FRI, MAY 10 2019-theG&BJournal-The US Foreign Agricultural Service (FAS) have published their assessment of Nigeria’s domestic cane sugar market for marketing year (MY) 2019/20.
The report noted that the Nigerian government’s sugar policies have not led to production increases, quoting sources that dismissed the government’s backward integration program (BIP) for sugarcane production as ‘’significantly challenged’’ by weak infrastructure, poor policy formulation and implementation, limited funding, and insecurity in some of the sugarcane production areas.
Domestic cane sugar production in marketing year (MY) 2019/20 (May-April) is forecast to reach 75,000 metric tons (MT) (raw value), down about six percent compared to the MY 2018/19 figure of 80,000 metric tons.
High transport and production costs for hauling harvested sugarcane to the mills, as well as low capacity building are additional constraints identified in the report.
Post forecasts Nigeria’s sugar consumption in MY 2019/20 to reach 1.62 MMT, up less than one percent from the 1.61 MMT 2018/19 estimate. Nigeria’s per capita sugar consumption in 2019 is about eight kilograms, lower than the global average of roughly 36 kilograms per person.
FAS said Nigeria continues to employ trade restrictive measures despite being a member of the World Trade Organization (WTO). These include high tariffs and foreign exchange control, as well as levies, import bans, and other measures to protect its domestic agricultural production.
Current domestic supply, it said is not keeping pace with rising demand, despite government incentives to boost local production.
Raw sugar imports is forecast to rise to 1.76 MMT, up over one percent from the 1.74 MMT volume reported in marketing year 2018/19. The uptick is attributed to increasing industrial demand, expanding population, and growing middle-class income. Imported brown sugar, but refined locally, meets most of Nigeria’s sugar requirements. FAS Lagos forecasts Nigeria’s refined sugar imports in MY 2019/20 volume to stay unchanged at 130,000 from the MY 2018/19 estimate.
FAS Lagos also forecasts Nigeria’s ending stocks in MY 2019/20 at 100,000 MT, a volume unchanged from the MY 2018/19 estimate and it does not anticipate major changes to ending stock levels in the near future.
Nigeria’s strategic policy is to grow its sugar sector by means of the Nigerian National Sugar Master Plan. It is aiming to produce around 1.79 MMT of sugar in 2020-23. FAS Lagos understands that major sugar refineries in Nigeria recently signed the revised edition of the backward integration program for the sugar sector.
The Dangote Group reportedly is investing $334.1 million; the BUA Sugar Refinery is spending $107 million; and Golden Sugar Refinery is devoting $142.4 million to expansion. The Central Bank of Nigeria (CBN) is also supporting improved sugarcane production through its Anchor Borrowers’ Program.
President Muhammadu Buhari was re-elected to a second four-year term after winning the national elections in February 2019. Over the last four years under his presidency, the government has sought to diversify the economy away from reliance on oil revenues; ‘’this is still pending.’’
Anticipations are rampant that there will be major cabinet changes and policy shifts/adjustments setting new targets during the new four-year term (beginning May 29, 2019).
Nigeria’s population (estimated at 203.4 million –Central Intelligence Agency, July 2018) accounts for nearly half of West Africa’s population, while also Africa’s largest oil and gas exporter.
Over half of Nigeria’s population live in urban areas; urbanization is growing at 4.23 percent annually. The population, projected to grow to 392 million by 2050, will make Nigeria the world’s fourth most populous country.
This population is increasingly reliant on domestic and imported processed food products while revenue from crude oil and gas exports constitute over 80 percent of the country’s revenue.
‘’The neglect of the country’s agricultural sector and weak infrastructure translates into high-cost and under-developed domestic food processing,’’ FAS said.
The report also mentioned the living conditions for most Nigerians which it said have not improved despite the rebound of global oil prices—from the less than $40 per barrel the last two years to average US$70 per barrel.
‘’The country’s economy, forecast to grow by about 1.9percent in 2019, is down from the 2.1percent recorded in 2018 due largely to the effects of uncertainties from the national elections conducted mid-February through mid-March 2019, which limited business activities—including industrial investments and services.
The 2019 year-on-year inflation rate forecasts at about 13.9percent, is up from 12.2percent in 2018 resulting from the weakening currency and high consumer prices. Growth in 2018 was also constrained by limited consumer demand and a relatively high inflation.’’
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