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Wheat Importation Costing Nigeria N2trn Annually: FMAN Laments

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Members of the Flour Millers Association of Nigeria have decried about N2 trillion yearly losses incurred on the importation of wheat from Canada, the United States, Mexico and other countries.

FMAN made the disclosure at the 2022 edition of the annual Wheat Farmers Greenfield Day, organised by the association, on Tuesday, in one of the largest wheat farms in Zindi, Misau LGA of Bauchi State.

According to the National President of FMAN, Alhaji Salim A. Salim, wheat farmers in the country have not been able to meet up the demands, as Nigeria is one of the top consumers of the commodity. Calling for increased wheat farming, Salim stressed that the importation of wheat has a negative impact on Nigeria’s economic growth, costing the nation N2 trillion annually.

Salim advised that if Nigeria can get serious with wheat production, “we will save money and make our farmers wealthy. We need to concentrate on farming wheat to meet up with our local demand.”

Applauding the Central Bank of Nigeria’s agricultural initiative – Anchor Borrowers’ Programme, the FMAN president explained that the scheme aided in boosting wheat farming and production in 15 Northern states. He urged more farmers to key into the initiative and participate in the program to boost wheat production in the country, significantly reducing the level of importation.

Salim also assured the farmers that their products will be purchased directly by FMAN association members. He added that presently, there are 27 demonstration wheat farms in 7 Local Government Areas across Bauchi state.

Wheat is a popular commodity in Nigeria as an estimated 75 million food portions consumed daily in Nigerian homes are wheat derivatives. Food products such as semolina, bread, noodles, and pasta among others are produced from wheat flour. They form a regular part of meals in most urban and rural households across the country.

On his part, the state governor, Senator Bala Mohammed Abdulkadir, represented by the Commissioner of Agriculture and Rural Development, Tula Mbami commended the Anchor Borrowers’ Programme, funded by the CBN. While declaring the programme opened in Bauchi, Mohammed stated that if well implemented, the country will benefit from growth in food production and security, while imports will be reduced.

The governor said his administration is ready to support agricultural development, as it has invested much in the sector, through the procurement of improved seedlings, pesticides, chemicals and other farming implements. He advised the farmers to reciprocate the government’s efforts by committing to increasing wheat production.

He said, “Bauchi State has been in the forefront of wheat production over the years. We are ready to do that again as can be seen here in Zindi wheat farm.”

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Nigeria to Suspend Import Levies on Food Crops to Ease Inflation Pressure

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The Nigerian government has announced a series of measures aimed at curbing the surging cost of food.

Among the most significant steps is the suspension of import levies on key food crops, including wheat and corn, for a period of 180 days.

Agriculture and Food Security Minister Abubakar Kyari outlined the new measures in a statement released on Wednesday.

“The government is committed to stabilizing food prices and ensuring that essential commodities are accessible to all Nigerians,” Kyari said. “This temporary suspension of import duties will help increase the supply of crucial food items and alleviate some of the pressure on consumers.”

The government will also introduce a recommended retail price for imported foods to prevent price gouging and ensure that the benefits of the duty-free window reach the general populace.

Specific guidelines to enforce compliance with these measures are being finalized and will be issued in the coming days.

This move comes amid a wave of economic reforms initiated by President Bola Tinubu, who took office in May 2023. These reforms, including the devaluation of the naira and increased electricity tariffs, have contributed to the inflationary spiral, with food prices jumping 41% in May—the highest rate in 28 years.

The steep increase in prices, compounded by a weakening naira—the world’s worst-performing currency this year after the Lebanese pound—prompted the Central Bank of Nigeria to raise interest rates to a record high.

Last month, the government signaled its intention to introduce measures to curb inflation through a so-called Inflation Reduction and Price Stability Order.

Despite earlier interventions, such as the release of 42,000 tons of assorted food commodities and the purchase of 88,500 tons of milled rice, food prices have continued to rise.

“In some cases, these days, food items are becoming unavailable,” Kyari noted.

To further boost supply, the government plans to import 250,000 tons of semi-processed wheat and a similar amount of semi-processed corn. These imports will be distributed to small-scale processors and millers across the country to enhance local production capabilities.

The Nigerian government has attributed the rising food supply challenges to inadequate infrastructure, multiple taxes and levies, and profiteering by marketers and traders.

The International Monetary Fund estimates that at least 19 million Nigerians are food insecure, with the nation having the world’s largest population of citizens living in poverty after India.

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Cocoa Processing Slows Amid Soaring Bean Prices

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Cocoa processing slowed last quarter and industry experts warn a steeper decline is looming as the ripple effects of skyrocketing cocoa prices hit chocolatiers globally.

