Saturday, June 25, 2022

CBN RT200 FX: Resolving Quality Issues Of Nigerian Agro Products Exports

Nigeria is a country that has a very huge potential to generate foreign exchange from its numerous solid minerals and Agricultural products but this has been largely hindered by high level of mortality rate of the export business. One of the major reason for this high level of dropout of the business is the huge losses incurred from the export of low quality products. Most of the products that have quality issues are largely Agro commodities and solid minerals in the primary state. Many businesses have lost money due to exportation of low-quality products either due to total rejection of the goods leading to no payment or partial rejection of the goods leading to payment of only a small fraction of the expected export proceeds. 


The federal ministry of industry, trade and investment recently set up a committee to address this problem and this article is aimed at making some recommendations to this committee. I will strongly recommend to this committee that the focus should not just be on the supply side but also on the demand side. If the focus is only on getting the farmers to produce good quality products, this will be futile because no matter the effort being made on the supply side, if the demand side is still buying low quality products produced by the farmers then there will be no incentives for the farmers to embrace the good agricultural practices that will make the quality of their products to be ready for the export markets 


There are many reasons for the quality issues associated with commodities leaving Nigeria and hence the consequent rejection of the products at the destination market. Some of the reasons for the quality issues plaguing Nigerian commodity export include ignorance of the quality requirements among the exporters, ignorance of good agricultural practices among the farmers producing the commodities, lack of readiness for export business leading to lack of systems and structure in place to ensure strict adherence to expected quality standards, lack of quality inspection before procurement, wrong packaging of the goods in transit, lack of quality standards benchmark for any commodity that is leaving the country, lack of enforcement team to ensure that whatever is leaving the country as export conforms to the standard and the focus on the export of raw materials (which is more prone to quality issues) rather than value added product.


Ignorance is a major challenge that is causing many Nigerian businesses to export low quality products. Many businesses are only interested in the transactions and profit thereof and not the processes involved. This makes them to fund the export of products that they do not even understand the quality specifications let alone ensuring quality control before shipment. To solve this problem, I will recommend that the Nigerian Export Promotion Council (NEPC) commence an export orientation programme for the new company applying for the export certificate for the first time. This should be done in batches in the NEPC offices across the country every month. This will create an avenue to educate new exporters on the importance of quality specifications and the consequences of not adhering to these quality specifications. 


The ignorance factor leading to low quality products is not just only peculiar to the exporters, it is also an issue among the farmers producing these commodities. Most of the farmers in the country are very old people who are used to a particular way of cultivating their crops. As they say, old habits die hard. This has made it difficult for these farmers to change the way they go about their farming practices. Even when they have been taught, the additional cost of implementing good agricultural practices coupled with the fact that there are people ready to buy their substandard produce have made them to continue in their old ways. To solve this problem, the government should not just train the farmers but also incentivize them by giving them funds and inputs (where necessary) to reduce the cost of implementing the good agricultural practices. The government should also guarantee off takers by linking them up with exporters that will buy the farm produce upon harvest and other necessary processing like drying.


Another factor leading to the export of low quality commodities from Nigeria is the lack of readiness for the businesses for the export market. This is manifested through lack of structure (people) and systems (processes) in place to ensure strict adherence to expected quality standards. This means that even though the exporter is aware of the required quality specifications, he will keep buying and exporting substandard Agro commodities and this is because the business does not have what it takes to ensure strict adherence to these specifications. To solve this problem, there is need for capacity building for the exporters on how to build structure and systems that will guarantee quality control in commodity procurement. 


The fact that some exporters buy their Agro commodities blindly from the farm gate, local buying agents and commodity merchant without quality inspection prior to procurement is a another major reason for the export of substandard commodities. Sometimes, such goods arrive at the port and loaded into the container without quality inspection. Most of the time, the exporter gets to know that the goods are defective when the goods arrive at the port terminal or warehouse and the inspection agent carry out the pre-shipment inspection. At this time it is already too late to return the goods, the exporter then begins to look for other buyers who will accept the low quality but such goods are often rejected at the border of the destination country of the new buyer. To solve this problem, the government should support interested private sectors businesses to setup quality inspection companies in every local governments or senatorial districts where the exportable Agro commodities are produced in large volume. 


Another issue that leads to the shipment of low quality of goods being exported from Nigeria is the way the produce are handled after harvest and this is of referred to as post-harvest handling. The challenge of post-harvest handling is manifested in the environmental conditions that the produce are exposed to during processing (like drying, slicing, fermentation etc), wrong packaging and the ambience created for the goods while at the warehouse or in the container while in transit from the supplier’s warehouse to the port of loading or from the port of loading to destination port. To overcome this challenge, both the farmers and the exporters need capacity building in handling their Agro commodities (like the use of the right type of bags, container dressing, use of desiccant to absorb moisture in transit etc.) after harvesting in order to preserve the quality of the product till it arrives at the destination 


The focus of the country on the export of raw commodities (which are more prone to quality issues) rather than value added products will make the challenge of the export of substandard commodities to remain with us for a very long time. Apart from the fact that the export of substandard goods gives the country a bad name and image around the world, it also makes the country to earn very little amount of export proceeds from this export. To put an end to the exportation of low quality commodities from Nigeria, the government must be ready to put an end to the exportation raw commodities in their primary form. However before this is done, the government should create enabling environment and provide the necessary supports to aid the processing of the commodities into secondary or tertiary forms


Nigeria does not currently have a minimum quality specifications for any Agro products leaving the country and hence there is no enforcement at the port of exit. This means no matter how bad the quality of product is, it will be allowed to be shipped out of Nigeria because there no system put in place to stop such shipment. It is important to state that setting a minimum benchmark of quality specification for any item (particularly Agricultural produce) to be shipped from the country and putting a system in place to enforce it at the port of exit is one of the viable solutions to putting an end to the shipment of substandard commodities out of the country. As a matter of fact the stoppage of the shipment of substandard goods will make exporters to demand quality goods from their suppliers and this will make the suppliers to demand quality goods from the farmers. All these will consequently make the the farmers to begin to adhere to good agricultural practices in order not to loose their customers. To solve this problem, the government have to agree with the stakeholders in the sector, the minimum benchmark for quality of all exportable Agro commodities in the country. The enforcement should be done by a team that should include the Nigerian Export Promotion Council (NEPC), Nigeria Agricultural Quarantine Service (NAQS), Federal Produce Inspection Service (FPIS) and the Nigeria Custom Service (NCS).


This article has highlighted my recommendations to the committee already setup by the minister of trade industry and investment to provide solutions to the menace of rejection of Nigerian commodities in the export market. I strongly believe that If the solutions suggested in this write up can be given consideration with necessary modifications, it will make the solutions to be recommended  by the committee to be robust enough to finally put an end to the shipment of substandard Agro commodities from Nigeria.


For the love of Nigeria, Africa and Mankind  

Bamidele Ayemibo (

Lead Consultant, 3T Impex Consulting    

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