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Nigeria: China's low price offering threatens cassava business

The low price tag put on Nigerian cassava chips by China is frustrating Nigerian exporters of the commodity. This development is impeding the successful execution of the cassava chip export contract entered by Nigeria and China.

Chinese importers, it was learnt, are offering Nigerian exporters $250 per tonne instead of $400 it goes for in Europe and $350 in Israel. Business advisory services officials at the Bank of Agriculture have advised Nigerian cassava chips exporters that if the contract price is less than $400 per tonne, the business will not be viable.

Financial Vanguard gathered that the Bank of Agriculture team suggested that exporters should explore European markets that offer $400 or Israel that offers $350 as against China's $250 offering.

This aside, indications are also that the desire of the Federal Government to develop a viable value chain in the agricultural sector is being hampered by the current regime of interest rate of 22 per cent among other factors.

They also said that high cost of internal logistics (transportation), high cost of shipping, hurdles in documentations with Customs, finance needed for capacity-building, are among the numerous challenges facing value added production in the country.

Their situation, they said, is further worsened by the activities of middlemen, cassava merchants, who buy from the farmers at a cheap rate and sell to processors at a high rate pinning the cost differential on high transportation cost from the farms to the factories.

These, they said, are some of the challenges faced by cassava chips processors and exporters and the main reason why Nigeria, after signing a contract with China to export 3.2 million metric tonnes of cassava chips annually, is yet to execute the contract.

A cassava chips processor said that the offering price of the Chinese with which the Federal Government signed a contract for cassava chip export is a big issue, when compared with the Nigerian cassava raw tuber price processing and exporting. BOA at the stakeholders' consultation forum informed that if the contract price is less than $400 per ton, the business will not be viable.

Source: allafrica.com

Publication date: 9/9/2014


 


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