WFAN, FMAN agree Nigerian wheat should sell at N130,000 a tonne
Temitayo Ayetoto is Businessamlive Reporter.
You can contact her on temitayo.ayetoto@businessamlive.com with stories and commentary.
Wheat Farmers Association of Nigeria, (WFAN) and Flour Millers Association of Nigeria (FMAN) have agreed to fix the off taking price of the produce (Nigerian wheat) at N130, 000 a tonne, representing 8.3 percent increase over the previous price of N120, 000. The agreement followed series of meetings and deliberations between both parties.
WFAN has for some weeks been pushing for a 25 percent increase in price to N150,000 on high cost of production which they say leaves farmers in deficit of investment.
Salim Saleh, WFAN president in an interview with business a.m. said the association will continue to push for the 25 percent increase to help its member from running at loss.
“We had a meeting with the Flour Millers Association and we have suggested some possible prices. The farmers are looking for N150, 000 per metric tonne but we said if they can reach a gap in between, it can be appreciated,” he said.
“In every farming activity, we have what we call economics of production. Suppose you spend N251, 000 to cultivate one hectare and at the end of the day you realise only 1.5 metric tonne which is 15 bags, and the market is giving N12, 000 per bag; that is N350, 000. If you
remove, 251,000 the balance will leave you with less than 100,000. So how do you expect a farmer spending four months doing activities in the farm not to be able to make a profit of 100,000 at the end of it all? It is not encouraging. We are not saying that the farmer must get double the price of what he invested but let him have an average price that can sustain him to go into production by next season,” explained Saleh.
The union of leading industrial wheat consumers, including Dangote Group, Flour Mill Nigeria (FMN), Honeywell, Olam and Dufil, among others, had signed a memorandum of understanding (MoU) with the wheat farmers in 2016 to take in all available wheat grain produced in the country in
line with standard parameters and prevailing market prices. They absorbed over 2,400 metric tonnes of wheat valued at N467million and recently 1,600 metric tonnes worth N237million.
The pricing mechanism has over time been in juxtaposition to the lower rates of imported wheat, which the industrial consumers largely prefer in their bid to bridge the internal demand gap.
While they obtain 100 kilogrammes of seeds of the spring wheat variety at N25, 000, the winter types are just N8,000. And with increasing demand for wheat based foods imports are forecasts to expand by nine percent to five million tonnes next year and double by 2030, according to the U.S. Department of Agriculture.
WFAN believes that pricing, among other issues with production, requires government intervention in the form of subsidy either at the initial stage or the tail end of their activity. The association also averred that it is necessary for the government to support mopping up of excesses of farmers’ harvests after the FMAN must have bought the quantity they need.
Saleh said: “In an ideal situation, government used to subsidize agriculture and the subsidy may be at the initial of the last point of harvest. That is, when we set a price of maybe, 150,000 per metric tonne and the flour mill association decides to buy at 130,000 per metric tonne, the government can intervene and give a subsidy of 20,000 so that the farmer would not lose and the association will also get the price they want. For instance, this year, they are going to buy only 4,000 metric tonnes. Out of the 7,000 metric tonnes, the excess of 3,000 ought to be mopped up by the government and be warehoused for next farming activities. If they are mopped, farmers would make enough money to start the preparation for the next season.”
However, some keen ob- servers of the wheat industry who spoke with business a.m. urged the private sec- tor to encourage local wheat production, noting that if viewed from the long term perspective, it would be more beneficial to buy locally once robust production capacity is guaranteed. It was also argued that importation may not hold sway for as long as anticipated because market influences such as temperature in wider growing regions of the world and the food security objective on the preference list of some exporting government may sooner or later affect product availability.
In 2016, for instance, a prolonged summer heatwave devastated crops across Europe, forcing some countries in Central and Eastern Europe, that usually export food, to import it for the first time in decades. Several, including Hungary, Bulgaria and Romania witnessed rising food prices.
Wheat output in the Euro- pean Union will be millions of tonnes down with much greater losses in southern Europe than in the north, according to the United Nations’ Food and Agriculture Organisation (FAO). In Ukraine, once known as the breadbasket of the former Soviet Union, the wheat crop fell to five million tonnes this year, a 75 percent decrease on normal years. In 2016, its government was forced to make a point that the country was going to reduce the quantity of wheat for export because it needed to take care of local demand. The decision led to the downgrade of their forecasts.
Hence, it’s imperative for Nigeria to look inwards and grow its own wheat sufficiently enough to profit from its own market and eliminate the risks attached to depending on other nations for its food supply.