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Cassava Flour Inclusion Policy: Looking At The Bottom Line

By Fabian Odum
26 April 2015   |   5:05 am
DIVERSIFICATION of the agriculture sector has begun, but in some areas, the progress has been slow, hindered by a number of factors. Bureaucratic and financial bottleneck as well at an environment some stakeholders consider to be hostile have been manifest.

Cassava flour millDIVERSIFICATION of the agriculture sector has begun, but in some areas, the progress has been slow, hindered by a number of factors. Bureaucratic and financial bottleneck as well at an environment some stakeholders consider to be hostile have been manifest.

Cassava, for instance, is one crop in which the country is the largest producer worldwide, producing about 40million metric tons per annum, with a projection to hit about 50million metric tons in the next three years, but has not translated to huge foreign exchange earner.

Ministries of Trade and Investment and Agriculture and Rural Development play the role of coordination of investment in the cassava bread subsector and farmers’ support respectively; International Institute for Tropical Agriculture (IITA), Federal Institute of Industrial Research (FIIRO) and National Root Crop Research Institute (NRCRI), take care of research, development and demonstration, while Bank of Industry (BoI) and Nigerian Agriculture and Rural Development Bank provide financial support.

Other bodies with interest in the cassava value chain include Standards Organisation of Nigeria (SON) and National Agency for Food, Drug Administration and Control (NAFDAC), which carry out the responsibility of quality control; Export Promotion Council coordinates the export of cassava products and the flourmills produce the composite flour.

Certain high points emerge in the drive to make agriculture a business especially deriving from commodities, where Nigeria has the comparative advantage, but obviously from what the cassava bread and its development fund had encountered, not all the players have performed well. This has led to hiccups experienced by middle of 2013 and quite different from the enthusiasm that heralded the cassava flour inclusion policy via the laudable Agricultural Transformation Agenda (ATA) of the Federal Government.

The project did pick up later by mid 2014, when the $10bn creamed off the extra duties on wheat imports was released to BoI and Nigerian Agriculture and Rural Development Bank for disbursement. Of the undisclosed total collection from the wheat importers for a period of one year, July 2012-August 2013, only $10bn was approved for all the operators in the cassava value chain.

Sources at the flour mills show that the Customs and Excise department has not ceased to make the deductions as it was in the beginning as at the time of this report.

Clearly, what the Federal Government is deriving from the deductions on wheat imports remains the same. Therefore, at conservative estimate, about N12billion should be in the kitty for stakeholders in the cassava value chain since the third quarter of 2013.

Agriculture Minister, Akinwumi Adesina, revealed that the Fund would cover credit facilities to cassava growers, high quality cassava flour (HQCF) processors, wheat-cassava composite flour millers, farm equipment suppliers and other investors in the industry. The plan is also to give loans at interest rate as low as five per cent with 3-4 years period of repayment.

The matter concerning the Fund lie between Dr. Ngozi Okonjo-Iweala’s Federal Ministry of Finance and that of Agriculture and Rural Development, but attempts to get the Agriculture Minister to give The Guardian an update on its own side of the fund and what becomes of its administration did not yield any result.

Although consumers are asking to see the bread in the market, but it could only go as far as the master bakers put the special multipurpose flour (wheat-cassava flour blend now manufactured by Flour Mills of Nigeria and Honeywell Flour mills) to use.

According to Mr. Jude Okafor, National Publicity Secretary of the Association of Master Bakers and Caterers of Nigeria, many bakers cashed in on the lower price of the multipurpose flour to cushion the effect of the higher priced straight wheat flour in the last quarter of 2014 to keep bread prices steady.

The lower price of the multipurpose flour derive from the low interest loan of less than five per cent per annum facilitated by BoI set the production lines, according to Mr. Lanre Jaiyeola, Managing Director, Honeywell Flour Mills.

He commended the Federal Ministry of Agriculture and Rural Development (FMARD) for the cassava bread initiative and the support it has given to millers that are partnering them in the project.

