Value chain

Analysts call for urgent action to avoid collapse of wheat value chain

Oluchi Chibuzor

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

Analysts made that call in a recently published study of the global wheat market following the war between the two major wheat-exporting countries, Russia and Ukraine. Multifaceted value chain crises, including shortage of foreign exchange, rising transport costs and rising diesel prices, aggravated by the war, continue to weigh heavily on the wheat value chain, analysts say. .

Millers continued to struggle with rising production costs and low local wheat production. Rising costs have been passed on to bakers and have increased the hardship and cost of living index for beleaguered local consumers who continue to bear the burden of rising prices for wheat-based foods and wheat products. household basis.

Experts said millers and bakers were under intense cost pressure as the price of all-important grain continues to soar in the international market and transport costs spiral out of control.

The review showed that the price of wheat on the world market jumped to $1,000 per bushel in March 2022 from $761.25 in January. On top of that, millers are expected to spend more to ship the commodity from exporting countries as their combined freight bill forecast has risen from 21.6 trillion naira in 2019 to 28.8 trillion naira in 2021.

According to the report, “as demand for wheat products is relatively price elastic, the burden of each further cost increase is borne primarily by millers and bakers. The upward trend in global wheat costs and transport costs continues to frustrate millers, who have long borne the burden of costs to maintain retail price stability and avoid passing costs on to poor consumers, who depend on rely heavily on wheat-derived foods such as bread, which remains an important part of their daily diet, to feed their households. The price of a basket of similar food products increased on average by more than 50%, and bread prices only increased by 30%. Millers and bakers bore the rest of the inflationary burden,” they said.

Citing urgent measures that must be taken to avoid production and a major food inflation crisis, the experts proposed the wider adoption of the agricultural value chain intervention model developed by the Senegalese government. Senegal’s agricultural program provides access to key inputs such as seeds, fertilizers, and technical and business assistance to local smallholder farmers.

Other measures proposed by analysts to help millers, bakers and consumers included the removal of the 15% cassava tax imposed on the import of wheat grains, increased access to forex at the import and export (I&E), granting tax benefits in accordance with the index of major backward integration programs, and providing logistical support, among others, to millers.