NIGERIA – The Lagos Chamber of Commerce and Industry (LCCI) has faulted the federal government’s policy on wheat, saying heavy import tariff on the commodity are adversely affecting millers in the country.
In 2012, the Government of Nigeria introduced a 15% levy on wheat grain imports resulting in an increase of the effective duty from 5% to 20%.
Additionally, the federal government also introduced a 65% levy on wheat flour imports to increase the effective duty from 35% to 100% which has since the resulted into an increase in prices of wheat flour and bread have by about 20%.
The LCCI has cautioned on the hefty import tariffs projecting them to have an adverse impact on wheat trade between Nigeria and the United States.
LCCI said that the heavy tariff imposition was being transferred to the final consumers wheat and wheat related products in the form of high prices.
However, despite the higher levy charged, Nigeria’s wheat imports have continued to grow, from 4,140,000 tonnes since August 2012 imports to 5,400,000 tonnes representing a 30.4% increase, according to according to USDA figures.
Currently, Nigeria imports about 5.4 million metric tonnes of wheat at an average market price of US$211.45 per tonne with the government seeking to reduce expenditure on wheat imports by 50% to US$360 million.
“Protectionist policy by the federal Government in the form of heavy tariff imposition of up to 50 per cent on wheat import continues to affect millers in the country,
Consistent efforts of millers to source wheat locally is yet to yield the desired results,” the LCCI added.
Wheat production in Nigeria is currently much below the consumption due to challenges local production including lack of capacity by local wheat producers, poor quality and higher prices of local wheat relative to imported wheat.
This has continued to push industry players in the sector to consider diversify into cassava as a suitable substitute to wheat in a bid to address the challange including higher cost of enzymes among other material.
However LCCI has highlighted logistic issues and high start-up costs especially in procuring the machines and technology required to process cassava into flour and other challenges as major impediments to adoption of cassava as a wheat substitute.
“Thus, there is need for government to introduce some policy measures that will incentivize millers in the country to use cassava for bread,” it added.
After several interventions in the sector by both the private sector and the federal government, wheat production has increased from less than 200,000MT to 900,000MT.