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Home Business News

Arewa cotton partners Cross River government on cotton farm

Onome Ohwovoriole by Onome Ohwovoriole
July 24, 2017
in Business News, Company News
10 things you need to know about Cross River Garment Factory
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Cross state government, in a move to reduce its reliance on FAAC allocations has gone into partnership with Arewa cotton. The farm is expected to produce 30,000 tonnes of cotton by year end, and will be located in Woda community, Yala local government.

How the state benefits

The cotton produced will provide raw materials for the state-owned garment factory. The farmers that will be employed under the scheme will earn extra income which will be spent within the state, therefore boosting the local economy. The state government also benefits from enhanced tax revenue from the staff that will be employed. If the farm does well, it is likely to encourage other investors to move to the state. Dwindling oil prices have led to a drop in FAAC (Federal Account Allocation Committee) allocations for states, leading to many of them owing salaries and pension obligations. FAAC allocations are revenue earned from crude oil and tax that are shared by the three tiers of government on a monthly basis. The state becoming an investment hub, provides a much more stable source of revenue compared to oil revenue which fluctuates.

How does the company gain

Opening a farm in Cross River State increases the production capacity of the company, enabling it to benefit from economics of scale. Economics of scale are the cost savings a company makes by operating on a large scale. Arewa cottons in 2013, had signed a similar MOU with the Ogun State government and farmers in the state. Partnering with the state government also reduces the likelihood of the community disrupting work on the farm or harassment from various agencies of government for taxes and levies. Greater profits from the farm mean more profits to the owners of the firm. Proximity to an export processing zone, means the company can decide to export the cotton to ither countries, therefore earning foreign exchange.

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Tags: Arewa cotton partnersCross RiverNews Review
Onome Ohwovoriole

Onome Ohwovoriole

Onome Ohwovoriole has a degree in Economics and Statistics from the University of Benin and prior to joining Nairametrics in December 2016 as Lead Analyst had stints in Publishing, Automobile Services, Entertainment and Leadership Training. He covers companies in the Nigerian corporate space, especially those listed on the Nigerian Stock Exchange (NSE). He also has a keen interest in new frontiers like Cryptocurrencies and Fintech. In his spare time, he loves to read books on finance, fiction as well as keep up with happenings in the world of international diplomacy. You can contact him via onome.ohwovoriole@nairametrics.com

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