Daily Trust - Experts flay forex ban without maize plan

 

Experts flay forex ban without maize plan

Stakeholders in the agricultural sector are expressing divergent views on the recent foreign exchange restriction imposed on maize importation by the Central Bank of Nigeria.

While farmers welcome the development, assuring that they have the capacity to produce enough to meet local demand, some experts in the sector believe the ban on its own may not address the problems associated with maize production in Nigeria without a comprehensive national corn plan.

Over the last few weeks, maize, a major staple crop in Nigeria, has been constantly in the news over rising prices, scarcity and the recent moves to check its importation.

The national demand for maize is estimated at 15 to 18 million metric tonnes, 60 per cent of that demand is consumed by the poultry subsector alone while other users utilise the remaining 40 per cent.

However, many stakeholders describe the statistics on domestic production as sometimes controversial because most commodity associations tend to praise their funding organisations but do not have production data of each member centrally collected.

Why there must be a National Corn Plan

Mr Ayo Akinfe, a renowned journalist and longtime watcher of the sector, believes that the recent ban on foreign exchange for maize imports is meaningless unless backed up with a comprehensive plan.

He said though the country was not doing too badly on maize production as we are the 11th largest maize producer in the world with an annual production of about 11m tonnes, production costs in the country are too high, making imports from countries like  US, Canada, Brazil, Argentina and India cheaper.

“If you are a Nigerian food processor, you will save costs by importing cheaper maize. So, as a first step, the Nigerian government needs to reduce local production costs.

“In 2016, Nigeria imported 650,000 tonnes of maize but this figure reduced to 400,000 in 2018 and 2019. If you are in a flour mill or brewery for instance and Nigerian maize is selling for $20 a tonne but imported maize is going for $8 a tonne, surely you are better off importing, especially when the quality is the same, if not better,’’ he said.

He added: “Nigeria actually needs 15m tonnes of maize a year, so we are not yet there in terms of quantity. So, our first step has got to be to develop high-yielding seedlings that can boost output by say a quarter within a year. We are clearly under-utilising the agriculture departments in our universities.’’

His position was supported by the chairman, Delta State chapter of the Poultry Association of Nigeria (PAN), Chief Alfred Mrakpor, when he recently appealed to President Muhammadu Buhari to allow immediate importation of maize into the country since local farmers cannot meet the demand of  consumers.

“The rising cost of maize is threatening livelihoods of small businesses in Nigeria. It is not only poultry farmer’s investments that are threatened, but also other players in value chain – feed producers, chicken and egg vendors and processors, grain traders, veterinary and drugs vendors, etc, thus plunging the economy into a deeper crisis,” he said.

Last week, the PAN national body aggregated their demands between now and December 31 and found that they would need around 1.5 million to 2 million metric tonnes, according to its National President, Mr Ezekiel Ibrahim.

PAN then wrote a letter to the Maize Association of Nigeria (MAAN), the apex body of all maize farmers in the country, requesting for the supply of 1.5 million metric toones from now to December, which the farmers do not have.

The poultry farmers then wrote to the president seeking waiver to imports, and were referred to the Minister of Agriculture and Rural Development, Alhaji Mohammed Sabo Nanono, a few days to the recent forex ban.

Also, the reasons given by the maize farmers for not being able to meet the recent demands in the country further buttressed the need for a national plan that will holistically address the challenges facing maize production in the country.

Dr Bello Abubakar Funtua, the national president of the Maize Association of Nigeria, said they could not meet the demand of poultry farmers because most of the grains had left their hands and are now in the hands of grain merchants, who are creating the artificial scarcity.

Dr Bello said most farmers sold their grains to merchants who are currently hoarding the product to get more profit. He said maize is available in the country but in the hands of merchants who hoard the product, a situation he said leads to price increases across the country.

Merchants exploit shortage opportunity

Merchants who mopped and stored maize in large quantities at N80,000 per tonne before the beginning of this year are now making up to N170,000 per tonne in some places.

A merchant, Mohammad Auwal, said other factors such as interstate transportation difficulty and the closure of markets across the country during COVID-19 was partly responsible.

At the local markets, household consumers are paying extra to buy either a measure or a bag of maize.

In most of the markets across the country, a 100kg bag of maize now sells for between N16,000 and N20,000 from between N9,000 and N10,000 some months ago.

At Sheme Market in Katsina, one of the major producing states in the country, a 100kg bag of maize now sells at N16,000 from around N8,000 some few months ago.

