Nigeria, Africa’s largest economy, is grappling with an increasing grain import bill as the current lack of a state-supported credit facility for farmers, poor basic infrastructure, surge in farm input costs and insecurity, especially in rice-growing regions, hamper efforts to achieve self-sufficiency in wheat, rice, corn, soybeans and other critical agricultural production.
Although the overall growth of Nigeria’s domestic product (GDP), estimated at slightly more than $500 billion, was 0.8% in 2017, up from the -1.5% in 2016, with positive projections of 2.1% and 2.5% in 2018 and 2019, production of wheat, rice, corn and soybeans has remained below national consumption demand.
The value of locally produced wheat in Nigeria was estimated at $13 million in 2016, rising to $15.5 million in 2017 with projections that local producers would increase production to $16 million and $16.3 million in 2018 and 2019, respectively. But the national wheat production capacity is a drop in the ocean compared to the Nigerian market demand that was valued at $1.2 billion in 2016 and $1.5 billion in 2017, with estimates putting the 2018 and 2019 requirements at $1.65 billion and $1.7 billion, respectively.
“Local wheat production remained inadequate and other domestic supplies of substitute staples within Nigeria and neighboring countries have not kept pace with demand,” according to a November 2018 report issued by the U.S. Department of Agriculture (USDA).
The deficit has been met through imports from countries such as the United States that exported $300 million and $400 million worth of wheat to Nigeria in 2016 and 2017, respectively. The United States’ wheat exports to Nigeria in 2018 and 2019 are projected to reach $530 million and $534 million, respectively. Additional wheat imports came from Russia, Canada and Germany.
“Nigeria still imports significant amounts of food and the country also does not earn significant foreign exchange from agriculture, meaning we are losing both ends,” said Chief Audu Ogbeh, the federal minister for Agriculture and Rural Development, in a previous ministry report.
Furthermore, government and analyst reports indicate Nigeria, which has only 30 million hectares of cultivated land compared to 78.5 million hectares needed to feed the country’s 196 million, suffers a 2.7-million-tonne rice deficit. This is despite the area under cultivation having expanded from 2.4 million hectares in 2010 to 3.2 million tonnes in 2017, with 80% of the producers being smallholder growers while 20% of the production was from commercial farmers.
New agricultural policy
Nigeria, currently the largest rice producer in West Africa and second largest grower in Africa, meets its rice deficit from imports sourced from India, Thailand, Benin, Brazil and China with the government banking on the implementation of a new agricultural policy, Agriculture Promotion Policy (APP), to not only increase rice production but also substantially reduce the imports, which make Nigeria the world’s third largest importer of the commodity.
Nigeria’s drive to reduce grain imports and increase local production is anchored on APP, which replaces the state-initiated Agricultural Transformation Agenda (ATA), which the government had previously attributed to contributing to 11% growth of the country’s general agricultural output and reduced the total food import bill by $1.3 billion before the collapse of the oil prices in 2015. Nigeria’s food import bill is estimated at $11 billion.
Under the APP, Minister Ogbeh said Nigeria hopes to address two key gaps in agriculture, including “an inability to meet domestic food requirements, and an inability to export at quality levels required for market success.”
The inability to produce enough food volumes, the minister said, “is a productivity challenge driven by an input system and farming model that is largely inefficient and an aging population of farmers that do not have enough seeds, fertilizers, irrigation, crop protection and related support to be successful.”
Nigeria’s constraints in increasing grain exports and other agricultural products is largely because of “an equally inefficient system for setting and enforcing food quality standards, as well as poor knowledge of target markets.”
“Insufficient food testing facilities, a weak inspectorate system in the Federal Ministry of Agriculture and Rural Development, and poor coordination among relevant federal agencies serve to compound early-stage problems such as poor knowledge of permissible contaminant levels,” said the APP strategy paper.
“The federal APP is a strategy that focuses on solving the core issues at the heart of limited food production and delivery of quality standards, and as productivity improves domestically and standards are raised for all Nigerian food production, export markets will also benefit impacting positively on Nigeria’s balance of payments,” the APP said.
Nigeria’s Ministry of Agriculture has listed wheat, rice, soybeans and corn among the pool of crops the government plans to expand area under production and improve production methods in partnership with the private sector. Apart from enhancing end-to-end value addition of these crops, the government also hopes through the six-year APP scheme to woo a new generation of farmers keen on commercial agriculture and who the ministry promises to support with a seamless supply of fertilizers, high quality chemicals and certified seeds to improve production.
Elsewhere, Nigeria suffers from poor infrastructure and high levels of insecurity, especially in rice growing regions where more than 3 million people have been displaced by militants and ethnic conflicts. Even in grain-producing regions, the government is pushing for the elimination of taxes and levies on key crops such as wheat, soybeans and corn by Nigerian regional governments. By the end of 2020, Nigeria, which is struggling to wean itself from over-reliance on oil and gas, expects to have gathered adequate information that the government can use in improving the APP plan with the Ministry of Agriculture promising to publish crop metrics periodically to track performance such as tonnage produced and consumption trends.
Other interventions introduced by Nigeria in its quest for increased quality agricultural production include the introduction of the Anchor Borrower’s scheme under which the government has disbursed $150 million to 250,000 farmers and also the launch of the Presidential Fertilizer Initiative.
The fertilizer initiative has led to the revitalization of 14 fertilizer blending plants, with a total installed capacity in excess of 2 million tonnes annually, thereby supporting many farmers nationwide, according to government records. Furthermore, the government recently announced it is proceeding with the privatization of 20 out of the 23 Strategic Grains Reserve Silos in the country to ensure food security.
Despite the determination by Nigeria to pull up its grain production levels, several hurdles must be crossed to achieve quality increased production of key crops, especially rice, wheat, corn and soybeans. Although Nigeria’s rice production has been on the upswing over the last five years to 8.7 million tonnes in 2017, smuggling of the food commodity across the country’s porous borders continues to suppress national efforts to expand production. It is estimated 95% of the rice imported into Nigeria enters through informal means such as smuggling through cross-border smuggling channels despite existence of new foreign exchange regulations to curb the rice imports.
“Nigeria’s domestic rice production target is also far from reality due to lack of infrastructure, poor policy implementation, as well as increasing state of security caused by Boko Haram and rural violence in many rice-producing regions in northern region,” the USDA said.
Demand for corn also is expected to remain high despite Nigeria producing 7 million tonnes of the 7.5 million tonnes needed to meet national demand.
The USDA said Nigeria’s demand for animal feed is set to rise, which together with the “increasing foreign investment in the sector are expected to boost corn imports to 550,000 tonnes, a nearly 40% increase compared to the preceding year (2017).”
The trend of importing key grains to meet Nigeria’s rising demand is expected to continue until it addresses what the African Development Bank identifies as “significant challenges including foreign exchange shortages, disruptions in fuel supply, power shortages and insecurity in some part of the country.”