US embassy cable - 02ABUJA2505

UNCLAS SECTION 01 OF 02 ABUJA 002505 
 
SIPDIS 
 
USDA FAS FOR FAA/AME/PAUL HOFFMAN 
 
STATE FOR AF/W - DAN EPSTEIN 
 
TOFAS 013 
 
E.O. 12958, N/A 
TAGS: EAGR, NI 
SUBJECT: NIGERIA: FOOD FOR PROGRESS PROPOSAL 
 
 
1. The American Embassy in Nigeria is proposing a 
Government-to-Government "Food For Progress" activity for 
FY 2003.  This program will involve 25,000 mt of soybean 
and/or soybean meal (SBM) at $200 per mt.  Africare will be 
the consultant to the Nigerian Government, managing the 
sale of the commodities and the activities to be carried 
out with the funding.  The American Soybean Association 
strongly endorses a carefully constructed proposal and will 
provide technical support to the importers.  The proposal 
also has the support of FAS Lagos, Amembassy Abuja, the 
local trade and the Nigerian Government, including 
President Obasanjo.  There are no Bellmon or UMR issues. 
The funds will be used to support a joint program of the 
Government of Nigeria and Africare, called `Wise' - The 
Women's Initiative for Sex Education and Economic 
Empowerment.  The goal of the `Wise' program is to 
economically empower and provide HIV/AIDS awareness to low 
income and vulnerable young women living in the Federal 
Capital Territory of Nigeria.  It is anticipated 
that the plan of operations will be submitted in September. 
 
 
2. There are several factors resulting in increased 
demand for soybean products in Nigeria that open the 
possibility for the import of U.S. soybean and feed-stuffs, 
including : 
 
 
-- a large population growing at approximately 3 percent 
annually; 
 
 
-- an annual growth in the Nigerian poultry industry of 20% 
over the past three years; 
 
 
-- high tariff on imported chicken, in an effort to 
protect local producers; 
 
 
-- the existing feed industry is operating below its 
installed processing capacities; 
 
 
-- knowledge and understanding of the feed and poultry 
industry trying to rebuild after more than two decades of 
decline; 
 
 
-- interest and investment in soybean processing capacity, 
creating a new market. 
 
 
3.  A few companies in Nigeria import feed-stuffs, 
primarily wheat and some soybean meal.  Available 
statistics, however, are not reliable.  Industry sources 
estimate Nigeria's consumption requirement at more than 
200,000 mt of soybean annually, and the market is growing. 
Nigeria became a significant importer of soybean meal in 
1999 following the revitalization of the poultry sector 
after nearly two decades of decline.  Prior to this, the 
local feed industry was able to secure adequate supplies of 
soybean meal from the oilseed processing sector.  Based 
upon FAS Lagos surveys of the feed industry, total soybean 
meal imports in calendar 1999 are estimated at 12,000 tons. 
Soybean meal imports increased to 21,000 tons and 30,000 
tons in 2000 and 2001 respectively.  The bulk of the SBM 
appears to be crushed from local beans.  One importer is 
investing in a line of extruders with a total capacity 
of 100 mt per day.  He is interested in importing U.S. 
soybeans to make feed for his poultry operations and to 
trade full fat or partially defatted soybean meal on the 
open market. 
 
 
 
 
4. Positive factors that suggest using monetization 
in Nigeria include: 
 
 
A) a growing market, though somewhat constrained by 
Forex financing difficulties and low volumes, which 
increase product, shipping and transaction costs. 
Monetized SBM could increase the overall consumption and 
therefore be additive. 
 
 
B)  The market is already fairly large.  At 200,000 mt 
consumption per annum, a program of slightly more than 10% 
should not be considered disruptive.  The Nigerian 
Government's request indicates that local authorities have 
no concerns about market disruptions. 
 
 
C)  Soybean imports would be a new import and offer 
considerable value to the local industry by encouraging 
local value-added, increased throughput (which increases 
demand and benefits to local soybean farmers). 
 
 
D)  Imports of beans also increase capacity utilization 
in the existing crushing mills and reduce Nigeria's 
dependence on vegetable oil imports.  This program would be 
additive and not disruptive to the established trade. 
There are significant positive economic effects of 
financing value-adding activities in the agricultural 
sector without a foreign exchange outlay. 
 
 
5.  A well managed monetization program that gives 
opportunity to multiple buyers (either through 
multiple product mix, regional sales, or some similar 
arrangements) would be beneficial for the buyer, the 
pvo/seller and for U.S. exports.  We support this soybean 
initiative. 
 
 
6.  Ambassador Jeter is well aware of this proposal and 
fully endorses it.  President Obasanjo wrote to the 
Ambassador on August 20 and requested that the proposed 
project be implemented as soon as possible. 
 
 
7.  This cable was drafted by FAS Lagos. 
 
 
Jeter