Nigeria: Bridging the Maize Supply Gap

16 September 2020

Oluchi Chibuzor and Maduabuchi Ubani write on the recent decision by the federal government to grant four companies approval for maize importation.

The recent decision by the federal government to grant four companies approval for maize importation has continued to attract mixed reactions.

While some farmers believe the new policy would help bridge the supply gap currently being experienced in the country, others have argued it is a sign of policy inconsistency in the country.

The Nigeria Customs Service (NCS) recently confirmed that four companies have been given the Central Bank of Nigeria's (CBN) emergency approval to imports 262,000 tons of maize into Nigeria.

The companies are Wacot Limited, Chi farms Limited, Crown Flour Mills Limited and Premier Feeds Company Limited. This was disclosed in a memo with reference number: NCS/T&T/I&E/021/S.93/VOL on Thursday evening signed by the Deputy Comptroller General, T.M ISA and seen by Nairametrics.

The letter explained: "In line with the government's policy on food security, sufficiency and striking a balance between food imports and local production capacities to meet anticipated shortfall, the Central Bank of Nigeria has granted approval for the underlisted companies to import maize in the quantities stated below."

While Wacot Limited got approval to import 60,000 tons; Chi Farms Limited - 60,000 tons; Crown Flour Mills - 22,000; and Premier Feeds Company Limited - 120,000 tons.

The four companies have combined feed milling capacity of over 130,000 mt monthly with sites in Lagos, Ibadan, Calabar, Onitsha, Ilorin, Kaduna, Kano and Sapele. In addition to providing feed they are also directly providing maize to 30-50 other members of the Poultry Association of Nigeria (PAN).

The development came few days after President Muhammadu Buhari announced the federal government's plan to release 30,000 tons of maize from the national reserves to animal feed producers to deal with the high cost of poultry production after the ban on maize imports.

The president had said: "We are very mindful of the challenge of high food prices, at a time when the economy is already in a slowdown caused by the global coronavirus situation, and are doing everything in our power to bring down the prices of food items across the country."

Clearly, the foregoing shows the imbalance in the demand and supply of maize in the country, which could have negative impact on the economy if the resent intervention by the federal government is done.

Without the crop, the production of poultry and fishery in particular, piggery and other livestock in general would be endangered.

But production of the commodity in Nigeria is in short supply.

That is not to imply that Nigerian maize farmers are not making earnest effort to grow maize.

In fact, Africa's largest producer is Nigeria with over 33 million tons, followed by South Africa, Egypt, and Ethiopia.

Africa imports 28 per cent of its required maize grain from countries outside the continent as most of the maize production in Africa is done under rain-fed conditions and irregular rainfall can trigger shortages and famines during occasional droughts.

According to FAO (2017) the total maize harvest in Africa was estimated at 40 million hectares, with Nigeria being the top producer (16%).

In 2019, maize production for Nigeria was 11,000 thousand tonnes. Maize production of Nigeria increased from 1,310 thousand tonnes in 1970 to 11,000 thousand tonnes in 2019 growing at an average annual rate of 6.89 per cent, according to the World Data Atlas.

In Nigeria, the largest volumes of maize are produced in the northern region, particularly in Kaduna, Borno, Niger, and Taraba and in the South-western states including in Ogun, Ondo and Oyo, according to a report by Sahel Capital Partners.

Cropping systems differ from north to south. Northern farmers typically do not practice intercropping. While, in the south, maize is usually inter-cropped with yam, cassava, guinea corn, rice, cowpea, groundnut, and soybeans, the report by Sahel Capital Partners added.

The production season of maize differs in the north and south. The main season in the north is May--October, while the main season in the south is March to August. There is usually a second season (August--January) which is rain-fed in the South and irrigated in the north. Harvest is usually done three months after planting. However, the cycles have been affected in recent years by changing weather patterns.

During the growing season the price of dry maize, locally referred to as 'old maize,' increases significantly due to growing demand by processors. Grain merchants in northern Nigeria store the maize during the peak of availability and sell at higher prices in off-season periods to food processors and feed mill operators.

"Maize has become indispensable for food security in Nigeria. Much of the maize produced is consumed in a range of commercial sectors.

"About 50 per cent of the maize produced is consumed by the animal feed sector, with poultry claiming as much as 98 per cent of the total feed produced in Nigeria," the report added.

Stakeholders' Reactions

Some operators have welcomed the decision to grant approval to the four companies for the emergency maize importation.

