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Cotton Should be Seen as National Asset, Says Achimogu

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  • Cotton Should be Seen as National Asset

President of the National Cotton Association of Nigeria (NACOTAN), Mr. Anibe Achimogu, spoke on the dwindling fortune of cotton, poor mobilisation of farmers and lack of commitment by stakeholders, which has allowed neighbouring countries to dominate the market to the detriment of Nigeria.

Nigeria was one of the top cotton producing countries, but it has over the years lost its place. What is responsible for the backward slide of the sector today?

There are many factors responsible for that. Mainly, it has to do with lack of research and investment. One of the most important things to keep cotton production going in our country is planting seeds. Unfortunately, we have not invested in that over the years. The institute mandated by the Federal Government to produce breeder foundation seeds is the Institute for Agricultural Research (IAR) in Zaria. Unfortunately, that Institute is not funded enough. They don’t have enough breeders; they don’t have the right equipment and so on. But I would like to say that the planting seed priority that they have, their intrinsic values per quality is quite good and if they are supported, I am sure they can produce and the impact will be felt in terms of yields. I think that is the first challenge.

The second challenge is inability to meet the needs of farmers. When I say the needs, I am talking specifically about the inputs. The point is that Agriculture is time bound generally. You see, cotton particularly has specific windows for planting. So, if they don’t have the right inputs at the right time, definitely that will affect the cotton yields expectation. In fact, this is the reason why cotton production is dwindling in the country today. There are other challenges in the sector, which we believe, once addressed will lead to higher demand of cotton in the country.

The cotton producing states cannot meet the local demand for the product, not to talk about meeting export needs. How bad is this?

That is exactly what I am saying. It has to do with the planting seeds. For instance, in the last planting season of 2016, we as an association mobilised 68,000 farmers that will be engaged, but we still didn’t have enough planting seeds that will go round the farmers. Even the existing or current states that are producing cotton were not able to reach their optimal capacity to produce cotton because not all the farmers are cultivating the produce. Those that even have the seeds have poor quality seeds, so the yields are low and also like I said if you don’t support these farmers at the right time, give them the inputs to prepare their farmlands and also produce, there wont be any result. All these affect cotton production in Nigeria, in terms of quantity and quality.

Yes, we have 25 cotton producing states; perhaps in this season we only had 10 or 16 that only planted. Even then, like Zamfara State and others states that have maybe 14,000 farmers for instance, perhaps only 1,000 or 3,000 farmers were mobilised to farm. So, this is a direct negative effect on cotton production in the country.

In what ways can government ensure massive production of cotton?

You see, I am now pushing government to recognise the activities of National Cotton Association of Nigeria, which is primarily set up to promote cotton production, to support the farmers and all that. Now, we have a plan we have put forward. Like I said, and what I want government to do for us as cotton farmers is to link us, and perhaps give us a special status as they’ve done to rice farmers under the Anchor Borrowers programme. I think it is still the best programme for Agriculture. Like I said, if you go under the anchor-borrowers programme, for instance, they are faced with two major issues concerning the farmers. The first is market, because you have an anchor company that must be on stand-by that will obtain all that the farmers produce.

Then, the second major problem for farmers again is the price that is determined by the anchor companies and even Central Bank Nigeria (CBN) is involved and the participating banks. So, on that price issue, the farmers know what is involved and even before they plant the cotton. Anchor-borrower programme is a good programme, in the past when you give inputs to farmers and sometimes they start selling and engage in diversion and so on, but now that has ceased. Right now, if I as a Ginner get my raw material as real cotton, I process it, obviously there would be raw materials for textiles companies and that would be available for them, which is the cotton needs. For me, I want government to see cotton, first and foremost or treat cotton as an essential product for the nation.

You see, anywhere cotton is produced in the world, it is taken as a national asset. That is why in neighbouring countries, their governments control the production and supply of cotton jealously. They don’t joke with it. They take cotton as we take oil in this country. So, it needs to be seen as a national asset and given a special status it deserves, such as what they gave rice under the anchor-borrower’s programme. After all, cotton is still part of the aims and objectives of the anchor-borrowers programme. And we that are in the Association and stakeholders in the industry need to be guided and supported in order to grow the industry, if we do what government wants us to do in terms of positioning our farmers, grouping them and all that. We are ready to do that, and once we come to government and those funds needed are made available for us, the sky will be the limit for the increase in production of cotton in our country.

The problem we are facing is the delay in payment and inputs supply. If you don’t release the funds that we all agreed on to be released to farmers, stage by stage and you don’t release it on time, then indirectly it will affect the work on the farms. That is why we are saying that the Association is in the best position to guide the anchor-borrower’s programme for cotton production.

To what extent do cotton farmers access funds presently from government?

Right now, it is zero percent. Access to finance by farmers is difficult today. If you go to the commercial banks, everybody is talking about collateral. That is why again, I will go back to say that the anchor-borrowers programme is the best, because that gives farmers access to funds. In this sense, finance and assistance will be given directly to them. The only difference is that the only cash that comes to the farmers, which he needs as his own labour is estimated, but every other thing is disbursed as inputs. For instance, if the farmer needs fertilizers and tractors, as the case may be for his farm, the companies would be paid directly.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Crude Oil

IOCs Stick to Dollar Dominance in Crude Oil Transactions with Modular Refineries

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Crude Oil - Investors King

International Oil Companies (IOCs) are standing firm on their stance regarding the currency denomination for crude oil transactions with modular refineries.

