Nigeria’s dream is to become a regional hub for agro exports. But the road seems not too smooth. Reason: producers and agro-allied companies seeking export markets have to contend with stiff regulations and standards, lengthy certification processes and other barriers, such as limited transport infrastructure. DANIEL ESSIET points the way forward.
Under the Agricultural Transformation Agenda (ATA), Nigeria aims to become an export hub for agricultural goods in Africa. In the thinking of experts, that may hold the key to diversifying the economy. It is also capable of creating new jobs and generating economic activities in diverse areas.
At the moment, Nigeria’s soybeans, cotton, sesame seeds, cashew nuts, mangoes, green beans, melons, vegetable tropical products are in high demand in the international market.
The Minister of Agriculture and Rural Development, Dr Akinwumi Adesina, recognised that much when he said there is huge potential in agriculture, particularly in agro exports.
The minister is right. Already, some agri-entrepreneurs have seen the new vista of opportunities in agro export and are ready to grow, process, package and export fruit and vegetables. One of such entrepreneurs, who have seen the opportunity in agro export is Sunday Anjorin, Chief Executive, Anjorin & Atanda Investment Limited, Lagos. He has since carved a niche in the business where he exports cashew nuts, ginger, sesame seeds, moringa, pepper and vegetables to Europe, Asia, and the United States. He is looking at selling more produce overseas, having learnt export processes, from field preparation to clearing produce.
President, National Cashew Association of Nigeria (NCAN), Tola Faseru has also keyed into agro export business. Today, he is large cashew exporter. He relies on a national network to get supplies. He has agents across villagers, who search for nuts. During the harvest season, which starts in January, agents and traders looking for supplies for processors and exporters, go to the villages. During the peak months of April and May, the farms literarily become a theatres of war for exporters scrambling for farmers’ loyalty.
For Faseru, cashew makes a substantial economic contribution. The major importers are the developed countries. Although, the kernels are used in food preparation and confectionery and are important in Asian cuisine, the principal outlet is the snack food market, and this sector is growing rapidly in markets in the developed countries. Foreign buyers, according to him, prefer kernels without defects or blemishes for confectionery, biscuits and bakery products, and other prepared foods.
Faseru and other agro experts say that a lot is happening around the cashew sector, as growers of cashew are buoyed by demand from India and China as well as resurgent consumption in Europe and North America. Demand for cashew has grown about seven per cent a year over the past decade on the back of healthy snacking habits.
However, as Faseru, Anjorin, and others agri-entrepreneurs, are striving to key into the agro export business, they are met with stiff challenges. For instance, Anjorin lamented that export of agricultural products, especially those meant for human consumption, is often fraught with various impediments part of which is the rigid and cumbersome sanitary testing procedures by most importing countries. This, he said, is quite challenging, particularly, for a relatively new entrant in the agro export business.
On his part, Faseru lamented that entrepreneurs are losing a lot because most cashew output is exported in raw nut form. According to the Programme Coordinator, Farmers Development Union (FADU), Mr. Victor Olowe, agricultural products and processed foods shipped from Nigeria have been rejected by foreign buyers. The rejections, complaints and restrictions, he said, were from Vietnam and India. In addition, many countries have imposed restrictions on peanuts, rice, poultry products, curry leaves, okra, groundnuts, and cassia seeds for different reasons. Also, some countries imposed temporary bans on various products. The European Union (EU) maintains such data online on its website.
Indeed, experts say that Nigeria could have achieved far higher growth in the export of agro products if it had come up with a suitable policy providing, among other things, the facilitation of the movement of export cargo within the country, bulk storage at the airports, and space for carrying the export merchandise by the national carrier, where applicable. Besides, it has been found that short shelf-life is a major constraining factor and this has yet to be addressed through intensive and extensive laboratory research.
Some of these issues are believed to be responsible for why many agro-based consignments from Nigeria frequently face confiscation and rejection at destinations. This not only causes economic loss to the exporters, but also puts a question mark on the credibility of Nigeria as an exporter of quality produce. About 264 Nigerian agro-commodity products were rejected at the international trade market between 2004 and 2012, according to the Deputy Director Export and Port Inspectorate Directorate National Agency for Food and Drug Administration and Control (NAFDAC). Sylvia Ajoku. This was made known at a stakeholders’ forum on export proceeds recovery through cargo defence fund held last week in Lagos.
