Yemisi Iranloye conceived the idea for Psaltry International, a cassava processing company, in 2005. At the time, she was an employee at a firm where she worked extensively with cassava and was exposed to the crop’s commercial potential. While still an employee, she paid intermittently for her first piece of land upon which she later developed her farm and factory. Within 10 years, the business has grown from 600 million Nigerian naira to over five billion naira (about $12 million) in revenue per annum.
Iranloye shares her insight into the cassava processing business and the agricultural sector of Africa’s largest economy.
Give us an overview of what Psaltry International does.
Psaltry International Limited produces food-grade starch and high-quality cassava flour, and we now have the first cassava-based sorbitol factory in Nigeria. We grow the cassava ourselves and also buy from local smallholder farmers. Food grade starch has almost 300 applications in the food industry and is used largely by beverage companies and for seasoning, noodles and pastries. Sorbitol is used in toothpaste, pharmaceutical drugs and high-end drinks because it’s a healthier sweetener than cane syrup.
Our clients are Unilever, Nestlé, Nigerian Breweries and Promasidor, to name a few.
Tell us a bit about your history before Psaltry International.
I finished my first degree in food biochemistry from the Federal University of Technology Minna in 1997 and completed my master’s in biochemistry and nutrition from the University of Ibadan in 2000. I started as an entrepreneur formulating food for diabetic patients using wheat and making natural drinks. In 2001, I moved over to Ekha Agro Processing Ltd, a company that uses cassava to produce glucose syrup. I spearheaded that project and it was where I fell in love with the crop. I stayed with the company for 10 years and left to start this business.
Describe the early days of the company.
After 10 years with Ekha Agro, I relocated to the farm in Oyo State. I came here from Lagos, built a small house and stayed on the farm with about six staff. We cultivated the land and worked with smallholder farmers in the community. We engaged with them to change their thinking from farming only for fufu (a West African food made out of cassava) or garri (granulated cassava) to farming for industrial purposes.
I already knew my success parameters: raw materials and proximity to the raw materials. Not the proximity to market because I can easily move my finished goods but my raw materials are not as simple. I also knew quality was going to open doors to the various buyers.
Nestlé took samples from our first batch and was our very first customer within two weeks of production. They had witnessed our journey and already knew the kind of quality we were going to produce. Not many people in Nigeria were producing good quality starch at the time and Nestlé certified us within two or three weeks. Nigerian Breweries followed and from there our business grew.
What have been the biggest challenges in the early days?
This is a rural area, so there was no power. We started with generators. I chose this location because there was ample land and the community was welcoming. Our only water source was a small stream that dried up in the dry season; however, there was a dam 15km away, which we could pipe to our factory eventually.
To cope with the water shortage, we built boreholes. First for the community in 2011, then for the factory itself. The farmers realised we meant business once we built boreholes in the rocky environment. They were delighted and welcomed us with so much warmth.
At the time, the road was poor. The small village was in the middle of this vast area. Sorting out transport and convincing staff to come and work here were all challenges we had to face.
Currently, our biggest challenges are raw materials and funding. The banks do not understand the way the funding cycle of this business works. For example, every year, you must plan for the next year because it’s a 12-month crop. You need a budget to support the crops you’ll cultivate this year, which you will only harvest next year. When buying the inputs you need for farming, you have to pay within 24 hours but when you sell the finished product, you don’t get paid for 60 days. There is a constant outflow of cash with a very slow return rate. These are things you need to explain to the financial institutions. This industry needs heavy working capital.
In the beginning, where did you obtain funding?
Funding was a major challenge. All I had was this land. I presented many business plans and proposals to convince the bank this was the way to go. Fortunately, we received funding from the Central Bank of Nigeria (CBN) called the Commercial Agriculture Credit Scheme (CACS) at a single-digit interest rate. We used these funds to construct the first factory.
The following year, we accessed more funding through the CBN’s Agricultural Credit Guarantee Scheme Fund (ACGSF). This fund provides loans to farmers for up to 75% of the value of their collateral. We saw it as an advantage, even though it required us to provide a 100% collateral guarantee for the farmers. Because we had trusted them, having lived and worked with them for about two years, we felt we could put down the collateral for about 100 farmers. Also, under that scheme, when farmers pay back, they get what we call drawbacks. We got the farmers to pay back 100%, and CBN returned about 40% of their interest. That encouraged them a lot, and they were able to expand their farms.
Currently, we have more than 5,000 farmers in our network.
Describe the company’s manufacturing process.
It is a fully integrated system with full traceability from the farm to the weighbridge. When the produce arrives at the weighbridge, we test the cassava for starch content. It then goes for peeling, washing, milling, extraction, dewatering, and drying if it is for starch. The cassava goes from peeling to washing, milling, dehydrating, flash drying, and into the disc feeder if it is for flour.
How do you deal with the challenge of transport infrastructure and logistics?
It’s difficult but we have to live with it. The quality of the roads is poor so we use alternative routes which take longer. We make sure our trucks travel slowly and at night when there’s less traffic. They arrive at their destinations in the morning and discharge.
What are some of the trends you see in Nigeria’s agribusiness sector?
Right now, the agri-processing sector is suffering because of Covid-19. It affected a lot of companies because of the shortage of raw materials. We struggled as cassava is used in garri production and garri is one of the major relief products the government distributed during the pandemic. I foresee a situation where more people will go into the cultivation of raw materials and predict companies will spring up to provide food for the 200 million people in Nigeria. There’s nothing we produce in this country that we cannot consume. We need to do more.
If you had the chance to start Psaltry International again, what would you do differently?
I would have looked for an international fund to come with me. The road would have been easier. We’re about to open up the company to more investors. Perhaps I should have done it at the beginning and we could have grown faster.
Psaltry International CEO Yemisi Iranloye’s contact information