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Questions raised over Nigeria’s cassava blending and wheat tariff policy

18 November 2012

At the end of August 2012, the USDA published a report on the introduction by the Nigerian authorities of new levies on wheat and wheat flour imports. The report noted that on 20 July 2012 the Nigerian government raised the effective duty on wheat grain imports from 5 to 20%. On 1 July 2012, ‘a 65% levy on wheat flour imports’ was also introduced, in addition to the 35% import duty on wheat flour already in place, raising the effective duty to 100%.

The new import levies form part of a government policy ‘compelling cassava flour inclusion in wheat flour’ products, starting at 10% inclusion and increasing to 40% by 2015. Nigerian bakeries are to be allowed until July 2013 to comply with the new blending requirements. Duty-free imports of machinery and equipment required for cassava processing and blending are to be allowed, in order to help people to meet the blending targets.

The USDA analysis argues that while some companies and trade associations have supported the government’s blending policy, broader consultation and more time are needed to prepare for implementation if the policy is to be successfully implemented. It is maintained that the required processing technology and supplies of cassava of the requisite quality are simply unavailable, while bakers maintain that only 3 to 5% blending of cassava flour with wheat flour is possible without ‘a significant loss of quality’. This view is endorsed by Nigerian flour milling industry executives and local analysts, who argue that more stakeholder consultation is required.

The USDA maintains that stakeholders are reluctant to engage with the government blending initiative, in view of ‘past negative experiences’ with similar policy initiatives.

According to the USDA, ‘prices of wheat flour and bread have increased about 20 percent’ as a result of these measures. This observation was echoed by local press reports, which indicated similar prices rises for other wheat-based products.

The measures have also seen a 20% reduction in the value of US wheat exports to Nigeria in July 2012 compared to July 2011. Currently, the United States accounts for 90% of Nigeria’s imports of wheat, and US exporters see the Nigerian wheat market as having huge potential for growth.

Press reports in late August indicated that Nigeria had exported 1.1 million tonnes of cassava chips to China, earning US$136 million in foreign exchange ‘in the last few months’. In addition, Shonga Farm Holdings, a Nigerian company, signed an agreement with an Australian company in September to export 500,000 tonnes of cassava annually to Australia. 

Editorial comment

The success of Nigeria’s cassava blending policy requires that bakers be encouraged to adapt to new processing technology and that investments be made in both capital equipment and training of staff. Although the federal government has made a commitment to removing the duties on imported capital equipment, much work remains to be done to enable the large number of small bakeries across the country to meet the 10% blending target by July 2013. As well as meeting the challenges of retooling, retraining and adopting new processing techniques, producers will also need to ensure no significant loss of product quality in order to avoid a consumer backlash against the new cassava bread.

At present, while there is demand born of curiosity, this demand needs to be consolidated and extended in order to foster generalised acceptance of the new blended flour products. This is far from the case at present. However, the part-cassava bread is still not generally available on local stalls and in bakeries. Time will tell whether the government’s incentives to investors will be matched by adequate demand to sustain their investment.

At present it would appear that overambitious targets need to be scaled back in order to develop consumer acceptance and make the necessary investments to ensure a smooth functioning of blended flour supply chains.

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