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Nigeria’s Wheat Value Chain’s Growing Importance to Job Creation, Food Security

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food security

The wheat value chain continues to play key roles in providing employments for the active segment of the population while strengthening the nation’s food security position.

The jobs and the affordable meals that are being delivered to the local markets through the bold developmental actions pursued by the local wheat millers couldn’t have come at a better time as Nigeria’s unemployment situation and inflationary trends grow agonizingly worse.

Data released by the National Bureau of Statistics (NBS) indicates that unemployment, underemployment and youth unemployment/ underemployment, reached 33.3 %, 22.8 %, 42.5% respectively in the 4th quarter of 2020 in the country.

Meanwhile, the increasing dietary shift to more affordable wheat derivative foods such as bread, semolina, pasta and noodles has led to expanded production, processing, warehousing, distribution/ logistics, fleet management, last-mile and retailing activities in the wheat value chain, consequently lifting the employment generating capacity of the value chain from 10 million to 12 million.

Coming at such a crucial time when the impact of the COVID-19 pandemic incessantly weakens the economic contributory latency of other sectors, the robust activities being generated along the wheat value chain are a rare lift for Nigerian households.

The wheat value chain does not only provide jobs for the population, it also ensures the population has consistent access to affordable quality foods.

In the past year, the prices of Rice, Garri, millet and Beans, which are notable national staples, have risen sharply by 21.1%, 114.1%, 57.2% and 66.6%, respectively, while the prices of wheat derivative foods have been largely cushioned from the adverse inflationary trend by local millers.

The flour milling companies, under the aegis of the Flour Milling Association of Nigeria (FMAN), and the bakers, intentionally absorb the extra cost of production occasioned by the tough operating environment, in order to keep feeding the population.

Take for instance bread, a widely consumed staple food produced from wheat. The wheat millers continue to ensure that while other food commodities increased in price by 50% and more in the past year, bread is shielded from such debilitating trend, increasing by just 28.5% and the average daily production output of 10 million loaves is maintained. To this end, bread has traditionally become the cheapest carbohydrate option available for Nigerians.

The availability of quality flour brands at competitive prices helps the bakers to maintain production level, forgo downsizing and help meet customers demands, despite the adverse effects of the COVID-19 outbreak. Bakers, therefore, understand the importance of the millers’ intervention efforts.

How did the flour millers achieve such an important economic balancing act? The flour millers intentionally track commodity prices in the carbohydrate food staple space to keep the price of inputs for bread production competitive. The same goes for every other wheat derivative food such as semolina, noodles and pasta, which the flour millers intentionally ensure are kept within affordable price boundaries of the consumers.

A global consulting firm, KPMG, attests to the important roles played by flour millers in feeding a national population that has over the years been priced out of the other staple foods due to continuous food price inflation, a spike in unemployment rate and a declining income level.

In a report themed ‘Wheat-based consumer foods in Nigeria’, KPMG underscored the fact that the flour milling businesses that operate in Nigeria have been a source of “low-cost convenient staple and baked foods” for the teeming population.

This also explains why 45% of the food variants served in Nigerian homes are produced from wheat. As more foods are being served to nourish, sustain and strengthen the Nigerian populace, by direct correlation, more jobs are also being created by the wheat millers and the wheat value chain.

Speaking on the employment-generating and food security roles played by the wheat value chain, Mr Ashish Pande, Managing Director of Crown Flour Mill (CFM) Limited, a subsidiary of Olam, an agribusiness conglomerate, said: “Presently, the wheat value chain accounts for over 10.5 million jobs generated annually in Nigeria. This of course has placed the wheat value chain at the centre of the various economic development agenda of the Federal Government of Nigeria.”

To reiterate the nutritional and economic contributions of flour millers, Ashish expatiated further, “Presently, the wheat value chain adds N2.3 trillion to Nigeria’s GDP annually, being the average yearly spend on wheat derivative foodstuffs; and accounts for 75 million of the daily food portions in Nigerian households.”

He said, “To scale up its contributions, the milling association continues to invest N500 million annually in seed trials, research, training of smallholder wheat farmers and reimbursing the various farming research institutes in the country to ensure that the current local production levels of wheat improve significantly. While these efforts have ensured that we keep providing affordable and quality food for the growing Nigeria population, it has also deepened the rate of jobs generated for the young and active of the population.”

Similarly, Professor Adetunji Kehinde, provost of the College of Agriculture, University of Osun, provided an insight into the robust activities that keep turning out the impressive job creation rates in the wheat value chain.

