Wheat glut erodes U.S. exports as cheap Russian grain wins buyers

Oil isn’t the only commodity where the largest producers are fighting for market share in a world awash with supply.

Russia and the United States, two of the biggest wheat exporters, are going head-to-head in a battle for customers. Russian shippers, with the advantage of a weak currency and falling freight rates, can undercut most competitors, selling their grain about 16 percent cheaper than cargoes from the U.S.

While American dominance in the global market has been shrinking for two decades as output expanded from the Black Sea region, long-standing buyers of supplies from the U.S. are shifting more purchases to Russia. The plunge in oil prices ravaged Russia’s economy and pushed the ruble down 45 percent in the past year, the biggest drop of any currency. That helped make the country’s exports more competitive and eroded the buying power of energy-rich grain importers like Nigeria and Mexico.

“Russian wheat is far cheaper,” said Gafai Ibrahim Usman, charge d’affaires at Nigeria’s embassy in Moscow. “There will be more and more wheat imported from Russia. Nigeria’s mostly rural society can barely afford to buy products made from American wheat.”

Competition for market share is intensifying after back-to- back bumper harvests worldwide left silos bursting. The largest stockpiles in almost 30 years, according to the International Grains Council, are pressuring wheat prices from Chicago to Paris and Russia’s port city of Novorossiysk. Wheat entered a bear market last month and fell to as low as $4.63 a bushel on Friday, the weakest level since May 5, on the Chicago Board of Trade.

Nigeria, Africa’s largest economy and once the top U.S. wheat customer, has cut purchases by almost half in the past five years. The Black Sea region including Russia and Ukraine now contributes 17 percent of its imports, from 1 percent two years ago, according to the U.S. Department of Agriculture.

Mexico reduced wheat imports from its North American neighbor 7.5 percent last season, and sales are down 29 percent since the current marketing year began June 1, USDA data show. The Black Sea region has increased market share in Mexico to 12 percent from zero in the past two years, the department says. The Baltic Dry Index, a gauge of freight costs, is down 22 percent in the past year, signaling lower costs for shipping Russia’s crop.

Russian wheat has maintained a discount to competitors, with prices about $34 a metric ton less than U.S. supply, according to data from the IGC and the Moscow-based Institute for Agricultural Market Studies.

“It’s clearly a price issue as much as anything,” said Amy Reynolds, a senior economist at the IGC in London. “The Black Sea region has good-quality grain at a good price, and prices in the U.S. do appear to be too high to be justified.”

Both U.S. and Russian shipments have gotten off to a slow start this season, with traders in Russia grappling with an export tax that went into force July 1. Still, the USDA forecasts Russia will ship a record 23 million tons this season. That’s just below the 25.2 million that the USDA expects will be shipped by the U.S., which has seen its share of global exports drop to 16 percent from almost 30 percent in 2008, USDA data show.

Even as it loses market share, U.S. shippers maintain a geographical advantage in their own backyard. The wheat trade is divided roughly by region, with the Black Sea and Europe supplying most of the grain for major buyers in the Middle East and North Africa, the U.S. and Canada dominating in Latin America, and Australia supplying much of Asia.

While Mexico has cut purchases, it remained the No. 2 buyer of U.S. wheat last year after Japan. Cheap Russian wheat makes sense now, but Mexico is unlikely to make a long-term shift away from U.S. grain, said Vince Peterson, vice president for overseas operations at the U.S. Wheat Associates lobby.

The countries share a 2,000-mile long border and free-trade status, with U.S. wheat shipped south by rail.
Nigeria, however, has become a “competitive crossroads” for the U.S. and Russia because it’s a similar nautical distance from both suppliers, Peterson said.

Shipments from Russia to Nigeria more than doubled last season to 721,000 tons, according to researcher OOO ProZerno.

“We’re still maintaining a good market there, but no question it’s been eroded,” Peterson said by phone Aug. 21 from Arlington, Virginia. “Probably more Russian wheat is going to find its home in Africa.”

The U.S. has seen its market share eroded before as Russia became a more dominant exporter during the past 15 years. Egypt’s state-run grain buyer once sourced 90 percent of its imported wheat from the U.S.

