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FX: Flour millers invest N2.16trn on wheat amid restriction

Flour millers have spent $4.49billion between January 2019/2020 and June 2020/2021 seasons to import 9.4million tonnes of wheat. This is despite the Central Bank of Nigeria (CBN)’s restriction on access to foreign exchange. It was gathered that flour millers now sourced their foreign exchange at the black market to bring the grain into the country because of the high demand by consumers, who have shifted to wheat products for food. Russia supplied 3.28million tonnes of wheat valued at N370.05billion ($754.4million) grain last year to Nigeria last year, according to International Grain Council (IGC).

Wheat Farmers’ Association of Nigeria (WFAN) had commended CBN over its Anchor Borrowers’ Programme (ABP) as moves by flour millers to access foreign exchange to purchase wheat came to naught over a year now. The National President of the association, Salim Muhammad, noted that WFAN would engage 600,000 farmers to cultivate wheat on one hectare each with an expected yield of 1.8 million metric tonnes this year. Currently, Nigeria has capacity to produce 1.17per cent or $15.4million of the 4.7 million tonnes needed in 2021, while total global production is estimated at $295billion.

Because of high demand by Nigeria and other importing countries, the price of wheat has shot up this year to $230 per tonnes from $201, representing an increase of $29. This week alone, Nigerian Ports Authority (NPA)’s shipping position revealed that some 141, 335 tonnes of wheat valued at N1.3billion (32.5million) were ferried to Lagos Port complex, Apapa with Desert Dignity laden with 55,000tonnes; Desert Oasis, 47,752tonnes; Sharp Island, 31, 383tonnes and Cardinal, 7, 200 tonnes. The World Bank had said that average wheat price would surge by nine per cent in 2021 as global wheat production is expected to rise by 919million tonnes to 932million tonnes. It would be recalled that in March this year, the CBN said that it would reduce wheat importation by 60 per cent over the next two years under its import substitution programme.

The CBN disclosed this in Gombe at the flag-off of the 2020 wet season harvest aggregation and the second cycle of the 2020 dry season distribution. According to CBN Governor, Mr. Godwin Emefiele, the apex bank is committed to improving local production of wheat and reducing importation by 60 per cent.

He added: “There is therefore no need to panic over the current prices of major staple food items.” Also, Emefiele lauded the resilience of the farmers in the country, who continued to farm in order to ensure food sufficiency in Nigeria despite the challenges caused by insecurity in some parts of the country. He said: “It is also encouraging news which presents different narratives, which portend that most of our farmers are unable to go to their farms due to nationwide insecurity.” In 2020, noodles producers imported a total of 840,000tonnes tonnes of wheat valued at N193.2billion ($420million) this year. According to the United State Department of Agriculture (USDA), wheat consumption in the country reached 5.26 million metric tonnes between 2019/20, up nearly four per cent or 200,000 tonnes higher than the 2018/19.

The organisation attributed the surge in imports to increase in food, seed and industrial (FSI) usage, noting that the bulk of Nigeria’s wheat imports destined for milling and production were sourced from Russia, the United States, Canada and Australia. Also, USDA explained Nigeria had spent $1.2bil-lion in 2016; $1.5billion in 2017 and 2018, $1.65billion, making it one of the top buyers of Hard Red Winter (HRW) and Soft Red Winter (SRW) wheat the global market. It was learnt that Flour Mills of Nigeria pioneered pasta production in 1999, since then it expanded pasta production capacity from 40,000 tonne in 1999 to 350,000 tonnes, while Dangote also expanded its own milling capacity from15,000 tonnes/year in 2000 to a total installed capacity of 800 tonnes/daily.

Other major pasta producers are Honeywell Flour Mill and Olam/ Crown Flour Mills. Following the massive importation of the grain, the Federal Government imposed a five percent tariff on wheat imports, additional 15 per cent levy and 12 per cent tax rebate to bakers willing to blend cassava flour with wheat flour for bread making but wheat importation has continued to increase.

 

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