How Nigeria is losing over N215 billion annually to importation of starch, ethanol
Nigeria is the largest producer of cassava in the world, with annual production at over 50 million tons. This figure according to stakeholders is very low because currently, our production per hectare is still below 10 tons, which is significantly low.
However, being the largest producer of cassava in the world, Nigeria does not have adequate factories and industries to process and convert cassava to industrial raw materials, hence it is popularly consumed locally as fufu or gari.
Meanwhile, government’s effort to support local processors of ethanol and starch is minimal, as most of them provide for themselves some basic infrastructures for the day-to-day running of their factories, which makes the cost production very high.
Imported ethanol and starch had continued to lead in the market based on price. While locally processed ethanol and starch are sold higher due to the high cost of production, imported ones maintain very low cost even after import duty is paid.
Stakeholders had however called on the federal government in many occasions to do an upward review of import duty or simply do import adjustment tax in order to allow the locally processed ethanol and starch compete favourably with their imported counterpart in the market.
The government in the other hand had received the report on the import adjustment tax during the Economic Recovery Growth Plan (ERGP) meeting held last year and agreed to work in it.
It is worthy of note that Nigeria requires a total of 400 million litres of ethanol annually, but local production is still below 15 million litres annually, hence the remaining 385 million litres is imported to satisfy local demand.
According to Ashish Deshpande, one of the managers at Allied-Atlantic Distilleries Limited (AADL) which is the largest ethanol producers in Nigeria, a litre of ethanol in the market is sold for N300. It means that Nigeria is spending N115 billion annually to import 385 million litres of ethanol.
Deshpande disclosed this while speaking with Tribune Online at Cassava Investment Forum organised by the Cassava Compact of Technologies for African Agricultural Transformation (TAAT), in collaboration with the Federal University of Agriculture Abeokuta (FUNAAB).
Technologies for African Agricultural Transformation (TAAT) is a program initiated by the African Development Bank (AfDB) as part of its Feed Africa Initiative.
The main objective of the program is to improve the business of agriculture across Africa by raising agricultural productivity, mitigating risks and promoting diversification and processing in 18 agricultural value chains within eight Priority Intervention Areas (PIA).
Deshpande explained, “we have a big market for ethanol in country, but however the challenge is that we need to start the production on local basis, we need to have more and more producers of ethanol locally, the gap between the local production and the importation is very high, that gap needs to be bridged.
“The production of ethanol is low because we do not have enough producers of ethanol in the country to start with, there are a number of issues one of the issues is the tariff on imported ethanol, if you look into this matter, am sure sustained investment into this industry can help us.
“The government need to increase the tariffs on imported ethanol, that will help the local industries to get a higher percentage of the production.
“We produce 9 million litres of ethanol annually, we need to increase the local industry to move into this sector from the help of government so that we can bridge this gap as fast as possible”.
Meanwhile, it was gathered that other local producers of ethanol across the country produce about 6 million litres annually which brings the annual ethanol production in Nigeria to about 15 million.
On starch production, According to the Chairman, Harvest Feeds Agro-Processing, Goke Adeyemi, Nigeria requires about 600,000 tons of starch annually, while our annual production is about 100,000 tons, leaving a deficit of 500,000 which is imported.
Adeyemi further explained that a ton of starch is sold for N200,000 in the market, which means that Nigeria is spending about N100 billion annually importing 500,000 tons of starch.
Speaking further on starch importation, Adeyemi said “It is an issue that is very topical and it came up in the Economic Recovery Growth Plan (ERGP) Focus Lab that President Muhammadu Buhari initiated in 2018.
“Even though Nigeria is the largest producer in cassava, but so far, starch production is still at infancy in Nigeria, the issues are such that right now the imported starch in Nigeria is attracting very low import duty, it’s about 5 to 10 per cent, as a result, they sell imported starch in Nigeria at about N140,000 to N150,000 per ton, however, the starch producers in Nigeria cannot sell at that price because our processing cost is quite high, and the yield of cassava is still very low.
“Cassava starch producers are largely rural companies basically and infrastructure in rural are very poor, the government is making some efforts and we can see it, however, we want it accelerated so that Nigeria can take rightful place as the biggest processors of cassava, that is our aim.”
Meanwhile, the Director for Development and Delivery of the International Institute for Tropical Agriculture (IITA), Dr Alfred Dixon said because of inadequate Technologies to improve cassava production, Nigeria has been unable to tap into the full potential of cassava crop which is estimated at $5 billion annually.
According to him “today, that Nigeria’s cassava annual production is above 50 million tons up from 35 million tons in the early 90’s is not by accident. It was as a result of efforts from most of you seated in this room in research and development to all other aspects of the cassava value chain such as processing, mechanization and markets.
“Despite this achievement of having more than 50 million tons of annual production, there are still challenges that are still confronting the Cassava crop. Our yield per hectare is still low (less than 10 tons per hectare), we are still battling with the problem of cyclical glut, there are still processing challenges, weeds are still problems in cassava, and several others. Consequently, Nigeria is yet to tap the full potential of cassava crop which is estimated at $5 billion annually.”