WASHINGTON, D.C., U.S. — The Central Bank of Nigeria continues to restrict access to foreign exchange in an effort to reduce rapid spending of U.S. dollars outside of Nigeria, the U.S. Department of Agriculture’s (USDA) Foreign Agricultural Service (FAS) said in an April 21 report. This restriction is hindering all direct imports, including food and agricultural products. The report estimates that Nigeria’s market year 2016-17 wheat imports will decline by 5% to 4.1 million tonnes.

Nigeria’s 2016-17 wheat area and production is estimated to remain unchanged at 60,000 hectares and 60,000 tonnes, respectively. The Nigerian government sources note that Nigerian wheat yields have recently improved from 1-2 tonnes per hectare to 4-6 tonnes per hectare based on improved seed and management. However, industry insiders suggest 1 tonne per hectare based on low soil quality and limited land suitable for wheat production. Moreover, industry insiders claim that the official yield estimate is only possible with government intervention, including an official announcement for the minimum guaranteed price. Nigeria’s Ministry of Agriculture, the Flour Millers Association and other relevant stakeholders are determining the minimum purchase price for this year’s wheat. 

The Nigerian government is interested in reducing wheat imports by 50% starting 2017; however, farmers and industry insiders note that local wheat production face on- and off-the-farm challenges that would prevent reaching such goal. Separately, Boko Haram insurgents and herdsmen in Nigeria’s wheat belt continue to dislodge farmers and limit investment. Long-term private-sector investment is needed before local production can meet demand. 
To remain competitive in the market, Nigerian wheat millers are blending higher quality U.S. wheat with lower quality, inexpensive wheat from other suppliers. With Nigeria’s current economic situation, lowering purchasing power, and limited availability of foreign exchange, the report is reducing its market year 2015-16 wheat import estimate by 100,000 tonnes to 4.3 million tonnes. Importers who have direct access to foreign exchange (due to their export business) will gain market share in this current business climate.

Nigeria’s 2016-17 wheat consumption is estimated to decrease by 3% to 3.9 million tonnes from the current market year 2015-16 estimates of 4 million tonnes. Wheat millers note slower-than-normal flour production largely due to limited domestic supplies and restricted access to foreign exchange for imports. Major millers want to keep their factories at productive levels, so they are adjusting some of their formulas and origins in order to maintain profits at reasonable levels. Bakers are also increasingly becoming proficient in mixing wheat flours. Wheat products, especially bread, will continue to be widely consumed as a major staple.