That had dropped to 7 percent by last season, while Russia accounted for 25 percent, according to Egypt’s General Authority for Supply Commodities. The North African country is the world’s largest wheat importer.
Big crops worldwide, including record production in France and a looming harvest in Australia, mean global competition is unlikely to let up any time soon. The wheat trade will total 148 million tons this season, according to the IGC.

“Competitiveness so far has favored Russia,” Stefan Vogel, head of agricultural commodity research at Rabobank International in London, said by phone Aug. 25. “I don’t see the U.S. as the prime origin right now to supply the world market.”

Cassava could transform Nigerian economy say Experts

Chief Executive and Managing Director of Thai Farms International, Louw Burger

This week ‘CNN Marketplace Africa’ reports from Nigeria, exploring how a simple plant, cassava, may be transforming the Nigerian economy and the livelihoods of Nigeria’s cassava farmers.

Nigeria is the world’s largest producer of cassava, a starchy and versatile root which is a staple food in the developing world and can be baked, fried, boiled or steamed. Now, the plant is being used for something else – fl our.

In 2012, in an effort to reduce Nigeria’s wheat import costs, the Nigerian government implemented a policy which stated that companies must add 10 per cent cassava fl our to all wheat flour.

Chief Executive and Managing Director of Thai Farms International, Louw Burger, a Nigerian company that buys cassava from local farmers and processes it into fl our, tells ‘CNN Marketplace Africa’ that cassava is widely grown in Nigeria and around the world.

He explains to the programme: “It’s almost an indigenous plant. It’s grown right across the world in the equatorial belt. It grows like weed, and a farmer with a $3 cutlass can become a cassava farmer. We found at our factory we have nearly 4000 small farmers who supply us with cassava, very few have mechanised, and they can effectively grow large volumes of cassava.”

Burger believes that the cassava industry has the potential to help create jobs in Nigeria. He tells ‘CNN Marketplace Africa’: “Looking at the whole of Nigeria, Nigeria grows around 50 million tons of cassava a year. You put all these things together, you’ve got huge unemployment, a need for work for the young people, you’ve got a crop and a plant that lives here, that can be used to create industrial products, and the elements are all there for a good recipe to develop this thing and to put people to work.”

However, Burger tells ‘CNN Marketplace Africa’ that there wasn’t always such a demand for cassava: “When we started we struggled. In the fi rst year we probably produced 900 tons. Last year we produced 8000 tons. This year we’ll produce 16000, 17000 tons. And the policy wasn’t the only factor; this awakening to the fact cassava you can do more with it than just make curry out of it, but the policy and the drive has made people sit up and take notice.”

The positive effects of the fl our policy have also been felt by the cassava farmers. Alhaji Sherif Adewale Adenuga tells ‘CNN Marketplace Africa’ that the cassava market has grown since he fi rst began farming: “I have been in farming since 1986. Though then it was on a very small scale. Until recently when we began to have a market for our cassava… This policy has helped farmers a lot. We are able to cultivate more area, and as such we are able to employ more people, our own lives have been better.”

Farmers Receive 4,000 Orange-Fleshed Sweet Potato Vines in Niger, Osun

L-R: Representative of the DG, RMRDC, Dr Hussaini Doko Ibrahim , Presenting OFSP vines to POGPMAN, Osun chapter chairman, Mr Olusegun Adepoju

The Raw Materials Research and Development Council (RMRDC) has presented 4,000 high yielding Orange-Fleshed Sweet Potato (OFSP) vines and pumping machines to members of the Potato Growers, Processors and Marketers Association of Nigeria (POGPMAN), Niger and Osun  states’ chapters.

Director General, RMRDC, Dr Hussaini Doko Ibrahim while addressing farmers and stakeholders at the presentation ceremony held at the council’s headquarters in Abuja, said that the initiative was meant to promote development, production and use of improved planting materials of elite varieties of agro raw materials to bridge the gap between demand and supply in the country.

“To leverage on the potential contribution, which the beta carotene-rich Orange Fleshed Sweet Potato can bring to improving nutrition and food security in Nigeria, the council, under its boosting programme, is promoting the production of this crop,” Ibrahim stated.

Speaking at the presentation ceremony, Dr Eddy Nwaogu of the National Root Crop Research Institute, Umudike-Nyanya substation, which developed the technology, stressed that Orange-Fleshed Sweet Potato is a nutritious food for households, especially those with children below 5 years, pregnant and lactating mothers.

