Agribusiness

Avert disruption in wheat value chain, analysts task FG

Local industry analysts have called on the Federal Government to take a swift and deliberate action to cushion the effects of the disruptions in the global wheat market on Nigeria’s wheat value chain.

The call was made in a recently published review of the global wheat market, following the war between two top wheat exporting countries, Russia and Ukraine.

According to the analysts, the multifaceted value chain crises, including the shortage of foreign exchange, mounting freight charges, and hike in the price of diesel, worsened by the war had continued to take a heavy toll on the wheat value chain.

Flour millers have continued to battle with the rising cost of production and low local wheat production. The rising costs have passed down to bakers, raising the hardship and cost of living index of the hard-pressed local consumers who continue to bear the burden of the increase in the prices of wheat derivative foods and household staples.

The experts said the millers and bakers had come under intense cost pressure as the price of the all-important grain continued to skyrocket in the international market, freight charges spiralling out of control.

The review showed that the price of wheat in the global market shot to $1,000 per bushel in March 2022 from $761.25 in January. On top of that, the millers are expected to spend more on shipping the commodity from the exporting countries as their combined freight bill prediction jumped from N21.6 trillion in 2019 to N28.8 trillion in 2021.

According to the report, “the demand for the wheat-based products being fairly price-elastic implies that the burden of every new rise in costs is primarily absorbed by the millers and bakers. The upward trend in the global wheat and freights costs continues to frustrate the millers, who have for long borne the cost burden to keep the retail price stable and avoid passing on the costs to the poor consumers, who rely heavily on wheat-derivative foods such as bread, which remains a significant part of their daily diet, in feeding their households. A basket of similar food commodities has increased in price by an average of over 50%, and bread prices have only increased by 30%. The millers and bakers have borne the rest of the inflationary burden.

“Under the present circumstances, anyone can guess how much longer they can keep prices moderate.”

Citing urgent actions that must be taken to avert production and major food inflation crisis, experts have proposed the wider adoption of the agriculture value chain intervention model developed by the Senegalese government.

Senegal’s Agriculture Programme provides access to key inputs such as seeds, fertilizers, and technical and marketing assistance for local smallholder farmers.

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