She explained that one of the problems that led to trade rejects was substandard packaging, adding that the specified nylon and other buyers’ specifications were not strictly adhered to in most cases by the exporters.
Continuing, Ajoku said: “The nutrition analysis, batch number, expiring date and the manufacturing date as well as moisture content should be evaluated and printed on the specified nylon as these were some of the causes revealed by investigation.”
She maintained that some exported products were rejected on the grounds of being preserved with prohibited chemicals, advising exporters to attend training organised by NAFDAC. She urged exporters to get approval for every product to be exported, adding that getting a certificate was necessary to avoid subsequent rejection on export. She said that export certificate and laboratory analysis for exportable products are issued free by NAFDAC.
Ajoku advised agro exporters to imbibe the culture of sending their exportable products to the quarantine department to be certified and fumigated with the proper chemicals.
President, Federation of Nigerian Shippers Association (FONSA), Ayobami Omotoso urged exporters to adopt a secured means of payment to reduce the risks of loses. He said a bank account was the least secured method of payment to the exporter but most attractive to the importer, adding that it is only recommended when an exporter is sure that payment would be received.
Omotoso said some exporters do not comply with the key terms of the contract relating to documentary requirements such as quality and quantity, noting that the practice could result in issuance of Non-Negotiable Certificate of Inspection by the inspecting agencies which often leads to litigations and delay of payment.
Nigeria’s aging transportation infrastructure has also been a pain on the neck of agro exporters, as most of them are unable to move produce from farms to the ports. Inadequate infrastructure is seen as one of the major challenges to doing business in Nigeria, a situation that puts the country at a competitive disadvantage when compared to its neighbours.
Besides, as the global trading environment becomes ever more competitive, the fragmentation and geographical separation of commodity value chains compound traditional challenges faced by exporters. Today, it is no longer enough to meet quality and packaging standards, have storage facilities, possess the appropriate skills, and have access to technology; participation in value chains requires superior infrastructure and transport as well as swift crossing of borders.
Anjorin said that entrepreneurs must have a deep understanding of the export markets by keeping abreast of changing consumption trends; for example, the move towards organic products in some segments and the reality that more consumers wish to know where their food comes from. For instance, traceability and certification standards are of growing importance to agri-entrepreneurs. He said he has taken note of these because he is planning to go into fresh produce export, which requires a facilitated pack house, refrigerated trucks and cold storage.
Ordinarily, the Export Expansion Grant (EEG) is supposed to take care of some of the challenges facing agro exporters and by implication, help achieve Nigeria’s dream of becoming a regional hub for agro exports, but the scheme has been allegedly abuse. The EEG is supposed to be a critical incentive stimulation package to drive the non-oil export sector. It is a Federal Government’s initiative aimed at encouraging exporters of non-oil products, including agro-commodities, through the reduction of high cost of production occasioned by inhospitable business climate at home.
EEG beneficiaries in various categories mainly – manufacturing/ processed to finished products; and merchandise exporters/exporters of primary products (including commodities and Solid minerals) – whose products are evaluated based on local value added, local content, employment of Nigerians, priority sector, export growth and capital investment; gain between 10 and 30 per cent EEG (financial assistance). To be eligible to enjoy the benefit, an exporter must be registered with the Nigerian Export Promotion Council (NEPC); shall be a manufacturer, producer or merchant of made-in- Nigeria products for the export market; must have a minimum annual export turnover of N5 million and evidence of repatriation of proceeds of exports; and shall submit baseline data like audited financial statement and information on operational capacity to the NEPC.
Violators of the guidelines are supposed to be dealt with by the Presidential Committee on Trade Malpractices (PCTM) and the Economic and Financial Crimes Commission (EFCC) in conjunction with members of the EEG Implementation Committee. However, the EEG has been grossly abused. Crooks and cronies of top government officials allegedly claim the grant. Cases of over-invoicing and fraudulently claiming the entitlement of manufactured products when raw commodities are exported also abound. Reports say Nigeria lost about N27.8 billion it would have earned as Customs duties and other charges in the first half of the year to the corrupt and inept implementation of the EEG, while about N74 billion was lost between 2003 and 2007.
The calculated loss for the first half of 2009 was put at N12.5 billion. Customs authorities allege the huge fraud was perpetrated through the use of Negotiable Duty Credit Certificates (NDCCs) to cover import and excise duties that would have been paid by fraudulent beneficiaries of the EEG. The matter was made worse by reckless compromise in the issuance of duty waivers and concessions on the orders of the Presidency, especially in 2007.
