adds to the challenge.  Salaries, seeds, and inputs are all paid out in US dollars and costs are continually going up compared to the value of the local currency.  The farm is not quite at the size where they have any economies of scale yet.  At 0.5 hectares under cover now, they need to get to a full hectare of greenhouse production to break even.  Their business model is planned to scale to five hectares.  The short term goal is to build the system to at least the first 2.5 hectares to be profitable at that scale, but one of the key challenges to this is available working capital.

Market demand is very strong for the product.  They sell all their “class A” (high quality) tomatoes and peppers to the local ShopRite chain (a South African supermarket) and they move all Class B produce through local markets.  Buyers take everything they can grow.  I inquired about the demand for organic produce and there is not currently much demand for organic produce and they found it hard to imagine how they would achieve organic standards with the available seed options, soil medium, sprays controls and other factors.

The women are looking at ways to optimize the growing space within the greenhouse to keep as much of the area in production as possible.  Any empty bays or unused space is potential lost revenue, given the expensive “real estate” and the fixed overhead costs under this intensive production system.  They are currently piloting a “canoe method” of planting in the soil along the edges of greenhouse.  The “canoe” part is due to the very deep drainage ditches that are carved out of the rows near the edges to capture the heavy rain/moisture that collects along the sides.  If this pans out, they will continue to experiment with different disease resistant varieties in this space since they are the first “contact” from diseases entering along the sides of the house.

As we were heading out of the greenhouse, they also showed me their trial planting of “paw-paw” (papaya) that is a dwarf variety that produces more of a “single size” papaya fruit compared to the local fruit which is larger and often is more than people can eat in a sitting and due to lack of refrigeration, ends up being wasted.  They liked all of their experimentations as a giant research facility.  They keep changing their approach, trialing new seeds, and are figuring out best practices.  They are hoping that once they are fully set up in 2-3 years, maybe they will form a separate NGO with an educational component.  They have a total land base of 8 hectares, with currently only the first 0.5 hectare in the greenhouses, so there is a lot of room to expand.

When I asked about their background and how they got started in farming, Emeraba started to share her story first.  She received her MBA at Harvard University and during her graduate school years, she was constantly writing her papers and essays on the agriculture sector.  She grew up farming with her mother and although she became an accountant and worked in finance, after graduate school and being in the workforce, she realized that farming was her calling.  She left her job at Exxon and knew what she wanted to do.  Nkiru also studied abroad and attended York University in Canada.  When she decided she wanted to change careers and move into farming, she knew she didn’t want to do the type of farming her mother did or what others were doing – fish farming, snails, bush meat, piggeries or other endeavors.  She wanted to leverage new technologies and see what that could support.  She decided to focus on vegetables.  The two women had met each other at a very young age and their families have known each other for over 40 years.  The two met in nursery school when their mothers were friends, but they lost touch after primary school and then didn’t really connect again until after University when they were both working at Exxon.  They both had a lot in common and both realized they wanted to launch a farm business and this was their calling, thus concept of Envirogro was born.

I asked them about their perspectives on farming as a woman in Nigeria.  They both said “we intrigue people,”   and reported that at first, they are immediately chalked up as “hobby farmers.”  With their fancy degrees and entering the business a little later in life, they often are not taken that seriously.  From one look at the complexity of the operation, this is certainly no casual endeavor.  As demand for local product is increasing and ShopRite is importing most of what it sells, this is most definitely a business venture for them.  They aren’t just doing it since local is “hot” and there is a lot of “talk” about reviving agriculture in Nigeria.  They’ve done the market research and demand is there.  ShopRite imports the majority of its produce and they both know that farming is the right thing for them.  Some of the challenges in being female farmers have more to do with how to approach business etiquette in a “man’s world.”  They are often trying to navigate the culture of business relationships, and how they should “react” or behave in the business world – should they be aggressive or more demure?  They have to constantly be attentive to nuance and do their homework to be sure they are taken seriously.  They also have to be attentive to the business culture and intentionally schedule meetings in the lobby of a hotel, “never agree to meet in a private room.”  They know not to accept business calls or schedule business meetings after 8 pm in the evening (even though their husbands could be on the phone until well past 11 pm and out at business meetings all hours of the night).  They must be more conscientious and more reflective of their every move to make sure they are seen as serious, ethical, and upstanding business women.

