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Here’s why CBN took interim measure to approve emergency maize importation

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Here’s why CBN took interim measure to approve emergency maize importation

 

 

 

 

 

A source in the Central Bank of Nigeria (CBN) has explained why the apex bank approved four companies to import maize despite an earlier memo placing maize on the list of items not eligible for foreign exchange.

The CBN had earlier approved four companies to import the product, saying it was due to their capacity and already existing infrastructure. The companies are Wacot (60,000 tons), Chi Farms (60,000 tons), Crown Flour (22,000 tons), and Premier Feeds Mills (120,000 tons).

A central bank source told BusinessDay that the interim measure that led to the selection of the four firms was geared towards stabilising food prices and easing Nigeria’s high inflation rate.

“We are spending a lot by way of credit to local farmers and have no interest in seeing more imports. This was the motivation for stopping the imports…we now expect the huge investment that has been made over the last five years to start yielding fruit,” the CBN source, who asked not to be named, told BusinessDay.

“However, these four companies are only being allowed to complete the importation process that had started before the ban. And so far this year, 314 Forms M have been processed for maize importation alone,” the source said.

Farmers, however, say the importation would be counter-productive as the containers would likely arrive at a period of harvest.

BusinessDay checks, though, show that insecurity, mostly in the northern part of Nigeria, the impact of COVID-19, and farmers’ increased appetite for rice cultivation are part of the reasons there will be a decline in the volume of maize harvest which is due in the next two months.

Analysts, on the other hand, say technical banning of maize would shoot up prices of the commodity and frustrate manufacturers using it as raw material while creating scarcity.

But the central bank and poultry farmers see merit in the policy.

To increase local production of maize, stimulate economic recovery, safeguard rural livelihoods and increase jobs, the Central Bank of Nigeria (CBN) on July 13, 2020, directed all authorised dealers to discontinue the processing of Form M for the importation of maize/corn with immediate effect.

The implementation of the CBN directive of withdrawal of Form M for maize importation added more pressure on the sector which was already burdened with the scarcity of maize – a fallout of the adverse effects of the COVID-19 pandemic.

Data by the Poultry Association of Nigeria (PAN) show that the price of a metric ton of maize jumped by over 100 percent after the FX ban on the product. From about N90,000 per metric ton in January, the landing price of the product climbed to about N200,000 in August.

According to industry players, especially those in the poultry business, maize, which constitutes over 50 percent of poultry feed, became very scarce, and the price of the product hit a record high.

The scarcity of maize and the continuous rise in its cost has dire consequences on not only the poultry farmers but all associated sectors that are linked directly or indirectly to the poultry value chain.

To manage the high cost of poultry production after the ban on maize imports, the apex bank on August 6 granted a waiver to four foreign firms to import 262,000 metric tons of maize, as stated in a memo signed by TM Isa, deputy comptroller-general of Nigeria Customs Service.

“In line with the government’s policy on food security, sufficiency and striking a balance between food imports and local production capacities to meet the anticipated shortfall, the Central Bank of Nigeria has granted approval for the underlisted companies to import maize in the quantities stated below,” the memo read in part.

Nigeria, Africa’s second-largest maize producer after South Africa, with a production capital of about 10.5 million metric tons per annum, has a demand deficit of about 4.5 million tons per annum as it has a demand of 15 million metric tons, according to data from the Federal Ministry of Agriculture.

Sunny Ezeobiorah, MD, Sunchi Farms and Hatchery, Enugu and national treasurer of PAN, said the approval to allow some companies to import maize has actually reduced the cost of maize from about N200,000 per MT to N160,000.

He explained that while the product is sold at about N140,000 in Lagos, the cost of transportation pushes the landing price to N160,000.

“The price is still high compared to the N90,000 it was sold in January. If PAN can be given the licence to import as an association, we can take the landing cost to N140,000 per metric ton,” Ezeobiorah said.

Frank Ikemefune, MD, Rainbow Feeds, Sapele, Delta State, said, “The government should also create level playing field so that those that are importing will be able to sell maize at a lower price.”

Meanwhile, President Muhammadu Buhari on September 3 said the Federal government would release 30,000 tons of maize from the national reserves to animal feed producers to deal with the high cost of poultry production.  (BusinessDay)

Here’s why CBN took interim measure to approve emergency maize importation
Here’s why CBN took interim measure to approve emergency maize importation
Parrot Nigeria
An online news aggregator

1 COMMENT

  1. This is a good and timely. This saves true organic maize available for direct consumption as one of the major staple foods in our diets.

    Whatever is imported goes from industrial use. Commendation to the CBN for the observation and the corresponding prompt reaction.

    I guess same should apply to some other staple food sources like rice, tomato pastes and vegetable oils.

    This is because apart from the scurg of COVID-19, the incessant and escalated gross security breach is the greater hindrance to peasant farming which plays major role in the availability of our traditional foods.

    Great idea from the CBN policy thinkers. Kudos.

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