Rising wheat price, forex crises pushes CBN to increase funding for wheat cultivation

The Central Bank of Nigeria has increased funds to stimulate wheat-growing due to a global increase in wheat prices and the need to redirect cash from imported goods.

The apex bank announced a funding increase of about N42 billion to speed up wheat cultivation in 132,799 hectares across 15 states in the country.

The Governor of the Central Bank of Nigeria, Mr Godwin Emefiele, announced this during the start of the 2021/2022 Brown Revolution Field Day/Harvest in Gabarin village, Jigawa’s Ringim Local Government Area.

What the CBN is saying

Emefiele, who was represented by Hajiya Sa’adatu Ibrahim, the CBN Controller, Dutse Branch, said the facility was provided to address issues in the wheat value chain during the 2021/2022 dry season activities.

He explained that the strategy centered on making high-yield seed varieties available through the creation of a local seed multiplication program, as well as extending wheat-growing acreage through coordination with state and federal organizations.

According to him, the apex bank aims to increase the annual cycle for wheat cultivation during wet season activities through international partnership and promote Good Agronomic Practices (GAP).

“In Nigeria; wheat remains one of the commodities with the highest demand and despite its high demand, Nigeria produces less than two per cent of its annual wheat consumption needs.

“In the light of the circumstances faced in wheat cultivation in Nigeria, the bank through its flagship Anchor Borrower Programme, in 2020, commenced a strategic approach targeted at facilitating import substitution by promoting self-sufficiency in the wheat value chain,” he said.

He added that the bank had also educated over 250 extension workers with a total reach of over 120,000 farmers in order to use the GAP to spread knowledge to farmers in their particular areas.

According to him, the apex bank identified, vetted, and grew demonstration farms in partnership with the Flour Milling Association of Nigeria to comprehensively display the enhanced wheat farming procedure in Nigeria and the impact of GAP on high yields to farmers.

“Four seed companies have been commissioned to process 25,000 metric tonnes for the next planting season.
“This strategy seeks to reduce wheat importation by 60 per cent in two years and eliminate wheat importation over the long term,” the CBN governor added.

According to him, the aim is to reduce the gap by at least 15% during the 2021/2022 planting season.

Emefiele said the bank equally disbursed N975.61 billion to over 4.52 million smallholder farmers, cultivating 21 agricultural commodities, among other interventions targeted at addressing the financing needs to enhance the agricultural value chain.

What you should know

• Following a spike in its import bill, Nigeria posted a trade deficit of N1.94 trillion in 2021, after buying products worth N20.84 trillion in the review period, compared to N18.91 trillion in exports. The continued reliance on foreign commodities to meet local demand at the expense of limited foreign exchange resources puts greater pressure on the local currency.
• Wheat futures in the United States are up 5.37% as of this writing, trading at $1,072.40 basis point, a far cry from the $500 range it was trading two years ago.
• According to the NBS data, durum wheat was the second-largest contribution to Nigeria’s import bill and the biggest imported food item in the review year, accounting for 6.2% of the total import expenditure.
• Durum wheat is a spring wheat variety that is often ground into semolina and used to produce pasta, couscous, bulgur, noodles, and bread, all of which are popular Nigerian foods. A closer examination of the data reveals that durum wheat imports in 2021 were the largest on record.
• The price of wheat has been surging to multi-year highs since Russia began a special military operation in Ukraine, signalling the start of a full-blown invasion of its neighbour. The rally in the price of wheat is as a result of investors’ worry about a potential supply disruption, being that Russia is the top wheat exporter in the world, accounting for 24% of the total wheat exports in the world.
• Wheat, the third most widely consumed grain in Nigeria has been a major factor in the exchange rate imbalance, according to the Central Bank of Nigeria (CBN).