Nwoagu noted that Orange-Fleshed Sweet Potato is a valuable crop for the makers of baby food items, stressing that its richness in beta carotene, which is a precursor to Vitamin A, will solve deficiency problems in children.

President, Potato Growers, Processors and Marketers Association of Nigeria, Chief Bayo Ajibade, applauded the effort of RMRDC in scaling up elite varieties of crops in Nigeria, saying: “POGPMAN is particularly happy that RMRDC has uplifted POGPMAN with 2000 bundles of 100 vines each and 20 water pumps to water OFSP farms during the dry season in Niger and Osun states.”

In their appreciations, the Niger State Coordinator, Alhaji Umar Aliyu, and the Osun State Coordinator, Mr Olusegun Adepoju, expressed their gratitude to the council for providing them with the equipment and technology to be self-sufficient in orange fleshed sweet potato production in the country.

Corp Member Establishes Farm to Feed Poor Host Community Members

Corp Member's Farm

In service to the fatherland, under the mandatory National Youth Service Corp, Idowu Kayode, a batch C – Corp member, serving at Baruten Local Government Area, Kosubosu in Kwara state, has set-up a farm in his host community in a bid to help curb poor nutrition and bring about food security in the country.

Maize grown on his farm at Baruten LGA, Kwara State

Farm land of corp member at Baruten LGA, Kwara State

According to some of his friends who made this know to newsmen, Kayode who studied Agriculture and Animal Science at the Ahmadu Bello University, Zaria, voluntarily set up his farm land in which various cash crops, vegetables and tuber crops are planted in order to feed the poor masses in the community.

Cassava grown on his at Baruten LGA, Kwara State

Speaking on the impact of his laudable project, a fellow Corp member in the same community as Kayode, Okere Ugonna, acknowledged that the project has helped to boost the nutritional value of the people of Baruba.

Farm land of corp member at Baruten LGA, Kwara State

“This kind of humanitarian selfless service should be the core value of all Corp members not looking out for national or presidential awards in return.” He said.

Nigeria Spends $1.5bn Annually On Importation of Tomato Products- Research Council

improved tomato seeds

Director General and CEO of the Raw Material and Research and Development Council (RMRDC), Dr. Husaini Ibrahim, have revealed that Nigeria spends around 1.5 billion dollars annually on tomato products importation from China and other parts of the world.

The Director General, represented by a Consultant with RMRDC, Dr. Usman Argungu Hassan, disclosed recently while addressing farmers in Lafia that such imports were unsustainable following the economic downturn befalling the country.

Dr. Ibrahim noted that the country can reverse the trend with the introduction of improved seeds that yield more in dry season farming, adding that the essence of introducing the improved seeds is to boost its production in the country.

Meanwhile, to address the problem of acute shortage of tomato vegetables and boost Nigeria’s foreign currency earning, the council has introduced improved and certified high yielding tomato seeds to various Growers Associations in the country.

“In Nigeria in spite of all the comparative advantage the country has in all year round tomato production, we are largely dependent on importation of tomato paste and other tomato products from China and other exporting countries, which is unacceptable”, he said.

According to Ibrahim, the council has developed a robust monitoring and evaluating plan in conjunction with the Nasarawa State Government to ensure productivity in crop production.
Earlier, while welcoming the DG to the event, the Permanent Secretary Ministry of Agriculture Nasarawa State, Mr. Naphthali Dachor commended the Council for researching and improving the tomato seed, which is reportedly resistant to diseases and pest.

He advised farmers in the state to go into dry season farming using irrigation technique for bountiful harvest, disclosing that during dry season crops like tomato yield twice as much as it does during the raining season.
Dachor also called on the council to assist farmers in the state by setting up a tomato production factory in order to check wastage of produce.

Responding on behalf of farmers, Mr. Ali Adamu said with the introduction of the new seeds, farmers in the state will increase their efforts and hope for a bountiful yield in March 2016.

FISH FARMING: Lagos Govt. Renews Support for Farmers

Fish Farming

In a bid to address the decline in supply of fish in the state, the Lagos State Government has reiterated its readiness to support fish farming by creating an enabling and conducive environment, facilitating capacity building for fish farmers as well as creating easy access to credit facilities.

