By Gabriel Ewepu
Against the backdrop of moves by the Federal Government to promote processing of agro-commodities before export, the Centre for the Promotion of Private Enterprises, CPPE, has recommended that the government should first fix epileptic power supply, roads, railways, and other infrastructure to aid processing, and not place a ban on export of raw agricultural commodities.

Speaking with Vanguard Agrobiz in a reaction to this move, the Executive Director, CPPE, Dr Muda Yusuf, pointed out that the idea is good but wrongly timed, because there are serious challenges currently impeding processing or adding value to agro commodities before export.

He stated: “The principle is good, but they don’t talk about the cost of the process. You want to process, you want to add value, but at what cost? That’s the key question we need to answer, we need to respond to it because if they are processing at a very prohibitive cost, it doesn’t make economic sense.

“So we need to come back to the issue of cost, the structural issues. If you don’t fix the structural issues, and we are talking about value addition, talking about processing, we wouldn’t get anywhere.

“We just end up penalizing people who are in the primary end of the supply chain, which will also not be fair because you go and suppress their prices because you want to give subsidized raw materials to those who claim to be processing’’.

He further maintained that the cost of production is currently high in the country due to failure in putting in place basic incentives that would facilitate processing.

“You are running a factory who gives you gas, which is very expensive? You are battling with logistics problems; You are battling with problems in the ports. Look at all the shipping places; these things are very costly.

‘‘So for me we need to fix the cost environment first before we begin to talk about processing’’.

According to him, “The most critical is the energy cost”, saying, “There is no public power supply. The manufacturer has to use, depend on diesel or you depend on gas, and gas is priced at a Naira equivalent of the global USDollar price’’.

He also raised concerns over finance saying, “You want to process as a manufacturer, you are borrowing at 30 per cent. How can you compete out there? Finance cost, logistics cost, energy cost, by the time you put all of these costs together you discover that after you process, it may not be that competitive.

“So we need to focus on competitiveness, not just on processing because processing is a means to an end, and the end is that you want to add value, export, and make profit’’.