Industrial Development Policy Impacts on Backward Integration of Sorghum Production in Nigeria

Kindly Share This Story:

The Federal Government of Nigeria in an effort to conserve foreign exchange earnings, and enhance domestic and commercial production, started restricting importation of certain goods in the 1980s,Following the Structural Adjustment Programme (SAP) where some categories of goods were completely prohibited from the country’s import list.

In addition, the government came up with the industrial development policy on Backward Integration, which requested manufacturers to substitute some imported raw and packaging materials with local alternatives.

For instance in the food and beverage sector the malted barley importation was banned in 1988 therefore all breweries were forced to brew with only locally available grains.

According to research, Nigeria is the largest sorghum producer in West Africa, accounting for about 71% of the total regional sorghum output.  Nigeria’s sorghum production also accounted for 35% of the African production in 2007.  In fact 2010, Nigeria was reported be the world’s largest producer of grain sorghum, followed by the United States and India. In developed countries, and increasingly in developing countries such as India, the predominant use of sorghum is as fodder for poultry and cattle. Nigeria’s agricultural production of sorghum has leaped to the second place, now trailing only the United States in annual production.

Furthermore a data from the United States Department of Agriculture (USDA) put world sorghum production at 59.34 million metric tonnes for 2017through to 2018.

Base on above figures, USA’s output to reach 8.4m metric tonnes while Nigeria figures stands at 6.4m metric tonnes, follow shortly by Mexico comes in the third position with 6.0m metric tonnes.

Also the USDA data, put sorghum production at 63.08 million metric tonnes in 2016. This year’s output of 59.34 million metric tonnes represents a decrease of 3.74 million tonnes or a -5.93% decrease.

Nigerian Breweries Plc (“NB”), the nation’s largest brewer and one of the major industrial consumers of sorghum noted in its Sustainability Report tagged “Enhancing the Sorghum Value Chain” that the industrial sector, especially food and beverages utilized 20% or 1.3m metric tonnes of the grain as raw materials in 2015, while 80% or 4.2 million metric tonnes were utilised to produce food and livestock feed.

NB said that its demand for sorghum is approximately 100,000 metric tonnes per year.

Sorghum is said to be nutritionally rich and serves as a staple food in most parts of Northern Nigeria. The grain has assumed commercial relevance in recent years, especially in the food and beverage sector. It is said to be a valuable ingredient next to malted barley used in the brewery industry.

According to researched, in response, the Nigerian Breweries commenced exploratory work in reformulating some of its brands with local substitutes. One of the local grains that then received the attention and patronage of the Company was sorghum grains. Some level of success, which was to be improved upon with time, was recorded.

According to report ever since, some sorghum farmers have continued to receive part of the Company corporate social investment outflows as well as market support as part of the Company grain supply chain development.

As the Company plans to settle down on local raw source, here come in 1999 within one year interval, Nigeria government announced a reversal in policy of substitution direction which the Nigerian Breweries has commenced exploratory work in reformulating some of its brands with local materials. One of the local grains that then received the attention and patronage of the Company was sorghum.

By Government lifted the ban on malted barley importation, the effort at backward integration was abounded due to the policy reversal. Guest what; the net effect was for the beverage industry to re-focus once again from the use of locally grown sorghum to imported malted barley. Thus, the initial attempts at local cultivation of grains waned considerably.

According report at least, five companies in Nigeria invested in the construction of multi-billion naira sorghum malting plants. One of such companies was Sona Group, whose subsidiary – Food, Agro & Allied Industries Limited specializes in the production of malted sorghum and malt derivatives like malt extracts, malt syrup, glucose, etc.

Over the years the company has invested billions of naira in the expansion of its sorghum malting plant but these investments are now not running at full capacity due to the Federal Government’s decision to lift the ban on imported barley malt on special concession in duty.

The Managing Director of Food, Agro and Allied Industries Limited, Mr. Sudhansu Sinha, said that the current waivers given to barley malt and barley concentrates imported into the country from Europe has led to redundancies and loss of thousands of jobs in the value chain such as farming, processing and storage segment, among others.

A source within the Company revealed that Nigerian Breweries, however, driven by corporate social responsibility as well as business interests, continued to work on its sorghum development programme, latching on the tremendous experience already gained in incorporating local grains in its beverage formulations.

As a result, the Company decided to maintain a substantial level of local grains in most of its products recipes. This gave the Company the competitive advantage of pioneering the commercial development of sorghum using new hybrids in Nigeria.

The decision to sustain the sorghum supply development effort was taken among other chain reasons, to encourage the sustainability of brewery business and this way, to help in poverty alleviation among farmers by boosting the quality of seeds sown and the quantity of yield per hectare of land.

In addition, it was designed to motivate demand for sorghum with the attendant multiplier effects as well as lead brewery industry and corporate Nigeria to show more interest in the agricultural sector as a way to improve food supply, create employment opportunities for Nigerian youths as well as explore the opportunities of producing sorghum and other grains for export.

Kindly Share This Story:

Related Post

Leave a Reply

Your email address will not be published. Required fields are marked *

amehnews greetings