The foreign exchange crunch is forcing manufacturing companies to buy more of local grains to ramp up production but this is threatening to take food off the tables of Nigerians.
“Local sourcing of agro inputs by industries has increased. This has raised the demand for our produce and it is what is causing the scarcity at the moment,” Ike Ubaka, president, All Farmers Association of Nigeria (AFAN) told BusinessDay.
Nigerian grains such as maize and wheat are becoming scarce in the Nigerian market as food and beverage companies such as Nigerian Breweries, Nestlé, Guinness, International Breweries and flour millers pay for them at the point of harvest or before they are moved to the market. This is leaving less and less grains to sell to Nigerians who need the same crops as food on their table.
Nigeria’s second biggest brewer, Guinness Nigeria plc is ramping up the use of maize and sorghum sourced from local farmers from 43 percent to 87 percent over the next two years, according to Peter Ndegwa, managing director, Guinness Nigeria Plc.
The country’s biggest brewer, Nigerian Breweries (NB) Plc said in a sustainability report that it had improved on local sourcing of sorghum and maltose syrup derived from cassava.
Farmers who spoke with BusinessDay confirmed that it is becoming much easier selling to manufacturers who are now seeking local input, as they get bulk cash from such companies.
“Our patronage has increased tremendously from manufacturing companies. Some of the crops we farm, such as dry maize, was once imported into the country before the foreign exchange crisis. But with the shortage of dollars, importers and manufacturers cannot bring in dry maize to sell and make profit, so they are now buying from us in large quantity,” said, Abiodun Olorundenro, chief executive officer, Green Vine Farms.
Nigeria’s major grains are rice, wheat, maize and sorghum, with a production of 15.56 million metric tons and demand of 25.5 million metric tons per annum, according to the Federal Ministry of Agriculture. This shows a demand-supply gap of 9.9 million metric tons per annum.
A ton of maize sells for N130,000 (as at yesterday, November 15) as against N57,000 in December 2015. In January 2016, a ton of wheat was sold for N100,000, but this rose to N140,000 in August 2016. The price is about N160,000 at the moment.
According to the Manufacturers Association of Nigeria (MAN), local input in the food and beverage sector has edged up to 73.36 percent since December 2015 as against 69.75 percent in December 2014.
Garba Shehu, special assistant to President Muhammadu Buhari on media and publicity, had on Monday, raised an alarm in Kano over what he called “mindless export of Nigerian grains across our borders”, stating that unless the trend was curtailed, Nigerian markets would be bereft of food by January next year.
Farmers and experts faulted this line of thought, saying that what is needed is to put measures in place to ramp up production.
“We should be talking about doing all-year-round farming and not depending on rain-fed farming. We have the arable land and population to make this happen. It takes three months to grow and harvest grains, so all-year-round farming is possible,” Muda Yusuf, director-general, Lagos Chamber of Commerce and Industry (LCCI), said.
“The more opportunities we have for export, the better for us as a country because of the dollar proceeds,” Yusuf said, adding that output can only increase when farmers have incentives and use mechanisation and modern farming techniques.
Tunde Oyelola, chairman of the Manufacturers Association of Nigeria Export Group, said the government should adopt what is called ‘strategic reserves’.
“When there is a bumper harvest, government needs to buy from farmers and store in silos. Grains are not banned from export, so you expect farmers to sell and you also expect exporters to buy,” Oyelola said.
Tunji Ademola, national president, Maize Association of Nigeria (MAN) said, “To avert the scarcity of grains for next year, government must mobilise people to start farming grains. Provide farmers with improved seeds and mechanisation. Farmers need incentives to farm all year round.”
Jon Tudy Kachikwu, CEO of Jon Tudy Interbix, exporter of packaged foods to the USA, said government need to provide single-digit loans to farmers to enable them to expand.
“If you do not give them soft loans at a single-digit rate, or do not create an enabling environment for them, how will they raise output?” Kachikwu asked. “ In Kaduna, farmers who cannot repay loans are being threatened. This tells you that there is a challenge in this area,” he added.
http://www.businessdayonline.com/feeding-at-risk-as-companies-buy-up-grains/ lalasticlala, Pavore9, dominique, Mynd44, FarmTech |
