Nigeria has again renewed the commitment to expand domestic production of wheat in President Muhammadu Buhari’s bid to halve importation and secure a significant chunk of demand for local producers.
Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL), a subsidiary of the Central Bank of Nigeria (CBN) will support the cultivation of about 400 hectares of wheat during this November and December cultivation season, BusinessDay learnt.
The Flour Millers Association of Nigeria (FMAN) also has acquired about 600 hectares for wheat cultivation, and another 20 hectares for seed production.
Meanwhile, the Wheat Farmers Association of Nigeria (WFAN) under the Anchors Borrowers Programme of the CBN plans to cultivate about 100,000 hectares of wheat.
But will tonnage increase alone resolve the poor price competitiveness facing Nigeria’s wheat farmers? Has the directive that millers purchase local wheat at a fixed price of $400 secured industrial demand? These were questions left hanging, which stakeholders believe must be addressed to create a sustainable wheat market.
Locally produced wheat has overtime struggled to ruffle feathers with much cheaper imports originating from Russia, the United States, Canada and Australia. Millers with gaze fixed of minimising input cost place preference on importation, despite the 20 percent levied by the federal government.
Farmers find the directive to sell at N145,000 per metric to millers unprofitable, preferring to sell to the institutional buyers and or export at premium rates. The lack of stability in wheat pricing only offers loss where the cost of farming is high and the yield per-hectare low, farmers say.
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“For a farmer to sustain his business, he is supposed to have got N18, 000 per 100 kilogrammes and in a worse case, N15,000. But surprisingly flour millers offered N13, 000,” Salim Saleh Vice President of WFAN told BusinessDay.
In suitable conditions, farmers harvested about three tonnes of wheat per hectare but that plunged to 1.5 ton per hectare as of 2018, dampening the country’s prospect of raising output.
Besides pricing, a more troubling argument by millers and manufacturers of bread and pasta, the most consumed flour-based foods in the country, is that locally produced varieties of wheat don’t fit well for milling due to higher protein content, lower moisture and lower gluten. Consequently, local wheat flour goes into the preparation of traditional more than, reaping from the huge demand.
The off-taking arrangement, rather than being a function of market fundamentals often takes the shape of corporate social responsibility on the part of compelled millers and charity by the government.
The Nigerian government, along with humanitarian relief organisations, and non-governmental organisations (NGO) routinely purchase local wheat, deployed to internally displaced Nigerians by the Boko Haram insurgency.
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Nigeria’s wheat consumption in the marketing year 2019/2020 is expected to rise to 5.26 million metric tons, accounting for nearly four percent or 200,000 MT higher than from 2018/19 estimate of 5.06 million metric tons, according to the U.S. Department of Agriculture (USDA) forecast. It attributed the increase to a rise in imports combined with an increase in food, seed and industrial (FSI) usage. The rise in FSI wheat consumption is attributed to rising population, which is increasingly reliant on domestic and imported processed food products. The USDA sees production being retained at the 2018 levels of 60,000 metric tons, with yields holding steady at one metric ton per hectare.
Oluwasina Olabanji, executive director Lake Chard Research Institute said wheat farmers churned out less than 300,000 metric tons nationwide at the end of 2017/2018 farming season, declining from 625,000 metric tonnes during 2016/2017 season and 25 percent from 400,000 in 2015/2016.
He believes however that a round table meeting of the critical stakeholders on the 6th of this month would bring substantial support to wheat production.
