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The Federation of Agricultural Commodity Associations ( FACAN) has warned the National Assembly against enacting into law any Act asking for compulsory 30% value addition to every agricultural produce before export, saying it would bring more pain to farmers and exporters.
FACAN, in a submission paper made available to us through the office of the Executive Secretary, Prince Peter Bakare, was asking the upper chamber to exhaustively exploit all necessary information before approving the passage of the Act from RMRDC, demanding such power over raw agricultural produce.
FACAN posited that " Enforcing a 30% value addition requirement for Agricultural exports in Nigeria could have several implications, both positive and negative."
Although FACAN was also mindful of the potential that enforcing the 30% processing of raw materials could generate for the nation's economy, enhancing competitiveness in the sector, it warned that the underlisted challenges must be well considered for smallholder farmers.
i. Implementing value addition may require farmers to invest in new technologies or processes, which could be financially burdensome, especially for smallholder farmers.
ii. Enforcing a 30% value addition requirement could create an additional regulatory burden for exporters, leading to increased bureaucracy and potential delay in export processes.
The RMRDC is already pushing for an Act to reposition the export of raw materials in Nigeria, including agricultural produce, to pass through a compulsory 30% value addition, saying it would help develop and grow our local processing industries.
However FACAN has stated that " Achieving 30% value addition before export can be challenging for several Agricutural commodities due to various factors relating the nature of the products, market dynamics, processing capabilities, infrastructure as some of the mentioned raw materials include Grains, fruits/ vegetables, livestock, coffee/ cocoa, sugar cane, oilseeds, cotton, spices, fish/ seafood and nuts saying what would be a standard of 30% measurement for each of them.
Read the text of the paper " SUBMISSION BY: THE FEDERATION OF AGRICULTURAL COMMODITY ASSOCIATIONS OF NIGERIA (FACAN) ON A BILL FOR AN ACT TO AMEND THE RAW MATERIALS RESEARCH AND DEVELOPMENT COUNCIL ACT, 2022 TO PROVIDE FOR THE PROTECTION AND DEVELOPMENT OF NIGERIA’S LOCAL MANUFACTURING AND PROCESSING INDUSTRIES, AND OTHER RELATED MATTERS
Introduction.
The Federation of Agricultural Commodity Associations of Nigeria (FACAN) appreciates the effort of the National Assembly in promoting value addition and local manufacturing through legislative intervention. However, we wish to raise concerns regarding the proposed amendment mandating 30% value addition before the export of agricultural commodities. While the intent to boost industrialization and local processing is commendable, the reality on the ground presents significant challenges that must be critically examined.
Challenges of Achieving 30% Value Addition Before Export
Achieving a uniform 30% value addition threshold before export poses a number of difficulties due to several factors, such as the nature of the produce, lack of infrastructure, and limited market access. Some of the key challenges across various commodity types include:
Raw Grains (e.g., Wheat, Rice, Corn): Grains are bulk commodities with minimal processing infrastructure. Most rural areas lack milling and packaging facilities necessary to meet value addition targets.
Fruits and Vegetables: These are highly perishable and require specialized technology such as drying, canning, or freezing. Nigeria currently lacks sufficient cold storage and processing capacity.
Livestock Products: Processing of meat and dairy requires stringent hygiene standards and cold chain logistics. These remain underdeveloped, making value addition difficult and risky.
Coffee and Cocoa: Although these can be processed into high-value products, the transformation requires significant capital investment, skilled labor, and consistent power supply—all of which are in short supply.
Sugarcane: Converting sugarcane into sugar or ethanol is capital-intensive and relies on large-scale industrial infrastructure, which is not readily accessible.
Oilseeds (e.g., Sesame, Soybeans, Sunflower): Basic oil extraction is possible, but advanced refining, bottling, and packaging to meet export standards are limited due to technology gaps.
Spices: Processing requires grinding, blending, and packaging under strict quality control. Inconsistencies in quality and a lack of certification infrastructure make compliance difficult.
Fish and Seafood: This sector faces post-harvest losses due to poor storage and transportation infrastructure, limiting the scope for processing and export certification.
Nuts (e.g, Cashew, Groundnuts): Processing is expensive, and quality control remains a major concern. Small-scale processors often lack access to modern equipment and finance.
Implications of Enforcing 30% Value Addition Requirement
Increased Costs for Farmers and Exporters: Implementing value addition will necessitate investment in equipment, infrastructure, and training—an unrealistic expectation for smallholder farmers and SMEs.
Restricted Market Access: Many small-scale producers cannot meet the new standards, effectively barring them from participating in international trade.
Increased Bureaucratic Burden: The requirement introduces additional layers of regulation and paperwork, potentially increasing delays and breeding inefficiencies at ports and inspection centers.
Monitoring and Compliance Issues: Enforcing a uniform 30% value addition policy will be administratively burdensome and prone to abuse due to limited institutional capacity and unclear guidelines.
Price Inflation: The costs of value addition may be transferred to consumers, resulting in higher prices for processed agricultural products in both domestic and export markets.
Disruption of the Agricultural Supply Chain: The transition to a value-added model, without foundational support, could destabilize existing supply chains, affecting farmers, aggregators, and exporters.
Conclusion and Recommendations
While the objective of the bill aligns with Nigeria’s long-term economic diversification goals, the proposed 30% value addition mandate is currently unrealistic and potentially counterproductive, particularly given the state of infrastructure, finance, and technical capacity in the sector.
We therefore recommend the following: Suspend the implementation of the bill until wide consultations are held with key stakeholders, including farmer groups, processors, exporters, and industry experts.
Clarify key provisions in the bill: How is the 30% value addition calculated? Which agency determines compliance? What benchmarks and standards will be used?
Develop a comprehensive implementation roadmap that includes: Training and capacity-building for farmers and processors, Investment in rural infrastructure (power, water, roads), Access to finance and modern technology
Harmonization of certifications to avoid multiple charges. Streamline and simplify the certification process by minimizing the number of regulatory agencies involved and addressing the issue of overlapping charges and multiple taxation.
Pilot programs or phased implementation could be considered, focusing on select commodities or regions where the infrastructure and processing capability already exist.
FACAN strongly urges that no enforcement should commence until these gray areas are addressed and robust support systems are in place. The success of any value addition policy depends on the collective readiness of all stakeholders and the economic realities on the ground."
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