• Monday, July 15, 2024
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Why Nigeria needs urgent, collaborative action to resolve maize crisis

Why Nigeria needs urgent, collaborative action to resolve maize crisis

Maize production in Nigeria suffered a decline in 2020 as it was afflicted by many challenges – an issue industry player say has put the sector in a state of emergency.

The impact of the Covid-19 pandemic and the resultant lockdown, flooding and unfavourable weather conditions in many maize producing areas, insecurity caused by Boko Haram insurgency, kidnappings and herdsmen-farmers crisis, especially in the Northern region, where most of the maize is grown, are the challenges that disrupted maize production in Nigeria last year.

According to Afex Commodities focus on Maize, in Q4 2020, “it was hard to keep up with the demand for maize in Nigeria. The price of the grain has seen a steady uptick resulting from a low base of production.”

Maize prices slumped 17 percent between October and December 2020 from N179,666 to N148,807 as the market was awash with late maize, which was harvested in October 2020. However, increased purchase by institutional buyers for the commodity has seen prices surge, settling at an eight-month high of N185,000 as at January 14, 2021.

Nigeria’s annual production level, ranked 13th in the world and second in Africa behind South Africa, averaged 10 million tons per annum in 2018 by Afex Community report, and was forecast at 11.5 million tons in 2020 by the USDA.

According to Bello Abubakar, the president of the Maize Association of Nigeria (MAAN), the low supply and price hike of maize are as a result of mostly the insecurity around the major maize producing belt of Niger, Kaduna, Katsina, Zamfara, and some areas in Kano State.

Also noting the challenges encountered in the maize sector and the resultant price increase, Edwin Uche, president, Maize Growers, Processors and Marketers Association of Nigeria (MAGPMAN), noted that banditry, drought in some parts of the country in 2020 and activities of middlemen are responsible for the current high price.

Explaining that many of the farmers recorded losses worth millions of naira invested in cultivating the crop in the 2020 planting season, Oyo State maize farmers, under the auspices of the Association of Farm Settlers said it was as a result of poor and unstable rainfall, which has dissuaded many farmers from planting the crop in the 2021 planting season.

To encourage local production, the Federal Government imposed a ban on the issuance of forex for the importation of maize in July 2020. This brought about an increase in the demand from local processors, thus an uptick in price, and then inflation.

Corn prices, which stood at an average rate of N80,000-N90,000 in May 2020, rose to between N155,000 and N170,000, within a few months.

Despite being one of the largest producers in Africa, Nigeria still imports 28 percent of its required maize from countries outside of the continent. From the 1.4 billion MT of maize farmed worldwide, 65 percent of maize demand is for livestock feed production alone according to the Food Agriculture Organisation (FAO).

To water the sector, which was badly burnt by the challenges that impacted maize production in Nigeria in 2020, the Central Bank of Nigeria (CBN) in August 2020 approved an emergency intervention measure to four companies to import maize into the country. Wacot Limited (60,000 metric tons), CHI Limited (60,000 metric tons), Crown Flour (22,000 metric tons), and Premier Feed Mills Limited (120,000 metric tons).

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According to analysts, maize is the most abundantly produced grain in the world and the most important food crop in sub-saharan Africa, but for over a year now, there has been a critical imbalance in the demand and supply of maize in the country. The current market price for a ton of maize is now N200,000. This is a 150 percent increase from the N80,000 in January 2020.

Consequently, the spiralling cost of maize has hurt the wider economy. This essential grain is a major driver of inflation in Nigeria and a continuous rise in market prices adversely affects a considerable part of Nigeria’s population, the feed and poultry industry, and our national GDP.

While maize is the most critical ingredient in the production of animal and aqua feeds, the continuous increase in the price of maize has badly affected the poultry industry in Nigeria. Poultry meat/eggs is considered as one of the cheapest sources of protein in Nigeria.

The poultry industry contributes over 25 percent of the agricultural GDP to the Nigerian economy. According to industry players, the sector is in a critical state if the cost of maize continues to persist.

In an attempt to relieve the pain suffered by Nigerians with maize crisis in the country, the CBN said it planned to intervene with 300,000 metric tons of maize in February through its strategic anchors facilitated by the Cbn-financed Anchor Borrowers’ Programme (ABP) and other drivers in the supply chain.

While the move has been welcomed and anticipated by a lot of Nigerians, industry analysts say it is like a ‘raindrop in the ocean’ as the intervention is temporary and will not solve the problem of scarcity.

To solve the maize crisis in the country, industry experts advise that the government should intervene by replicating the policy that granted access to some players to import maize into the country. Especially, as the March – April cultivation season is behind the corner the government should purposefully open a discussion with the stakeholders, knowing fully well that the country has nothing left in the national reserve.

Government needs to intervene immediately to drive the market of maize by allowing for the importation of maize to curb and contain the imminent hunger in the land, and prevent shutdown of the poultry industry as a result of high cost of production.

The government should allow the importation of maize to save the country from imminent hunger, and the excess put in the national reserve.

In it all, stakeholders are saying, “We need to facilitate an urgent national conversation, which will influence and drive the right action with the following discussion points:

“An analysis of the provisions and effectiveness of current policies governing maize, along the market realities; Identify shortterm and long-term strategies that will drive down market prices, increase production, curb an imminent hunger crisis, and a complete shutdown of the poultry industry due high cost of production.

“Identification of private sector partners with credible backward integration projects to collaborate with in order to sustain the value chain.”

These have already been summed up before now by data from the USDA grain report on Nigeria: “Nigeria will likely rely on grain imports this year for food security as Covid-19 pandemic, foreign exchange devaluation, and climate change reduced the country’s 2020 output of wheat, maize, and rice.”

According to the report, the decline is expected due to the negative effect of Covid-19 lockdown measures on productivity.

Analysts puts Nigeria’s midyear 2020/21 maize production at 9 million tons, a 13 percent decline when compared to 11.5 million tons forecasted last year. MY2020/21 area harvested is forecast at roughly 5.0 million hectares (MH), about a 24 percent drop compared with 6.5 million hectares registered the preceding two years”.

In addition, the report states that “Heavy July floods across many maize-producing areas also destroyed lands under cultivation at a time of soaring input costs and when many farmers lacked capital for replanting,” the report added.

“These are expected to be the case as growing insecurity (caused by Boko Haram insurgency, herdsmen-farmers crisis, and kidnapping) continues to limit land area under cultivation during the out-year,” the report further said.

The Afex 2020 annual commodity report, expect prices of Maize to be pressured up prior next harvest in May 2021 after the supply of late maize may have been exhausted in the market coupled with aggressive demand by industrial users.

“We do not see the CBN rescinding its ban on maize importation. With existing supply gap in the Nigerian maize market, we maintain our stance on higher prices for maize in current trading season”.

Similarly, the country’s poultry association says it would require importing about 5.6 million metric tons to meet its industry demand for the grain in the MY2020/21 period.

“Government needs to intervene immediately to drive down the market of maize by allowing for the importation of maize into the country to curb and contain the imminent hunger in the land and the complete shutdown of the poultry industry as a result of the high cost of production,” an industry analyst said.