FG weighs raising levy on imported starch to boost local cassava production

The Federal Government is said to be considering levying imported sweeteners, flour and ethanol in order to reduce the food import bill and boost local investment in cassava processing, the ingredient from which starch is derived.

Despite been the world’s largest producer of cassava, Nigeria still imports most of its industrial starch, a by-product of cassava. With an import levy, the government hopes to reverse the trend under an “Industrial Cassava Policy.”

Nigeria spends nearly N252bn ($700 million) annually to import industrial starch and other by-products of cassava.

With a local processing capacity of 35%, industries that depend on cassava by-products may have no other choice than to look inwards at local producers as government explores measures to place levies of between 0% – 60% on the product.

For beverage manufacturers, distilleries, textile operators, bakeries, pharmaceutical companies dependent on starch, sweeteners and ethanol, importation has always been a viable option due to cheaper prices and the inability of local producers to meet demand.

According to government data, Nigeria imports 96% of starch as local demand of 600,000 tonnes could not be met, and 200,000 tonnes or 100% of sweeteners used in the country are currently being imported. For high quality cassava flour (HQCF), 88% of the 504,000 tonnes demanded locally is being imported.

By levying imported starch, the federal government hopes to improve local production of cassava starch to 1.4 million tonnes annually by 2022 as well as increase investment in the sector.

Reacting to the government’s move to impose a levy on imported starch, the President, Manufacturers Association of Nigeria (MAN), Dr. Frank Jacobs called for caution in the execution and implementation of policies.

“Whatever we can derive from the country, we should work towards it. We have plenty of cassava. However, if we begin to use cassava for industrial use, it might put pressure on the demand for cassava. Cassava is a staple food for us in this country and raw materials for other products.

“If government poses a levy on importation, I believe it is a step in the right direction. We need to encourage utilisation of our local resources to produce what we need. It is necessary to carry the stakeholders along so that they can know how to cushion effect on their businesses”, he added.

On his part, the President, Cassava Processors and Marketers Association, Ayo Olubori, said it is a welcome development if the present administration is keen on implementing the policy.

Commenting further, he said that the present policy direction was one of those positions that the association made during the tenure of President Olusegun Obasanjo on the need to discourage importation of products in which the nation has local capacity.

“It is a welcome development and we hope that it would be implemented and sustained. The fear of pressure on the domestic market was once raised over a decade ago. Then, we had the political will and that aided the increase in local production. Investors saw the seriousness in government and raised their stakes. It will complement local efforts to improve production”, he added.

In the wheat segment, Dangote Flour Mills Plc and other key stakeholders in the flour milling industry have donated 50 AMAR multi-crop threshers to wheat farmers in the country; a move they say was part of their commitment to achieve self-sufficiency in wheat production.

The General Managing Director, Dangote Flour Mills Plc., Thabo Mabe, stated that with the threshers, the current output of wheat production would be doubled, thereby reducing the current 4.5million metric tonnes importation of wheat into the country.

The Managing Director Flour Mill Nigeria, Paul Gbededo, said the initiative would effectively accelerate the government’s drive at attaining internal sufficiency in wheat production while saving foreign exchange.

He said the Flour Millers Association of Nigeria (FMAN) had signed MoU with the wheat farmers in 2016 to purchase all available wheat grain produced in the country in line with standard parameters and prevailing market prices.

You may also like:

Leave a Reply

Your email address will not be published. Required fields are marked *