The Flour Milling Association of Nigeria (FMAN) called on the federal government to suspend the 15 percent cassava tax following alarming insecurity concerns in Nigeria’s wheat plantation belt and in the agricultural sector.
Further, the association acknowledged that despite the rapid growth in cassava production, the cassava sub-sector in Nigeria is still constrained by a number of factors, warning that the 15 percent levy would only increase. the cost of production of millers and bakers in the country.
The association also urged the government to help local wheat farmers acquire improved wheat seed varieties while exploring other measures to support millers and bakers across the country.
In an internal newsletter on Nigeria’s wheat value chain, FMAN members urged the government to give millers easy access to foreign exchange at the Investors and Export (I&E) FX window.
They highlighted strategic tax breaks in areas that aligned with the Central Bank of Nigeria’s (CBN) backward integration goal, among others, as additional measures that would prevent a collapse of the manufacturing industry. flour mill.
Citing current economic conditions and unfavorable regulatory frameworks, the millers warned of a looming food crisis in the country.
Further, the association explained that due to the disruption of vital supply chains, globally and locally, due to COVID-19 reduction policies, unfavorable currency regimes and other related challenges. to wheat, it becomes more difficult to secure food for the average Nigerian. to support.
FMAN urged the Nigerian government to face the economic reality that threatens the country’s food security, especially around the wheat sector, due to the important role that wheat consumption plays in every household in Nigeria.
According to the FMAN, industry reports show that 45% of the food variants served in Nigerian households are derived from wheat and account for 75 million daily food servings in Nigerian households.
The FMAN report highlighted the profit eroding effects of falling global wheat production levels, rising costs and skyrocketing freight / free on board (FOB) rates imposed on goods. to Nigeria on the income of millers and bakers.
The millers argued that the current rise in prices in the world wheat market, which local millers have relied on to fill the sizable supply gap caused by the low level of domestic wheat production, is a constraint. This has a considerable impact on the cost of production of millers and has the potential to further increase the prices of wheat-based commodities.
They also pointed out that by the first quarter of 2021, the world price of wheat had risen to $ 642 per bushel in January 2021, and then to $ 650 per bushel by the end of the quarter. Further market pressure saw the price settle at $ 726.75 a bushel in May.
At the end of June 2021, the price fell to $ 693.5 per bushel, while another spike pushed the price to $ 707 per bushel in July 2021.
The sector report revealed how millers and bakers are absorbing the inflationary burden and the impact of the rising world cost of wheat on the cost of wheat products, adding that wheat food products are quite elastic by relative to prices and therefore any increase in the price of these products produced in local markets can potentially increase the pressure on the disposable income of Nigerians, many of whom belong to the socio-economic spectrum C, D and E.
They revealed that a likely third wave of the COVID-19 outbreak, given the increasing spread of the new Delta variant in addition to several early hits, could see the bottom fall entirely for the flour milling industry if any urgent measures are not taken to stop it.
FMAN, in the newsletter, said that the flour milling industry has played an important role in providing Nigeria’s ever-growing population with access to relatively cheaper commodities.