The Permanent Secretary, Lagos State Ministry of Agriculture, Dr. Olajide Basorun, who disclosed this at the closing of the 11th Annual Executive Training on Investment Opportunities in Fish Farming, where 89 persons were trained in production techniques, said the aim of the support is to reduce the cost of fish production and enhance profitability.

The Permanent Secretary explained that the reduction in fish supply is due to a number of factors, which includes pollution, high cost of fishing input and use of ancient fishing methods, rural urban drift and over fishing, among others.

He noted that traditionally, Lagosians have always been fishermen, but over the years volume of fish caught has been dwindling; thus prompting the state to introduce fish farming about 20years ago to address the dwindling supply.

Basorun said the executive training on farming was conceived 11 years ago to expose participants to the new investment opportunities in the fisheries value chain and build capacities of practicing fish farming for enhanced productivity.

The Permanent Secretary said food security is one of the cardinal programmes of the present administration of Governor Akinwunmi Ambode, adding that strategies are in place to engender sustainable food production and ensure that the citizens are well fed.

According to him, “One of the major principles of attaining food security is to look at those areas where we have comparative and competitive advantage and focus on them. One of those areas is aquaculture because over 22 per cent of the land mass of Lagos is covered by water and we have a 180-kilometer coastline”.
Speaking earlier, the Special Guest of Honor, who is a veteran fish farmer and a former Permanent Secretary in the State Civil Service, Mrs. Adedoyin Olusoga, said the downward trend in fish supply over the years has necessitated the massive importation of fish, adding that: “this is a big drain on the scarce foreign exchange, hence aquaculture or fish farming has been identified as the next viable option for increasing domestic fish production.”

She said the state requires about 330,000 metric tonnes annually to satisfy the dietary needs of its citizens and the aggregate domestic fish supply from all sources is about 176,850 tonnes per annum.

Olusoga added that the government has realised the huge potential for increasing fish production and has initiated developmental projects that make aquaculture popular and as a tool for sustainable fish production and employment creation.

FG to Review Current Import Policy on Staple Food Items

Rice and Wheat

 The Federal Government has disclosed plans to review the current import policy on staple food items such as rice, wheat and fish, within the next three years.

Permanent Secretary, Federal Ministry of Agriculture and Rural Development (FMARD), Arc. Sonny Echono, made this known at a recent meeting with the Executive Secretary of the Nigerian Investment Promotion Commission (NIPC), Uju Hassan-Baba, in Abuja.

Arc. Echono, who described the current import policy on staple foods as “unfavourable,” said it would ensure that Nigeria becomes self sufficient in food production before the restriction of the importation of these food items.

According to a statement from the ministry, Arc. Echono said: “The ministry would in the next three years seek the review of the current unfavourable policy by the federal government which allows the importation of staple food items such as rice, wheat and fish into the country.”

He also stressed the need to link Nigerian farmers to the market, adding that it was one of the critical factors that would determine productivity and incomes of farmers as well as promote exports through value addition.
Arc. Echono underscored the need for attraction of more investments in the sector and explained that Nigeria had comparative advantage in the development of agricultural sector in view of its vast arable land, huge population and markets.

He pointed out that the main target of the ministry was to guarantee food security for the country as well as export food items to other countries in the West African sub-region.

In her reaction, Hassan-Baba called for the reestablishment of synergy that had existed over the years between the commission and the agriculture ministry.

She said there had been an increase in the demand of market information on agricultural activities in Nigeria by foreign investors, adding that a desk officer from the Ministry should be posted to the NIPC’s one-stop shop.

The NIPC boss, further disclosed that the commission would organise stakeholders’ forum on promoting investment in the agricultural sector, noting that the ministry had a critical role to play in order to ensure the success of the proposed forum which comes up in Abuja soon.

HARMFUL EXPORTS: EU Bans Nigeria from Exporting Beans, Melon, Others

Food Product

Senator Joshua Lidani representing Gombe South has raised alarm over the health implication of the consumption of foods containing a high concentration of pesticide among Nigerians.

Lidani raised the alarm in an interview with newsmen recently in Abuja, in the wake of the suspension of some agricultural food exports from Nigeria by the European Union (EU).