Some of their major challenges in operating Envirogro Farms includes access to capital and financing (which I’ve heard a lot on this trip!), and that the ecosystem they are trying to manage is not well supported by available local inputs.  There is considerable corruption within government programs that control the supply of such inputs.  The fertilizer dealers and importers have a challenging time wading through the government bureaucracy and kickbacks and other forms of fraudulent business practices.  They need access to good quality fertilizer, and soluble fertilizer at that, not just the granular formulas that come in bags and distributed by the government.  It is hard to get access to the minerals and other micronutrients needed to balance the fertility needs of their specialized crops.  Seeds are another matter all together, the seed varieties from East Africa are not compatible with West African climates.  The expertise needed to maintain and repair their specialized equipment is also missing, so they fly in experts from East Africa where the Dutch have set up outpost greenhouse industries.  They hired their technical agronomist with a salary committed in US dollars, which has gone from $160 naira/ $1 US dollar to over $380 naira/dollar.  Diesel prices have soared from $140 N/liter to over $220 N/liter.  With such fluctuations in prices and a terrible currency exchange their already minimal margins are squeezed even tighter.  Their question is how long to hang in there until they break even.  They have cashed in their 401ks and borrowed money from friends and family.  We all laughed that being in agriculture is the new “noble vanguard” but there is nothing to be en vogue about if you are losing your shirt.

When I asked what they see as their future trajectory in this business, they would like to consider developing an exchange program with US schools who are studying agricultural technology and transfer.  As noted above, they have considered developing a separately incorporated NGO to teach people about farming.  They would continue to run the operation as a business (at least until they could buy their investors out) and have a separate entity who could also pass on best practices and develop a robust curriculum to teach other Nigerians about technology-based commercial greenhouse production.

When asked what kind of special software technology or other innovations they use to monitor their operations, they haven’t had too much specialization other than knowing basic recordkeeping and business skills.  Their capacity building and learning curve has been supplemented by the expertise of expert consultants.  They basically use a specialized software for their fertility applications, but otherwise, they reconcile monthly records and financial analysis in Excel.  The business isn’t that complex yet, though they are looking into other types of software that they could expand to in the future (Quickbooks, Sage, etc.).  They currently sell their products by weight in plastic clamshells with no specialized branding (the stores are not yet interested in private label sales at their scale).

I asked how they decided on the name of their company and both women immediately burst out laughing.  Basically, they wanted a concept that demonstrated that their farming methods are environmentally friendly, not doing harm to the natural environment, and to conjure up an image of healthy food.  They searched for available domain names for their URL and the first five names they selected were already taken!  The fifth name, Environgro was available and voila – they had the company name.

Envirogro is a limited liability company and the two women own the majority shares.  They have two venture capital (VC) investors as silent partners, but one of them is apparently not very silent.  He’s more of the “money man” and is constantly asking about margins, profitability, and concerned about returns.  When I inquired about the process of bringing on investors to their business, it was apparently not easy and they shared their war stories.  They worked with several investors and got to the point of developing three different “term sheets” with each of them.  One group took the ladies for an 18-month “ride” which didn’t end up panning out.  They described the situation as an emotional rollercoaster and in the end, felt they were “played” since the firm didn’t actually close the investment fund they had committed and were working toward, so at some point, the investors just stopped communications and then the firm basically went dark and stopped responding to calls, emails, or any other form of communication.  It was a complete waste of eighteen months of time.  By then, they had already turned down the two other VC offers, so it was too late to retract and start again with them.  Eventually, through continued connections, they were able to secure the financing they needed and get started.  The hard part of all of it is that people tend to find VC investors through local networks and word of mouth, so even though deals don’t pan out, there is still a need to operate in the same social circles as part of your business network.

An additional challenge they face is with ongoing government policies that don’t really support farmers.  Everyone I have met has said the government likes to “talk” like it is pro-agriculture, yet there are continual barriers.  One such example faced by Envirogro is how the Nigerian government classifies agricultural equipment.  For example, tractors are considered agricultural equipment and are supposed to be free of import duties, but greenhouses are apparently not.  So, the import of their greenhouses was subject to a 25% tax, as with other components of their operation that are clearly necessary to their agriculture enterprise but are not officially “defined” as agricultural equipment.  They feel a revised government policy is needed and to correctly classify agricultural goods and services so they qualify for import waivers.

