blurry image The Commodities Value Chain needs to Embrace Fair Trade

Reading time:5 min read

The Commodities Value Chain needs to Embrace Fair Trade

Precious
Precious OkoroJune 24, 2024

Being at the forefront of the logistics squad at AFEX has been a rollercoaster for Abdulkadir Ajia Oluwafemi. In his 7 years at AFEX and nearly 3 years leading the squad, he has had experiences that he said when compiled into a book should make for a 400-pager. In this chat with him, this lover of social and environmental impact tells us how the COVID-19 pandemic has impacted the logistics of commodities; the necessity for fair trade in the sector, and a short session on what it takes to move commodities from the north to the south of Nigeria.

Hello, Ajia. You’re not a new person to our seat. Welcome back.

Thank you, my name is Abdulkadir Ajia Oluwafemi and I currently head the supply logistics part of the business. LOL, wait, are you referring to when I spoke about my AFEX story?

Yes, please and we had a swell time reading it.

I enjoyed discussing the past 6 years of my career here at AFEX. If you haven’t seen it, you can read it up here – Ajia’s 6 years at AFEX.

We’d like to know how you manage the market like moving commodities from the markets to the north to the south.

Firstly, I think if you asked anyone working in the supply chain sector, they’d all say that there are market peculiarities that are time and environment-bound. What works for Jigawa State may not work for Ogun State. When I came on board, I was first tasked with providing structure to the team.

Before this structure, we had cases of trucks and commodities disappearing. This structure was part of our traceability program. A Know Your Customer system (KYC) was introduced to better identify our drivers and the transport companies we are dealing with. Just information like their office addresses, and recent business dealings to mitigate risks and also for having safe trails when accidents occur, they will be able to manage properly.

Also, we need to understand at least basic information about the different cities we are operating within. E.g. the price of maize is slightly higher in the south because the bulk of it is gotten from the north, and you’d have to factor in the logistics cost. These prices are not static as well, usually around mid-February logistics prices skyrocket because nearly everyone has goods to move. So, the rules of demand and supply just affect everything.

Does this scarcity of vehicles directly affect the availability of commodities?

Not exactly. I’ll give you a little background.

During harvest season, there are loads of commodities in circulation. Most times there are buyers, mostly processors who want to cut down the cost of production by buying in bulk and at the cheapest prices. Hence, they may move into areas easily accessible to them. However, some clients have to wait for commodities to move to the south from the north. With these, it could look like the scarcity of vehicles is translating into the unavailability of commodities.

At what point does fair trade come into this picture, ensuring that farmers get the appropriate value of their goods irrespective of surplus?

This is where AFEX has come to play a role, ensuring fair trade for us requires working from the base. Creating and putting mechanisms in place, like the price discovery, and grading standard. These checks are implemented to ensure everyone involved in the sector gets a fair chance without bias. The standards are marked against quality and quantity. Today if you check the afex.africa, there’s a daily price ticker open to the entire public and applicable to everybody.

That’s interesting. In the last chat with one of your team members, Minti Joesph mentioned that COVID-19 was a tough time to navigate the supply chain because of the movement restrictions. Could you give us a few words on how your squad scaled the period?

The arrival of COVID-19 fell between planting and harvest, post-cultivation. What we did was to immediately pick up sensitizing the farmer. The restriction meant closure of markets and like everyone else, we thought it was going to last for just a short period. When it was time for harvest, there were commodities but no means to move them around. When the ban was lifted for essential workers, truck drivers hiked prices. This was an unforeseen happening.

Oh mine, how was this handled?

Post-COVID brought a new wave of hikes, everyone was on the move to at least make up for what the restriction had cost. Before 2020 a truck trip from Kaduna to Ibadan would cost N 250,000 to N 230,000. It moved to over N400,000. Now, it’s close to a million and sometimes more to move between the 2 locations. The world has not recovered but we are looking forward to better days.

Absolutely, adaptation is key. But looking ahead, what do you think would create an ideal future supply chain for Nigeria?

While there are many immediate needs, a pressing one is achieving supply chain transparency. This means companies know exactly where and how their goods are produced, backed by reliable data. The information should then be shared openly with both internal and external stakeholders, including customers.

We at AFEX have long embraced this practice because it ensures traceability and sustainability throughout the supply chain. This, in turn, helps guarantee its availability for future generations.

Thank you, Ajia

This is the third part of the series on the Heart of our Commodities Trade at AFEX. Look out for other stories in the coming posts.

Thank you for reading, if you enjoy this, share it within your network.

    • AFEX
    • Get digestible commodities & financial news sent to your inbox daily.
    • AFEX
    • Get digestible commodities & financial news sent to your inbox daily.