Operators push for long-term solutions aside food duty waivers

The announcement of the duty waiver for essential foods by the Federal Government came at a time when the country’s food inflation has gone up. Though operators have applauded the government for the initiative, they believe that a more drastic approach should be taken to address the challenge permanently, ANOZIE EGOLE writes

On July 8, the Federal Government announced a 150-day duty-free import window for food commodities, a move which was targeted at ensuring a reduction in the inflation rate in the country. The government also collaborated with states to expand land cultivation across the country.

Consequently, the government suspended duties, tariffs, and taxes for the importation of certain food commodities through the land and sea borders. Among other things, the latest directive is expected to reduce demand for foreign exchange by food importers as the country spent $2.13bn in 2023 to import food items from foreign countries.

The quarterly statistics of the Central Bank of Nigeria showed that the country exported large amounts of food from foreign countries despite being touted as the food basket of Africa.

Speaking at the press conference held in Abuja, the Minister of Agriculture and Food Security, Abubakar Kyari, noted that 150 days of duty-free imports would be valid for commodities including maize, husked brown rice, wheat, and cowpeas. He said the initiative, which is part of the Presidential Accelerated Stabilisation and Advancement Plan, would also enable the Federal Government to import 250,000 metric tonnes of wheat and 250,000MT of maize.

Kyari explained that the imported food commodities were in their semi-processed state would target supplies to small-scale processors and millers across the country.

“To ameliorate food inflation in the country caused by affordability and exacerbated by availability, the government has taken a raft of measures to be implemented over the next 180 days. A 150-day duty-free import window for food commodities, suspension of duties, tariffs, and taxes for the importation of certain food commodities (through land and sea borders). These commodities include maize, husked brown rice, wheat, and cowpeas. Under this arrangement, imported food commodities will be subjected to a recommended retail price.

“I am aware that some good citizens might be concerned about the quality of the would-be imported food commodities as it relates to the trending worries around the genetic composition of food. I am glad to reiterate that the government’s position exemplifies standards that would not compromise the safety of the various food items for consumption,” Kyari explained.

The minister stated that the imported food commodities in their semi-processed state will target supplies to small-scale processors and millers across the country.

As a follow-up to the earlier directive of the government, the Comptroller General of Customs, Adewale Adeniyi, recently announced that the NCS would begin implementation of the duty waiver on imported foods soon.

He, however, mentioned that the long-term interests of Nigerian farmers and other stakeholders who are involved in the production of the affected food items must be considered.

Adeniyi made this known in Abuja during a combined news conference by the heads of security agencies and service chiefs, convened by the Chief of Defence Staff, Gen. Christopher Musa at the Defence Headquarters.

He said that the guidelines for implementation were still being worked out at the Ministry of Finance, saying it would begin as soon as the guidelines were ready.

Adeniyi appealed to Nigerians to exercise patience, adding that efforts were ongoing to address the demands of the August protesters, especially concerning food inflation and the cost of living.

The decision by the Federal Government has been themed by many industry players as a move in the right direction because it was coming when the country’s inflation rate was 34.19 per cent.

The National Bureau of Statistics, in its Consumer Price Index and Inflation Report for June 2024, stated that Nigeria’s inflation rate increased to 34.19 per cent, an increase of 0.24 percentage points from the previous headline inflation rate of 33.95 per cent in May. The CPI measures the average change over time in the prices of goods and services consumed by people for day-to-day living.

The increase is way higher than the 34.01 per cent projected by analysts at Meristem Research and lower than that of analysts at Cowry Assets Management Research, who had projected 34.25 per cent.

According to NBS, on a year-on-year basis, the headline inflation rate was 11.40 per cent points higher compared to the rate recorded in June 2023, which was 22.79 per cent. Also, the rate of increase rose month-on-month as the headline inflation rate in June 2024 was 2.31 per cent higher than the rate recorded in May 2024 (2.14 per cent).

“This means that in June 2024, the rate of increase in the average price level is higher than the rate of increase in the average price level in May 2024. On a month-on-month basis, the food inflation rate in June 2024 was 2.55 per cent which shows a 0.26 per cent increase compared to the rate recorded in May 2024 (2.28 per cent),” the bureau said.
Stakeholders speak

Some stakeholders are of the view that the decision by the Federal Government to come up with a waiver on the importation of staple foodstuffs like rice, and wheat, among others, could only be introduced by a government that has the interest of its citizens at heart, saying though it may not be a permanent answer to the problems Nigerians face, no doubt, would address some of the many challenges the country is passing through.