Our correspondent in Kano reports that at Dawanau grain market, the same size is sold at N17,500, while in Lagos it goes for N20,500.

Can the forex restriction stop importation?

Some watchers in the sector believe that the apex bank’s directive to discontinue the processing of Form M for the importation of maize with immediate effect as part the effort to increase local production may not entirely stop maize importation in the country.

Mr. Toyin Ajayi, an agric economist, said many exporters may decide to source their forex on their own.

He said despite the forex scarcity, the quantum of maize import, particularly from the US, is on the increase and wondered if the CBN policy would change anything significant.

For example, from 2017 to 2020, the importation of maize has been rising since falling from the 650,000 tonnes in 2016 to 200,000 in 2017, according to the  US Department of Agriculture.

It climbed again from 400,000 tonnes in 2018 and 2019 to 500,000 metric tonnes so far this year. He also suggested a national corn plan that will address problems associated with maize production in Nigeria.

What government should do

According to Ayo Akinfe, agriculture ministry needs to make seedlings, pesticides and herbicides available to farmers at zero interest rates. Their crop will serve as collateral with the loans recovered upon harvest.

“The agric minister also needs to leverage on the Fulani herdsman saga to build a huge animal feed industry. Just imagine if we had four mega cattle ranches in Nigeria with each surrounded by massive maize, sugarcane, cassava and soya bean plantations that grow produce for their animal feed compound factories.

“I would actually set a target of matching Argentina’s 50m tonnes of maize output. Of this total, 10m tonnes would be targeted at the livestock and animal feed industry with poultry, cattle, goats and rams firmly in my sights.

“One area where I would take no prisoners would be with processing and value-addition. I would offer private sector operators unbelievable tax holidays and breaks to open processing plants. My goal would be to have at least one maize processing plant in every one of our 36 states,’’ he said.

He added: “We would have a five-pronged line of attack – maize for animal feed, canned maize, maize flour, maize on the cob and maize as an industrial raw material. Our factories would be modular and able to produce all

“Our minister must then get automobile manufacturers to provide refrigerated trucks to help with collection on our rural areas. Each of our 774 local government areas must also have at least one refrigerated silo to keep our maize fresh.’’

 

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Experts flay forex ban without maize plan

Stakeholders in the agricultural sector are expressing divergent views on the recent foreign exchange restriction imposed on maize importation by the Central Bank of Nigeria.

While farmers welcome the development, assuring that they have the capacity to produce enough to meet local demand, some experts in the sector believe the ban on its own may not address the problems associated with maize production in Nigeria without a comprehensive national corn plan.

Over the last few weeks, maize, a major staple crop in Nigeria, has been constantly in the news over rising prices, scarcity and the recent moves to check its importation.

The national demand for maize is estimated at 15 to 18 million metric tonnes, 60 per cent of that demand is consumed by the poultry subsector alone while other users utilise the remaining 40 per cent.

However, many stakeholders describe the statistics on domestic production as sometimes controversial because most commodity associations tend to praise their funding organisations but do not have production data of each member centrally collected.

Why there must be a National Corn Plan

Mr Ayo Akinfe, a renowned journalist and longtime watcher of the sector, believes that the recent ban on foreign exchange for maize imports is meaningless unless backed up with a comprehensive plan.

He said though the country was not doing too badly on maize production as we are the 11th largest maize producer in the world with an annual production of about 11m tonnes, production costs in the country are too high, making imports from countries like  US, Canada, Brazil, Argentina and India cheaper.

“If you are a Nigerian food processor, you will save costs by importing cheaper maize. So, as a first step, the Nigerian government needs to reduce local production costs.

“In 2016, Nigeria imported 650,000 tonnes of maize but this figure reduced to 400,000 in 2018 and 2019. If you are in a flour mill or brewery for instance and Nigerian maize is selling for $20 a tonne but imported maize is going for $8 a tonne, surely you are better off importing, especially when the quality is the same, if not better,’’ he said.

He added: “Nigeria actually needs 15m tonnes of maize a year, so we are not yet there in terms of quantity. So, our first step has got to be to develop high-yielding seedlings that can boost output by say a quarter within a year. We are clearly under-utilising the agriculture departments in our universities.’’

His position was supported by the chairman, Delta State chapter of the Poultry Association of Nigeria (PAN), Chief Alfred Mrakpor, when he recently appealed to President Muhammadu Buhari to allow immediate importation of maize into the country since local farmers cannot meet the demand of  consumers.

