eat Imports Ilit N635bn AtIDUaIly A s the impact of the new 15 per cent levy on wheat Im ports, which commenced on June I,
kicks in. new data obtallll'<.l by TH1SDAY at the weekend showed that Nigeria spends
N635 billion ($4.1 billion) per annum on wheat importation.
Nigeria ranks as the largest Importer of wheat from the United Slates of America, with available dala suggesttog that the country imported 123 "m illion bushels of wheal from the US in 2010, more than any other country. The rising appetite for wheal has been linked to the growth In consumer demand, which has in tum spurred the expansion of flour ffililing plants In the country. Flour Mills of Nigeria Pic, Dangote Flour Mills Pic. Northem Nigeria Flour Mill!. Pic and Honeywell Flour Mills Pic are the biggest millers In Nigenil. In Its monthly economic report for Mil)', Finance Derivative Company (FOC), iI Lagos-based economiC and financial advisory firm, indicated thai based on the volume of wheat Imports into the country, the current. price of flour was N5.700 per 50kg bag. 1be company added when the 15 per cent levy is factored into the price of imported wheat. a bag of flour will Increase to N6,555.
• A conugnmull oJ ""hmt ~jng o.fJJoodnl Q/ the prtmisls oJ FkHu Mills of Nigrria Pic, lAgos
Stories by Feshl5 Aka,.bi The report. howt!ver. noted that the impact of the 15 percent levy imposed by the federal government shoufd not necessarily affect the price of a bag of
£lour, and in tum. bread and other end made from flour, given the 26 percent declIne in global wheal prices this year 10$259, down from $354.47 per metric ton in May 2011 FOe. In the n!')Xlrt, added that the oli-
p~ucts
Nigeria to Benefit from $13.5mn Cocoa fuitiative
gopolistic - few suppliers, many buyeni - nature of the wheat market In Nigeria. the ne ... . levy will still work in favour oi the supplil!J'5. The biggest ilCflefioary, the report noted, IS - Flour Mills of Nigeria PIc. which centrols lPO per cent of the market. The cempany is also said to have total control of the flour millers and Master Bakers J\.SSOCiation. The n!'PO" ac$d:ed that flour millers are already stOi :k ing up on inventory from 60 to 120 days in readiness for the new regim.· all wheat imports in June.
neil actiO! . according to the was bcund to translate into higher carrymg and storage costs, wFiich can e1the-r ~ transferred to con· sumers or born: b)' the millers by way of reduced margins.. . One of the three scenarios, FJ)(' noled, would e.ltail the full cost of the inaease an carrying and storilge (SO per cent) being passed on to ronsumers. Under th.i> sa.'nano, the pnce of bread will i ~a5e' by 15 per cent from N200 10 N230 per loaf. If this happens. the bllrd...>n Will be ~ on to consumers, whale the nulJers Will smile to the b.tnk as they wdl automatically m.lil tai _"l their profit marre~rt.
gms.
The second ,cl."l'Iario envisages the readiness of t.l.e Imllers to share the increased co"t SO.SO. Thi!. means, 40 per cent of tht burden Will be transferred to the ..:O:lSumer, while the price of bread will ilcrea.se by?5 per cent to N215 per loaf. U thIS happens, millers' profit margins will thin out by 10 per cent, thl report stated. The third o ption is for mille.s to absorb the ent.re cost, a development thai will lea\ e the price of bread unchanged at .'1200 but mill~rs' profit margil1S will d~line by 20 per cent.