He said, “Like other agro-products, the wheat value chain has created and is still creating employment at the pre-production (procurement of loan for land, labour, and training), production (seed procurement to field management till harvesting time), harvest (methods, tools, labour, and transport) and postharvest (handling, storage, processing, and milling), preservation, packaging, distribution and marketing levels. The wheat milling industry is one of the most important drivers of employment in the food sector.”

Considering the contributory role that the wheat value chain plays in employment generation and food security, all hands must be on deck to support flour millers, in their current efforts to strengthen the all-important value chain.

Formulating and implementing a developmental agro and financing policy framework that would ensure that flour millers continue to access wheat would help maintain the key roles of providing affordable staple foods and employment for the Nigerian population. This should be the focus of the Federal Government and relevant agencies and key stakeholders, especially at this challenging period.

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Economy

Nigeria Rakes N174.9bn from 2020 Marginal Field Bid Round

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Marginal Field Bid Round

By Adedapo Adesanya

The Nigerian Upstream Regulatory Petroleum Commission (NURPC) has disclosed that the 2020 marginal field bid round, which was concluded last year, has so far yielded about N174.944 billion, with owners of 30 fields having partially paid and two fields stalled by court cases.

The new commission further stated that 20 companies that won the bids had partially paid up, among those who won the 57 oilfields.

In May 2021, the Department of Petroleum Resources (DPR), which transmuted into NURPC with the enactment of the Petroleum Industry Act (PIA), concluded the 2020 marginal oilfield bid round, the first successful exercise since 2003, when 24 assets were put on offer.

The process which culminated in the presentation of letters to the bid winners in Abuja by the industry regulator, started in June 2020, with 57 marginal fields spanning land, swamp and offshore put up for lease by the federal government.

Marginal fields are smaller oil blocks typically developed by indigenous companies and have remained unproduced for a period of over 10 years.

Some of the companies which emerged winners at the time included: Matrix Energy, AA Rano, Andova Plc, Duport Midstream, Genesis Technical, Twin Summit, Bono Energy, Deep Offshore Integrated, Oodua Oil, MRS and Petrogas.

A few others that succeeded in crossing the hurdle and had fully satisfied all conditions were: North Oils and Gas, Pierport, Metropole, Pioneer Global, Shepherd Hill, Akata, NIPCO, Aida, YY Connect, Accord Oil, Pathway Oil, Tempo Oil, Virgin Forest among others.

The process was hailed as a big win for local oil and gas companies in the country, which had a good outing during the ceremony as 100 per cent of the beneficiaries of the exercise were indigenous entities.

Nigeria last conducted marginal field bid rounds in 2003, with 16 of the fields contributing just two per cent to the national oil and gas reserves.

The commission also stated that its target revenue for 2022 remained N3.38 trillion, substantially exceeding its 2021 revenue projection of N3 trillion and that of 2020 which was pegged at N1.746 trillion.

In a presentation it made to the Senate Committee on Petroleum, Upstream, led by Mr Bassey Akpan, during an oversight meeting at its headquarters in Abuja, the agency led by Mr Gbenga Komolafe, explained that it hit N1.99 trillion revenue in 2020, surpassing its forecast of N1.746 trillion by about 13.98 per cent.

But in 2021, with a revenue target of N3.066 trillion, the commission pointed out that it generated N2.711 trillion, achieving 88.45 per cent of its revenue forecast which is usually paid into the federal government coffers.

It stated that in spite of the reduced fiscal provision in the PIA, the organisation was set to achieve its desired revenue target for 2022.

Furthermore, the NURPC lamented that with the Organisation of Petroleum Exporting Countries (OPEC) production quota of 1.683 million bpd in January and 1.701 million barrels per day in February, it is only able to pump 1.396 million barrels per day currently, leading to a loss of at least 115,926 million barrels per day on a daily basis, put at roughly $300 million monthly.

“We are losing about 115, 926 barrels per day, so that literally translates to roughly about $300 million and that’s a huge loss to a nation that actually requires these funds,” he stated.

Mr Komolafe attributed the underperformance to mostly oil theft, sabotage, vandalism as well as technical issues, including ruptures associated with the assets.

“But the larger percentage is due to crude oil theft and as a commission we know the impact of this and recognising our regulatory role, we have been able to reach out to other operators as to what we can do about this.

“We are trying to put in place an industry-wide initiative to ameliorate the situation and we are expecting to go live in terms of implementation in collaboration with the Nigerian National Petroleum Company (NNPC) and the other stakeholders,” he added.

However, he stated that despite the encumbrances, it would continue to promote an enabling environment for investment in the upstream petroleum sector, establish, monitor and regulate as well as enforce environmental measures and optimise government’s take from the country’s hydrocarbon resources.