Bad as the situation is for agro exporters, experts say the situation can be salvaged if the government could frame appropriate policies in consultation with stakeholders aimed at boosting agro exports. Apart from ensuring access to mainstream markets, there is need for technical support in the areas of product promotion and product diversification and adaptation to suit the choices and preferences of consumers abroad. Also, there is the need to continue to educate farmers on the technical requirements of selling to certain markets. For example, exporters of agricultural products to the US must comply with the rules set by the US Food and Drug Administration. Other nations have similar regulatory organisations.
At the level of policy, experts say the government could at the possibility of establishing Agri Export Zones to boost agri exports. Their argument is that since Nigeria is a producer of a range of commodities, such as coconut, mango, banana, , cashew nuts, pulses, ginger, turmeric and black pepper, there is need to leverage the production capability in these range of commodities for economic gains and to be self sufficient to meet the domestic consumption by setting up agri export zones. To promote agriculture and get returns to the farming communities, the Agri Export Zones (AEZs) should be considered.
The AEZ focuses on the cluster approach of identifying the potential products, the geographical region in which these products are grown and adopting an end-to-end approach of integrating the entire process right from the stage of production till it reaches the market. There would also be a need to identify problems encountered at each stage. These difficulties could be procedural in nature or may relate to a particular quality standard.
AEZs can yield benefits such as strengthening backward linkages with a market oriented approach; product acceptability and its competitiveness abroad as well as in the domestic market; value addition to basic agricultural produce; bring down cost of production through economy of scale; better price for agricultural produce; improvement in product quality and packaging; promote trade-related research and development; and increase employment opportunities.
That is not all. Experts also canvass the establishment of centres of perishable cargoes. The thinking is that as exporters work to increase agricultural exports, some players are seeking more perishable centres to boost agro exports, a Centre for Perishable Cargo (CPC) at airports would boost, perishable cargo volumes. Such facilities improve the nation’s position in the global cargo industry by attracting global players and international freighter aircraft.
The centre will also encourage farming for export in the area through production agreements with exporters, as well as a proliferation of sorting and packing centres. Also, plant quarantine centres at such facilities would ensure export quality is maintained. The centres should have facilities for temperature and humidity control, and cold stores.
impediments. This is largely attributed to the rigid, at times cumbersome sanitary and phytosanitary testing procedures followed by most importing countries. Facing this challenge, he explained, it is no mean achievement for a relatively new entrant in the field.
To stay on top of the situation, he said entrepreneurs must form a deep understanding of their export markets. This means keeping abreast of changing consumption trends, for example, the move towards organic products in some segments, and the reality that more consumers wish to know where their food comes from. For instance, traceability and certification standards are of growing importance to agri-entrepreneurs.
He has taken note of these because he is planning to go into fresh produce export, which requires a facilitated pack house, refrigerated trucks and cold storage.
As a requirement also, he is expected to train his people through Partners in Protection (PIP) in Hazard Analysis and Critical Control Point (HACCP) food safety programmes, integrated pest management, safe use of pesticides and traceability.
For farmers and buying agents, arable land has become scarce.
There are ongoing challenges like rising input costs and climate change, with hot seasons sapping soil moisture. A lot is happening around the cashew sector.
Growers of cashew, are buoyed by demand from India and China as well as resurgent consumption in Europe and North America.
Worldwide demand for cashew has grown about seven per cent a year over the past decade on the back of healthy snacking habits.
Tola Faseru, President, National Cashew Association of Nigeria (NCAN) is a big time cashew exporter. This has kept him in business. He relies on a national network to get supplies.
Because of this, he has agents across the farming villages, who go in search for supplies of harvested nuts.
During the harvest season, which starts in January, agents and traders looking for supplies for processors and exporters descend to the village. During the peak months of April and May, the farms are scenes of scramble for farmer loyalty.
For Faseru, cashew makes a substantial economic contribution. The major importers are the developed countries. Although the kernels are used in food preparation and confectionery and are important in Asian cuisine, the principal outlet is the snack food market, and this sector is growing rapidly in most developed country markets.
He explained that foreign buyers want kernels without defects or blemishes for confectionery, biscuits and bakery products, and other prepared foods.
This requires him making efforts to control the entire ‘chain’ – covering production, packaging, processing and marketing. To solve this problem, he dedicated a team to the task of integrating these four critical elements.