This, according to them is because they have adequate storage capacity in or around the ports of Lagos, Port Harcourt, Sapele and Calabar to manage the quick off-load from vessel and storage, and the handling, bagging and distribution of the maize to different parts of the country within the next 45 to 60 days.

Shipments were received at dedicated ports to ensure a speedy and distributed impact into the market with traceability.

Another reason why they welcomed the choice of these companies is that they collectively represent over 50 per cent of the organised feed milling sector of Nigeria and therefore will keep the supply of feed flowing during this critical period.

The Director Animalcare, one of the largest egg producers based in Ogere, Ogun state, Asaba in Delta state and Kano, Mr. Adewale Adeniyi, while speaking about maize importation licensing, noted that, "the ones that were imported are already available even though there were some complaints that it was only foreign companies that were given the licence to import, but I'm of a different opinion.

"Did any of the local operators or local stakeholders apply and the company was not given? I'm definitely not aware of any. Then do we have any that has the capacity to bring in a shipload?

"I don't think so. Do they have the handling facility? I don't think so. The major players would have still ended up getting the license to import."

Also, the Managing Director of Sapele-based Rainbow Feeds, Mr. Frank Ikemefune, in reacting to the development said: "We buy from those that have been allowed to import, mainly multinationals, they have the money and we don't have, they also have the facilities to import and receive and they are selling to us."

Similarly, the Managing Director of Hybrid Feeds, Kaduna, Dr. Alayande Leye, said, "for now the maize imports have been highly impactful because at a point before the importation, there was a drastic drop in supply and a high demand gap from feed millers and it really made the price of feed to skyrocket.

"The imported maize that came, although it came at a time when the local maize was not available, gave a lot of respite, I tell you a lot of respite. If not for that maize, some farms would have been shut down by now, some farmers would have been out of business and the part of the protein requirement in diets would have been unavailable, so that saved us seriously."

He added: "Our company accessed from Wacot and that has brought our production back to full capacity of 1,000mt per day in all our plants. Before that we dropped to about 600mt.

"Let me be frank to all intents and purposes that imported maize was a saving grace and it is still a saving grace, because if not for that a lot of farms would have been down-toned and that would have caused a lot of unemployment. It would also have paved the way for imported chicken to come in, which we don't pray for."

In the same vein, the Chairman of Premium Farms, Alhaji Mahey Rasheed, argued that the intervention by the federal government to grant licenses to the four firms has brought back life to a sector and a value chain that was near total collapse.

According to him, about one-third of the poultry farms have already closed down as well as some companies that use maize to produce foods like Semovita, leading to a substantial loss of jobs.

However, despite the intervention, there are concerns that the country could still witness same challenge in the near-term, if capacity is not ramped up and also if rising cases of insecurity and ethno-religious crisis in some parts of the country are not addressed.

To the Managing Director of Sunchi Farms and Hatchery, Enugu and National Treasurer of Poultry Association of Nigeria, Mr. Sunday Ezeobiora,

"The scarcity in my simple analysis will repeat next year, because of the issues of Boko Haram, banditry and restriction of movement due to COVID-19 and there was a fake fertilizer that circulated during the farming season and you can see from some people's farms that the maize they planted are not doing well, you can also see army worms attacking the maize, so there is every indication that next year will be like this year."

Also, the chairman of Agro Group, Lagos Chamber of Commerce and Industry, Mr. Africanfarmer Mogaji, said the climate condition last year occasioned by heavy rainfall created a deficit for 2020.

He also said the COVID-19 pandemic which disrupted the global supply chain also contributed to the deficit.

He pointed out that most of the multinationals that use maize use 100 per cent local maize, thus creating high demand and low supply for the Nigerian market.

Mogaji said the kind of seeds that would produce enough to meet Nigeria's minimal demand are not present in Nigeria. He added that besides shortage of seeds, the issue of bad weather, which the Nigerian Meteorological Agency (NIMET) alerted on, was not put into consideration. He said the government had good intentions, but was given bad advice by banning the importation of maize.

He, however, praised the federal government for allowing the recent importation waiver because the alternative would be a grounding of the industry. He also praised the government for the specific importers they licensed as they would most likely maintain quality control.

He advised the government to allow importation until they can get the right kind of seeds and fertilizers to properly empower local farmers to produce to the extent of meeting local demand.

The National President of All Farmers Association of Nigeria (AFAN), Kabir Ibrahim, said, "It takes more than the government to take decisions on what needs to be done.