In addition, the commission vowed to ensure compliance with the terms and conditions of leases and licences granted, enforce all laws relating to upstream operations as well as maintain a petroleum industry data bank.

Mr Komolafe, responding to issues raised by the senators on the environmental degradation in the Niger Delta, stated that there are provisions in the PIA which provide for remediation.

He stated that the commission recognises that the job was enormous and had set up an internal committee to liaise with the senate steering committee to work on regulations for the industry.

The agency’s chief executive stated that if fully implemented, the PIA would take care of issues connected with the environment, adding that while some pollutions are attributable to normal oil operations, others could be credited to sabotage by other parties.

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Economy

AfDB to Establish Onion Commodity Exchange in Sokoto

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Onion Commodity Exchange

By Adedapo Adesanya

The Sokoto State Governor, Mr Aminu Waziri Tambuwal, has revealed that the African Development Bank (AfDB) will soon facilitate the establishment of an Onion Commodity Exchange in the state.

According to the Governor, this was part of the outcomes of a high-level meeting he and some of his Commissioners had with the management team of the bank last week in Abidjan, Côte d’Ivoire.

A statement signed by his media aide, Mr Muhammad Bello, said the Governor made this known at the closing of a three-day training for budding entrepreneurs in the state last week, adding that his administration was dedicated to supporting indigenous farmers.

The realisation of the plan will make such an establishment the 15th of its kind in Africa and the fourth in the country after the Abuja Securities and Commodity Exchange, Lagos Commodities and Futures Exchange; and AFEX Commodities Exchange Limited.

In economic parlance, trading in exchanges includes derivatives contracts, such as forwards, futures, options and spot trades- focusing on immediate delivery.

It could also be traded on interest rates, foreign exchange futures, freight contracts instruments and environmental instruments.

According to the statement, Mr Tambuwal revealed that “during our visit to the AfDB, we had engagements with them and agreed that an Onion Commodities Exchange will be established in Sokoto with the help of the bank on the framework and technical support.”

He said the potential for onions trade abounds in the state, thus putting it in the topmost position of states cultivating the commodity in the country.

He cited an example of an individual in Abidjan, who transacts over N2.8 billion onion trade annually from Sokoto-Côte d’Ivoire, elaborating that the result of a survey he commissioned has revealed that from onion trade alone, the state engages in an annual transaction of between N250 and N300 billion.

Over the past few months, several stakeholders have been looking at how to push the onion species produced in the country to one of the best in the world.

Experts note that because of its strong pungency, it is exported to many countries including France, Japan, India, Niger Republic, Ghana and others.

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Economy

GSK Consumer Healthcare Business Not Worth Than £50bn—Unilever

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GSK Unilever

By Dipo Olowookere

Unilever Plc has said it will not increase its £50 billion bid for the acquisition of GSK Consumer Healthcare business owned by GlaxoSmithKline, which was earlier rejected by the company.

In a statement issued last Saturday, GSK confirmed that it “received three unsolicited, conditional and non-binding proposals from Unilever” for the acquisition of its consumer healthcare arm, which is jointly owned by GSK and Pfizer, with GSK holding a majority controlling interest of 68 per cent and Pfizer 32 per cent.

According to GSK, the acquisition value of £50 billion comprising £41.7 billion in cash and £8.3 billion in Unilever shares was below the true value of the business.

The offer was rejected, according to the company, because the consumer healthcare business was “fundamentally undervalued” as the business has great “future prospects”, which was not factored into the proposals.

“The board of GSK is strongly focused on maximising value for GSK shareholders and has carefully evaluated each Unilever proposal.

“In doing so, the board and its advisers assessed the proposals relative to the financial planning assessments completed to support the proposed demerger of the business in mid-2022, including the sales growth outlook,” a part of the statement noted.

But reacting to the rejection in a statement on Wednesday, Unilever said it does not feel that the value of the GSK consumer business is worth more than its £50 billion valuations and because of that, it would not increase it.

“We note the recently shared financial assumptions from the current owners of GSK Consumer Healthcare and have determined that it does not change our view on fundamental value,” the statement said.

Unilever said, “Accordingly, we will not increase our offer above £50 billion,” noting that it will continue to maintain “strict financial discipline to ensure that acquisitions create value for our shareholders.”

“Unilever also reiterates its commitment to continuing to improve the performance of its existing portfolio through its ongoing focus on operational excellence, its upcoming reorganisation and by rotating the portfolio to higher growth categories,” it added.

Unilever and GSK both have subsidiaries in Nigeria and are also listed on the local stock exchange.

Business Post reports that on Wednesday, shares of Unilever Nigeria closed flat N13.20, while GSK rose by 0.84 per cent to N6.00 from N5.95.

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