Despite an historic shortage that sent cocoa prices to record highs this year, the impact on chocolate makers has been somewhat delayed.

However, as stockpiles of pre-crisis beans dwindle, manufacturers will soon face the full brunt of the price surge.

Cocoa prices soared to an all-time high of over $11,000 per ton in April due to poor harvests in West Africa, a key production region. Though prices have slightly eased, they remain more than double what they were a year ago.

This surge has not yet fully translated into higher costs for chocolate makers, who had previously secured beans at lower prices.

However, with inventories running low, the need to replenish supplies at higher costs is expected to significantly impact cocoa grindings in the latter half of the year.

Jonathan Parkman, head of agricultural sales at Marex Group, explained, “The cheap stuff is beginning to drop off, and the expensive stuff is coming in. The worst of input inflation will affect the second half of this year.”

A recent Bloomberg survey of six analysts and traders revealed that second-quarter cocoa grindings likely fell from a year earlier.

Processing in Europe, the largest consumer of cocoa, is estimated to have declined by 2%, potentially marking a four-year low.

All six analysts anticipate a larger global decline in the second half of the year.

Nestlé SA has already signaled the challenges ahead. An executive from the company warned last month that as manufacturers face higher cocoa costs, they will have to pass these expenses onto consumers, leading to a potential decrease in chocolate consumption.

Darren Stetzel, vice president of soft commodities for Asia at broker StoneX, echoed this sentiment, noting, “We are more likely to see a significant change in the grind number in the second half of the year.”

The rising costs have forced some cocoa processors to shutter factories, particularly in West Africa. This, combined with the tight supply of beans, has made it difficult to gauge true demand.

Traders and analysts are closely watching upcoming cocoa grinding data and earnings reports from major chocolate companies, such as Barry Callebaut AG, for further insights into the market.

To adapt to the high costs and scarce supply, some chocolate manufacturers have started using substitutes like palm oil to maintain production levels.

However, this is seen as a temporary fix rather than a long-term solution.

The cocoa crunch underscores the vulnerability of global supply chains to regional disruptions. As the second half of the year unfolds, the chocolate industry will be forced to navigate these challenges, balancing the need to secure sufficient cocoa supplies with the pressures of maintaining affordability for consumers.

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Refiners Predict Petrol Prices to Fall to N300/Litre with Adequate Local Crude Supply

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The pump price of Premium Motor Spirit (PMS), commonly known as petrol, could drop to N300 per litre once local production ramps up significantly, according to operators of modular refineries.

This projection hinges on the provision of sufficient crude oil to domestic refiners, which they say would undercut the exorbitant costs currently imposed by foreign refineries.

Speaking under the aegis of the Crude Oil Refinery Owners Association of Nigeria (CORAN), the refiners stressed the urgency for the government to ensure a steady supply of crude oil to local processing plants.

They argue that the reliance on imported petroleum products has been economically disadvantageous for Nigeria.

Eche Idoko, Publicity Secretary of CORAN, emphasized that the current high costs could be mitigated by boosting local production.

“If we begin to produce PMS in large volumes and ensure adequate crude oil supply, the pump price could be reduced to N300 per litre. This would prevent Nigerians from paying nearly N700 per litre and stop foreign refiners from profiting excessively at our expense,” Idoko stated.

The potential price drop follows the model seen with diesel, which experienced a significant price reduction once the Dangote Petroleum Refinery began its production.

“Diesel prices dropped from N1,700-N1,800 per litre to N1,200 per litre after Dangote started producing. This is a clear indication that local production can drastically reduce costs,” Idoko explained.

In a previous statement, Africa’s richest man, Aliko Dangote, affirmed that Nigeria would cease importing petrol by June 2024 due to the Dangote Refinery’s capacity to meet local demand.

Dangote also expressed confidence in the refinery’s ability to cater to West Africa’s diesel and aviation fuel needs.

Challenges and Governmental Role

However, achieving this price reduction is contingent on several factors, including the provision of crude oil at the naira equivalent of its dollar rate.

CORAN has advocated for this approach, citing that it would bolster the naira and reduce the financial burden on refiners who currently buy crude in dollars.

The Nigerian government has shown some commitment towards this goal. Gbenga Komolafe, Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), confirmed that a framework has been developed to ensure consistent supply of crude oil to domestic refineries.

“We have created a template for the Domestic Crude Oil Supply Obligation to foster seamless supply to local refineries,” Komolafe stated.

Industry Reactions

Oil marketers have welcomed the potential for reduced petrol prices. Abubakar Maigandi, President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), expressed optimism about the Dangote Refinery’s impact on petrol prices.

“We expect the price of locally produced PMS to be below the current NNPC rate of N565.50 per litre. Ideally, we are looking at a price around N500 per litre,” Maigandi noted.

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