"The poultry industry itself should be able to come up with its total requirement of feed and other inputs. And since it is a business concern, it should know whether it is able to meet those needs from in-country and where it discovers that there is a shortfall in the country, it should make it very obvious to the government that all these things are not available, this quantum is not available, so the government can allow guided importation if need be to meet that shortfall.

"But when we don't have the data, then it is only when something happens that we rush to find a solution, the poultry industry has not been forthcoming in telling the whole country that this is what the shortfall will be."

He added: "As a former president of the poultry farmers association of Nigeria, I know that there is a very serious competition for maize consumed by humans and poultry. Nobody knows the total maize consumption of human beings and that of poultry and so, even the maize growers cannot tell the exact quantity required, because there is no helpful data on consumption.

"It is impossible to plan when there is no data, so even if the government has a fault, we the farmers also have a fault.

"There should be an information synergy between the industrial consumers, the growers and the government and we are working out modalities to establish this kind of working relationship which is vital to the survival and success of these sectors.

"This is why we say that every agricultural association should come under AFAN to make data acquisition straightforward and enable the growth of a more efficient sector.

"It will help for the industrial consumers of maize to collate and know their consumption quota to help guide producers, because you cannot just produce without knowing your market, you must have an off-taker to validate your value-proposition.

"Every business must have a business plan and that includes agribusiness, we must properly target our market. It is not just about making noise we must project what we intend to do and how to do it.

"This also affects the government because without precise data, even the interventions of government could fall short of targeted objectives, for example 5000mt tonnes was released to the poultry association as a whole when many individual members utilise about 10,000mt monthly."

In addition, the timeliness of the intervention is notable, as it took only one month from the July 2020 date of approval by the CBN for the imported maize to land the country and pushed out to feed mills.

Premier feeds for example has been commended by the poultry association for their concerted efforts in providing succour to the poultry during the crisis to the sector For their support to the poultry industry development and agriculture in general, Premier Feeds is considered an integral team player in the sector.

Their efforts recognised by poultry owners in the country include the crucial role played in keeping the industry afloat through the importation of maize.

Demonstrable commitment to the industry by forfeiting their share of the 5000mt FG intervention to the sector. This was to help smaller scale farmers to benefit.

Premier Feeds has so far supported feed millers, intergrators & farms across Ogere, Enugu, Ibadan, Sapele, Jos, Abuja and Ogun with 6,301 Mt of maize

Animal Feed Sub-sector

Clearly, Nigeria's animal feed sector remains underdeveloped, largely due to high production costs.

It is interesting to note that 70 per cent of the operational costs of most poultry, aquaculture, and other livestock operations go to feed.

The animal feed sector, estimated at more than $2 billion, continues to attract significant local and foreign investment in large-scale feed mill operations.

Indeed, about 60 per cent of production goes to animal feed, especially for poultry. Other commodities utilised in lesser amounts in feed manufacture include groundnut, sorghum, other cereals, and fats and oils.

The current year has witnessed the highest recorded cost of maize/corn in the history of Nigeria (in the region of N180, 000 to N200, 000 per metric tonne (mt).

This increase came from a pre-COVID price of N80, 000 to N90, 000 per metric tonnnes in March this year, which coincided with the conclusion of the harvest.

The recent dramatic rise in maize price necessitated a one-off emergency supply of maize to supply the poultry and fish industries.

Nearly 60 per cent of feed inputs come from maize/corn and both industries are facing a challenge of near collapse due to scarcity and high cost of maize.

Many feed millers have significantly cut back or stopped production for lack of this commodity.

Nigeria is currently experiencing stock exhaustion from 2019 in the grain markets.

Necessitating urgent intervention initiatives to close the supply gap, stave off millions of job losses across the value-chain and prop up an economy that has already been impacted by the current pandemic.

The resultant effect of the latter initiative which is the only one in process for now, has pulled the sector back from the brinks of comatose and an unavoidable return to the era of imported and smuggled frozen poultry products.

Therefore, the urgent intervention by the CBN is significant and timely as poultry and fish farmers must make commercial decisions today on whether to continue growing their poultry and fish stock which have gestation periods between 60-180 days to maturity leading to the end of year period which is a peak sales season.

The animal protein and feed sectors in Nigeria employ millions all over the country largely in the form of MSME.

By making this one-off, emergency supply, organised poultry and fish sectors will continue to be supplied with raw materials until harvest season when supply will become abundant and prices moderates.

This measure takes the pressure off the demand for maize, secures the survival of the poultry, fish and feed industries and ensures continuous nutrition of the populace.

It is also of such restricted quantity and amount that it will not negatively impact the harvest price for farmers.

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