Over the last several months, there has been a critical imbalance in the demand and supply of maize in the country, which could have a spiralling negative impact on the wider economy. The impact could be as widespread as to affect farmers, jobs, growth potential and by implication, GDP.
There is no gainsaying the fact that Nigeria’s macroeconomic environment is a fertile ground for maize production expansion, a crop that much in the livestock industry depends on.
Without the crop, the production of poultry and fishery in particular, piggery and other livestock in general would be seriously imperilled.
But production of that essential commodity in Nigeria is in short supply.
That is not to imply that Nigerian maize farmers are not making earnest effort to grow maize. As a matter of fact, Africa’s largest producer is Nigeria with over 33 million tons, followed by South Africa, Egypt, and Ethiopia. Africa imports 28% of its required maize grain from countries outside the continent as most of the maize production in Africa is done under rain-fed conditions and irregular rainfall can trigger shortages and famines during occasional droughts.
According to FAO (2017) the total maize harvest in Africa was estimated at 40 million hectares, with Nigeria being the top producer (16%).
In 2019, maize production for Nigeria was 11,000 thousand tonnes. Maize production of Nigeria increased from 1,310 thousand tonnes in 1970 to 11,000 thousand tonnes in 2019 growing at an average annual rate of 6.89%. -from world data atlas
Nigeria’s animal feed sector remains underdeveloped, largely due to high production costs. It is interesting to note that seventy percent of the operational costs of most poultry, aquaculture, and other livestock operations go to feed. The animal feed sector, estimated at more than $2 billion, continues to attract significant local and foreign investment in large-scale feed mill operations.
Roughly, 60 percent of production goes to animal feed, especially for poultry. Other commodities utilized in lesser amounts in feed manufacture include groundnut, sorghum, other cereals, and fats and oils.
The current year has witnessed the highest recorded cost of maize/corn in the history of Nigeria (in the region of N180k to N200k per metric tonne (mt). This increase is coming from a Pre-COVID price of N80-N90k per mt in March of this year, which coincided with the conclusion of the harvest.
The recent dramatic rise in maize price necessitated a one-off emergency supply of maize to supply the poultry and fish industries. Nearly 60 per cent of feed inputs come from maize/corn and both industries are facing a challenge of near collapse due to scarcity and high cost of maize. Many feed millers have significantly cut back or stopped production for lack of this commodity.
Nigeria is currently experiencing stock exhaustion from 2019 in the grain markets. Necessitating urgent intervention initiatives to close the supply gap, stave off millions of job losses across the value-chain and prop up an economy that has already been impacted by the current pandemic.
One of such interventions being President Muhammadu Buhari’s approval for the release of 5000mt of maize from the nation’s strategic grain reserves to the Poultry Farmers Association of Nigeria and the one-off license to four firms to import 226,000mt using their technical advantages to distribute to feed mills across the country.
The resultant effect of the latter initiative which is the only one in process for now, has pulled the sector back from the brinks of comatose and an unavoidable return to the era of imported and smuggled frozen poultry products.
Reactions from stakeholders in the value chain has been rather divided, not on the impact of the emergency one-off import of maize, which has been roundly applauded, but on the choice of only 4 firms as some are of the opinion that more could have been added to the list.
However, all that argument is inconsequential, given that millions of households continue to earn income from the sector as a result of the intervention and Nigeria on the whole is better for it economically.
The urgent intervention by the CBN is significant and timely as poultry and fish farmers must make commercial decisions today on whether to continue growing their poultry and fish stock which have gestation periods between 60-180 days to maturity leading to the end of year period which is a peak sales season. The animal protein and feed sectors in Nigeria employ millions all over the country largely in the form of MSME.
Poultry, fish and eggs make up the primary form of protein provided to the nation. By making this one-off, emergency supply, organised poultry and fish sectors will continue to be supplied with raw materials until harvest season when supply will become abundant and prices should moderate. This measure takes the pressure off the demand for maize, secures the survival of the poultry, fish and feed industries and ensures continuous nutrition of the populace. It is also of such restricted quantity and amount that it will not negatively impact the harvest price for farmers.
To qualify for the one-off import license, the 4 firms were able to prove their capability to handle the logistics and smooth operations of the import and distribution of 262,000 mt of maize in a fairly narrow window. These companies include WACOT, CHI Farms, Olam and Premier Feed Mills.
Industry watchers say it was apposite to restrict importation to these four companies because they have adequate storage capacity in or around the ports of Lagos, Port Harcourt, Sapele and Calabar to manage the quick off-load from vessel and storage, and the handling, bagging and distribution of the maize to different parts of the country within the next 45 to 60 days.
Shipments were received at dedicated ports to ensure a speedy and distributed impact into the market with traceability. The need to deploy those entities with the sufficient logistical and infrastructural capacity to handle and push out this critical volume of emergency maize in the short time frame and achieve maximum impact while providing a salutary effect on prices domestically cannot be downplayed in the face of the crisis.
Another indicator of the appropriate choice of these companies is that they collectively represent well over 50 per cent of the organized feed milling sector of Nigeria and therefore will keep the supply of feed flowing during this critical period. The four companies have combined feed milling capacity of over 130,000 mt monthly with sites in Lagos, Ibadan, Calabar, Onitsha, Ilorin, Kaduna, Kano and Sapele.
In addition to providing feed they are also directly providing maize to 30-50 other members of the Poultry Association of Nigeria (PAN).
