Who Import Bans Don Epp?
“People in Port Harcourt recently dug up tonnes of chicken condemned and buried by the Nigerian Customs at a trailer park at Ebubu in Eleme local government area of Rivers state. Tell.ng reports that the people went to the pit with shovels, pans, basins and buckets, which they used to dig up the chickens and carry them to their homes.” — Port Harcourt Residents Dig Out Condemned Chickens, Naij.com
Look at my Nigerian brothers digging up condemned chicken like it’s a Black Friday sales.
In my last article, I mentioned that Government should focus on making agriculture in Nigeria more competitive instead of banning the importation of food. But why did Government resort to banning imported food in the first place? What led to this problem and are there any other ways this problem could be resolved?
Last year, Hon. Abubakar Amuda-Kannike of Ilorin East/South gave a speech at the House of Assembly to defend the 2003 ban on imported chicken. According to him, “The economic impact to the local poultry industry is enormous; given that Nigerians lose about 1 million jobs and about N399.4 billion annually to the importation and smuggling of frozen birds, the loss is estimated to be in the region of over N600 billion annually.”
Some of these ‘economic impacts’ our Honourable is referring to emerged from an international practice called DUMPING.
According to the World Trade Organisation (WTO), Dumping is defined as “a situation of international price discrimination, where the price of a product, when sold in the importing country, is less than the price of that product in the market of the exporting country.”
LOL okay. In simpler terms, Dumping occurs when a farmer from country A sells his produce in Country B below the cost of production of country B. In this case of Imported Chicken Vs. Our Honourable, dumping involves selling Farmer Matheus of Brazil’s chicken where it has been cheaply grown; first, Farmer Matheus’ chicken is transported to our neighbours Cameroon and Benin (with their zero duty tariffs) before it makes its way (smuggled or imported) into Nigeria to compete with our Nigerian Farmer MacDonald’s chicken (remember him and his agricultural problems?).
Not a bad business plan, if you ask me. But that’s by the way.
So, as bad as it sounds, is dumping illegal? Nope, not according to the World Trade Organisation.
Is dumping unethical? Yes, if its effects can be proven.
Lyle Vanclief, the former Canadian Minister of Agriculture, uses the consequences of dumping on developing countries to explain why it should be considered unethical:
“Consider a farmer in Ghana who used to be able to make a living growing rice. Several years ago, Ghana was able to feed and export their surplus. Now, it imports rice. From where? Developed countries. Why? Because it’s cheaper. Even if it costs the rice producer in the developed world much more to produce the rice, he doesn’t have to make a profit from his crop. The government pays him to grow it, so he can sell it more cheaply to Ghana than the farmer in Ghana can. And that farmer in Ghana? He can’t feed his family anymore.”
And so, our Federal Government decided to fight fire with fire by placing import bans on Father Matheus’ chicken and other sources of chicken outside our borders. Government bans the importation of certain food items (frozen chicken in this case) to encourage (force?) the patronization of locally produced food. Other reasons why they do so is to promote local farmers, encourage us to meet the local demand for produce and boost our income.
“I’ve not here for what you hoped to do. I’m here for what you did.” — V to Dr Delia Surridge, “V for Vendetta”
But friends, countrymen, ladies and gentlemen, I come here to talk about how imports bans do not help us, local farmers, not about dumping and its morality.
The short-term response of local farmers to the ban, when it is stringently enforced, is always general acclaim. I recall some months just before Christmas in 2014 when the Customs used ‘Operation Hawk Descend’ to seize, raid and intercept imports of frozen chicken; the revenue we made with local farmers from poultry sales that period was unprecedented because government successfully cut the supply of imported chicken into the market. I recall a conversation with a local poultry farmer we were working with:
“In my life, I no fit think of any other thing wey Government don do for me” (this is the first time Government is doing anything for me in my life)
But on the long run, what followed that period of profits was an increase in the cost of production for poultry farmers. Some of the raw materials we needed for our operations ended on other agricultural import ban lists, meaning sourcing for those materials got costlier. Suppliers got wind of our increased profits and also increased their transport costs. Power supply, Na worse e don worse.
All that extra profit we were supposed to use with local farmers to grow their farms was gone before we could say ‘Jack Robinson’.
And how did the general public take the ban? While farmers initially cheered, the general public grimaced with pain at the cost effects of the ban. The increased demand for our local chicken caused the price of chicken in the market to skyrocket. I remember we sold 1 kg of our chicken for between N1,200 — N1,500, up from N700, during that period. The average Nigerian cannot afford a price increase of 100% on chicken. Don’t believe me? Look at these pictures again:
Are we trying to turn chicken into premium meat, exclusive for only the rich and wealthy?
We lost on revenue from other local produce too. Because Nigerians were spending more on chicken now, their spending power reduced. Lower spending power meant they had less amount of money available to them to patronise our other locally farmed agricultural produce. Egg must suffer because chicken must be sold? Toh!
You wanna know the worst part?
Less than 2 months into 2015, the exuberance of the ‘Operation Hawk Descend’ Customs officials waned. Frozen chicken importers were back in business after being away for less than 6 months. Smugglers flooded Nigeria with their imported chicken and sold it at the inflated price of chicken in the market. Basically, our Government helped these importers make more profits than they normally would!
This cycle of “short term gains, long term losses” for local farmers always repeats itself when import bans are applied and further reinforced. And this is not just for chicken importation; it applies to every agricultural produce.
Government say they want to promote, encourage and boost us. Well, there’s a saying that goes, “The road to hell is paved with good intentions.”
Far from help us to meet the local demand, it appears to me that these import bans have mostly caused food prices to rise. If these bans were meant to help us meet local demand, what is the point of “meeting local demand” if the demand cannot afford our supply?
Back in one of our early VALORE brainstorming sessions to come up with a slogan, someone suggested “Feeding Nigeria, One Family at a time”. I like it a lot because it aligns with our focus to end hunger in Nigeria using our local farmers. It also aligns with the Federal Government’s ambition to help local farmers meet local demand. But most importantly, another thing it captures is one of our visions: “Because every Nigerian deserves to eat well: A Nigeria where all families can afford to eat a balanced meal daily”; it’s equally important to us at Valore that our food produced by Nigerians is available to all Nigerians at the lowest possible price.
We want your help Mr President and we deserve your help, Mr President. There are other methods you can use to reduce the economic impacts that imports have on the agricultural sector. I would suggest considering other non-tariff barriers to trade if you’re concerned about the impacts of dumping; that will ensure that supply of food like frozen chicken is always met while we improve the demand for our locally produced chicken and convince consumers to patronise us. You should consider improving the dearth of infrastructure immediately; this would drive down the costs of the factors of production for farming and allow us to match imported food on price. How about creating an investment-friendly environment and encouraging Farmer Mattheus to come teach us how to farm more productively and effectively till we can compete with suppliers of imported food?
Personally, I think it’s highly ambitious for Nigeria to produce EVERYTHING that Nigerians need to eat, but if it’s that kind of ambition & patriotism that will spur the development that the agricultural sector needs, then you have my support, Mr President.
Let’s make sure we point that patriotism in the right direction, shall we?