Agro-allied manufacturers are increasingly sourcing raw materials locally as foreign exchange hiccups deal blow on their capacity to import inputs. Many have invested heavily in backward integration and source more inputs from farmers to reduce production cost. The situation boosts the agricultural sector while creating jobs.

“We the farmers are benefiting from the forex crisis. Our patronage has increased tremendously, especially from manufacturing companies. Some of the items we farm used to be imported into the country, but with the shortage of forex, importers cannot bring in a commodity like dry maize to sell and make profit so they are now buying from us,” said Abiodun Olorundenro, chief executive officer, Green Vine Farms.

“We now have better pricing for our commodities and a lot of people are now investing in agriculture,” Olorundenro said. Edobong Akpabio, chief executive officer, Green Animalia, said: “Many companies are now looking inwards and investing in backward integration. There are more service providers in the agricultural sector now than it has ever been since I started my agribusiness.”

Ikechukwu Onyemenem, a cassava expert, said: “Our company has invested heavily on backward integration which has help to boost our local supplies and we are buying more from farmers now than we use too buy before. “Farmers are unable to meet our demand currently,” he said. In a bid to defend the naira and salvage dwindling foreign exchange earnings, the Central Bank of Nigeria (CBN) last year restricted manufacturers of some 41 items from FX.

The restriction has led to capital flight, low output and naira crash in the economy, even as international agencies call on the government to relax capital control.

But experts say resourced-based manufacturers will gain as the country looks inwards.

Muda Yusuf, director- general, Lagos Chamber of Commerce and Industry (LCCI), said, “The FX policy is only beneficial to companies that can substitute locally because their business is more competitive now.

“Most of our farmers are smallholder farmers that ply their trade with crude equipment and do not need FX to imports machines. This makes local content in the agric sector very high,’’ said Yusuf. Nigeria’s central bank believes there is light at the end of the tunnel.

“Recently, we have seen people coming to talk about investing in agriculture in Nigeria. About two weeks ago I inspected a 16,000 hectares sugar cane farm as well as a milling and refining facilities in Niger State. We have Nigerian investors looking at investing in fertilizer. So the biggest fertilizer plant in the world will be in Nigeria,” said Godwin Emefiele, governor, Central Bank of Nigeria.

“We believe that over time and hopefully around the middle of early 2018 or the end of 2018, the pressure that the demand for some from these final products, the pressure that places on reserve and CBN will be substantially reduced and I think with that we can see the green light at the end of the tunnel,”Emefiele added.

Analysts have maintained that Nigeria can do without crude oil export, if adequate attention is given to agricultural sector and non-oil sectors of the economy.

Although, local production of starch, palm oil and other agricultural inputs has increased over the years, it has not met rising demand and consumption.

According to analysts, local sourcing of raw materials guarantees sustainable supply of inputs reduces dependence on imports and reduces cost of production.

Almost a year since the present administration took over; Nigeria is still awaiting policy direction of the agricultural sector whose growth could offset a slump in oil revenue that has plunged the economy into crisis.

http://businessdayonline.com/2016/04/fx-shortage-spikes-local-sourcing-of-agro-inputs/ lalasticlala, dominique, Mynd44, Seun