By Siaka Momoh
Olam Nigeria Limited, a frontline agribusiness company in Nigeria, has come out with his position on the alleged breach of rice importation quota by some companies which the Federal Ministry of Agriculture and Rural Development gave the companies (OLAM is on the list of the companies in question).
‘We have noticed some reports in the media on the issue of outstanding duty owed by Olam Nigeria Limited. These reports , for the most part cover the issue only partially and also contain some inaccuracies in some instances.
The correct facts and position on this issue are as follow:
- Olam is the largest existing investor in rice farming and milling in Nigeria.
- Olam has also had a long and leading position in the market in importation and distribution of rice.
- We believe that importation and distribution will continue concurrently with rice farming and milling so that Nigerian consumers will have adequate supply of this staple food item.
- The policy thrust of the government is to attract and incentivize increasing investment and production in local paddy production and rice milling such that local rice farming and milling cater to increasingly larger part of the Nigerian rice consumer and share of imports gradually shrinks and becomes insignificant or zero.
- We received our quota allocation letter for 2014-15 period in the 1st week of Dec 2014, when 8 months of the quota period was already over. Olam could not have any knowledge of what our quota would be and therefore we could not have deliberately imported “excess” quantity before the quota quantity became known to us.
- Our import volumes in those 8 months, prior to the receipt of the quota letter, was about 243,000mt which was in line with or even below our average import volumes over the past 5 years. We were assessed for tariff at 10%customs duty + levy of 20% ( as the largest existing investor in rice milling and farming) and we paid the tariff and cleared the cargoes accordingly.
- Upon receipt of the letter for import quota for 2014-15 in Dec 2014, we wrote to the Federal Ministry of Agriculture, Federal Ministry of Finance and Federal Ministry of Trade and Investment who were involved in issuing the quota, informing them of our concerns on the quantum of quota allocated to us and requesting for an enhancement of our quota based on our huge and actual investment in the sector.
- The above notwithstanding, and being mindful of our responsibility as a corporate citizen, we cancelled our existing contracts for shipments between Dec 2014-April 2015 period in view of the fact that the quota granted to us was already used up. This entailed substantial costs and pain to us, because these were international contracts. Our actions are very unlike some other companies which have continued to import heavily in spite of haven already exceeded the allotted quota by a big margin in Dec 2014.
- The Federal Ministry of Agriculture intimated us of the import quota for 2015-16 (May 2015-April 2016) allotted to us through a letter in April 2015. In this letter, the ministry granted us an enhanced quota for import for 2015-16 and also acceded partially to our request for enhancement of quota for 2014-15 period by increasing the quantity for that period by 54,000mt and allowed us to set-off the remainder 54,000mt from the import quota for 2015-16. What this means is that we would no longer be allowed to import our full quota for 2015-16 at preferential tariff of 10% duty+20% levy but that 54,000mt out of that quota would be set-off against the “excess” import volume of 2014-15.
While this does not fully meet our request for quotas to be allocated based on actual investment made, we are nevertheless thankful to the government for considering our position and request. Therefore, based on the position stated by the Federal Government through the Federal Ministry of Agriculture, Olam’s quantity for duty shortfall stands reduced to 54000mt from 108000mt earlier and the remaining shortfall of duty payment for this 54000mt can be set-off through reduction in the import quota of 246,000mt. Therefore, Olam has no liability to pay any shortfall of duty for any excess quantity unless and until its import quantity exceeds 192,000mt (246,000-54000) during the period May 2015-April 2016.
- We have not sought to buy or utilize the quota issued to any other company to offset our “excess” import volume of the period 2014-15.’
With an initial focus on the procurement of primary commodities like cashews, cocoa and sheanut, it gradually refined its operational scope and expanded operations into three major business streams, namely exports, imports, and branded packaged food products under Caraway Foods.
Today, OLAM has approximately 1,380 staff spread throughout the country, engaged in helping it manage its value chain activities of origination, processing, marketing and distribution.
It would be recalled that OLAM in pursuance of its backward integration programme in Nigeria in consonance with the Federal Ministry of Agriculture and Rural Development policy on this subject, has in Rukubi town in Doma local government of Nasarawa State, a 10,000-hectare integrated rice project reputed to be the largest in Africa. It started backward integration as far back as 2011.
According to Ade Adefeko, OLAM’s Director, Corporate & Government Relations, “Nigeria needs many more OLAMS to help achieve self-sufficiency in rice production. Our local rice is out there in the market: MAMA PRIDE and CHEF’S CHOICE. We have been around for over 25 years and started here in 1989.Currently there is a supply gap and that is being bridged by imports which is short term and as soon as many other investors upscale and invest in the sector like we have done that gap will be narrowed.”
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