Dollar Scarcity May Impede FG Agric Diversification Plans | Independent Newspapers Limited
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Dollar Scarcity May Impede FG Agric Diversification Plans

Posted: Apr 26, 2016 at 5:11 am   /   by   /   comments (0)


Seyi Taiwo-Oguntuase



The lingering dollar shortage may hinder the Federal Government’s plan to diversify into the agriculture sector, scuttling the revenue avenue, stakeholders have said.

Stakeholders, who spoke with Independent, said the scarcity is having adverse effects on the sector, which if not tackled urgently may affect it drastically.

Nigeria is going through its worst economic crisis in years due to a slump in crude prices which came as low as $30 per barrel. Before the drop, a barrel sold for over $100. As at Monday it was $44.61. Oil exports account for around 90 percent of national income. Naira has fallen some 50 percent on the parallel market as import firms struggle to get dollars from official channels. As at Monday N322 exchanged to a dollar at the parallel market. Most firms get their forex from the parallel market.

Sotonye Anga, an agribusiness strategist, said Nigeria being an import driven nation which imports most of its agricultural processing facilities and packaging materials has made the cost of building agriculture infrastructure very expensive.

According to him, “When you are importing there is no dollar available; you go source for dollar, and it is so expensive sourcing for dollar at the black market, so it has made the cost of building agriculture infrastructure very expensive.”

He stated that at this time when the world is diversifying, the scarcity has put a clog on government’s objective, adding value to agricultural commodity means that requisite technological infrastructure must be built and in doing that you spend so much.

He said the nation needs some level of stability so that farmers will be able to take advantage of the window of opportunity to build capacity and most importantly, be less import dependent.

“If we are less import dependent, the scarcity of the foreign exchange will not fall on us, a country that imports so much, that is the kind of effect you see.

“I think what we need to do now as a nation in order to cushion this is we need to boost production and export more because when you export more products you are actually earning more foreign exchange and you are making more money and that is a huge advantage,” he added.

Adeola Elliot, chairman, Lagos Chambers of Commerce and Industry (LCCI), Agro and Allied Group, stated that the scarcity is really affecting farmers in the sense that it is shortchanging farmers who are importing machineries and also raw materials.

“Let me give you an example of fish feed for instance and other things that are being imported. We are importing at a high rate and you know that the foreign exchange is not there but the people have to go to the black market, it is really not paying the small farmers economically.”

“When the president traveled to China, one of the key point is exchanging yuan for naira; it is another strategy because we import a lot from China, so if that yuan and naira become exchangeable and it will no longer be through dollar you can just import like that, that is being managed so that it will not just be weighing down on Nigeria because we are the ones who are importing a lot.”

Sayina Riman, national president, Cocoa Association of Nigeria, lamented the effect especially on cocoa farmers, stressing that it should be a plus for the sector but the high exchange rate of the dollar does not allow it.

“It does not give the advantage the producer should have over its produce, you can’t harvest cocoa at such high input and then you go and sell it at the official exchange rate when everything has increased to 24 to 25 percent and then you want to sell at the official exchange rate when the market itself is not recognizing the exchange rate.”

He said cocoa farmers generate foreign exchange for Nigeria because they export over 95 percent of their cocoa.

“We are supposed to be generating revenue and foreign exchange for the country, but I am just telling you how it affects us negatively, it is the negative aspect of the exchange rate as established by the CBN which we might, as an association, go to court to fight.

“There is every tendency that if it is not resolved we will have to go to court to address it. It is only the industry that is in such a confused state, that what should be the benefit of farmers is what the banks roundtrip and sell to the black market, so we are against it, there should be one single exchange rate, which should be determined by the market”.

On the other hand, the scarcity has also had a positive effect on the sector.

Sotonye said the scarcity of foreign exchange has affected the agric sector positively in the sense that prices of almost every commodity have gone up which means that farmers seem to be making more money.

Elliot in his view said the present problem is forcing Nigerians to look inwards.