While origin is of the produce is no importance at the retail level in Nigeria, it is not so with buyers from Vietnam and India who purchase raw nuts from a range of suppliers and the origin is required.
Larger nuts achieve a premium, smaller nuts and the scorched grades trade at a discount. He said entrepreneurs are losing a lot because most cashew output is exported in raw nut form.
Speaking with The Nation, the Programme Coordinator, Farmers Development Union (FADU), Mr Victor Olowe said agricultural products and processed foods shipped from Nigeria have been rejected by foreign buyers. The rejections, complaints and restrictions were received from Vietnam and India. In addition, many countries have imposed restrictions on peanuts, rice, poultry products, curry leaves, okra, groundnuts and cassia seeds for different reasons. Further, some countries have also imposed temporary bans on various products as well. The European Union maintains such data online its website.
For experts, Nigeria could have leaped into far higher growth in the export of agro products if the government could come up with a suitable policy, providing, among other things, for facilitation of the movement of export cargo within the country, bulk storage at the airports, space for carrying the export merchandise by the national carrier, where applicable.
Besides, it has been found that short shelf-life, believed to be a major constraining factor in case of these products, is yet to be addressed through intensive and extensive laboratory research.
Challenges
Many agro-based consignments, frequently face confiscation and rejection at destinations, which not only causes economic loss to the exporters but at the same time puts a question mark on the credibility of Nigeria as an exporter of quality produce.
The sanitary and phytosanitary (SPS) measures are an agreement on how the governments can apply food safety and animal and plant health measures set out in the WTO.
Director, Nigeria Quarantine Service (NQIS), Dr Mike Nwaneri said the service is helping exports meet these requirements and that several of export consignments are of quality and SPS compliance.
Meeting the SPS requirements became essential since the introduction of the WTO regime in 1995, but without proper attention paid to this important sector, agricultural exports were affected.
The aging transportation infrastructure has as well proved to be a hindrance, making it difficult to move produce from farms to the ports. Inadequate infrastructure” is seen as one of the leading challenges to doing business in Nigeria, putting the country “at a competitive disadvantage as compared to its neighbours.
Many exporters complain about having to deal with different rules of origin. This could be solved with a multilateral trading system based on most favoured nation status, but also with a well-designed trade agreement.
As the global trading environment becomes ever more competitive, the fragmentation and geographical separation of commodity value chains compound traditional challenges faced by exporters. No longer is it enough to meet quality and packaging standards, have storage facilities, possess the appropriate skills, and have access to technology; participation in value chains requires superior infrastructure and transport as well as swift crossing of borders.
Consistency: Delivery of ‘the same quality over time’ as most cashews is used by roasters for blends that are meticulously formulated. A buyer might not even be interested in the best quality cashew if it does not fit their blending formula.
Traceability: Detailed tracking at all stages of production, harvest, processing, transportation, storage, shipping, etc. Importers and roasters need to know where responsibility rests if problems arise. Roasters and retailers have to answer questions raised by end-consumers and civil society groups, for example questions related to labour conditions and environmental impact.
Large quantity: For economy of scale reasons, most importers, roasters and retail chains are asking for larger and larger quantities. With around 80 per cent of the world’s commodities being produced by smallholders, making large quantities available presents a challenge for many – even as members of large cooperatives.
Abuse of Export Expansion Grant
The EEG scheme is supposed to be a critical incentive stimulation package to drive the non-oil export sector. It is an FG initiative aimed at encouraging exporters of nonoil products, including agro-commodities, through the reduction of high cost of production occasioned by inhospitable business climate at home. Beneficiaries in various categories mainly – manufacturing/ processed to finished products; and merchandise exporters/exporters of primary products (including commodities and Solid minerals) – whose products are evaluated based on local value added, local content, employment of Nigerians, priority sector, export growth and capital investment; gain between 10 and 30 per cent EEG (financial assistance). To be eligible to enjoy the benefit, an exporter must be registered with the Nigerian Export Promotion Council (NEPC); shall be a manufacturer, producer or merchant of made-in- Nigeria products for the export market; must have a minimum annual export turnover of N5 million and evidence of repatriation of proceeds of exports; and shall submit baseline data like audited financial statement and information on operational capacity to the NEPC. Violators of the guidelines are supposed to be dealt with by the Presidential Committee on Trade Malpractices (PCTM) and the Economic and Financial Crimes Commission (EFCC) in conjunction with members of the EEG Implementation Committee.
