Thursday, September 15, 2016 9.29am/ FBNQuest Research
The federal minister for agriculture and rural development, Heineken Lokpobiri, told a meeting at the weekend in Bayelsa State that the local community could play its part in diversification of the economy.
He warned that the cost of a bag of rice could rise from N26,000 to N40,000 by the end of the year if it did not plant rice in time for consumption in three months’ time.
Lokpobiri subtly developed his argument to say that the development of commercial agriculture would discourage sabotage and violence in the Niger Delta.
His message is in line with the official policy of import substitution.
Since this was also the policy of the previous administration we have looked at the foreign trade data for Q2 2016 for any clues as to its success.
We have used the NBS measure of broad economic categories (BEC, see chart). Food and beverage imports declined gently from N1.20trn in 2014 to N1.09trn in 2015, and then sharply to N419bn in H1 2016.
We see the influence of easing household demand in the economic slowdown in this decline, and also the CBN circular of June 2015, which ruled 41 import items including several in the food category ineligible for fx from the interbank market.
Our feeling is that substitution is underway but not at the desired pace. The target of rice self-sufficiency, for example, seems to have slipped from 2017 to 2018.
The local media account of Lokpobiri’s visit to Bayelsa highlights the need for caution over statistics. He was quoted as putting annual food imports at US$22bn. The figure was US$5.6bn for food and beverages in 2015 in the BEC definition of the NBS, and US$34.2bn for total imports cif.
1. Domestic Rice Production is a Necessity