• Friday, April 19, 2024
businessday logo

BusinessDay

Revisiting Nigeria’s sugar supply case

businessday-icon

Nigeria’s sugar story is one this writer loves most of all stories. ‘Why?’ you may want to ask. The simple answer is that a story on sugar, written by him, made him one of the 20 winners of the Citi Journalistic Excellence Award 2011, an award that took him and his colleagues, to memorable places of interests in New York that year.

A strong case was made in that story, titled ‘Keeping Nigeria’s sugar cubing plants alive’ for protection for six Nigerian sugar cubing firms whose businesses had become stalled as a result mass importation of St. Louis Sugar into the country and the banning of importation of bulk sugar, which they needed as raw materials. The point was made then that these plants were going the way of Dunlop and Michelin, the two big Nigerian tyre manufacturers that had gone moribund, among some others plants that went the same way.

Investigation revealed that of the six sugar cubing plants operating in Nigeria, only two – Dantata Foods & Allied Products Limited and McNichols Consolidated plc were in business, producing at 6 percent and 3 percent capacity, respectively. The four others – Kano Sugar Processing Company Limited, Paastra Industries Nigeria Limited, and Lange & Grant Commodities Limited had shut down.

We reported then that affected industry sources were worried that the Federal Government did not allow sugar cubing factories to import the raw material required for production of cube sugar, whereas importation of finished cube sugar remained unrestricted. This, the sources argued, was unfair and robbed Nigerians of highly deserved jobs, stating the figure of job loss as 4000. They argued that Nigeria’s sugar importation policy was inconsistent with the Federal Government’s policy direction of restricting importation of basic food items “where there is local capacity to produce these products,” citing the absolute ban on importation of biscuits, fruit juice in retail packs, spaghetti, noodles, bottled water, vegetable oil, wheat flour, sugar confectioneries, cocoa butter, cocoa powder and cakes.

The sugar cubing plant owners, no doubt have a good argument. The Federal Government is yet to purge itself of its policy inconsistency trait, which has become its strong and glaring culture. If government is sincere with its policy of supporting local capacity development for basic food items, it should not allow the influx of cube sugar from outside our shores. The government has consistently restricted importation of other manufactured food items where local capacity to produce such goods exists. Why should the rule not apply to sugar?

Importation of sugar in retail packs results to loss of revenue to local refineries and erosion of Nigeria’s hard earned foreign exchange earnings. Permitting importation of cube sugar (which is a finished product) and restricting local producers of retail packs of sugar from importing granulated sugar, which is 99 percent of their raw materials, is strange and does not support the objectives of the government in encouraging local production.

Again, allowing importation of retail packs of sugar from the international market and disallowing local cube sugar factories from importing bulk sugar as raw material has killed and is still killing local producers. Decrease in sugar prices 

Nigeria’s sugar story is one this writer loves most of all stories. ‘Why?’ you may want to ask. The simple answer is that a story on sugar, written by him, made him one of the 20 winners of the Citi Journalistic Excellence Award 2011, an award that took him and his colleagues, to memorable places of interests in New York that year.

A strong case was made in that story, titled ‘Keeping Nigeria’s sugar cubing plants alive’ for protection for six Nigerian sugar cubing firms whose businesses had become stalled as a result mass importation of St. Louis Sugar into the country and the banning of importation of bulk sugar, which they needed as raw materials. The point was made then that these plants were going the way of Dunlop and Michelin, the two big Nigerian tyre manufacturers that had gone moribund, among some others plants that went the same way.

Investigation revealed that of the six sugar cubing plants operating in Nigeria, only two – Dantata Foods & Allied Products Limited and McNichols Consolidated plc were in business, producing at 6 percent and 3 percent capacity, respectively. The four others – Kano Sugar Processing Company Limited, Paastra Industries Nigeria Limited, and Lange & Grant Commodities Limited had shut down.

We reported then that affected industry sources were worried that the Federal Government did not allow sugar cubing factories to import the raw material required for production of cube sugar, whereas importation of finished cube sugar remained unrestricted. This, the sources argued, was unfair and robbed Nigerians of highly deserved jobs, stating the figure of job loss as 4000. They argued that Nigeria’s sugar importation policy was inconsistent with the Federal Government’s policy direction of restricting importation of basic food items “where there is local capacity to produce these products,” citing the absolute ban on importation of biscuits, fruit juice in retail packs, spaghetti, noodles, bottled water, vegetable oil, wheat flour, sugar confectioneries, cocoa butter, cocoa powder and cakes.

The sugar cubing plant owners, no doubt have a good argument. The Federal Government is yet to purge itself of its policy inconsistency trait, which has become its strong and glaring culture. If government is sincere with its policy of supporting local capacity development for basic food items, it should not allow the influx of cube sugar from outside our shores. The government has consistently restricted importation of other manufactured food items where local capacity to produce such goods exists. Why should the rule not apply to sugar?

Importation of sugar in retail packs results to loss of revenue to local refineries and erosion of Nigeria’s hard earned foreign exchange earnings. Permitting importation of cube sugar (which is a finished product) and restricting local producers of retail packs of sugar from importing granulated sugar, which is 99 percent of their raw materials, is strange and does not support the objectives of the government in encouraging local production.

Again, allowing importation of retail packs of sugar from the international market and disallowing local cube sugar factories from importing bulk sugar as raw material has killed and is still killing local producers. Decrease in sugar prices

 

SIAKA MOMOH, Industry Editor