“The arrangement of the Wheat-High Quality Cassava composite flour should not be affected in any way. This is also in the interest of Nigerians and Honeywell has committed so much to this project already in terms of human resource and financial investment,” Jaiyeola said.

At a news conference marking the release of the fund in 2013, Adesina also disclosed that the BoA had provided credit facility of N1 billion to cassava farmers and processors, adding that the bank would disburse the N2.4 billion facility to cassava growers and processors at five per cent interest rate.

Though the Minister had revealed the Cassava Bread Development Fund would also be used to support research and development efforts on cassava bread, not much is in the public domain if any of the fund had been released to the research institutes that back up the development of the bread.

BOI said that the Fund is a revolving one, as a means of keeping the scheme sustainable. As Okafor would affirm, the Bank Officials visited members of the Master bakers to verify how effectively and efficiently the funds have been utilised in terms of equipment delivery, installation and efficient operation across the nation.

Though, the process was slow, the bankers supervising the chunk of the fund that went to the bakers and equipment providers did deliver on getting the baking equipment and chillers to the different parts of the country for use.

Louw Burger, MD/CEO, whose Thai Farm International, a subsidiary of Flour Mills of Nigeria Plc is one of the biggest cassava flour processing plants in Nigeria is quite optimistic of the future of the flour project. He canvassed the need for better strategies by entrepreneurs and industry captains in the sub sector to develop the HQCF enterprise so that the industry would be sustained.
He submitted that with the right input and Good Agronomic Management Practices (GAP), farmers would even quadruple their profit.

In a presentation by the United States Agency for International Development (USAID), a major challenge of HQCF value-chain is the “lack of enforcement of government policy on the 10 per cent replacement of wheat flour with HQCF in bread.”

An attempt to resolve this led to the push by the Agriculture Ministry and the Federal Government to use legislation to bring every stakeholder to fall in line with all activities that make for the production of HQCF and cassava bread.
With the change of leadership baton at Aso Rock, what would become of the bill that has not been touched by the lawmakers is yet to be seen.

Hitherto, Nigeria imports about four million tons of wheat per year with a resultant extraction rate of 75 per cent that rolls out equivalent of three million tons of wheat flour yearly.

The report says a total of 2.2 million ton/year is used for bread making; 500,000tons for biscuits/snacks; and 300,000tons for noodles. However, it noted that at a 10 per cent replacement rate, this translates to 220,000 tons of HQCF for the bread making industry and another 50,000tons for biscuits, and 30,000 tons for noodles.

BoI, in conjunction with the FMARD, is working to support about members of the Master Bakers association in achieving the goals of the Cassava Bread Fund Initiative.

While the millers clamour for a stepwise increase in the cassava flour inclusion until the 20 per cent is achieved, the funding for the scheme is for the acquisition of baking equipment to bake the 20 per cent cassava flour. 

A release by BoI said “the sum of N2.2 billion was earmarked for beneficiaries in form grants and loans. The members were grouped in two batches. The sum of N989 million has been disbursed to the first batch of 100 beneficiaries, which represents 92 per cent of the approved sum of N1.074 billion.  

“In addition, of the remaining beneficiaries, only 60 have met basic conditions precedent to facilitate the disbursement of 50 per cent grant amounting to N537.93 million. The requests for this batch are being processed as the suppliers of equipment only provided Performance Bonds as equipment delivery guarantees only on Wednesday, February 4, 2015 and the funds will be released on February 9, 2015.”

Now, as confirmed by the master bakers, the Bank of Industry has largely delivered on the promises of the ATA of the Agriculture Minister as far as the bakers and caterers are concerned.

He pointed that the bakers were waiting for the working capital without which it becomes difficult to put all the equipment already supplied.

As with loans, beneficiaries were enjoined by the bank “to ensure timely fulfillment of the agreed conditions precedent to loan disbursement as specified in the agreement governing the Scheme to enable the Bank serve them better.” But in another development, the bakers are asking for a loan repayment period of 10-15 years, as the fund is developmental in nature rather than a time frame of about five years.