Other challenges includes the constant need for permits, administrative paperwork and the never ending corruption in the government.  The government claims to be supporting agriculture and offers loans for farmers at a “reasonable” interest rate of 9%, yet the government doesn’t directly finance the loans, they rely on the administration of private commercial banks.  So, in order to secure a government loan for agriculture, one still must go through the same process, documentation, and paperwork as a traditional bank loan, if it ever goes through.  They both found this extremely frustrating given that most bank lenders do not understand agricultural lending and want quick payback terms.

Land access another significant challenge and it took the women at least five years to find this parcel of land in Epe, Lagos state.  The biggest asset they have is the land, but financing is dependent on having a clear title.  Even though the government owns all the land and families can have title (which is basically a long-term lease), there is no title company or title search that is possible.  You have to hope that whoever sells you the property actually has the correct title and that someone else can’t come along and claim they already own it and also have the title (of course, after you have already purchased it).  This can be a tremendous hassle and hurdle to establishing a farm business.  Around their search for land, they felt like they just “jumped in the bushes” and they eventually found a suitable property, got a title, paid for it and then realized they were shorted the amount of land they actually purchased.  They went ahead and registered it and luckily found that no one else really owned it.  Their business is now officially registered and they have a tax certificate.  There is no land use decree and titles are supposed to be registered with the state, although this appears to be very haphazard and there is no centralized system to manage land holdings.

I also asked about security and protection of their valuable resource, given that their high-tech greenhouse was considerably out in “the bush” and wondered how they managed to safeguard their operations.  They do have staff who live on site and their goal is to develop a dormitory and on-site facility for staff to live on the property and to develop a formal business center there (we were back to where we met and were meeting in their “cabana” which is their field office for on-farm meetings, it was quite lovely!).  They would love to be connected with solar companies who could help them become more self-sufficient and off-the-grid (not that there really is much of a reliable grid) to power their pump and irrigation system, and eventually cold storage.  They said if I knew of any direct solar manufacturers I could recommend to them to send them their way.  Homework for me!

When I asked the two women what their “succession” plan was for their business – did they imagine that their children or other family members would want to continue it when they “retired”, they both looked at me and laughed heartily.  They are both were emphatically hoping that within the next decade, Cargill or Dole Foods will buy them out!  They want to grow the business, become profitable and then exit with their shirts intact.  They want to get their “chips off the table” over the next 10 years and look toward retirement.  I laughed and said that with both of their drive and determination, I couldn’t imagine that they would throw in the towel so easily and kick back on the Riviera with drinks in hand.  I imagined they would both be bored in an instant if they really had to retire.  They explained that they were both “foodies” and love food and agriculture and really want to make an impact in this space, but that they need to make this existing business a success to gain credibility for a next play in the sector.  They need to prove to themselves and to others that they can really pull this off successfully.

I could tell they wanted to keep their cards close to their chest and were not going to completely divulge their future latent business ideas, but as I continued to try to probe, they admitted that they had dreams of entering the value added produce space.  They described that their next phase would be to start cutting up peppers and tomatoes (their “seconds”) and they described how Nigerian cuisine is extremely time consuming and labor intensive for women in the kitchen.  They weren’t talking about going as far as microwave meals in a box, but in America, we definitely take it for granted that we have access to already chopped onions, frozen vegetables in a bag, or cut up fruit ready to buy in the markets.  They both love to cook, but they have to do everything from scratch with whole fruits and vegetables and they would love to see more of the value added component here in Nigeria to make it easier for the modern woman to prepare meals at home.  Of course, that means that starting a value added food business here in Nigeria requires doing it all themselves – figuring out and building each and every step of the supply chain from production, processing, packaging, cold storage, marketing, and distribution.  These are the realities of the winding road to success in Nigeria, and every entrepreneur will find speed bumps, potholes, hurdles, and have to try to find their way with unclear direction and many twists and turns to find the correct path between two NEPA poles near the plantain grove along the way.

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