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Cablegate: Gum Arabic Exports From Northern Nigeria

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 04 ABUJA 000587

SIPDIS

USAID/W FOR AFR/WA, MICHAEL KARBELING
USAID/W FOR EGAT/AA, EMMY SIMMONS
USAID/W FOR AFR/SD, JEFF HILL
STATE/W FOR AFW/WA, CALLI FULLER
USTR/W FOR AFR/IT, FLORIZELLE LISER
LAGOS FOR ADMIN


E.O. 12958: N/A
TAGS: NI
SUBJECT: GUM ARABIC EXPORTS FROM NORTHERN NIGERIA
FACILITATED THROUGH USAID SUPPORT

REF: NONE


-------
SUMMARY
-------
Gum arabic is a key ingredient in a wide variety of
products manufactured in the United States, and
represents an environmentally-friendly export
opportunity for Nigeria. But while Nigeria possesses
the resources to meet a significant portion of U.S.
demand, poor processing capacity severely limits its
ability export to the United States. USAID assistance
is helping Nigeria to realize the export potential of
gum arabic through improving harvesting and post-
harvest handling techniques used by the industry in
northern Nigeria, establishing market linkages with
U.S. buyers, and providing laboratory equipment to
certify gum arabic quality. In a ceremony attended by
U.S. Ambassador Howard F. Jeter on February 26, 2003,
laboratory equipment funded through the USAID project
was handed over to the Jigawa State Gum Arabic
Company. The laboratory facility will enable gum
arabic to be tested and certified to meet
international quality standards, helping to ensure
that the gum arabic produced in Nigeria is suitable
for U.S. manufactures and guaranteing that Nigeria's
gum arabic farmers and producers earn premium prices
for their product.


----------
BACKGROUND
----------
Gum arabic is a key ingredient in a wide variety of
U.S. manufactured products and industries, including
soft drinks, baked goods and candies, cosmetics,
pharmaceuticals, and printing (e.g., newspapers).
Given its significance to U.S. manufacturers, the
United States is the largest consumer of grade one
(top grade) gum arabic, importing more than 60 percent
of the world?s raw and processed supply.


Gum arabic is a naturally occurring product that is
exuded from the stems and branches of the acacia tree.
More than 70 percent of the world?s supply is produced
by Sudan on an annual basis. However, U.S. sanctions
against Sudan, initiated in 1997, mean that the U.S.
manufactures have limited direct access to Sudanese
gum arabic, with imports of raw gum arabic from Sudan
dropping from more than 7,000 MT in 1990 to just over
1,000 MT in 2002. With demand for gum arabic in the
United States increasing (overall imports of raw gum
arabic have doubled since 2000 compared to the early
1990s), U.S. manufactures have had to increasingly
rely on intermediary countries for their supply. For
example, in 2002, France was the second largest
exporter of raw gum arabic to the U.S., supplying more
than one-third of the total imported that year. All
of this was imported by France, and subsequently
exported to the United States.


Given the importance of gum arabic to U.S.
manufacturers, USAID has teamed with the U.S. private
sector to diversify the supply of gum arabic,
expanding the opportunity for direct imports and
minimizing the impact of the rapidly changing
political landscape in eastern Africa. The initial
project in this effort is a collaborative gum arabic
sector development program in Nigeria, one of the
friendly countries in the gum arabic belt of West
Africa and, along with Sudan and Chad, one of the top
three producers worldwide.


The Nigerian gum arabic sector is substantially under-
developed with respect to commercial production and
marketing standards. Nigerian gum is traditionally
harvested from wild forests on public or private
lands, and could benefit from an inherent price
advantage over Sudan and Chad due to the county's port
access. But while Nigeria possesses the natural
resources to supply at least one-third (5,000 MT) of
current U.S. demand for raw gum arabic, poor harvest
and post-harvest production capacity limit Nigeria's
ability to export to the United States, which
accounted for less than one percent (100 MT) of total
U.S. imports in 2002.


In addition to benefiting U.S. manufacturers,
enhancing Nigeria's capacity to produce gum arabic
will develop an economic opportunity for rural farmers
in the Muslim North. With low input costs (consisting
largely of a rudimentary tapping tool, labor and
transportation costs) and a value of between $1,000
and $1,500 per MT, gum arabic is the most profitable
crop in the region of northern Nigeria. Gum arabic
producers earn between $0.27 and $0.35 per kg. In
comparison, other non-irrigated products that are
grown in similar areas, including cowpeas, groundnuts,
sesame, sorghum and millet, currently earn farmers
between $0.19 and $0.27 per kg (with equal or higher
input costs). Given that competing crops earn less
revenue and have comparable to moderately higher input
costs, gum arabic harvesting would seem to be a
rational choice of crop for farmers to concentrate on,
perhaps in conjunction with one of the other food
crops.


Environmentally, by increasing the economic
opportunities associated with old-growth acacia
forests naturally occurring in Nigeria, improving gum
arabic post-harvest production will encourage
Nigeria's farmers to preserve existing forests which
would otherwise be cut-down in order to plant other
crops. Similarly, increased production capacity will
enhance the potential for including acacia trees in
integrated and rotated cropping schemes, helping to
reduce soil erosion, fix nitrogen, and recycle other
nutrients lost to leeching from the top-soil.


------------------------
USAID GUM ARABIC PROJECT
------------------------
Beginning in early 2002, USAID initiated a project to
improve the production and marketing of Nigerian gum
arabic through strengthening gum arabic associations
and enhancing the capacity of local private sector
participants involved in gum arabic trading. The
training was conducted in five states in northern
Nigeria (Bauchi, Borno, Jigawa, Kano and Yobe). The
project has had strong collaboration from the U.S.
private sector, which assisted with training in
product standards, preparing training materials, and
providing technical advice during training workshops.
The project also included support to purchase and
install laboratory equipment to certify the quality of
the gum produced.