Despite earlier indications suggesting a potential shift towards naira payments, IOCs have asserted their preference for dollar dominance in these transactions.

The decision, communicated during a meeting involving indigenous modular refineries and crude oil producers, shows the complex dynamics shaping Nigeria’s energy landscape.

While the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) had previously hinted at the possibility of allowing indigenous refineries to purchase crude oil in either naira or dollars, IOCs have maintained a firm stance favoring the latter.

Under this framework, modular refineries would be required to pay 80% of the crude oil purchase amount in US dollars, with the remaining 20% to be settled in naira.

This arrangement, although subject to ongoing discussions, signals a significant departure from initial expectations of a more balanced currency allocation.

Representatives from the Crude Oil Refinery Owners Association of Nigeria (CORAN) said the decision was not unilaterally imposed but rather reached through deliberations with relevant stakeholders, including the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).

While there were initial hopes of broader flexibility in currency options, the dominant position of IOCs has steered discussions towards a more dollar-centric model.

Despite reservations expressed by some participants, including modular refinery operators, the consensus appears to lean towards accommodating the preferences of major crude oil suppliers.

The development underscores the intricate negotiations and power dynamics shaping Nigeria’s energy sector, with implications for both domestic and international stakeholders.

As discussions continue, attention remains focused on how this decision will impact the operations and financial viability of modular refineries in Nigeria’s evolving oil landscape.

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Energy

Nigeria’s Dangote Refinery Overtakes European Giants in Capacity, Bloomberg Reports

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Aliko Dangote - Investors King

The Dangote Refinery has surpassed some of Europe’s largest refineries in terms of capacity, according to a recent report by Bloomberg.

The $20 billion Dangote refinery, located in Lagos, boasts a refining capacity of 650,000 barrels of petroleum products per day, positioning it as a formidable player in the global refining industry.

Bloomberg’s data highlighted that the Dangote refinery’s capacity exceeds that of Shell’s Pernis refinery in the Netherlands by over 246,000 barrels per day. Making Dangote’s facility a significant contender in the refining industry.

The report also underscored the scale of Dangote’s refinery compared to other prominent European refineries.

For instance, the TotalEnergies Antwerp refining facility in Belgium can refine 338,000 barrels per day, while the GOI Energy ISAB refinery in Italy was built with a refining capacity of 360,000 barrels per day.

Describing the Dangote refinery as a ‘game changer,’ Bloomberg emphasized its strategic advantage of leveraging cheaper U.S. oil imports for a substantial portion of its feedstock.

Analysts anticipate that the refinery’s operations will have a transformative impact on Nigeria’s fuel market and the broader region.

The refinery has already commenced shipping products in recent weeks while preparing to ramp up petrol output.

Analysts predict that Dangote’s refinery will influence Atlantic Basin gasoline markets and significantly alter the dynamics of the petroleum trade in West Africa.

Reuters recently reported that the Dangote refinery has the potential to disrupt the decades-long petrol trade from Europe to Africa, worth an estimated $17 billion annually.

With a configured capacity to produce up to 53 million liters of petrol per day, the refinery is poised to meet a significant portion of Nigeria’s fuel demand and reduce the country’s dependence on imported petroleum products.

Aliko Dangote, Africa’s richest man and the visionary behind the refinery, has demonstrated his commitment to revolutionizing Nigeria’s energy landscape. As the Dangote refinery continues to scale up its operations, it is poised to not only bolster Nigeria’s energy security but also emerge as a key player in the global refining industry.

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Crude Oil

Brent Crude Hits $88.42, WTI Climbs to $83.36 on Dollar Index Dip

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Brent crude oil - Investors King

Oil prices surged as Brent crude oil appreciated to $88.42 a barrel while U.S. West Texas Intermediate (WTI) crude climbed to $83.36 a barrel.

The uptick in prices comes as the U.S. dollar index dipped to its lowest level in over a week, prompting investors to shift their focus from geopolitical tensions to global economic conditions.

The weakening of the U.S. dollar, a key factor influencing oil prices, provided a boost to dollar-denominated commodities like oil. As the dollar index fell, demand for oil from investors holding other currencies increased, leading to the rise in prices.

Investors also found support in euro zone data indicating a robust expansion in business activity, with April witnessing the fastest pace of growth in nearly a year.

Andrew Lipow, president of Lipow Oil Associates, noted that the market had been under pressure due to sluggish growth in the euro zone, making any signs of improvement supportive for oil prices.

Market participants are increasingly looking beyond geopolitical tensions and focusing on economic indicators and supply-and-demand dynamics.

Despite initial concerns regarding tensions between Israel and Iran and uncertainties surrounding China’s economic performance, the market sentiment remained optimistic, buoyed by expectations of steady oil demand.

Analysts anticipate the release of key economic data later in the week, including U.S. first-quarter gross domestic product (GDP) figures and March’s personal consumption expenditures, which serve as the Federal Reserve’s preferred inflation gauge.

These data points are expected to provide further insights into the health of the economy and potentially impact oil prices.

Also, anticipation builds around the release of U.S. crude oil inventory data by the Energy Information Administration, scheduled for Wednesday.

Preliminary reports suggest an increase in crude oil inventories alongside a decrease in refined product stockpiles, reflecting ongoing dynamics in the oil market.

As oil prices continue their upward trajectory, investors remain vigilant, monitoring economic indicators and geopolitical developments for further cues on the future direction of the market.

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