Why Nigeria needs to increase import tax on starch to 60% Adeyemi



The chairman of Harvest Feeds and Agro Processing Limited, Goke Adeyemi, in this interview speaks about the need to increase the tax on imported starch in order to develop local industry, which, in turn, will encourage cassava farmers to produce more. He also talks about other problems facing the industry. COLLINS NNABUIFE brings excerpts.

What was the result of the ERGP meeting in which you participated?

The plan for economic growth (ERGP) Focus Lab occurred between March 13, 2018 and April 28, 2018. Harvest Feed and Agro Processing Limited as one of the key starch producers, we fully participated in the focus lab, and the results from the Focus Lab were that we requested an import tax on imported starch entering Nigeria, now the import duty paid for imports starch, in Nigeria is from 5 to 10 percent, while the cost of planting imported starch is lower than the price of local starch, so it makes it difficult to protect our products and makes the use of cassava in Nigeria virtually impossible with of view of the industrial use of cassava, which is the direction that the government wants to go.

It is necessary to protect local industries, if there is no protection for local industries, there will be no industry at all, so our request is that the government protects us by increasing the tax on adjusting imports to import tax from 5 to 60 percent for this indicator, that the cost of planting imported starch will be close to the price that local producers produce.

Currently, imported starch sells about 150,000 pounds sterling per tonne, but local starch is about 150,000 tons per ton, so it's obvious that producers will buy cheaper imports, but if the import adjustment tax is met, they will also sell about from N190,000 to N200,000 per ton, so we can be competitive.

Cassava Processing in Nigeria, we are located mainly in rural areas where it is difficult to get infrastructure, for example, in my factory, speaking about energy supply, although we spent a lot of money to operate the 33KVA line with transformers, and the rest of them, but still since we economically get power, that's why we, apparently, work on a generator with cassava. Processing and local producers working on generators to feed our plants can not provide sufficient profit, profitability will be under stress, as a result, competitiveness with imported starch will be very difficult, so we need protection from the government, and also provide us with infrastructure, for example, electricity and roads to help us transport our cassava from the farm to the plant.

So, these three things were what we demanded, and we expect a response from the government, after 3 months we finished the Focus Lab, in which we want to act now.

Has the government taken any significant action after the inquiries you made?

We want to pay tribute to the government, they have an intention, but I think it's very slow, they need to speed up their response to this, we keep in touch with the Committee that promoted the implementation of the Focus Lab, I think they are in the Ministry of Planning , we talk to them, until now they just tell us to wait, we waited, but we want to act, because this is a time when we can take advantage of, the production of cassava in Nigeria also received momentum last year, even before this year, but if the use of factories and there will not be, the price will collapse, and when the price falls, the cassava farmers will not be encouraged further and do the next year, this will be a reference, once the factories get demand from cassava from farmers, farmers will grow more, but if that happens now , the industry does not use enough cassava, farmers will have cassava on the ground, no one is going to buy it, it either spoils, or they sell it at very ridiculously low prices, which are not going to even fully satisfy their profits or even overestimate their value, They will be discouraged further, this will have the effect of a snow field for the economy.

So what we are asking the government to do is take the bull by the horn, increase the import adjustment for imported starch in Nigeria, which corresponds to about 60 percent, let the local producers come from the point of view of patronage, we require a lot of starch in Nigeria, but basically almost 80 percent of them come from abroad, we can also provide at least 50 percent of what we want in Nigeria, gradually we increase the potential of what the economy will require.

What are the economic opportunities of starch?

This greatly affects the economy, do not forget that in Nigeria we have more than 5 million cassava farmers, until now we use cassava mainly for food, but industrial use of cassava is already growing, for example, we have 8 starch producers in Nigeria today , with a total capacity of about 100,000 metric tons of cassava per year, we have industries that use cassava to produce alcohol, we also have producers of cassava flour, so the industrialization of cassava is already growing, the only way that The further use is that the competitiveness of imported starch derivatives in Nigeria leads to the fact that the local do not compete with imports, and industrial consumers of starch, flour, alcohol prefer to import, because it is cheaper, so we say, we increase the tax on imports of these products entering Nigeria, from 5 to 60 percent, so that they also could be high in price, and we can compete, not forget that we are at a disadvantage due to lack of We are talking about growth, I hired 189 people in my plant, we are talking about direct employment, farmers, carriers, so we create a lot of work and growth, adding value to the manioca grown by farmers, and farmers also earn a lot of money because they increase their chances, perhaps from a growth of 1 or 2 hectares, to an increase of about 10 hectares, so with this we begin the multiple effect of using cassava starch in the economy.

What are your relationships with Cassava Farmers, Doug you empower them to produce more?

What we do with farmers is that, for example, I am a processor, from the very beginning I have cassava farmers who give what I call a producer fund, I have 3 tractors in my plant that I use to help farmers, and I bring them up in cooperatives, with some organizations, Lake Kassava, adding value for Africa (CAVA) and some other NGOs that we conduct for them, we help in terms of resource mobilization and control over them farms, so that they can increase, and I also encourage them to move from small-scale farming to pseudo-industrial agriculture, for example, some of them were engaged in 2 hectares per 1 hectare, and now they start growing up to 5-10 hectares of cassava, because this is what we need, we need to go from farming to commercial farming , our relationship, which encourages them to start taking steps towards commercial farming, is what we do for them.

What other serious problems do you face as a processor?

One step after another, the first call is a tax on adjusting imports of imported starch from 5 to 10% to 60%, which will make our product competitive with imports, and patronage will be there, then we can unleash the capacity of our plants, for example, my plant works by 30 percent, it can work 100 percent or even more than 100 percent, for example.

Therefore, if the import adjustment tax is met, I can work at a higher capacity, producing more starch, hiring more people, buying more cassava and cassava growing more cassava.

From the point of view of stimulating the growth of industry, infrastructure, especially electricity, yes, some improvements have especially improved in the area of ​​internal power supply in homes, I live in Lagos, sometimes in Abeokuta, we can see it, but in the industry, we did not feel that the impact of electricity is still increasing, mainly we are still working on generators, and it tames up a host of resources from the industry, and this will prevent the expansion of the use of cassava in Nigeria.

Large players also need to support young players in the industry, multinational companies that are starch users, textile companies use starch, packaging companies use starch, the company's seasoning uses a lot of starch, the food industry, the brewing industry makes extensive use of starch in Nigeria, all these big players , should also help local starch producers in developing their technologies, in developing their quality and efficiency at the plant, gradually raise them, or eat like big brothers, we expect that they will stretch a hand of dialogue when they pull we raise the farmers, and we are all together to raise the economy of Nigeria, these are the benefits that we can learn from this counsel.

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