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USDA argues for revision of Nigerian wheat sector policy

August 28, 2013

According to the US Department of Agriculture (USDA) in its report of 27 June, all but around 50,000 tonnes of Nigerias annual wheat consumption of 3.7 million tonnes is imported. Currently, Nigeria has wheat milling capacity of 8 million tonnes, and utilises around 50% of this. Unofficially, Nigeria exports 400,000 tonnes of wheat flour and wheat-based products to neighbouring West African countries.

Demand for wheat-based products continues to grow strongly in Nigeria. Bread is now a standard item in the modern breakfast diet, while demand for wheat meals such as semovita or semolina continues to grow. In addition, rapid growth is taking place in the production of pasta (noodles), with noodle production utilising an estimated 560,000 tonnes of Hard Red Winter wheat in 2012/13. The use of Soft Red Winter wheat in biscuit production is also increasing.

As part of the Nigerian governments Agricultural Transformation Agenda (ATA), plans are under way to develop 212,000 ha of wheat production in the north of the country using new high-yielding tropical and heat-tolerant wheat varieties. The aim is to produce 1 million tonnes of wheat under this scheme in 2014, expanding to 1.2 million tonnes in 2015 as the area under wheat is expanded.

According to USDA, while plans to introduce a wheat import ban have reportedly been finalised, this has been refuted by Nigerian government officials. Nevertheless, in July 2012 the Nigerian government began the implementation of a 15 percent levy on imported wheat grains which pushed the effective duty from 5 to 20 percent, leading to an increase in the price of wheat products.

In 2012, the Nigerian government also started enforcing its cassava blending policy, at an initial rate of 10% blending of cassava flour with wheat flour, but increasing to 40% by 2015. According to USDA, flour millers and bakers are reluctant to invest to comply with this directive.

USDA cites reports in the press of a statement by the Minister for Agriculture, Akinwunmi Adesina, who said that Nigerias imports of wheat flour have been reduced from about 4 million tons in 2010 to 3 million tons in 2012 as a result of the governments import substitution policies.

Despite this reported progress, USDA takes the view that even if cassava blending proves technically feasible to the extent planned by the Nigerian government, Nigeria would still be unable to meet the demand of the wheat flour milling industry due to the countrys lack of adequate cassava production, weak existing infrastructure and unstable policies.

With the US providing 85% of Nigerias wheat imports, but with high wheat prices and increased duties leading Nigerian importers to switch to cheaper sources of supply, USDA is arguing for the Nigerian government to revise its current policy of increasing wheat import tariffs as a means of stimulating domestic wheat production. The USDA report maintains that Nigeria has the potential to serve a huge export market for wheat flour and wheat-based products in the sub-Saharan region covering West Africa, Central Africa, North Africa and even beyond. It argues that, given the underutilisation of installed milling capacity, government policy would do better to focus on dropping wheat import levies and growing [Nigerias] export markets for wheat-based products in the region.

USDA argues that this would represent a boost to regional food security and assist local wheat flour millers to maximize capacity utilization.