At the beginning of September 2014, Nigerian cassava chip producers expressed frustration at the prices on offer for cassava chip exports to China. Chinese importers were reportedly “offering Nigerian exporters $250 per tonne”. This stands in sharp contrast to prices offered elsewhere – 37.5% lower than the price offered for sales to the EU market (US$400/tonne) and 30% lower than that on the Israeli market (US$350/tonne), for example. Processors have complained that if a price of “less than $400 per tonne” is obtained then cassava chip processing for export “will not be viable”.
These price disappointments come on top of the high financing costs faced in Nigeria and the high internal logistical and shipping costs. The low prices on offer from Chinese importers mean that no exports have yet taken place under the agreement reached between the Nigerian government and the Chinese authorities “to export 3.2 million… tonnes of cassava chips annually”.
The Chinese market for cassava chips will not have been helped by a second year of extremely high global cereals production, which by August 2014 saw prices 11.7% below what they were in August 2013. A second excellent year for cereals production was also enjoyed in China. This will result in an increase in the use of domestically produced Chinese maize in animal feed and a sharp reduction in demand for imported animal feed. China’s cereal stocks – with maize playing the largest role – are now at a 15-year high, at 24.7% of consumption for 2014/15, compared to a low of 18.4% in 2007/08.
The Nigerian government, meanwhile, is continuing with efforts to boost cassava milling to expand local demand for high-quality cassava flour (HQCS). This includes the importation of “six high-quality cassava flour mills”, and forms part of wider government efforts to promote the blending of HQCF with wheat flour, with a view to reducing wheat import requirements.
Press reports suggest that wider efforts to reduce Nigeria’s wheat import requirements are facing problems, suggesting that farmers are abandoning wheat cultivation in favour of other crops, following a failure to find ready outlets for the wheat production stimulated by earlier government exhortation. Farmers expected direct government intervention in support of the marketing of expanded wheat production and, when this did not occur, shifted away from wheat production. Press analysis has suggested that weaknesses in the wheat value chain contributed to this disappointing outcome. Other stakeholders, however, blamed the poor quality of the local wheat produced, compared to the quality of imported wheat, for the failure to sustain the expansion of wheat production.
While government-to-government agreements can potentially open doors for sales to non-traditional markets, they provide little benefit in the context of falling global prices, if the critical issue of price has been left unaddressed. This suggests that in targeting new international markets for cassava sales, much closer government–private sector cooperation is required. If this close cooperation is not in place from the outset, then exporters can be left vulnerable to falling global cereals prices, which directly impact on the prices offered for cassava chips used in animal feed.
The difficulties faced in the cassava blending initiative (see Agritrade articles ‘ Nigerian traders survey the challenges involved in the cassava bread ini...’, 17 February 2014 and ‘ Nigeria to abandon cassava blending policy?’, 23 May 2014) along with setbacks in developing local wheat production could well mean that over time the Nigerian government will need to review its wheat tariff policy (see Agritrade article ‘ USDA renews implicit criticism of Nigeria’s wheat sector policy’, 19 January 2014). Any such revision could then profoundly undermine efforts to promote the production of HQCF for blending in the production of bread and other bakery products.
This suggests that a new approach may be needed to identify and promote opportunities for the commercial marketing of cassava, if current government efforts to stimulate cassava production are not to grind to a halt.