The USAID program successfully trained approximately
200 farmers and traders from the targeted states on
the management of gum arabic plantations to improve
output and marketing. These trained participants
reported that they have extended information on best
practices to a further 3,000 people. These trainings
are already showing results. The most telling evidence
of successful adoption of practices leading to
increased productive capacity are the increased size
of gum nodules, a reduction in the instances of
adulteration, and the introduction of traceability
techniques. The use of improved tapping techniques by
farmers allows gum to exude into larger nodules, which
in turn is realized in increased volumes of grade one
gum, which corresponds to a higher quality product as
larger gum nodules are cleaner, easier to grade, sort
and bag. This increase in grade one volume has
occurred despite problems of locusts and the wetter
than usual rainy season, which have lowered overall
gum production in the northern region. Traders have
reported that the gum they are buying is purer than it
has been in recent years.


The USAID program stimulated increased commercial
interest in the gum producing states. For instance,
in Jigawa state, about 330 hectares of new plantations
have been established, while 250,000 seedlings were
raised as part of the state's long term strategy. This
is in addition to the approximately 900 hectares of
gum arabic in the state, some 500 hectares of which
are being harvesting for export. In Yobe state, the
Government during the year produced and distributed 10
million seedlings with support from the National
Association of Gum Arabic Producers, Processors and
Exporters of Nigeria (NAGAPPEN).


The program also supported the management of NAGAPPEN.
This aspect of the program implementation has shown
the most visible result. NAGAPPEN has emerged as an
association that is capable of effectively
representing the gum arabic sector in each gum
producing state and organizing economic activity
through the monitoring and enforcement of improved
practices. Dues paying members, with no outside
guidance, have initiated these chapters independently.
The Association, which is less than two years old, now
has over 2,000 dues-paying members.


--------------------------------------------- ---
LABORATORY EQUIPMENT CEREMONY, FEBRUARY 26, 2003
--------------------------------------------- ---
On February 26, 2003, USAID-funded laboratory
equipment was formally presented to the Jigawa Gum
Arabic Processing Company, Ltd. (GAPCO), at a ceremony
attended by U.S. Ambassador Howard Jeter, and His
Excellency, the Governor of Jigawa State, Saminu
Turaki. The laboratory is located at Maigatari Export
Processing Zone (EPZ), in Jigawa State, and will serve
the major processing zone of northern Nigeria, as well
as neighboring countries, including Chad. This
quality control is essential in order to meet the
quality standards demanded by buyers from the United
States and Europe.


U.S. Ambassador Howard Jeter cut the tape marking the
official opening of the facility, and noted the strong
need to enhance the Jigawa Gum Arabic Processing
Company's production capacity, and to encourage
farmers in the state to expand their capacity to
provide a high quality product. Apart from being a
great source of employment, he said, the laboratory
would "give importers greater confidence in the
products they are buying".


Ambassador Jeter reiterated that the Nigerian Gum
Arabic Program is a win-win situation in which the
U.S. industry would gain by diversifying its sources
of gum arabic, thus minimizing risk, and the Nigerian
farmers, traders and exporters would see a significant
improvement in their incomes and employment from the
development of the gum arabic sector.


--------------------------
REMARKS BY JIGAWA GOVERNOR
--------------------------
His Excellency, the Governor of Jigawa State, Saminu
Turaki, expressed satisfaction with the state's
relationship with the United States and noted that the
laboratory presentation had positioned Jigawa State to
pursue further negotiations with TIC gums, a U.S.
based firm that has negotiated a memorandum of
understanding for the purchase of high quality gum.
Governor Turaki said the gum arabic project was meant
to enhance the economic status of the region,
including Niger Republic, where some 10 million
seedlings were recently distributed to farmers. The
regional outlook of the project, he said, would enable
the producers to compete effectively in the
international market. Turaki said women who formed
the larger percentage of the poor in the region would
be mobilized to take part in the initiative.


The participants to the ceremony toured the GAPCO
warehouse and observed several tons of gum being
sorted and graded in sacks with the GAPCO labels.
This is the first commercial shipment of gum being
exported from Jigawa state. The gum acacia trees had
been planted some 25 years ago for reforestation
purposes, and its potential for gum arabic production
had not been realized prior to this project. The
first year harvest and export is expected to be a
modest 168 tons, but will undoubtedly grow due to the
strong leadership of Jigawa state, private sector
partnership with U.S. companies, and the enhanced
capacity of Nigerian farmers to properly harvest the
gum.


----------
CONCLUSION
----------
While production of premium-quality grade one gum
arabic in Nigeria is still low, the potential for
significantly expanding the production of gum arabic
suitable for export to the United States articularly
in terms of grade and quality is high.


The USAID project has sought to educate farmers and
traders on the comparative advantages of producing gum
arabic. By introducing best practices in cultivation,
harvesting and marketing, trainees have learned to
meet the specifications of U.S. importers, and have
extended these practices to others in their locations.
The sector is poised to be globally competitive
through the establishment of NAGAPPEN chapters in each
of the targeted states, which will be crucial to
future dissemination of best practices, industry
monitoring and self enforcement.


USAID's program to improve the production of gum
arabic in Nigeria is contributing to the strategic
U.S. goal of diversifying sources of imports, while at
the same time providing much needed income and foreign
exchange earnings to farmers in northern Nigeria.
JETER

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