Wheat importers to spend $1.29bn despite forex restriction
Despite foreign exchange restriction by the Federal Government and fall in price, Nigerian importers will still spend about N606.4 billion ($1.29 billion) on wheat this year.
The amount is 21.15 per cent of the projected N2.86 trillion ($6.1 billion) money spent on wheat importation annually.
Findings revealed that wheat price in Russia had fallen by $21 from $274 to $253 per tonne.
With the new price, the cost of importing the commodity to Nigeria has been reduced by 78.85 per cent. Flour Mills of Nigeria is the country’s largest importer, while other major importers include Dangote, Honeywell, Olam and Seaboard Group.
It was gathered that the importers were shifting from its major supplier, the United States, to Russia, where the price of the commodity has been falling since the beginning of the year due to low patronage by traditional buyers.
Nigerian importers prefer Hard Red Winter (HRW), Soft Red Winter (SRW), Hard White Wheat (HWW) and durum varieties.
Before the latest development, data released by the United States Department for Agriculture (USDA) revealed that 936,000 metric tonnes of the grain brands were imported by Nigerian firms from the United States in 2020.
It added that the shares of wheat flour for the production of bread, semolina, pasta and others in Nigeria remained at 60 per cent, 20 per cent, 10 per cent and 10 per cent respectively.
According to USDA, Nigeria has the capacity to produce less than one per cent or 55,000 tonnes of the 5.7 million tonnes needed for domestic and industrial consumption despite the Central Bank of Nigeria (CBN)’s policy to restrict forex for wheat importation into the country.
However, Wheat Farmers Association of Nigeria (WFAN) has commended the Central Bank of Nigeria (CBN) for the restriction, saying that the move to deny importers forex would allow local farmers increase production through the bank’s Anchor Borrowers’ Programme (ABP).
National President of the association, Salim Muhammad, who explained that the country spent $6.1 billion annually importing wheat, said that the check on forex was an impressive policy. He noted that the policy would enable government to unlock the unrealised potential in the wheat sub-sector.
He also stressed that the forex restriction policy would give relevant stakeholders the confidence to invest in the sub-sector as the returns on their investment is protected.
Muhammad said that this season, the association would engage 600,000 farmers, who will cultivate wheat on one hectare each with an expected yield of three metric tonnes per hectare, which will translate to 1.8 million metric tonnes, costing N214.03 billion ($455.4 million).
According to him, Nigeria consumes five million metric tonnes of wheat per annum, stressing that there was need to involve the private sector in wheat production.
Muhammad said the association was ready to start production in 16 states of the federation, adding that guaranteed minimum price for wheat would be set and other challenges of the value chain discussed.
Meanwhile, the current deficit experienced in the country has hindered the Federal Government’s plans to cut wheat importation by 60 per cent by 2025 as the country failed to produce 1.5 million tonnes locally per annum.
It would be recalled that in 2012, government said that it would increase national production from 300,000 metric tonnes to about two million metric tonnes per annum by 2019, but till date, production has dwindled to 55,000 tonnes.
The USDA also explained that Nigeria had spent $1.2 billion in 2016; $1.5 billion in 2017 and 2018, $1.65 billion, making it one of the top buyers of Hard Red Winter (HRW) and Soft Red Winter (SRW) wheat in the global market Following the massive importation of the grain, the Federal Government imposed a five per cent tariff on wheat import, additional 15 per cent levy and 12 per cent tax rebate to bakers willing to blend cassava flour with wheat flour for bread making.
Source: New Telegraph