The food items banned from Europe till June 2016 are beans, sesame seeds, melon seeds, dried fish and meat, peanut chips and palm oil. The European Food Safety Authority had said that the rejected beans were found to contain between 0.03mg per kilogramme to 4.6mg/kg of dichlorvos pesticide, when the acceptable maximum residue limit is 0.01mg/kg.

Lidani therefore, called on regulatory agencies in the country to rise up to the occasion and save Nigerians from the dangers of consuming foods containing unacceptable levels of chemicals.

“The EU ban should not have come as a surprise to us because they have very rigorous standards of checking food import especially with the shift towards organic foods. “Unfortunately we do not have similar standards in Nigeria especially as it affects the food we consume.

“We do not have standards of determining whether the foods we consume are noxious; whether they have chemicals that are harmful .NAFDAC and Standards Organisation of Nigeria are supposed to regulate but there is a limit to what they can do. “We are yet to realise the enormity of the problem; so unless we look into the effects of these harmful substances, we may end up having a population that is threatened by diseases such as cancer.

“Cancer is a consequence of eating this kind of chemically harmful foods; so we need to do a lot of work.“ Lidani said that legislators would ensure that the laws establishing the regulatory agencies were strengthened to enable them to check such harmful foods. According to him, once the Senate constitutes its committees, they will begin to consider bills on food laws for amendment in order to ensure food safety in the country.
“It is up to us the legislators to strengthen their capacity, to look at the laws under which they are operating so they will not focus on just food that are exported but food that are consumed within. “You also have to educate the populace as to the kind of foods that are harmful; what level of pesticides you should apply to your agric produce and what effects the chemical fertiliser that we apply to agric produce have on the food we eat.“

The EU had warned Nigeria that the banned food items constituted danger to human health because they contain a high level of unauthorised pesticide. It said it had issued 50 notifications on this to Nigerian Beans Exporters since January 2013. The pesticide contained in the food items is applied when the products are being prepared for export.

Photo action @ the official commissioning of Jigawa state Seeds Centre at Birin Kudu. The centre is a partnership venture of the state and Federal government at the initiative FAO in 2008 visit.

   SSG of Jigawa- State  Alhaji Adamu Abdukadri Fanini being welcomed at the commissioning by Ps. Agric, Dr Mohammad Idrith Danzomo and JASCO GM, Alhaji Hassan Idris Girbobo.

Cross section of the stakeholders present at the event .

FAO backs community seed production urges Act Passage.

The Food Agriculture Organization (FAO) has supported the use of community based seeds to curb adulteration in the system just as it urged the Federal Government to ensure the passage of the revised seed Act without any further delay saying this would enable more effective running of the industry by the private sector.

 

FAO’s Country Representative in Nigeria, Ms Louise Lobisa gave the advice at a stakeholders’ consultative workshop in Abuja. She said that the passage of the revised Seed Act would help develop the private sector and the community-based seed systems and by extension guarantee food security in the country wondering why the Act is still being held in the Federal Ministry of Justice after many delays with the legislation before approval.

Ms Louise Lobisa said that the essence of the workshop is aimed at designing a draft strategy that would strengthen and support private and community seed operation in the country adding the farmers need to know the importance of using improved quality seeds for agricultural production while government should face the business of efficiency system in the country.

She stated  that FAO was interested in building the capacity of government institutions with seed certification, seed quality, upgrading skills as well as strengthening agro-based laboratories as they are ready to make sure the private sector  playing its roles in the seed system in Nigeria pointed that “  seeds should not just be made available, but those, who are providing the seed should also make profit and make a living out of it”

Dr Okelola Oluwole, FAO Consultant and agricultural economist in his lecture “Draft Strategy to Strengthen Private Sector and Community Seed Systems” said that the country had witnessed the collapse of many seed companies.

He said “after witnessing collapse of many seed companies as far as 1984, but the number increased from 36 in 2011 to 164 in 2014.Certified seed production rose from 6,109 tons in 2012 to 149,844 tons in 2013. Access to credit by seed companies increased from N1.8 billion in 2012 to N6.02 billion in 2014. Seed distribution by companies also rose from 9,455 tons in 2011 to 59,000 tons in 2013”