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‘Production Cost Remains High Despite Crash in Food Prices’

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Agribusiness
  • ‘Production Cost Remains High Despite Crash in Food Prices’

Operators in the agricultural sector have complained about the high cost of production even though the prices of products such as palm oil have reportedly crashed.

The Chairman of Comtrade Group, an agro-allied firm, Mr. Abiodun Oladapo, said that the crash in the prices of agricultural products was not to the advantage of farmers since farming inputs and other factors of production such as diesel, animal feed, seed and fertilizers were exorbitant.

Reports had revealed that the price of palm oil went down from N30,000 per 30-litre keg in December 2017 to as low as N8,500 in places like Akure.

The Chairman, Ikeja Shop Owners Association, Mr. John Okonkwo, informed our correspondent that the product sold for between N14,500 and N14,000 in Ikeja.

He said the price of tomatoes also dropped from N12,000 a basket to about N6,500.

Oladapo lamented that the gains from the sector were very minimal compared to the amount of money practitioners invested in it.

According to the National President, Cassava Growers Association of Nigeria, Segun Adewumi, the cost of planting and harvesting cassava, for instance, was higher than the price that was being offered by buyers for the produce.

He said because of this, most farmers had refused to harvest their roots, choosing instead to leave them in the ground to rot.

The President, Nigerian Association of Small and Medium Enterprises Cooperative Multipurpose Society, Mr. Adams Adebayo, pointed out that farmers were exposed to a lot of risks.

He confirmed that the cost of inputs and harvesting was so high that it was difficult for farmers to make enough money to pay back loans that they borrowed from the banks.

Farmers also said they were at a loss and completely vulnerable when natural disasters such as flood and fire strike.

A farmer in Jos, Plateau State, Nandul Durfa, owner of Daje Palm Oil Farm, was reported to have lost 10 hectares of palm oil plantation to fire recently. He lost more than 4,000 palm trees, 4,000 seedlings for planting, 500 cashew trees and 200 mango trees after rat hunters set fire to the bush to smoke out rats, reports from the Lagos Chamber of Commerce and Industry’s agriculture whatsap platform indicated on Wednesday.

Describing the loss as devastating, Durfa was quoted to have said, “I have lost hundreds of millions of naira to the inferno. Palm trees are resilient; if you water the burnt trees consistently, they could come back to life but this year’s proceeds are gone.

“We spend an average of N40,000 every month to treat and maintain the new seedlings. It is difficult to quantify the financial loss and the psychological trauma.”

Adebayo lamented the fact that the Nigerian Agricultural Insurance Corporation did not make provision for farmers or their produce.

He said since the price of the produce was cheaper and purchasing power of consumers had dropped, farmers were not getting anything for their labour, adding that it would be helpful if marketing boards could regulate the prices of farm produce so that farmers would not lose so much.

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

Oil Prices Continue to Slide: Drops Over 1% Amid Surging U.S. Stockpiles

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Crude Oil

Amidst growing concerns over surging U.S. stockpiles and indications of static output policies from major oil-producing nations, oil prices declined for a second consecutive day by 1% on Wednesday.

Brent crude oil, against which the Nigerian oil price is measured, shed 97 cents or 1.12% to $85.28 per barrel.

Similarly, U.S. West Texas Intermediate (WTI) crude slumped by 93 cents or a 1.14% fall to close at $80.69.

The recent downtrend in oil prices comes after they reached their highest level since October last week.

However, ongoing concerns regarding burgeoning U.S. crude inventories and uncertainties surrounding potential inaction by the OPEC+ group in their forthcoming technical meeting have exacerbated the downward momentum.

Market analysts attribute the decline to expectations of minimal adjustments to oil output policies by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, until a full ministerial meeting scheduled for June.

In addition to concerns about excess supply, the market’s attention is also focused on the impending release of official government data on U.S. crude inventories, scheduled for Wednesday at 10:30 a.m. EDT (1430 GMT).

Analysts are keenly observing OPEC members for any signals of deviation from their production quotas, suggesting further volatility may lie ahead in the oil market.

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Energy

Nigeria Targets $5bn Investments in Oil and Gas Sector, Says Government

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Crude Oil - Investors King

Nigeria is setting its sights on attracting $5 billion worth of investments in its oil and gas sector, according to statements made by government officials during an oil and gas sector retreat in Abuja.

During the retreat organized by the Federal Ministry of Petroleum Resources, Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, explained the importance of ramping up crude oil production and creating an environment conducive to attracting investments.

He highlighted the need to work closely with agencies like the Nigerian National Petroleum Company Limited (NNPCL) to achieve these goals.

Lokpobiri acknowledged the challenges posed by issues such as insecurity and pipeline vandalism but expressed confidence in the government’s ability to tackle them effectively.

He stressed the necessity of a globally competitive regulatory framework to encourage investment in the sector.

The minister’s remarks were echoed by Mele Kyari, the Group Chief Executive Officer of NNPCL, who spoke at the 2024 Strategic Women in Energy, Oil, and Gas Leadership Summit.

Kyari stressed the critical role of energy in driving economic growth and development and explained that Nigeria still faces challenges in providing stable electricity to its citizens.

Kyari outlined NNPCL’s vision for the future, which includes increasing crude oil production, expanding refining capacity, and growing the company’s retail network.

He highlighted the importance of leveraging Nigeria’s vast gas resources and optimizing dividend payouts to shareholders.

Overall, the government’s commitment to attracting $5 billion in investments reflects its determination to revitalize the oil and gas sector and drive economic growth in Nigeria.

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Commodities

Palm Oil Rebounds on Upbeat Malaysian Exports Amid Indonesian Supply Concerns

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Palm Oil - Investors King

Palm oil prices rebounded from a two-day decline on reports that Malaysian exports will be robust this month despite concerns over potential supply disruptions from Indonesia, the world’s largest palm oil exporter.

The market saw a significant surge as Malaysian export figures for the current month painted a promising picture.

Senior trader David Ng from IcebergX Sdn. in Kuala Lumpur attributed the morning’s gains to Malaysia’s strong export performance, with shipments climbing by a notable 14% during March 1-25 compared to the previous month.

Increased demand from key regions like Africa, India, and the Middle East contributed to this impressive growth, as reported by Intertek Testing Services.

However, amidst this positivity, investors are closely monitoring developments in Indonesia. The Indonesian government’s contemplation of revising its domestic market obligation policy, potentially linking it to production rather than exports, has stirred market concerns.

Edy Priyono, a deputy at the presidential staff office in Jakarta, indicated that this proposed shift aims to mitigate vulnerability to fluctuations in export demand.

Yet, it could potentially constrain supply availability from Indonesia in the future to stabilize domestic prices.

This uncertainty surrounding Indonesian policies has added a layer of complexity to palm oil market dynamics, prompting investors to react cautiously despite Malaysia’s promising export performance.

The prospect of Indonesian supply disruptions underscores the delicacy of global palm oil supply chains and their susceptibility to geopolitical and regulatory factors.

As the market navigates these developments, stakeholders remain attentive to both export data from Malaysia and policy shifts in Indonesia, recognizing their significant impact on palm oil prices and market stability.

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