Abiodun Olorudero, the managing partner at Prasino Farms, has expressed skepticism about the effectiveness of the federal government’s new policy of zero import duty and VAT exemption on basic food items.
Last week, the Nigeria Customs Service (NCS) announced the implementation of the policy which involves the suspension of duties, tariffs, and taxes for the importation of food maize, husked brown rice, wheat, and cowpeas for 150 days.
The federal government holds that the measure would ameliorate the high cost of food items in the Nigerian market.
However, Olorudero argued that the policy might not yield the desired result due to “stringent crazy conditions.”
“They said you can only bring in paddy rice, which means that if I’m importing paddy rice, I must first take it to the north where there are processing machines before bringing it to the south to distribute. The cost of transportation is still an issue,” the agricultural expert said in a conversation with BusinessDay.
He added that there is a higher possibility that the processed rice will be exported due to a weaker currency at home as many farmers now prefer to sell outside the country to get more money.
BusinessDay can confirm that there’s a rice mill in Imota, Lagos State which has the capacity to produce 32-metric tonnes per hour. Although this processing plant is not in full capacity yet, the Lagos State attributed this to shortage of paddy rice.
Olorudero also said that the foreign exchange volatility is also an issue, saying that importers will still import at the rate of ₦1600/$.
Speaking on the slight drop in July inflation rate as reported by the National Bureau of Statistics, the agriculturist attributed the relief to harvest season, saying that “It is a reality that prices of tomatoes, pepper and some other vegetables have dropped. And there is fluctuation in prices of other commodities like beans and rice.”
The agricultural expert cautioned that the recent decline in inflation rates might be short-lived. Despite the positive figures, he pointed out that the prices of essential commodities such as bread and rice remain elevated.
Olorudero highlighted unfavorable weather conditions as a major challenge faced by farmers, particularly the rainfall deficit experienced in the northern part of the country. This, he said, has adversely affected agricultural production.
He emphasised that high energy costs, foreign exchange volatility, and increased labour expenses due to the minimum wage hike would likely contribute to persistent inflationary pressures in coming months.
