Nigeria’s quest to boost local wheat production in the country has suffered setback as production cost for the crop have since doubled in recent months, making it difficult for farmers to sell at the agreed off-take price with flour millers, BusinessDay has found.
In the 2015/2016 wheat farming season, the flour millers signed a Memorandum of Association (MoU) with farmers to off-take locally produced wheat at N140, 000 per metric ton. But with the high inflation rate in the country, the N140, 000per metric ton is no longer profitable for farmers as cost of key inputs have doubled.
Though this may make market sense to the flour millers, it is stalling the government hope of halving the importation of wheat into the country by 2018 and the drive to boost local production of the crop as farmers are now abandoning farming the crop.
“The off-take price is no longer profitable for farmers. Prices of inputs are more expensive than they were before, so how can we sell at that price and still remain in business. It is only profitable for farmers at N180, 000MT per ton now,” Saleh Mohammed, national president, Wheat Farmers Association of Nigeria (WFAN) told BusinessDay.
“Last year, we increased our production to over 600,000 metric tons but the flour millers only bough about one percent from us because they said that imported wheat is cheaper than the locally produced wheat.
“The major threat facing wheat farming in Nigeria is lack of market. We have over 22 flour milling plants processing wheat in the country but they all rely on imported wheat rather than buy the local wheat,” Mohammed said.
He noted that the imported wheat is cheaper due to the over 50 percent subsidy given to farmers in the countries of the originated wheat to grow the crop.
According to the United States Department of Agriculture (USDA), Nigeria’s production costs for local wheat have doubled to approximately $420 (N151, 200) per ton over the last six months.
BusinessDay price findings across states show that the average price of local wheat in the country sells for N140, 000 per metric tons.
A metric ton of US ‘hard red winter’, which is a major market for Nigeria, sells for $232 (N83, 520) per metric ton, according to the International Grain Council.
“Many wheat farmers in Kano have stopped producing the commodity due to lack of market and other challenges. Last year, we cultivated over 33,000 hectares of wheat farms but this year, only 10,000 hectares are under cultivation,’’ Faruk Rabi’u, chairman-Kano state chapter of All Farmers Association of Nigeria (AFAN) said in a recent press briefing in the state.
Rabi’u said that the Federal Government’s intervention was imperative because most farmers in the state had lost interest in wheat production due to the unwillingness of wheat flour milling companies to buy locally grown wheat.
In early 2016, a lot of flour millers purchased wheat from local farmers because of the exchange rate volatility the country experience then, as most of them were unable to source dollars for import.
But the situation has change owing to the stability in the country’s exchange rate, making economic sense to import rather than buy locally.
Nigeria’s produces 400,000 metric tons of wheat per annum and demand is put at 4 million metric tons, leaving a supply demand gap of 3.6 million metric tonnes, according to data from the Federal Ministry of Agriculture.
“The problem we have now is getting market for our wheat. The price is no longer attractive and this would make farmers to start shifting to other crops,” Muhammed Augie, a wheat farmer in Kebbi state said.
“If this happens, it will be a big blow on the government efforts to ensure we increase local production,” Augie said.
Data from the National Bureau of Statistics (NBS) state that the country imported at total of N198 billion worth of wheat from January through October last year.
Apart from the issue of pricing, Nigeria’s wheat production has faced a lot of issues among which are; insurgency, illiteracy and lack of technological know-how among wheat farmers.
Josephine Okojie
