FX scarcity shoots orange price up 28%

This may not be the best of times for fruit juice companies and fruit consumers in Nigeria as they grapple with the rise in the price of oranges which has witnessed a 28 percent hike in the past month, owing to the slump in the value of the local currency, the naira, against the US dollar, as well as climate change.

Oranges imported from neighbouring Mali and Burkina-Faso have dominated the Nigerian market for about ten years and Nigerians have savoured the special sweetness against the local species which often tend to have a sour tinge. But investigations show that scarcity of foreign exchange and unfavourable weather have continued to impact negatively on orange imports, resulting in the shortage of the foreign species in the market.
Consequently, prices of home grown oranges have increased by over 28 percent in recent weeks, further straining consumers purses, or putting the fruit beyond their reach altogether.
Oranges are patronised by fruit juice companies and all classes of Nigerians, although much of the more enlightened middle class, which constitute 23 percent or 40 million of the country’s 170 million populace, delibrately take fruits, including oranges, for their health benefits.
Some of the companies which juice fruits in Nigeria are Chivita limited, Dansa Foods limited, Choppee Fruit Drink and Industries limited, Fumman Agricultural Industries ltd and the Nigerian Bottling Company plc.
“This is majorly a climate thing because oranges are usually low around this time. Most times, they import from neighbouring countries like Mali and Burkina Faso but because of the hike in the price of the dollar, they are cautious about taking the risk,” said Afioluwa Mogaji, chief executive officer, X-ray Farms.
BusinessDay investigations further reveal that a basket of oranges which sold for between N16,000 and N18,000 two months ago, now goes for between N25,000 and N27, 000 depending on the location and the buyer’s bargaining power.
“We have two types of oranges in the market now. The new one which is just coming out is cheaper and we sell for N20,000 but the old orange which will phase out soon, we sell for N25,000. We buy our oranges from Benue, Ilesha, Ore and Benin.
“When we had imported oranges in the market, we sold a basket of the local orange for N18,000 and the Cotonou oranges for N25,000 but they no longer import oranges because the dollar is high,” said Yemisi Ogunrinde, an orange dealer at Ketu Market in on the outskirts of Lagos.
Nigeria is currently the ninth producer of citrus fruits in the world with 3.4 million tonnes, according to the Food and Agricultural Organisation (FAO) in its report. Fruit juices are categorised under the food and beverage sub-sector, which is the largest of all the groups in the manufacturing sector.
The sub-sector contributed N264.32 billion in output in the first half of 2015 and N41.21 billion in the same period.
As the prices of oranges continue to look northwards, many retailers are grumbling of drastic and consistent drop in sales.
“Customers are complaining that the new oranges are bitter, while the old oranges are expensive, so business has been dull,” said Blessing Ajele, an orange retailer at Mile 12 market.
Another orange retailer who gave her name simply as Iya Tosin said, “I have not been able to sell a basket all morning, which is unusual. I might be forced to sell them off at a lower prices to prevent spoilage because customers are not encouraging us at all.”
According to the local farmers, oranges from Benin Republic, Burkina Faso, Ghana and few other West African countries are sweeter and juicer, which gives them an edge over local species.
“Imported oranges from Mali and Burkina Faso which are sweeter are undocumented import so that is how the industry has been surviving but now that the dollar is high, there is a challenge because they all use dollars,” Mogaji said.
Currently, there is no restriction on the importation of oranges into Nigeria, as Nigeria has existing regional agreements like the Common External Tariff (CET), which tolerate importation of fruits.
Despite these regional agreements which make importation of oranges and other fruits legitimate, farmers who spoke with BusinessDay said they were worried that oranges would be imported into the country all-year round, rather than during Nigeria’s off-season.
“The seedling can be planted in Nigeria but farmers are not informed about where to get them. We do not have the same rainfall pattern and terrain with those countries,” Mogaji added.
Nigeria has orange varieties such as sweet and bitter oranges, as well as Mandarin. Each year, millions of tonnes of oranges and other fruits are harvested in Nigeria but a good number of them go down the drain as wastages, due to poor market access and poor storage facilities, among others.
Most of the oranges in the country are farmed in the middle belt region, with traders buying and conveying them crisscross.
In 2002, the Federal Government banned the importation of fruit juices into the country, which gave farmers hope of better days.
“ I also want to say that there must be investment in agriculture, particularly in the area of irrigation, that will ensure all year farming, to expand the local market,” said Akin Omotayo, director, Institute of Food Security, Environmental Resources and Agricultural Research (IFSERAR).