The foreign exchange shortages caused by a mixture of lower oil price and CBN forex policies have remained a stumbling block in the government quest to achieving its vision of being self sufficient in Sugar production in seven years.
From the first seven months of the year, the country spent $227 million (N70.37 billion) on sugar importation, making it the highest importer of the commodity in sub-Saharan Africa.
While the apex bank has adopted a flexible exchange rate that saw the naira lose one third of the value against the dollar, Boko Haram’s incessant attacks in the north-eastern part of the country has prevented many farmers from adding more cane plantation.
With the Nigerian army gradually subduing the insurgents, there are indications that planting may resume in the crisis ridden region.
Sugar prices are expected to remain volatile till the end of the year due to drought or El Nino destroying farms in Brasil, the largest producer of the product.
“We expect raw sugar prices to remain volatile for the rest of the year as weather conditions continue to threaten production in 2015/2016 season but do not expect to exceed the average achieved in 2015,”said Abdullahi Sule, managing director of Dangote Sugar.
Sule said the largest producer of the sweetener has 7,000 hectares (17,300 acres) of sugar cane under cultivation and bought another 33,000 hectares to be cultivated in the coming months.
Nigerian sugar makers have embarked on aggressive expansion to double capacity with a view to increasing market share while contemporaneously pursing backward integration policy.
BUA has invested $300 million sugar production in Lafiagi, Kwara State.
According to the recent data from the United States Department of Agriculture (USAD) Nigeria’s raw sugar import last year was estimated to be about 1.345 metric tons per annum (mtpa) which is expected to rise to about 1.7mtpa.
With a population of a 180 million that crave for consumption, these firms can tap into the opportunities and bolster top lines.
