NIGERIA’S AGRICULTURAL REVOLUTION INTRO
Nigeria relies on 10 billion U.S. dollars of imports to meet its food and agricultural
production shortfalls. These imports are mostly wheat, rice, poultry, fish, food services,
and consumer-oriented foods. Europe, Asia, the United States, South America, and South
Africa are major sources for agricultural imports. Nigeria is also a country of almost
200 million inhabitants, meaning its agricultural sector needs to be apt and efficient enough
to sustain stable and steady growth while ensuring that the nation is fed.
GOVERNMENT INVOLVEMENT The Government of Nigeria has initiated agricultural
programs such as the Anchor Borrowers Program to diversify its economy away from oil. The
government at the Council on Agriculture and Rural Development Regular meeting, approved
the implementation of a new Agricultural policy named National Agricultural Technology and
Innovation Plan. The four-year blueprint was designed to help Nigeria’s COVID-19 economic
recovery. This policy will replace the Agriculture Promotion Policy that was launched in 20 16
but terminated in December 20 20. Nigeria’s agricultural sector has been hurt
by several shocks: sporadic flooding, Boko Haram insurgencies, and conflicts between
herdsmen and local farmers. Food processing continues to suffer from a lack of financing
and infrastructure. Food inflation rose to 22.95% in the first
quarter of 20 21. There were wide-ranging price increases across items such as cereals,
yam, meat, fish, and fruits. The causes of the food inflation include worsening conflict
between farmers and herders, banditry, kidnapping, and insurgency in Nigeria’s agriculture
belt that the government of Nigeria is struggling to suppress. Additional upward pressure is
caused by devaluation of the local currency the naira which has been devalued multiple
times since 20 21. Also, higher fuel prices have also contributed to rising food prices.
U.S. food and agricultural exports reduced about 33% from 653 million U.S. dollars in
20 19 to about 489 million U.S. dollars in 20 20. U.S. food and agricultural products
exports to Nigeria averaged 537 million U.S. dollars over the past 5 years and about 70%
of which was wheat. Last year, Nigeria imported over 1.29 million metric tons of
wheat from the U.S., making it the fifth largest U.S. wheat importer in the world. Nigeria
also imports U.S. origin soybeans, intermediate food products especially vegetable oils and
animal fats, consumer-oriented food products like condiments and sauces, processed vegetables,
wine, prepared food, dairy products, and non-beverage ethanol, and fish products.
U.S. imports of Nigerian food and agricultural products reached 50 million dollars in 20
19 down just 2% compared to 20 18. Major U.S. imports of Nigeria-origin food and agricultural
products include cocoa beans, tea and herbal products, feeds and fodders, cashew nuts,
spices, and seafood products. Nigeria is a beneficiary of the African Growth and Opportunity
Act but has struggled to take full advantage of the trade preference benefits. The weakness
of the country’s sanitary and phytosanitary is the food safety system means that food
exports have difficulty meeting international standards. If you’re still with us
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Products with the most export potential include wheat, rice, dairy products, seafoods and
wine. Let us look at each of these products.
Wheat. Local wheat production meets an insignificant
portion of Nigeria’s wheat consumption demand. Overall demand is significantly augmented
by imports, which were estimated at 2.1 billion U.S. dollars in 20 20 and projected to be
2.5 billion in 20 21. With the country’s wheat milling capacity at more than 8.2 million
metric tons, Nigeria is the fifth largest U.S. wheat importer in the world. Bread, semolina,
and pasta are staples in Nigeria and the demand for these products continues to increase.
Currently, the shares of wheat flour for bread, semolina, pasta and others, remains at 60%,
20%, 10% and 10%, respectively. Nigeria has seen prices of all locally grown
staple foods spike in 20 21 weakening consumer purchasing power which is forcing consumers
to resort to cheaper commodities. The first quarter of 20 21 experienced 47% increase
in wheat importation. The increment was because of the spike in the price of rice and garri
that are Nigerians’ staple foods, making consumption of semolina, pasta, and noodles
more predominant. U.S. origin wheat market share in Nigeria was over 90% in 20 12 but
declined to less than 40% in 20 20 due to steep competition from wheat exports from
the Black Sea region. Some leading sectors include: Wheat flour utilized for bread, noodles,
pasta, biscuits and semolina. Local wheat production is insufficient to meet domestic
demand and is relatively expensive. Consumers demand higher quality wheat flour-based products.
Local importers consider U.S. wheat as a high-quality product and suppliers are viewed as consistent,
reliable suppliers. Rice.
Nigeria is Africa’s largest producer of rice and is among the top 15 producers globally.
The government of Nigeria had announced that the country would be self-sufficient in rice
production by 20 18 but the target was not attained. However, the high cost of rough
paddy rice as well as high operational costs continue to hamper large-scale, integrated
rice mills from producing at competitive prices. Imports continue to meet approximately half
of the country’s rice demand. Parboiled rice account for the bulk of imports. Thailand
and India origin rice dominate imports. Nigeria remains one of the world’s largest markets
for parboiled rice, consuming on average 4.0 billion dollars worth of parboiled rice each
year. The government’s Anchor Borrowers Program, initiated over the last three years,
has contributed to increased domestic production. However, paddy production and milling costs
remain high. Rice is one of the products listed by the Central Bank of Nigeria as not
valid for foreign exchange at the Nigerian foreign exchange window.
Thailand origin rice accounts for 65% of all rice imports followed by India at 20%. Other
origins include Brazil and China. Imported rice enters the market informally through
Nigeria’s porous borders. Usually, shipments are destined for seaports located in neighboring
countries and transported to Nigerian markets through land border routes. One leading sector
is Polished and milled rice which is exclusively parboiled. An opportunity in this area is
that Nigeria still depends on approximately 1.7 Million Metric Tons of imported parboiled
rice to meet its domestic rice consumption demand.
