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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

Dangote Mega Refinery in Nigeria Seeks Millions of Barrels of US Crude Amid Output Challenges

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Dangote Refinery

The Dangote Mega Refinery, situated near Lagos, Nigeria, is embarking on an ambitious plan to procure millions of barrels of US crude over the next year.

The refinery, established by Aliko Dangote, Africa’s wealthiest individual, has issued a term tender for the purchase of 2 million barrels a month of West Texas Intermediate Midland crude for a duration of 12 months, commencing in July.

This development revealed through a document obtained by Bloomberg, represents a shift in strategy for the refinery, which has opted for US oil imports due to constraints in the availability and reliability of Nigerian crude.

Elitsa Georgieva, Executive Director at Citac, an energy consultancy specializing in the African downstream sector, emphasized the allure of US crude for Dangote’s refinery.

Georgieva highlighted the challenges associated with sourcing Nigerian crude, including insufficient supply, unreliability, and sometimes unavailability.

In contrast, US WTI offers reliability, availability, and competitive pricing, making it an attractive option for Dangote.

Nigeria’s struggles to meet its OPEC+ quota and sustain its crude production capacity have been ongoing for at least a year.

Despite an estimated production capacity of 2.6 million barrels a day, the country only managed to pump about 1.45 million barrels a day of crude and liquids in April.

Factors contributing to this decline include crude theft, aging oil pipelines, low investment, and divestments by oil majors operating in Nigeria.

To address the challenge of local supply for the Dangote refinery, Nigeria’s upstream regulators have proposed new draft rules compelling oil producers to prioritize selling crude to domestic refineries.

This regulatory move aims to ensure sufficient local supply to support the operations of the 650,000 barrel-a-day Dangote refinery.

Operating at about half capacity presently, the Dangote refinery has capitalized on the opportunity to secure cheaper US oil imports to fulfill up to a third of its feedstock requirements.

Since the beginning of the year, the refinery has been receiving monthly shipments of about 2 million barrels of WTI Midland from the United States.

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Oil Prices Hold Steady as U.S. Demand Signals Strengthening

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Oil prices maintained a steady stance in the global market as signals of strengthening demand in the United States provided support amidst ongoing geopolitical tensions.

Brent crude oil, against which Nigerian oil is priced, holds at $82.79 per barrel, a marginal increase of 4 cents or 0.05%.

Similarly, U.S. West Texas Intermediate (WTI) crude saw a slight uptick of 4 cents to $78.67 per barrel.

The stability in oil prices came in the wake of favorable data indicating a potential surge in demand from the U.S. market.

An analysis by MUFG analysts Ehsan Khoman and Soojin Kim pointed to a broader risk-on sentiment spurred by signs of receding inflationary pressures in the U.S., suggesting the possibility of a more accommodative monetary policy by the Federal Reserve.

This prospect could alleviate the strength of the dollar and render oil more affordable for holders of other currencies, consequently bolstering demand.

Despite a brief dip on Wednesday, when Brent crude touched an intra-day low of $81.05 per barrel, the commodity rebounded, indicating underlying market resilience.

This bounce-back was attributed to a notable decline in U.S. crude oil inventories, gasoline, and distillates.

The Energy Information Administration (EIA) reported a reduction of 2.5 million barrels in crude inventories to 457 million barrels for the week ending May 10, surpassing analysts’ consensus forecast of 543,000 barrels.

John Evans, an analyst at PVM, underscored the significance of increased refinery activity, which contributed to the decline in inventories and hinted at heightened demand.

This development sparked a turnaround in price dynamics, with earlier losses being nullified by a surge in buying activity that wiped out all declines.

Moreover, U.S. consumer price data for April revealed a less-than-expected increase, aligning with market expectations of a potential interest rate cut by the Federal Reserve in September.

The prospect of monetary easing further buoyed market sentiment, contributing to the stability of oil prices.

However, amidst these market dynamics, geopolitical tensions persisted in the Middle East, particularly between Israel and Palestinian factions. Israeli military operations in Gaza remained ongoing, with ceasefire negotiations reaching a stalemate mediated by Qatar and Egypt.

The situation underscored the potential for geopolitical flare-ups to impact oil market sentiment.

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Shell’s Bonga Field Hits Record High Production of 138,000 Barrels per Day in 2023

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Shell Nigeria Exploration and Production Company Limited (SNEPCo) has achieved a significant milestone as its Bonga field, Nigeria’s first deep-water development, hit a record high production of 138,000 barrels per day in 2023.

This represents a substantial increase when compared to 101,000 barrels per day produced in the previous year.

The improvement in production is attributed to various factors, including the drilling of new wells, reservoir optimization, enhanced facility management, and overall asset management strategies.

Elohor Aiboni, Managing Director of SNEPCo, expressed pride in Bonga’s performance, stating that the increased production underscores the commitment of the company’s staff and its continuous efforts to enhance production processes and maintenance.

Aiboni also acknowledged the support of the Nigerian National Petroleum Company Limited and SNEPCo’s co-venture partners, including TotalEnergies Nigeria Limited, Nigerian Agip Exploration, and Esso Exploration and Production Nigeria Limited.

The Bonga field, which commenced production in November 2005, operates through the Bonga Floating Production Storage and Offloading (FPSO) vessel, with a capacity of 225,000 barrels per day.

Located 120 kilometers offshore, the FPSO has been a key contributor to Nigeria’s oil production since its inception.

Last year, the Bonga FPSO reached a significant milestone by exporting its 1-billionth barrel of oil, further cementing its position as a vital asset in Nigeria’s oil and gas sector.

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