BUA Foods to Construct a Sugar Estate in Lafiagi Worth $200 Million - Ayodele Abioye

The management of BUA Foods Plc, through the MD of the firm, Ayodele Abioye, recently announced that the food conglomerate had invested a whopping sum of $200 million into its integrated sugar estate in Lafiagi, Kwara State.

Mr Abioye announced this Wednesday to journalists that he was granted an interview at the BUA Foods Plc headquarters in Lagos State, Nigeria.

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In a bid to disclose the company's plans, he stated that the food company is investing in a project to construct a sugar refinery, ethanol plant, and other infrastructure that will cushion the dependence on forex-impacted raw materials.

He said, 

• Most of our raw materials are FX-dependent, which is a significant issue. Today, Nigeria is yet to be an industrial, agricultural producer of sugarcane, an important raw material source for us.

• We still depend on other countries. One of the things we are working on with the government is accelerating development in sugarcane agriculture. It used to be there.

According to the present MD of BUA Foods Plc, the BUA sugar estate, which will be located in Lafiagi, Kwara State, will be sitting on about 20,000 hectares of land space, an integrated project that has a combination of a cultural estate and 20,000 metric tonnes of refinery, 15,000 metric tonnes of crushed cane daily capacity.

He added,

• It has an industrial ethanol plant, and of course, you have supporting infrastructure, schools, and estates that we are also building. There is also an airport, a three-kilometre airport. We have spent more than $200 million so far.

• We are accelerating that space to see how we can reduce our dependence on forex. It will not be everything, but it is a good step in the right direction. Also, with the government's support.

Speaking on paddy rice, Abioye said, 

• We need paddy. As you know, Nigeria is one of the users of paddy rice. Over the years, the government has tried as much as possible to develop this supply chain.

• Specifically, we are trying to engage with communities and partnerships in agriculture, which are the best.

He also said that the federal government, in collaboration with the state governments, has done several outgrowth schemes, but they all failed.

He said,

• We are now working with community leaders rather than individuals. We do this with the Lafiagi Emirates, the emir; we know them and can support them, enrol their farmers, supervise them, give them input, and get their output.

• And for those outputs, we can buy more than 60% of them to feed our mills while they take the extras and sell them to other people. If not, we can buy them all.

Abioye also stated that BUA Foods Plc was extending this infrastructural development to other communities to push for self-sufficiency in the supply of local materials. Regarding the critical drivers of BUA Foods Plc in the New Year, Abioye said it would increase the production system to deliver more volume to the market.

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He concluded, 

• Our products' drivers will come mainly from volume; product offerings and low pricing are also critical, particularly in our situation. Our business model is such that we try as much as possible to hold back some of the impact of the shock so we don't pass the entire cost to the market

Back Story

In the BUA Foods Plc unaudited report for 2023, fortified sugar contributed the highest revenue to BUA Foods of its different business segments. The firm's total revenue rose by 74.13% to N728.48 billion in 2023 from N418.35 billion in the prior year, underpinned by 153% growth in income from fortified sugar to N327.55 billion.

Despite a 116% increase in finance costs to N18.89nm and a N73.56 billion forex loss, the firm's profit improved by 22.11% to N111.54 billion, compared to N91.34 billion in the previous year.