Nigeria: Sorghum malting plants investors worried by removal of embargo on barley malt and barley concentrates import

Nigerian investors in sorghum malting plants are currently closing shops owing to removal of embargo on barley malt and barley concentrates used in brewing beer and malt drinks, which now attracts five percent import duty and are being imported to the detriment of sorghum-based malt extract and sorghum malting, Business Day reported on June 29.

The current waivers given to barley malt and barley concentrates imported in Nigeria from Europe, according to a section of investors and producers of sorghum malting and sorghum-based malt extract, mean that thousands of workers in the farming, processing and storage segments of the sorghum value-chain could lose jobs.

Speaking on the current economic challenges facing the industry as a result of the five percent waiver on imported barley malt and barley concentrates, Sudhansu Sinha, managing director, Food, Agro and Allied Industries Limited in Sango-Otta, Ogun state, said the waiver given to importers of brewing raw-materials would surely affect sorghum malting plants and the country’s economy.

Sinha disclosed that more than half of workforce in Food, Agro and Allied Industries Limited has been paid off and the plant shut down due to the waiver, saying that this has given leading brewers in the country the option of importing barley concentrates and barley malt from their parent companies in Europe into Nigeria, thereby increasing the rate of capital flight.

“In the early 1980s, the Federal Government of Nigeria banned importation of barley malt. The act of patriotism saved the country of huge foreign exchange and gave fillip to cultivation, malting and industrial use of sorghum in brewing and other food industries in the country,” he said.

“Nigeria is the natural habitat for many varieties of sorghum cultivar and leading producer of this cereal in the world. Sorghum production grew and in 2008, Nigeria became the number one country in the world in sorghum production.

“Consequently, a number of sorghum malting plants were set up with the attendant economic activity-chain, involving thousands of workers, ranging from farming, processing and storage, transportation, malting and conversion into higher value food ingredients. The sorghum farmers and rural communities growing sorghum saw financial uplift.

“Unfortunately, in recent couple of years, ban on importation of malted barley was removed and was allowed to be imported as production raw material at five percent duty only. Multinational brewing companies embarked on massive importation of barley malt from their own malting plants in Europe where agriculture is highly subsidised.

“Foreign exchange is wasted for a product for which locally-grown replacement is abundantly available. The malting plants closed down one by one. Markets collapsed, new brand of professionals like ‘maltsters’ and supporting workers lost jobs; sorghum price collapsed and farmers and those involved in the sorghum chain suffered. The effect on the economy is seen and felt by all concerned,” he added.

He urged Muhammadu Buhari-led Federal Government to re-impose the ban on importation of malted barley or stiff duty and levy to discourage imports, just as he said that for every ton of malted barley imported, the importer should be made to use at least two tons of locally-produced malted sorghum.

01 July, 2015