CBN’S backtracking on Maize import renews fears of policy flipflops as N39bn eludes farmers
When the Central Bank of Nigeria (CBN) in July announced it was no longer making foreign exchange available for maize importation, to some who were looking for a window to get into the agric sector, this was the opportunity they were waiting for. What was not publicly known was that the apex bank would secretly work to permit selected companies to import the same commodity and access forex that should not have been made available for that purpose.
The decision to permit some companies to import maize was described as “shocking” by Kabir Ibrahim, national president, All Farmers Association of Nigeria (AFAN). “This is just coming immediately after the CBN announced that forex would not be available for anybody to import maize. So we don’t know how this violation of the same thing that is directed by the CBN will be taken by the generality of farmers”.
While Bello Dogondaji, national general secretary, Federation of Agricultural Commodity
Associations of Nigeria (FACAN), thinks “any policy against importation is welcome because it means home production is encouraged. At the same time, you are raising hopes of Nigerian farmers,” but backtracking as demonstrated by the CBN, dashes the hopes of the same farmers.
A leaked internal memo of the Nigeria Customs Service had indicated four companies; Wacot Limited, Chi Farms Limited, Crown flour mills limited, and Premier feed mills company limited, getting import quotas of 60,000 tons; 60,000 tons; 22, 000 tons; and 120,000 tons respectively between August and October. Written against the name of each company was a financial institution, expected to facilitate the transaction for them, and potentially utilising foreign exchange the CBN said should not be made available.
By October when 262,000 metric tonnes of maize would have arrived in Nigeria, farmers would be concluding their maize harvests, especially in the north where the bulk of maize used by industrial consumers is produced. While the quantity may not appear much (relative to annual consumption), it is unclear how many other shipments not publicly known would arrive the country at the same time, and dashing the expectations of local farmers.
“Several people are disappointed that it is happening. The farmers are really disturbed that this kind of thing should happen,” said Ibrahim.
The initial announcement of forex restriction by the CBN had been met with mixed reactions of support and opposition, with the poultry industry agitating this could lead to a collapse owing to what was described as insufficient maize supply required for animal feed. The maize farmers on their part had insisted the country could produce enough to meet both human and animal feed demand. However, the backtracking by the CBN has indicated the decisionmaking was likely done on flawed data that did not give an accurate assessment of the country’s sufficiency in maize production and consumption.
“When the pronouncement was made, I announced on our radio programme that don’t go and plant corn on this basis or you will fail,” said African Farmer Mogaji, chairman, Agric & Agro-allied Group, Lagos Chamber of Commerce and Industry (LCCI) in a phone interview. “In terms of confidence, it affects a lot of players in the private sector who take the word of government to rush into the sector”.
When the 262,000 tons of maize is multiplied by N150,000 which was the price for a ton of maize at the time of filing this report, it gives N39.3 billion that should have been earned by local farmers. Additional maize, however small the quantity may be perceived, is also likely to reduce the market price when it arrives, owing to the natural principle of demand and supply, implying farmers may not make as much as may have been projected.
“When there is policy inconsistency, investors are always very afraid,” said Bolarin Omonona an agricultural economist at the University of Ibadan. “You can imagine people who were already planning to invest for instance based on the forex restriction that would ultimately have led to reduction in the importation of maize into the country.”
Omonana further explained that people who were planning to invest in it are already discouraged, if they have started investing by way of planning or committed (funds) to it that would amount to a loss because maize would come in at a cheaper price.
Emmanuel Ijewere, vice president, Nigeria Agribusiness Group expressed the view that the situation has “brought to the consciousness of people, the shortage and importance of maize in Nigeria,” and also thinks it would incentivise more people to invest in it.
However, the tendency of government to reverse itself either directly or by actions of contradictory actions of its different agencies, makes it difficult for investors to confidently commit funds not just in agriculture, but other sectors of the Nigerian economy.