“The rising cost of maize is threatening livelihoods of small businesses in Nigeria. It is not only poultry farmer’s investments that are threatened, but also other players in value chain – feed producers, chicken and egg vendors and processors, grain traders, veterinary and drugs vendors, etc, thus plunging the economy into a deeper crisis,” he said.

Last week, the PAN national body aggregated their demands between now and December 31 and found that they would need around 1.5 million to 2 million metric tonnes, according to its National President, Mr Ezekiel Ibrahim.

PAN then wrote a letter to the Maize Association of Nigeria (MAAN), the apex body of all maize farmers in the country, requesting for the supply of 1.5 million metric toones from now to December, which the farmers do not have.

The poultry farmers then wrote to the president seeking waiver to imports, and were referred to the Minister of Agriculture and Rural Development, Alhaji Mohammed Sabo Nanono, a few days to the recent forex ban.

Also, the reasons given by the maize farmers for not being able to meet the recent demands in the country further buttressed the need for a national plan that will holistically address the challenges facing maize production in the country.

Dr Bello Abubakar Funtua, the national president of the Maize Association of Nigeria, said they could not meet the demand of poultry farmers because most of the grains had left their hands and are now in the hands of grain merchants, who are creating the artificial scarcity.

Dr Bello said most farmers sold their grains to merchants who are currently hoarding the product to get more profit. He said maize is available in the country but in the hands of merchants who hoard the product, a situation he said leads to price increases across the country.

Merchants exploit shortage opportunity

Merchants who mopped and stored maize in large quantities at N80,000 per tonne before the beginning of this year are now making up to N170,000 per tonne in some places.

A merchant, Mohammad Auwal, said other factors such as interstate transportation difficulty and the closure of markets across the country during COVID-19 was partly responsible.

At the local markets, household consumers are paying extra to buy either a measure or a bag of maize.

In most of the markets across the country, a 100kg bag of maize now sells for between N16,000 and N20,000 from between N9,000 and N10,000 some months ago.

At Sheme Market in Katsina, one of the major producing states in the country, a 100kg bag of maize now sells at N16,000 from around N8,000 some few months ago.

Our correspondent in Kano reports that at Dawanau grain market, the same size is sold at N17,500, while in Lagos it goes for N20,500.

Can the forex restriction stop importation?

Some watchers in the sector believe that the apex bank’s directive to discontinue the processing of Form M for the importation of maize with immediate effect as part the effort to increase local production may not entirely stop maize importation in the country.

Mr. Toyin Ajayi, an agric economist, said many exporters may decide to source their forex on their own.

He said despite the forex scarcity, the quantum of maize import, particularly from the US, is on the increase and wondered if the CBN policy would change anything significant.

For example, from 2017 to 2020, the importation of maize has been rising since falling from the 650,000 tonnes in 2016 to 200,000 in 2017, according to the  US Department of Agriculture.

It climbed again from 400,000 tonnes in 2018 and 2019 to 500,000 metric tonnes so far this year. He also suggested a national corn plan that will address problems associated with maize production in Nigeria.

What government should do

According to Ayo Akinfe, agriculture ministry needs to make seedlings, pesticides and herbicides available to farmers at zero interest rates. Their crop will serve as collateral with the loans recovered upon harvest.

“The agric minister also needs to leverage on the Fulani herdsman saga to build a huge animal feed industry. Just imagine if we had four mega cattle ranches in Nigeria with each surrounded by massive maize, sugarcane, cassava and soya bean plantations that grow produce for their animal feed compound factories.

“I would actually set a target of matching Argentina’s 50m tonnes of maize output. Of this total, 10m tonnes would be targeted at the livestock and animal feed industry with poultry, cattle, goats and rams firmly in my sights.

“One area where I would take no prisoners would be with processing and value-addition. I would offer private sector operators unbelievable tax holidays and breaks to open processing plants. My goal would be to have at least one maize processing plant in every one of our 36 states,’’ he said.

He added: “We would have a five-pronged line of attack – maize for animal feed, canned maize, maize flour, maize on the cob and maize as an industrial raw material. Our factories would be modular and able to produce all

“Our minister must then get automobile manufacturers to provide refrigerated trucks to help with collection on our rural areas. Each of our 774 local government areas must also have at least one refrigerated silo to keep our maize fresh.’’

 

More Stories