NIGERIA – Stakeholders in the sorghum sector are finding it challenging to remain in business as low import tariff on cheap barley malt, malt extract, glucose and maltose syrups is pushing the industry to near collapse.
The operators in the sector are seeking government’s intervention to halt the slide by re-imposing a ban on barley malt imports, or at worst, raising the tariff which would help slow the wave of imports and prevent the local industry from total collapse.
During the Structural Adjustment Programmes (SAP) of the mid to late 1980s, the Federal Government placed a ban on imported malted barley in order to conserve foreign exchange and boost growth of the local industry.
As a result, a number of sorghum malting plants sprang-up in the country, creating thousands of jobs in the sector’s value chain, ranging from farming, processing and storage, transportation malting and conversion into higher value food ingredients.
The resultant effect was a rise in income levels for those involved in the value chain.
At least, five companies in Nigeria invested in the construction of multi-billion naira sorghum malting plants.
One of such companies was Sona Group, whose subsidiary – Food, Agro & Allied Industries Limited specializes in the production of malted sorghum and malt derivatives like malt extracts, malt syrup, glucose, etc.
Over the years the company has invested billions of naira in the expansion of its sorghum malting plant but these investments are now not running at full capacity due to the Federal Government’s decision to lift the ban on imported barley malt on special concession in duty.
According to the Managing Director of Food, Agro and Allied Industries Limited, Mr. Sudhansu Sinha, the current waivers given to barley malt and barley concentrates imported into the country from Europe has led to redundancies and loss of thousands of jobs in the value chain such as farming, processing and storage segment, among others.
“Foreign exchange is wasted for a product for which locally-grown replacement is abundantly available.
The malting plants closed down one by one, markets collapsed, new brand of professionals like ‘maltsters’ and supporting workers are losing their jobs; sorghum price has also collapsed and farmers and those involved in the sorghum chain are suffering.
“The agricultural products are very cheap overseas, because of the subsidy that their governments over there are giving and any products made out of them are also cheap.
In Nigeria, agriculture has no subsidy or support from the government, which is why the import duties cannot be too low.
Malted barley is imported into the country at only 5 percent duties, exempted from VAT. So it is never possible to compete with imported barley malt. So anybody using any malted product prefers to import so that he will make more money,” Sinha said.
The MD adds that other malting plants in the country are struggling to stay in business. Aba Malting Plant is doing a mere 10% of its installed capacity due to the import waiver granted to some and other factors in the sorghum production value chain.
Sinha said that breweries in Nigeria, who are all multinational companies, have malting plants overseas and therefore, are enjoying a windfall at a cost to local producers, workers and sorghum farmers in Nigeria.
He adds that importation of barley malt for the production of beer is imposing foreign exchange burden on the masses. He said that it is taken by some unscrupulous companies and their supporters in the government.
Sinha notes that beer made with sorghum is “Gluten free” and scientifically proven to be better and of higher quality.
According to the MD, “the quality they find in our sorghum brewing extract, they don’t find in imported syrups used in brewing.
“When we started extract production, Guinness Nigeria was importing extract from China and Turkey; when we presented our sorghum extract, they said our extract should be first analyzed overseas.
We sent it to Germany, when they saw the result; they were surprised that they could get such a product in Nigeria. ‘Fermentability’ of the imported extract was 60-70 percent but ours has a fermentability of 85 -90 percent.
Then our product is rich in essential vitamins and minerals, while the imported ones lack vitamins like amino acid, vitamins, and others”.
“That is not all, Sorghum has got the unique property of being gluten-free, barley and wheat are full of gluten, people pay more money to buy gluten-free beer in Europe and these products are abundantly available here and we are neglecting it”.
He said that Guinness and a few other brewing companies now use their sorghum extract, which is of better quality.
However, other users of barley malt such as biscuit makers prefer to import the cheaper foreign made glucose and maltose syrups.
He said that what the biscuit manufacturers use as malt extract is often Molasses, a heavy metal loaded waste from sugar makinking.
The MD said that his biggest regret is not the misfortune of his company, but the fact that Nigeria may lose a major agricultural heritage that has put her on the global map.
He feels that the malting industry is slowly dying and no one outside of the sector seem to care.
“Nigeria happens to be the top producer in the world. In 2008, it was number one with 11million tons; currently it is about 6 to 7 million tons because of the government’s policy problems, but it is still the fourth largest in the world, and there is every potential to increase.
“Sorghum does not grow in Europe, it is a produce of the semi-arid tropical region; sorghum is grown in Nigeria in the upper North, Europe does not have that; Europe is a temperate climate, sorghum is not really unknown to them except for the lower part of France and Spain.
“Of course, a lot has so far been lost, but it is not too late for the government to rescue the situation by listening to the cries of stakeholders in the agro-allied segment who are calling on the Federal Government to re-impose the ban on importation of malted barley or stiff duty and levy to discourage imports”.
Sinha feels that for every ton of malted barley imported, the importer should be made to use at least two tons of locally-produced malted sorghum.
While it awaits a Federal Government intervention, Food, Agro and Allied Industries Limited is exploring other avenues to grow its business by looking at export markets.
Sona Group, the parent company of Food, Agro & Allied Ltd recently appointed an executive to look for buyers of its products in other West African markets.
In addition, the company, which is based in Ota, Ogun State is discussing with the owners of Guinness about supplying their other plants in Ghana and Kenya sometime this year.
The company is also investing in new production initiatives like animal feeds and sorghum flour. These efforts could see it emerge as an even bigger player in the food and agro allied industry in Nigeria.