Meanwhile, some believe that though the move by the government is in the right direction, there is a need for the government to seek sustainable solutions.

The National President of AFAN, Kabir Ibrahim, in a chat with The PUNCH, said the recent directive by the Federal Government on the suspension of taxes on imported foodstuffs was not a sustainable approach to tackle food insecurity in the country.

The AFAN president said that the only way to guarantee a sustainable solution is to ensure that farmers are given subsidies on all imports so that they would fill up productivity in the country.

“For the period that the government said it was going to import all these, we will patiently wait for that to happen, but it is not sustainable.

“The sustainable solution is to ensure that farmers are given subsidies on all imports so that they will fill up productivity in the country to have a sustainable food system, importing anything anywhere will not give you sustainable food security,” Ibrahim said.

Nevertheless, Ibrahim lauded the government for the approach saying it is the global standard.

“If the importation was for five months of 500 metric tons, then that is acceptable because this is a strategic way of getting out of a difficult situation that is acceptable to the world,” he noted.

According to him, in the global food system, when a country faces a certain difficult system where the country has a comparative advantage, “and you have to lose that comparative advantage you are free to import these things from other countries to argue, but it should be a quantity that you have determined to be important enough and it should not be an open-ended importation, you will fix that,” he stated.

The President of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture, Dele Oye, commended the government for the approach.

“NACCIMA commends the government for finally listening to the people’s concerns and taking steps to address the rising inflation and food insecurity in the country,” Oye said.

He, however, believed that importing food is not a sustainable long-term solution, advising that the government needs to address underlying issues such as as insecurity in farms.

“NACCIMA emphasises that importing food is not a sustainable long-term solution. The government needs to address underlying issues such as insecurity, which prevents farmers from accessing or maintaining their farms,” Oye said.

Similarly, a freight forwarder, Mr Johnpaul Ejiogu, while commending the Federal Government for the initiative, advocated for a more robust approach to tackle the issue of insecurity to enable farmers to return to their jobs.

“I must commend the government for this initiative, at least it is going to make the product more affordable if properly implemented. Though I have yet to feel the impact of the policy, I plead with the government to come up with better policies that would help tackle the insecurity challenges the country is facing.

“I believe if this is addressed; the problem with food scarcity would have been half solved,” Ejiogu stated.

Also, the Director General of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture, Mr Sola Obadimu, while lauding the government for the move, believed that there is a need for the government to come up with policies that would ensure food availability in the long run.

“It is a short-term measure but there is a need for a deeper fundamental strategy to sustain food availability in the long-run, aside from this short-term measure. But if it is done transparently and effectively, let us hope it is done in way that will help and in a way that will restore confidence in the people.  So, any measure that can ameliorate the present situation is welcome. But we need more fundamental measures that would sustain food availability in the country at a more reasonable rate in the long run,” he submitted.

Speaking further, the NACCIMA boss opined that there is a need for improved infrastructure and public transportation to facilitate the movement of goods from farms to markets, enhancing the domestic supply chain.

“If importation must occur, NACCIMA advocates that it should be restricted to companies with substantial investments in the agricultural sector,” Oye maintained.

For him, the measure would serve two key purposes which include, protecting domestic investments and preventing such imports from undermining existing domestic agricultural investments.

He maintained that the duty-free import window can provide immediate relief by potentially lowering food prices and reducing inflation in the short term. This, he said, could help alleviate some of the economic pressures faced by Nigerians.

Oye concluded, “NACCIMA’s concerns highlight the need for a comprehensive approach to food security. Without addressing the security challenges, farmers would continue to face barriers to cultivating and harvesting crops.

“Improving infrastructure and transportation is crucial for the efficient distribution of domestically produced food. Policies should focus on building a robust agricultural sector that can sustainably meet the country’s food needs. While the duty-free import window can offer temporary relief, it should be complemented with strategic measures to address the deeper challenges within Nigeria’s agricultural sector.”

This balanced approach can ensure both immediate and long-term food security and economic stability.