Dairy. The size of Nigeria’s dairy market in 20
19 was 1.6 billion U.S. dollars, with over 87% of demand met through imports. The country’s
dairy market is potentially as large as 6.5 billion U.S. dollars. Nigeria has the 4th
largest cattle population in Africa, estimated at 20 million cattle, including 2.35 million
cows used for dairy production. Despite its size, the Nigerian dairy sector
is largely fragmented, unproductive, and inefficient. Though small holder dairy households produce
most of the raw milk in Nigeria, the end market is controlled by large multinationals that
use imported milk in over 97% of products consumed. Local dairy processors rely on combining
and reconstituting milk powder imported mostly from the European Union. The reconstituted
milk is mostly packaged and sold as powdered, evaporated, and condensed milk and packaged
in metal cans and sachets of different weights. Ice cream, chocolate milk, yogurt, and shelf-stable
milk production is from reconstituted imported milk powder. Infant formula, cheese, butter,
as well as some ice cream, are mostly imported. Demand for these products continues to grow,
with the consumption of flavored milk drinks, mostly consumed by school age children is
increasing in demand. Beginning February 20 20, the Central Bank
of Nigeria launched a program to conserve foreign exchange and encourage local production
of milk and dairy products. The program introduced foreign exchange restrictions on the importation
of milk and milk derivatives into the country. Following this policy, the Central Bank of
Nigeria exempted and approved six Nigerian companies to import milk and dairy products
that had keyed into Nigeria’s backward integration program as the solution to increase dairy
productivity. These companies are FrieslandCampina WAMCO Nigeria, Chi Limited, T.G. Arla Dairy
Products Limited, Promasidor Nigeria Limited, Nestle Nigeria P.L.C, and Integrated Dairies
Limited. To curtail the recurrent clashes between herders
and farmers in Nigeria, the National Economic Council approved the National Livestock Transformation
Plan in 20 19. The program aims to improve the performance and sustainability of the
livestock sector, including meat and dairy production, through partnerships with state
governments and the private sector. Promasidor and the Ekiti state government
jointly collaborated to resuscitate the moribund Ikun Dairy Farm in Ekiti State. Ikun Dairy
Farm sourced about 300 jersey cows from the U.S. early in the year and the cow performance
is encouraging. The lactating cows are producing an average of 25 liters of milk per day per
cow. The farm is presently supplying about 600 liters of fresh milk daily to Promasidor
factory for further processing into different products.
Some leading sectors include Powdered, evaporated, and condensed milk packaged in metal cans
and sachets of different weights. Ice cream, chocolate milk, yogurt, and long-life milk,
reconstituted imported milk powder, infant formula, cheese, butter, skimmed milk powder,
flavored milk drinks. Nigeria’s dairy processors rely on combining
and reconstituting imported milk. The Nigerian dairy market is growing at 5% per year fueled
by a growing, increasingly urbanized population demanding more dairy-based products. Domestic
milk production is underdeveloped. On average, a cow in Nigeria produces one kilogram of
milk per day compared to an average U.S. dairy cow, which produces about 32 to 35 kilograms
per day. Seafood.
Frozen seafood is Nigerians’ most affordable source of animal protein and its consumption
is increasing. The country is a potential market for approximately 2.5 million metric
tons of fish valued at 3 billion U.S. dollars. Atlantic mackerel, horse mackerel, herring,
and croakers are the main species consumed. Domestic catches and aquaculture production
are mainly catfish and tilapia which remain underdeveloped due to high input costs. Catfish
and tilapia, which are produced in Nigeria, are banned for export. On March 1, 2018, The
United States Department of Agriculture’s Food Safety and Inspection Service suspended
the import of catfish and other fish products from Nigeria.
Nigeria’s Federal Fisheries Department failed to fully address information requested in
the self-reporting tool prior to the due date. Consequently, Nigerian catfish farmers and
processors lost the huge market opportunity for mostly smoked, packaged catfish they export
to the United States. The Foreign Agricultural Service in Lagos is actively involved with
the government of Nigeria to address the issue raised by U.S. Food Safety and Inspection
Services on catfish export to the U.S. Some leading sectors are Atlantic mackerel, horse
mackerel, herring, blue whiting, and croaker. Frozen seafood is Nigerians’ most affordable
source of animal protein and consumption is increasing. Under-developed domestic catches
and aquaculture production promotes reliance on large volumes of imports to meet local
demand. Wine.
Nigeria’s potential market for alcoholic beverages is valued at 2 billion U.S. dollars.
The still wines, that is red and white category leads the market. These account for a market
share of more than 80%. Red wine alone accounts for over 73% of the total volume sold but
local wine processing is underdeveloped. Middle-class consumers are increasing their
consumption of wine, perceiving it as a healthier option than other alcoholic beverages. From
June 4, 20 18, the 20% tax on wine was replaced by a tax of per centiliter over a three-year
period through 20 20. The government of Nigeria indicated it wants to raise revenues and reduce
health hazards associated with alcohol abuse. Some leading fields are Alcoholic wines and
spirits, still wines, premium wine and spirits labels. Local wine processing capacity remains
underdeveloped, with the cost of production high. Middle-class, young, rich, educated
and upwardly mobile Nigerians are the key demographics boosting wine consumption.
CONCLUSION Nigeria has one of the most robust agricultural
systems in Africa. Nigeria is doing well in the agricultural sector for a country that
is well known for oil refining as its breath of fresh air.
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