Industry stakeholders have called on the federal government to suspend the 15% levy imposed on the import of wheat grains to avoid production and a major food inflation crisis.
Stakeholders made the call in a recent report on the global wheat market following the war between the two major wheat exporting countries, Russia and Ukraine.
According to them, the multifaceted crises in the value chain, including the shortage of foreign exchange, the increase in transport costs and the increase in the price of diesel fuel further aggravated by the war, continue to weigh heavily on the wheat value chain.
The report showed that the price of wheat on the world market rose to $1,000 per bushel in March 2022 from $761.25 in January.
Additionally, 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.
“The demand for wheat products, being quite elastic with respect to prices, implies that the burden of each further cost increase is mainly absorbed by millers and bakers,” the report states.
“The upward trend in global wheat and freight 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 rely heavily on wheat-derived foods, such as bread, which remains an important part of their daily diet.
“The price of a basket of similar food products has increased on average by more than 50%, and the price of bread has only increased by 30%. Millers and bakers bore the rest of the inflationary burden.
“Under the current circumstances, anyone can guess how much longer they can keep prices subdued.”
Arguing for the removal of the 15% levy in a recent interview, Jude Okafor, National General Secretary of the Association of Master Bakers and Caterers of Nigeria (ABCON), said discussions had been held with the government on the matter.
“We previously appealed to the government to cancel the 15% tax on wheat (cassava).”
Stakeholders said the 15% levy was intended to increase local cassava production to the point of replacing cassava flour with wheat flour in most baked goods.
However, according to them, there has been no significant improvement in the cassava value chain since the introduction of the cassava substitution policy and the levy.
In view of the crisis in Ukraine and the global food crisis, stakeholders called on the Nigerian government to reconsider removing the 15% levy on wheat imports, as “this is necessary to avoid further breakdown and recession”. wide of the supply chain”.
Measures proposed by stakeholders to help millers, bakers and consumers include increased access to forex at the import and export (I&E) window, granting tax breaks in line with the index of major backward integration programs and the provision of logistical support.
In addition, stakeholders proposed the wider adoption of the agricultural value chain intervention model developed by the Senegalese government; which provides access to key inputs such as seeds, fertilizers and technical and business assistance to local smallholder farmers.