Miller Magazine Issue: 140 August 2021

79 Country Profile MILLER / august 2021 In 2021, Nigeria is expected to face decreases in grain supplies due to conflict and economic factors exacer- bated by the secondary effects of COVID-19. Internal se- curity across the country is a serious challenge to food production, especially in the corn belt. Insecurity is rife across the country’s leading agricultural states. Corn and sorghum production are forecast to decline while rough rice production is forecast to grow by 17% higher than MY 2020/21 due to farmers now cultivating two crops per year. Consumption of wheat and corn is forecast to increase - especially corn being a critically important source of feedstock. WHEAT PRODUCTION Nigeria only managed to produce just about two per- cent of all the wheat it consumed. Its wheat production has been hampered by a lack of modern agronomic practices and the unavailability of improved seeds. The national average yield for wheat is 1MT/Ha. According to USDA, Nigeria is again heading toward another year of low wheat production. USDA fore- casts Nigeria’s wheat production in the marketing year 2021/2022 to reach 55,000 metric tons (MT). Banditry and kidnapping activities have reached high levels in Northwest Nigeria, which is the primary wheat cultivation region. Wheat is grown mostly in Borno, Bauchi, Yobe, Kano, Jigawa, and Zamfara States. Currently, these states are under intense military operations to expel terrorists and bandits. These restrictions make it highly difficult for farmers to access their farms. Nigeria is struggling to meet rising wheat demand. MY2021/22 consumption is forecast at 4.9 million met- ric tons (MMT). Wheat consumption is expected to grow, but the recent foreign exchange restriction is impeding growing domestic demand. The government through the central bank is implementing measures to increase for- eign exchange (forex) availability. Importers are forced to source forex outside official CBN sources. Many of the milling companies have started looking at partners like subsidiaries or parent companies outside of Nigeria for help in getting dollars. This situation is negatively impacting the price of wheat products like bread. The prices of bread and oth- er wheat derivatives increased due to the high costs of production by the millers and bakers. Many households are already using yams, plantain, sweet potato, and garri (cassava products) as substitutes for bread. USDA projects MY2021/22 wheat imports at 5 MMT, a 2 percent increase compared to the previous year. The government’s foreign exchange restrictions on imported agricultural commodities, such as wheat, continue to add extra cost to flour, bread, and other wheat flour-based products. The price of wheat influences the market share of major suppliers. Russia, U.S., Black Sea countries, Canada and Australia are the major wheat suppliers to Nigeria for flour milling. Black Sea wheat exports to Ni- geria have increased over the past years due to lower prices. To reduce the domestic price of wheat flour and sustain profitability, most Nigerian flour mills have shift- ed to buying cheaper wheat from Latvia and Lithuania. Mills are blending cheaper, low-quality wheat with more expensive high-quality Hard Red Winter from the United States. Nigeria does not export wheat. However, there are informal sale outflows of Nigerian wheat flour through major trade centers in northern Nigeria into landlocked neighboring Sahel countries. This practice has been in- creasing mostly amid Nigeria’s currency devaluation that is resulting in attractive prices. Nigeria is a net importer of wheat. The country imposes a 5 percent tariff on wheat imports, plus an additional 15 percent levy for a total 20 percent duty. Despite the pref- erences of Nigerian millers for imported wheat, there is a constant government focus on reducing wheat imports by 50 percent. To reduce imports, the government is re- quiring millers to purchase local wheat at a fixed price of $400 per ton. However, farmers of the Wheat Farmers Association of Nigeria (WFAN) prefer to sell their limited output to the more attractive markets in Sahel countries, including NGOs - the latter feeds internally displaced per- sons in the crisis-torn northern regions. Meanwhile, the government is collaborating with milling companies to enhance wheat self-sufficiency – especially strengthen- ing backward integration projects. Backward integration refers to an arrangement in which a company acquires or merges with other businesses to improve supply chain efficiencies. Olam, one of the county’s main flour milling companies, indicated its commitment to partner with the