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Sources indicate that competition from neighboring countries has promoted informal exports of Nigerian grains by 40%; reportedly, the country's highest agricultural export level over the last 15 years.
Over the last two years, market prices have been doubling just as costs of farming inputs such as fertilizers, farm labor and agro-chemicals. Declining purchasing power and the Nigerian government’s lack of funds to continue with grain purchasing for strategic grain reserve also are discouraging farmers from increasing production. According to the FAS, there are few farmers who are able to export to neighboring countries, where prices are higher and cover local production costs; however, the majority remains to be mostly subsistence farmers.
The Nigerian government continues to face challenges with conserving the country's depleting value of its local currency, the naira, despite measures initiated by Central Bank of Nigeria (CBN) in 2015 that excluded importers of 41 selected goods (including rice) and services from officially accessing foreign exchange. The excluded items classified as “Not Valid for Forex” would not be funded at the interbank from proceeds of exports or supported with port clearance documents issued by CBN — even when foreign exchange is procured from the legitimate market at high costs. This translated into a technical barrier to trade for the affected products.
Nigeria continues to employ trade restrictions such as high tariffs, levies, import bans and other measures to protect its domestic agriculture, despite the country’s membership to the World Trade Organization (WTO). The country’s current trade-threatening measures on essential grains such as rice, wheat and maize will likely continue in the upcoming year. According to the FAS, Levies continue to be imposed on wheat imports, and this will likely remain in force along with the technical import ban on rice and other food/agricultural items classified as “Not Valid for Forex.” Import ban on corn was lifted about 10 years ago; however, “special clearances” are required before any buyer could import corn — a situation that is expected to remain during market year 2017-18.
“In late January 2017, the Nigerian government re-launched the Growth Enhancement Scheme (GES) to provide support to farmers through subsidized agricultural inputs,” the FAS said. “Despite this news, rural/small holder farmers and cottage agribusinesses, who contribute to over 80% of the country’s agricultural production, continue to note the absence of government support which helped increase agricultural productivity under previous administrations and better economic conditions.”
Conversely, the few large-scale agri-businesses note that the Nigerian government’s withdrawal of support, especially the Growth Enhancement Scheme, allows them to better plan as government support was typically provided towards the end of the production season when it was least beneficial.