Trailing the EEG, however, are several complaints of abuse, like crooks and cronies with no exports claiming the grant; over-invoicing and fraudulently claiming the entitlement of manufactured products when raw commodities are exported; for example. Reports said the country lost about N27.8 billion it would have earned as Customs duties and other charges in the first half of this year to the corrupt and inept implementation of the EEG; while about N74 billion was lost between 2003 and 2007. The calculated loss for the first half of 2009 was put at N12.5 billion.
Export Expansion Grant Fund Scheme (EEGF)
The objective is to provide cash inducement to manufacturing companies to encourage them to produce for export rather than for domestic consumption. The implementing agency is the Nigerian Export Promotion Council (NEPC). This provides cash inducement for exporters that the have exported a minimum of N50,000 worth of semi-manufactured products. To cash incentive is to enable such exporters to increase the volume and value of export and diversify their export products and market coverage. Since 1997, government approved a uniform rate of 4% of repatriated foreign exchange as basis for calculation of the export expansion grant. In addition, the autonomous exchange rate is applied in computing the value of the export expansion grant paid to beneficiary exporters. This fund is only available to exporters who have repatriated full proceeds from their export transaction. The repatriation must be certified by the CBN to be eligible.
Tax Relief on Interests Earned by Banks on Export Credit:
Introduced in 1986 to encourage banks to finance exports; the Federal Board of Inland Revenue (FBIR). (Now Federal Inland Revenue Services (FIRS) reduced their taxable income.
Export Development Fund (EDF)
The EDF is a special fund set up by the government to provide financial assistance to private sector exporting companies to cover a part of their initial expenses in respect of the following export promotion activities.
Recommendations
Experts stressed that it was critically important that the government framed an appropriate policy in consultation with the stakeholders aimed at boosting agro exports manifold and ensuring their access to mainstream markets. There is also the need for technical support in the areas of product promotion and product diversification and adaptation to suit the choices and preferences of consumers abroad.
Finally, efforts need to continue to educate farmers on the technical requirements of selling to certain markets. For example, exporters of agricultural products to the US must comply with the rules set out by the US Food and Drug Government, and other nations have similar regulatory organisations.
Agri Export Zones to boost agri exports
Experts said Nigeria is a producer across a range of commodities, such as coconut, mango, banana, cashew nuts, pulses, ginger, turmeric and black pepper. They said Nigeria needs to leverage the production capability for economic gains and being self sufficient to meet the domestic consumption.
With a view to promoting agriculture in the country and to fetch remunerative returns to the farming community in a sustained manner, the concept of the Agri Export Zones (AEZs) need to be floated. AEZs are to be identified by the State Governments evolving a comprehensive package of services provided by all state Government agencies, state agriculture universities and all institutions and agencies of the Union Government for intensive delivery in these Zones. Corporate sector with proven credentials are encouraged to sponsor new zone or to takeover already notified AEZs or part of such zones for boosting agri-exports.
Services would be managed and coordinated by State Government/corporate sector and would include provision of pre/post harvest treatment and operations, plant protection, processing, packaging, storage and related research & development etc.
The entire effort of AEZ focuses on the cluster approach of identifying the potential products, the geographical region in which these products are grown and adopting an end-to-end approach of integrating the entire process right from the stage of production till it reaches the market. There would also be a need to identify/enlist difficulties/ problems encountered at each stage. These difficulties could be procedural in nature or may relate to a particular quality standard. Agri Export Zones can yield benefits like strengthening of backward linkages with a market oriented approach; product acceptability and its competitiveness abroad as well as in the domestic market; value addition to basic agricultural produce; bring down cost of production through economy of scale; better price for agricultural produce; improvement in product quality & packaging; promote trade-related research and development; and increase employment opportunities.
Centres of Perishable Cargoes
As exporters work to increase agricultural exports, some players are seeking for more perishable centres to boost agro exports
Centre for Perishable Cargo (CPC) at airports would boost perishable cargo volumes. Such facilities would improve the nation’s world standing in the cargo industry by attracting global players and international freighter aircraft.
Such facilities will encourage farming for export in the surrounding area through production agreements with exporters, as well as a proliferation of sorting and packing centres.
Plant quarantine centers at such centres will ensure export quality is maintained. The centres should have facilities for temperature and humidity control, and cold stores.
