Food Producers Face Struggles Amid Growth — Economic Confidential

CBN’s Maize Ban: Food Producers Face Struggles Amid Growth

The Central Bank of Nigeria (CBN) has banned maize importation, raising prospects of potential shortages in the market. There is concern that local farmers may not meet market demand as poultry farmers and other food producers bemoan high cost of the produce.

The food industry is bracing for major adjustments as concerns over the impact of Central Bank of Nigeria’s (CBN) ban on maize import grow. While the extent of the ban’s impact remains uncertain, production disruption is a major area of focus. Some stakeholders fear that the CBN’s ban of maize import when local farmers have not produced enough to power the food industry will lead to high cost of the crop, which is a major raw material in livestock and pharmaceutical industries. Higher projected orders from the food processing industry have sent maize prices soaring with supplies plummeting.

With the ban on maize importation, analysts say food industries are paying more for maize.

Impact On Poultry Sector

The poultry sector is one of the major consumers of maize as it is a key ingredient in poultry feed and accounts for 70 per cent of production cost.

The Nation learnt that producers have not been able to pass on the high costs to consumers, as such, they have continued to reel under the impact of higher production feed costs.

The Southwest Chairman, Poultry Association of Nigeria (PAN), Dr. Adetoyi Olabode, expressed mixed feelings on the issue.

According to him, while the COVID-19 impact has been mitigated, the poultry sector still face challenges. Olabode, who appreciated the government’s steps to boost food security and curtail irresponsible use of foreign exchange, noted, however, that the ban was ill timed because poultry farmers were still counting their losses from the near-closure of businesses due to restrictions imposed by federal and state governments to stem the spread COVID-19.

The pandemic, according to him, has reduced the grain outlook. He said the government should have given poultry farmers at least three months to import enough maize while plans would be intensified to increase maize production to reverse the high cost of poultry feeds. The volume and quality of maize available locally, he said, might not be sufficient for industrial producers in the long run. So, the CBN should relax the policy to allow the import of white maize for animal feed between now and the end of October, he said.

Because of the ban, he said a ton of maize, which sold for N80,000 had climbed to N180,000. Maize prices have soared to an all-time high in the market because of weak supply, he added.

More Woes

Generally, 75 percent of the cost of raising a chicken goes to feed and this is hampering the competitiveness of producers. A poultry farmer in Uyo, the Akwa Ibom State capital, Solomon Ekong, who spoke with The Nation, decried the high cost of maize.

Ekong, a senior official of PAN, said the business of eggs and chicken, once considered a profitable venture, was no more rewarding as operators have continued to suffer losses, with some winding up their poultry farms.

Due to the cost of chicken feed, he said their operating costs had shot up, though the price of chicken and egg remained the same.

He noted that poultry business was suffering despite that consumption was significant. Ekong urged the Federal Government to come to their rescue, lamenting that their farms were crumbling.

The Delta State Chairman of PAN, Chief Alfred Mrakpor, appealed to the Federal Government to save the local poultry industry from collapse due to the high cost of feeds.

Mrakpor lamented the large numbers of small-scale poultry farms that have closed shop as a result of the exorbitant prices of critical ingredients in poultry feed formulation.

He said the benefits of the ban by the Federal Government on frozen chicken on the local industry would be eroded, if the exorbitant prices of maize and soya beans, major components of poultry rations, were not checked.

Mrakpor said: “It is heartbreaking to see that small farmers are falling out of business and by extension increasing the poverty level of the citizenry. This is not the expectations of our members, and we are negatively affected by the galloping price of maize by maize merchants without any remorse.

“In the last two years, the local broiler industry has boomed with a positive effect on food sufficiency for Nigeria. This has been largely aided by the ban on imports of frozen chicken. We see this great achievement being rolled back if local broiler production is threatened. “A ton of maize, which used to sell for N97,000, has climbed to N165,000 while a ton of soybeans have increased from N110,000 to N123,000 in the last few months.

“We appeal to President Muhammadu Buhari to allow the importation of maize since our local farmers cannot meet up with the demand required by consumers.”

Fear Of Aflatoxin

While farmers and food processors are encouraged to use existing stocks, another concern is that poor storage of maize during the lockdown would have caused it to be infected by aflatoxin, a toxin caused by mold.

Apart from the lack of storage infrastructure, the heat and humidity ensure that corn is easily damaged by mould.

The Dean, School of Basic and Applied Sciences, Babcock University, Ilishan, Ogun State, Prof. Dele Fapohunda, told The Nation, some of the maize might have become unfit for human consumption as they have been contaminated by aflatoxin, known to cause cancer and other health problems.

The loss comes when the country is still struggling with the coronavirus pandemic, which have adversely affected its food chain as markets were closed and movement restricted.

Fapohunda urged the government to assist struggling producers not only in the poultry sector, but in the entire agriculture industry, otherwise, food security will be at risk.

According to him, poultry farmers cannot produce chickens cheaply without subsidies. So far, farmers harvest two major corn crops yearly. For this reason, the biggest worry for the poultry players is there’s unlikely to be any respite from higher feed prices over the next five months, when the new maize crop arrives into the market.

A lecturer in the Department of Agric Extension and Rural Development, Faculty of Agriculture and Forestry, University of Ibadan, Dr Kehinde Thomas, urged the government to permit maize import because the country’s farmers have insufficient grains to feed the nation. He said the industry would need corn imports during this time of short supply.

The Programme Director, Lagos Business School Agribusiness Programme, Dr. Okechukwu Kelikume, described the directive by the CBN, banning the importation of maize, as ill-timed, with potential negative consequences for the poultry sector. He stated that the policy could further compound the woes of poultry farmers given that maize, which constitutes over 50 per cent of poultry feed content is currently very scarce, and where available, is very expensive, even as the price keeps rising.

Admitting that the CBN’s earlier policies of Agric, Small and Medium Enterprise Scheme and the Anchor Borrowers Programme have been largely successful, he said the decision to discontinue the processing of Form M for maize import could reverse the gains of those interventions.

Why CBN Banned Maize Import

The CBN has directed dealers to discontinue the processing of Forms M for maize/corn import. This directive was contained in a notice addressed to the dealers and signed by the Director of Trade and Exchange Department, Dr Ozoemena Nnaji.

The CBN gave four reasons for its action. These include: increasing local production, stimulating a rapid economic recovery, safeguarding rural livelihoods and increasing jobs. In line with this development, the dealers were told to return the Forms M they had registered for importation by July 15.

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