How Trump’s trade war with China might benefit Nigeria

Recently, China’s Ministry of Commerce announced that it was imposing a 178.6 percent tariff on shipment of Sorghum from the United States of America in an anti-dumping move. This move has hit the US Sorghum growers greatly and importers of the grain are now faced with multi-million dollar losses on their cargoes. The importers are now forced to divert their cargoes to resell to other grain buyers elsewhere at a discounted price.

According to Reuters, four cargoes have been resold to Saudi Arabia and Japan, and another is heading to Spain. If the ‘Peak Pegasus’ unloads in South Korea, it would be first of the Chinese cargoes to be resold in that country.

This trade battle started after the US Commerce Department banned US firms from selling parts to Chinese phone maker ZTE for the next seven years over violation of an agreement reached after ZTE was caught shipping goods to Iran.

A reduction in Sorghum export would hurt its growers in America, who largely backed trump during the 2016 Presidential election. The top five sorghum-producing states in the US  are Kansas, Texas, Colorado, Oklahoma and South Dakota. Colorado, however, did not go for Trump in the 2016 presidential election.

According to the Wall Street Journal, most U.S. sorghum is grown for the Chinese market, and farmers have planted more acres of the grain in recent years to keep up with demand from Chinese livestock producers. However, Chinese officials said that the new measure was the result of a months-long investigation, which concluded that U.S. sorghum was being dumped on the Chinese market. The Chinese Commerce Ministry also said that U.S. sorghum exports to China rose from 317,000 tons in 2013 to 4.76 million tons in 2017, while the price of the exported sorghum fell 31 percent — harming Chinese farmers.

On another hand, the chief executive of the National Sorghum Producers, an industry group, Tim Lust, denies that U.S. producers have engaged in dumping and says his organization submitted thousands of pages of data to the Chinese government to demonstrate they did not.

Since China is already having issues with the United States, there is a huge possibility of  the Asian country turning to Nigeria as a major source for importing Sorghum to the country. This is because Nigeria is the second largest exporter of the grain in the World after the United States of America. This is also important for Nigeria, who recently signed a Swap Agreement with China as it provides an opportunity that could help improve export of Nigerian products to China. Currently, some FMCG  have decided to replace imported raw materials like malted barley with the grain.

A report from one of the major local industrial consumers of sorghum, Nigerian Breweries Plc (NB) titled “Enhancing the Sorghum Value Chain” revealed that the industrial sector, especially food and beverages, utilised 20 percent or 1.3 million metric tonnes of the grain as raw materials in 2015, while 80 percent or 4.2 million tonnes were utilised to produce food and livestock feeds.

As Nigeria works towards diversifying its economy and reduce its over dependence on oil as its only source of income, it needs to pay more attention to this crop by increasing its production in order to meet the demand for both the local and international markets. This also sees Sorghum becoming a major cash crop in the country.