For example, Mr. Adewale Adeniyi, Sales Director Animalcare, one of the largest egg producers based in Ogere, Ogun state, Asaba in Delta state and Kano says, talking about maize importation licensing, noted that “the ones that were imported are already available even though there were some complaints that it was only foreign companies that were given the licence to import, but I’m of a different opinion.
“Did any of the local operators or local stakeholders apply and the company was not given? I’m definitely not aware of any. Then do we have any that has the capacity to bring in a shipload? I don’t think so. Do they have the handling facility? I don’t think so. The major players would have still ended up getting the license to import.”
Mr. Frank Ikemefune, MD of Rainbow Feeds, Sapele, says “we buy from those that have been allowed to import, mainly multinationals, they have the money and we don’t have, they also have the facilities to import and receive and they are selling to us.
Dr. Alayande Leye, MD of Hybrid Feeds, Kaduna, noted that “for now the maize imports have been highly impactful because at a point before the importation, there was a drastic drop in supply and a high demand gap from feed millers and it really made the price of feed to skyrocket.
“The imported maize that came, although it came at a time when the local maize was not available, gave a lot of respite, I tell you a lot of respite. If not for that maize, some farms would have been shut down by now, some farmers would have been out of business and the part of the protein requirement in diets would have been unavailable, so that saved us seriously.
“Our company accessed from Wacot and that has brought our production back to full capacity of 1,000mt per day in all our plants. Before that we dropped to about 600mt. Let me frank to all intents and purposes that imported maize was a saving grace and it is still a saving grace, because if not for that a lot of farms would have been down-toned and that would have caused a lot of unemployment. It would also have paved the way for imported chicken to come in, which we don’t pray for.”
Alhaji Mahey Rasheed, Chairman of Premium Farms Abuja told NATIONAL ECONOMY, that the intervention by the federal government to grant licenses to the four firms has brought back life to a sector and a value chain that was near total collapse.
According to him, about one-third of the poultry farms have already closed down as well as some companies that use maize to produce foods like Semovita, leading to a substantial loss of jobs.
While the sector has been saved for now, fears are that the country could still witness a recurrence as according to Mr. Sunday Ezeobiora, MD of Sunchi Farms and Hatchery, Enugu and National Treasurer of Poultry Association of Nigeria, “The scarcity in my simple analysis will repeat next year, because of the issues of Boko Haram, banditry and restriction of movement due to COVID-19 and there was a fake fertilizer that circulated during the farming season and you can see from some people’s farms that the maize they planted are not doing well, you can also see army worms attacking the maize, so there is every indication that next year will be like this year.
On his part, the chairman of Agro Group, Lagos Chamber of Commerce and Industry, Mr. Africanfarmer Mogaji told NATIONAL ECONOMY that the climate condition last year occasioned by heavy rainfall created a deficit for 2020. He also recalled that COVID-19 also contributed to the deficit.
He cited that most of the multinationals that use maize use 100 percent local maize, thus creating high demand and low supply for the Nigerian market.
He said local heavyweight stakeholders who advised the government to ban the importation of maize did not tell the federal government the full story, thus misleading the government.
Mogaji cited that the kind of seeds that would produce enough to meet Nigeria’s minimal demand are not present in Nigeria. He added that besides shortage of seeds, the issue of bad weather, which the Nigerian Meteorological Agency (NIMET) alerted on, was not put into consideration. He said the government had good intentions, but was given bad advice by banning the importation of maize.
He praised the FG for allowing the recent importation waiver because the alternative would be a grounding of the industry. He also praised the government for the specific importers they licensed as they would most likely maintain quality control.
He advised the government to allow importation until they can get the right kind of seeds and fertilizers to properly empower local farmers to produce to the extent of meeting local demand.
Arc Kabir Ibrahim, national president of All Farmers Association of Nigeria (AFAN), talking to NATIONAL ECONOMY about the poultry industry and how to pre-empt further feed crisis in the sector said, “It takes more than the government to take decisions on what needs to be done. The poultry industry itself should be able to come up with its total requirement of feed and other inputs. And since it is a business concern, it should know whether it is able to meet those needs from in-country and where it discovers that there is a shortfall in the country, it should make it very obvious to the government that all these things are not available, this quantum is not available, so the government can allow guided importation if need be to meet that shortfall.
“But when we don’t have the data, then it is only when something happens that we rush to find a solution, the poultry industry has not been forthcoming in telling the whole country that this is what the shortfall will be.
“As a former president of the poultry farmers association of Nigeria, I know that there is a very serious competition for maize consumed by humans and poultry. Nobody knows the total maize consumption of human beings and that of poultry and so, even the maize growers cannot tell the exact quantity required, because there is no helpful data on consumption.
“It is impossible to plan when there is no data, so even if the government has a fault, we the farmers also have a fault.
“There should be an information synergy between the industrial consumers, the growers and the government and we are working out modalities to establish this kind of working relationship which is vital to the survival and success of these sectors.
“This is why we say that every agricultural association should come under AFAN to make data acquisition straightforward and enable the growth of a more efficient sector.
“It will help for the industrial consumers of maize to collate and know their consumption quota to help guide producers, because you cannot just produce without knowing your market, you must have an off-taker to validate your value-proposition.
“Every business must have a business plan and that includes agribusiness, we must properly target our market. It is not just about making noise we must project what we intend to do and how to do it.
“This also affects the government because without precise data, even the interventions of government could fall short of targeted objectives, for example 5000mt tonnes was released to the poultry association as a whole when many individual members utilise about 10,000mt monthly.”