Thread by @DavidHundeyin

When I wrote this thread in September, I had no idea that one of the biggest agricultural industry stories in Nigeria's history was 2 months away. One of the recommendations here was the use of partnerships.

Then this happened.

https://twitter.com/DavidHundeyin/status/1442368690314428419

This is quite possibly the single biggest partnership between food processors in Sub Saharan Africa, and I’m tempted to ignore talking about the potential upsides to toot my own prescient horn.🙃

We're keeping it professional, so here's what this merger means for the industry

Cumulatively, both companies have spent over 80 years manufacturing and marketing flours, pasta instant noodles, semolina, sugar, cooking oils, starch, breakfast cereals and everything in between.

It's a bit like Diego Maradona and Cristiano Ronaldo signing for the same team.

First of all, merging two supply chains under a single chain of command could result in probably the greatest ever economies of scale in the history of Sub-Saharan African agriculture with a total of 20 food processing facilities across 12 states.

FMN is the market leader in logistics, distribution, packaging and port operation, while HFMP is known for quality control and operation efficiency. Combining these two advantages under a roof has simply never been tried before.

It has to be seen to be understood.

At risk of exaggeration, this new super-entity could become to Nigeria’s agricultural industry, something similar to what Samsung and Hyundai were to South Korean heavy industry - an industrial supercharger.

Consumers could benefit in terms of increased choice and eventually, lower prices. With lower food prices comes increased naira purchasing power, as well as an interesting new set of opportunities within the context of the AfCFTA - assuming the AfCFTA is actually implemented.

Counterintuitive as it sounds, Nigeria’s food prices are actually lower than across Africa, which is a function of agricultural economies of scale due to Nigeria's sheer market size.

The opportunity here is twofold:

1. Increased food production volumes and efficiency due to this merger could maintain or possible even lower the relatively low cost of food in Nigeria. This ensures that the naira's domestic purchasing power does not fall at the same velocity as its international exchange rate.

2. By taking advantage of new economies of scale, relatively strong domestic naira purchasing power and the naira's falling international exchange rate, the new entity has the opportunity to take over significant swathes of the African market, post-AfCFTA.

This is the export-led agricultural growth that Nigerian governments are obsessed with. Only this time, instead of tubers of yam that spoil at the port waiting for clearance, this type of agricultural export will be processed food with the benefit of FMN’s port operations.

NB: This is all subject to regulatory approval for the merger, which is still pending, and assumes that the AfCFTA is actually implemented and enforced.

We wait and watch what happens.