Wednesday, June 23, 2021

    CBN needs to pursue bankable policy to reduce Nigeria’s $1.5 billion import bill on Wheat

    Must read

    Naija247news Media, New York
    Naija247news is an investigative news platform that tracks news on Nigerian Economy, Business, Politics, Financial and Africa and Global Economy.

    Nigeria boasts of 34 million hectares of arable land area, with about 6.5 million hectares for permanent crops. Little wonder, Agriculture serves as the country’s main driver of the economy after oil. But despite the goodies in the sector, the country imported wheat worth N2.2 trillion in the last four years.

    According to data from the Food and Agriculture Organization (FAO) of the United Nations, Nigeria has witnessed low wheat yields amidst declining production in the last ten years. Within the period, the wheat area harvested reduced significantly. It also propelled the wheat yield to drop to the level of 10,678 hectograms (100 grams) per hectare (Hg ha) in 2018, the lowest since 1991 and one of such decline ever.

    Flourish logoA Flourish chart
    Between 2010 to 2019, wheat production was also on free fall, dropping to the range of 60,000 tonnes per annual from 165,000 tonnes production capacity in 2011. These staggering statistics (area farmed, yield, production) are the reasons why the country imported about 98 per cent of its total consumption. By implication, there are a vast population (market) but less capacity to produce one of its significant interest crops.

    Why so much dependence on import
    Nigeria’s Minister of Agriculture and Rural Development, Mr Sabo Nanono, recently identified seeds’ unavailability as one major factor hampering investment and low production in the wheat value chain. He, however, said the ministry would provide quality seeds and agricultural inputs to Nigerian farmers.

    Challenges facing the value chain include limited access to improved seed varieties, high production cost, inadequate irrigation infrastructure, insufficient funding systems, lack of a cohesive national strategy on wheat development, and unclear role of government and other stakeholders. These challenges factored in how Africa’s biggest economy managed to produce an average of 107,000 tonnes of wheat between 2001-2014. Africa produces more than 25 million tons of wheat on 10 million hectares (Mha) of land area, per FAO. Ethiopia and South Africa account for the largest production area with 1.7 Mha and 0.5 Mha, respectively.

    Nigeria ranks low compared to other African peers in area harvested, yield, and production of wheat. While South Africa, Kenya and Ethiopia harvested hundreds of thousands of arable land, Nigeria only harvested on an average of 70,000 to 80,000 per annum.

    What factors responsible for low local production
    The reasons for low local production can be categorised into two main areas; technical and economic challenges. Analysis of the FAO data for sub-Saharan Africa showed that these factors influence farmers’ low yields in Nigeria’s wheat market. In 2011, when Nigeria harvested 128,992 hectares, its recorded peak production levels at 165,000 tonnes.

    On the technical side, farmers in Nigeria have limited access to improved seed varieties, fertilizers & chemicals, high cost of production, and inadequate irrigation infrastructure, often leading to low yields. On the economic side, lack of investment opportunities, insufficient funding systems for research, and lack of a coordinated national strategy resulted in Nigeria’s dependence on imported wheat to meet its large population’s growing demands.

    A Financial Derivatives Company’s report cited insecurity in Nigeria’s wheat belt, the lack of mechanized and modernized farming techniques, and uncompetitive pricing as challenges facing low wheat production.

    Similarly, the International Food Policy Research Institute attributed a lack of policy support and support from international organisations to be responsible for low domestic production.

    Low yield propels lack of investment
    Despite the massive market for wheat in Nigeria, a perennial low yield often leads to low revenue and profits. This situation discourages the cultivation of wheat by farmers.

    They instead divert their funds into more rewarding agricultural produce. Several reports, including direct comments from farmers, have decried the government’s lack of commitments as one significant factor.

    Due to this, farmers have shifted focus towards the cultivation of rice, while bakers go after imported wheat because it is cheaper.

    Flourish logoA Flourish chart
    A look at the 2011 figure of the FAO data showed that yield dictates the propensity for investment (Area farmed/harvested). Also, the area planted, in turn, determines output (production). A classic case is Ethiopia’s wheat value chain, which shows consistency in growth in the last decade. The country’s healthy production is influenced by its continued investment in seeds, fertilizers, and mechanization, according to the OECD-FAO Agricultural Outlook 2018-2027.

    Flourish logoA Flourish chart
    Presently, Nigeria has no actionable policy for its wheat market. The Anchor Borrowers’ Programme (ABP) captured wheat production, but the approach was mere paperwork for wheat farmers. Alhaji Salim Mohammed, the National President of the Wheat Farmers Association of Nigeria (WFAN), told Dataphyte that there is no specific outlined policy for Nigeria’s wheat market. He said both the FMA&RD and CBN have no serious concern about it. Wheat is an essential grain belonging to the grass family. When milled into flour, it makes a wide range of foods, including bread, noodles, pasta, biscuits, cakes, cookies, pastries, cereal bars, sweets and crackers. On another aspect, it is one of the most common grains which serve as feed for livestock. Research also suggests grain improves the calcium and energy status of cows to help them in transition.

    Per a report by Emerald, Nigeria’s wheat importation stood at 4.2 MMT on average annually, costing $1.5 billion in import bill. For Nigeria to grow its wheat market, it needs to close the production gap and reduce the import bill as essential ingredients for best agric practices. These include improvement in seedlings, mechanizations, commercial agriculture, addressing insecurity in the North-East, a significant zone for Nigeria’s wheat.

    The central bank and policymakers can also learn from Ethiopia and Egypt’s wheat value chain by giving full attention to crop production to ensure food security. The Nigerian Bureau of Statistics (NBS) recent report shows that crop production remains a significant portion of Nigeria’s GDP. In the fourth quarter, the Nigerian economy grew by 0.11% (year-on-year) in real terms, representing the first positive quarterly growth in the last three quarters. Quarter-on-quarter, crop production grew by 3.42 per cent compared to 1.39 per cent in Q3, nearly double the increase.

    Investment and funding are also critical factors in expanding the wheat value chain, especially by supporting Lake Chad Research Institute in research and development to improve wheat seeds.

    - Advertisement -spot_img

    More articles

    - Advertisement -spot_img

    Latest article

    WP to LinkedIn Auto Publish Powered By :