Flour Millers Seek Suspension of 15% Cassava Levy, Task FG on Availability of Forex
Gilbert Ekugbe
The Flour Milling Association of Nigeria (FMAN) has called on the federal government to suspend the 15 per cent placed on cassava levy following the alarming insecurity issues in the wheat-planting belt of Nigeria and the agricultural sector.
Besides, the association acknowledged that despite the rapid growth in cassava production, the cassava subsector in Nigeria is still constrained by a number of factors, warning that the 15 per cent levy would only succeed in increasing the cost of production of millers and bakers in the country.
The association also urged the government to assist local wheat farmers to acquire improved wheat seed varieties while also explore other measures to support millers and bakers in the country.
In an in-house news bulletin on Nigeria’s wheat value chain, the FMAN members urged the government to give millers easy access to foreign exchange at the Investors and Export (I&E) FX window.
They pointed to strategic tax concessions in areas that aligned with the backward integration target of the Central Bank of Nigeria (CBN) amongst others as further measures that would forestall a cave-in of the flour milling industry.
Citing the prevailing economic conditions and unfavourable regulatory frameworks, the flour millers operators have warned of an impending food crisis in the country.
Also, the association explained that due to the disruption to vital supply chains, globally and locally, as a result of COVID-19 curtailment policies, and unfavourable foreign exchange regimes, and other wheat challenges, securing food for the average Nigerian is becoming tougher to sustain.
The FMAN urged the Nigerian government to sit up in the face of the economic reality that is threatening to the country’s food security, especially around the wheat sector, because of the important role wheat consumption plays in every home in Nigeria.
According to the FMAN, industry reports show that 45 per cent of the food variants served in Nigerian homes are wheat derivatives, and account for 75 million of the daily food portions in Nigerian households.
The FMAN report highlighted the profit eroding effects of the shrinking global wheat production levels, increasing cost and skyrocketing freight/ free on board (FOB) rates placed on Nigeria-bound goods on the revenue of flour millers and bakers.
The flour millers submitted that the current price hike in the global wheat market, which the local millers relied upon to bridge the expansive supply short-fall occasioned by the low level of domestic wheat production, constitute an operational strain that is heavily impacting the cost of production of millers and have the potential to further elevate wheat-based staples prices.
They also highlighted that as early as the first quarter of 2021 the global price of wheat rose to $642 per bushel in January 2021 and then $650 per bushel by the end of the quarter. Further market pressures saw price settle at $726.75 per bushel in May.
By the end of June 2021, price dropped to $693.5 per bushel, while yet another spike pushed price to $707 per bushel in July 2021.
The sector report revealed how the millers and bakers absorb the inflationary burden and the impact of rising global wheat cost on the cost of wheat-based products, adding that wheat-based food products are fairly price elastic and therefore any rise in the price of these products in the local markets can potentially heighten pressure on the disposable income of Nigerians, many of whom fall within the C, D, & E socio-economic spectrum.
They revealed that a likely third wave of COVID-19 outbreak, considering the widening spread of the new Delta variant in addition to several early knocks, could see the bottom fall out entirely for the flour milling industry if urgent steps are not taking to arrest it.
The FMAN, in the news bulletin, said the flour milling industry played a significant role in providing Nigeria’s ever-growing population access to relatively cheaper staples.
