Market News

Nigeria to save N129.4bn on wheat importation in 2019 - PUNCH

APRIL 16, 2018

his year, Nigeria’s wheat production has seen an increase from less than 200,000 metric tonnes to close to one million metric tonnes, and farmers and other stakeholders are making moves to increase the production to two million metric tonnes. ANNA OKON takes a look at the revenue prospects and impact on the wheat import bill

Nigeria may save $422.9m (N129.4bn) from importation of wheat next year, going by projections from farmers and other stakeholders that local production of the produce will increase to two million metric tonnes.

This is in line with the Federal Government’s Agricultural Promotion Policy, which aims to reduce wheat importation by 50 per cent this year.

The country currently imports 4.4 million metric tonnes of wheat at an average market price of $211.45/tonne.

After several interventions in the sector by both the private sector and the Federal Government, wheat production has increased from less than 200,000MT to 900,000MT.

“From the discussion I had with the Group Managing Director of Flour Mills Plc, Mr. Paul Gbededo, wheat production has increased to almost one million metric tonnes,” the Supply Chains Director, Honeywell Flour Mills, Mr. Rotimi Fadipe, said during the presentation of 50 threshers to wheat farmers by the Flour Millers Association of Nigeria.

In 2015, the Federal Government funded a research into wheat that led to the development of two new varieties, LACRI WHIT -5 and LACRI WHIT -6, by research institutes, universities, crop scientists and private seed companies.

These wheat varieties are high-yielding, have early maturity and better baking quality.

Under its Anchor Borrowers’ Programme, the Central Bank of Nigeria has also supported the sector by granting loans to farmers at single-digit interest rates.

The National President, Wheat Farmers Association of Nigeria, Alhaji Salim Mohammed, told our correspondent that farmers were working hard to further increase the production and had projected that with the right equipment and incentives, wheat production should reach two million metric tonnes between the year-end and 2019.

The sector is also seeing increasing private sector support. Just last week, the Flour Millers Association, comprising Dangote Flour Mills, Honeywell Flour Mills, Olam Grains and Flour Mill Nigeria Plc, donated 50 threshers, each valued at N1.4m, to the farmers to help boost the production of the crop.

 

The Group Managing Director, Dangote Flour Mills, Thabo Mabe, said the association was encouraging mechanised wheat production so as to bring about increased yield.

Local farmers are said to be battling rising production costs, which, according to the United States Department of Agriculture, have doubled in the last six months to $420 per tonne.

Mabe stated that with improved harvesting method, the costs could be reduced significantly.

He said, “With mechanised farming, the volume of wheat per hectare increases. When the volume of wheat you get per hectare increases, the yield goes up. When the yield goes up, the cost comes down and the consumers will be happy because the prices of bread can be reduced in a sustainable manner.

“The current unsustainable ways of ploughing and threshing is the reason why majority of the wheat in this country is imported. We are in the process of stopping this importation and driving Nigeria to self-sufficiency in wheat production.”

Mohammed confirmed that the challenge of wheat production was with the harvesting, which is mostly carried out manually.

He stated, “With manual harvesting, farmers beat out the wheat with their bare hands. In the process, there is huge waste as most of the crops will be lost. The process takes three weeks to one month and the yield is usually poor.

“But with mechanised harvesting, the process is faster, takes three days and the crop does not waste.”

The flour milling industry faced huge scarcity of wheat in 2016 when there was recession and scarcity of foreign exchange.

The scarcity was attributable to poor local yield and lack of new wheat varieties.

The leader, Wheat Chain, Lake Chad Research Institute, Zakari Turaki, told our correspondent that the institute did not receive any government funding for research in 2016 and so no new varieties were developed.

“We had planted 450,000 hectares in the past when there was funding and from each hectare, we got three tonnes,” Turaki said.

Firms had to devise means of getting supply by buying improved wheat seeds for farmers to plant so that they could buy the end-product back.

Many of them embarked on backward integration to cut down on the amount of dollars spent on importation, but despite these efforts, there is still a huge demand gap in the industry.

Gbededo told our correspondent that the situation caused stakeholders to look inwards at the possibility of growing more high-yielding wheat varieties locally.

“Whereas it was easier and cheaper to import in the past, the forex scarcity made us realise that with enough investment in local production, sourcing wheat locally could prove cheaper than importing,” he explained.

The flour millers’ body has embarked on an aggressive move to improve local production.

It went ahead to fund a research at the Lake Chad Agricultural Institute to the tune of N20m, aimed at creating improved wheat varieties that could grow well in the Nigerian climate.

The association distributed 3,000 bags of Norman and Attila variety seeds to farmers and also donated over 2,500 water pumps to them to aid in irrigation.

He said, “Our problem is building on the seed system. The seed companies run by the private sector are supposed to drive the development of seeds in the country.

“But in the past, they paid attention to maize and rice but not wheat. But now, we have brought in eight seed companies and they are going to join in the production of wheat seeds that are heat-tolerant and flood resistant. “

He added that the operators were targeting four million metric tonnes to meet the demand.

An increase in production of wheat will also translate to export revenue for the country as Nigerian wheat is said to be in high demand in other African countries that rely on the nation for grains.

Nigerian grains find their way to countries in the Sahel region, such as Niger, Chad, Mali, and Burkina Faso, according to the United States Department of Agriculture, which stated that cross- border trade in agricultural commodities had continued amidst insecurity across Nigeria.

“Exports are noted at 850,000 tonnes, an increase of more than 21 per cent over that of 2016/17 due to growing demand in neighbouring landlocked countries,” the agency stated in its report on the sector.

SEE HOW MUCH YOU GET IF YOU SELL

NGN
Real Time Analytics