Nigeria’s N898bn wheat imports at risk as Russia-Ukraine conflict escalates
Russia’s status as the largest exporter of wheat in the world is causing disquiet in many countries following its military incursion into Ukraine earlier today. Currently, wheat is one of the most consumed grains in the world for the production of noodles, pasta, cakes and other confectioneries.
According to the Food and Agriculture Organisation of the United Nations, the price of a bushel of wheat rose by 5.7 percent today to $9.347 following the escalation of the conflict.
Announcing the commencement of the military operations, Russian president, Vladimir Putin, claimed in a televised address the operations are meant to protect ethnic Russians in eastern Ukraine as well as to “demilitarise and denazify” Ukraine.
“For this we will aim for demilitarization and denazification of Ukraine, as well as bringing to justice those who carried out multiple bloody crimes against civilians, including citizens of the Russian Federation,” Putin said.
“Our plans do not include occupying Ukrainian territory”, he added.
However, his claims have received widespread condemnation and cynicism across the world.
According to the trade data provided by the Observatory of Economic Complexity (OEC), the world traded $44.1 billion worth of wheat in 2019, representing 0.24 percent of the global trade. The data further showed that Russia exported $8.14 billion worth of wheat and thus emerged as the largest wheat exporter in 2019.
The United States exported $6.94 billion worth of wheat while Canada exported $5.97 billion worth of wheat to occupy the second and third positions respectively. And France with $4.54 billion wheat exports, and Ukraine with $3.11 billion, completed the list of the top five wheat exporters across the world in 2019.
The top five importers of wheat in that year were Egypt, $4.67 billion; $Indonesia, $2.31 billion; Turkey, $2.15 billion; Italy, $1.69 billion, and the Philippines, $1.63 billion.
And concerning the current military conflict involving Russia and Ukraine, trade data showed that Egypt, Turkey, Bangladesh and Nigeria were the top destinations of Russia’s wheat in 2019, and the trend has not changed.
31.3 percent of the wheat used in Egypt in 2019 came from Russia. Same year, Turkey met 17 percent of its wheat needs from Russia, while Bangladesh and Nigeria sourced 6.4 percent and 4.8 percent of their wheat imports from Russia, according to OEC data.
Other African countries that imported wheat from Russia in 2019 were Sudan, 2.5 percent; Kenya and Tanzania, 1.3 percent each respectively.
Also, Egypt led other African countries that imported the most wheat from Ukraine in 2019, as wheat sourced from Ukraine accounted for 22 percent of the wheat used in that country. Tunisia and Morocco met 6.3 percent and 5.7 percent of their wheat imports from Ukraine.
With the escalation in the Russia-Ukraine crisis, commodities such as wheat and maize will face supply disruptions just like crude oil.
According to Nigeria’s data agency, the National Bureau of Statistics (NBS), Nigeria imported N898.2 billion worth of wheat in nine months that ended September 2021. The top origins of wheat into Nigeria in 2021 included USA, N194.2 billion; Canada, N136.4 billion, Russia, N124 billion, Lithuania, N122.3 billion and Latvia, N115.9 billion.
In 2020, Nigeria’s total wheat imports amounted to N756.9 billion of which N186 billion was sourced from the United States; N144 billion from Russia; N132.3 billion from Canada; N110.6 billion from Lithuania, and N101.9 billion from Latvia.
In 2019, N349 billion worth of wheat was imported into the country of which N127.7 billion came from the United States; N73.5 billion from Canada; N35.9 billion from Russia; N32.3 billion from Latvia, as well as N30.7 billion from Argentina.
The ripple effect will be faced by Nigerian firms operating in the food industry that are currently facing an uptick in production costs from exchange range volatility and supply chain disruptions.
In the last twelve months, wheat-based products such as the popular pre-packed wheat flour and bread (sliced and unsliced) have witnessed steady price increase across the country. In January 2022, a 500g sliced bread was sold for N418.65, representing 28 percent increase on a year on year basis. The 500g unsliced bread rose by 25 percent from N306.74 in January 2021 to N383.51 in January 2022.
Wheat flour pre-packaged golden penny 2kg which was sold for N757.97 as of January 2021 rose by 29 percent to N974.87 in January 2022.
source Businessdaynigeria
