Nigeria - AgricultureNigeria - Agriculture

Overview

Unit:  USD thousands

Total Market Size = (Total Local Production + Total Imports) – (Total Exports)
Data Sources: 
Total Local Production: Estimates from industry contacts
Total Exports: Estimates from industry contacts
Total Imports: Estimates from industry contacts
Imports from U.S.:   U.S. Census Bureau.  

In Nigeria, there are over 30 million hectares of farmland under cultivation season to season, falling substantially short of the estimated 78.5 million hectares of land that is required for farming to feed Nigeria’s growing population. The country’s agricultural sector is dominated by smallholder farmers who work an average of 4–5 acres each, under rain-fed conditions.  Most of them lack knowledge of modern practices, have insufficient capital and own little or no equipment of their own.  As a result, much of the farm inputs (machinery, seeds and chemicals) required are provided largely procured by the government and distributed to them under various subsidy programs. One of such subsidy packages is the e-Wallet system introduced in 2014 under the Agricultural Transformation Agenda (ATA) through which subsidized electronic vouchers for inputs were delivered directly to the farmers' mobile phones and then the vouchers were used as cash to purchase the inputs directly from agro-dealers. This initiative has proven to be both effective and efficient in providing poor farmers with much needed resources and eliminating corruption in the subsidy program.  There are about ten relatively large commercial scale farms in Nigeria deploying some form of mechanized processes.  These and a few construction companies can purchase tractors for agricultural and non-agricultural purposes.

The Nigerian economy took a hit from declining oil revenues in 2015, forcing the government to seek economic diversification.  It has set to pursue agricultural development as one of its key goals to help address the country’s dependence on food imports totaling nearly 11 billion dollars annually. It has also engaged in a campaign to redirect focus from oil to agriculture, manufacturing, and solid minerals development. In this regard, the government has rolled out five agricultural development initiatives. They include the Anchor Borrowers Program (ABP), the Presidential Fertilizer Initiative (PFI), the Youth Lab, the Presidential Economic Diversification Initiative (PEDI), and the Food Security Council. The ABP for example, was created by the Central Bank of Nigeria and works in partnership with state governments and several private sector groups to provide farm inputs in kind and cash to small holder farmers to boost production of agricultural commodities. At harvest, the farmers supply their produce to the agro-processors (anchor) which pays the cash equivalent to the farmers’ account. According to government reports, under the ABP initiative, a cumulative amount of over 150 million dollars has been disbursed to more than 250,000 small farmers who cultivated almost 300,000 hectares of farmland for rice, wheat, maize, cotton, soybeans, and cassava. This growing trend of agricultural activity is expected to continue, thus creating demand for agricultural inputs.

U.S. agricultural equipment manufacturers and suppliers are beginning to actively play in the Nigerian market. For example, in May 2018, John Deere reached a deal with Nigeria’s Ministry of Agriculture to supply 10,000 tractors while Hello Tractor will manage this large fleet with its telematics device and provide technology advice from its Mustard IT support team. AGCO, which is increasing its investment in the African continent, is looking to open an office in Nigeria and partner with some Nigerian universities to provide manpower/technical training and support to undergraduates in agricultural machinery handling and maintenance. Generally, multinational food processing companies are embracing backward integration by either establishing their own commercial farms or empowering small farmers through out-grower programs.  Setting up agribusiness in Nigeria can be challenging due to land ownership issues, lack of infrastructure including water irrigation, roads, security, and corruption.  But the benefits of making an agricultural investment can outweigh the risks.
 

Leading Sub-Sectors

Livestock production has continued to record increased growth because of private sector investments, especially in poultry and fish farming.  These segments have high market demand, and enjoy faster turnaround time, and as such, appear to be growing at a faster pace than crop production. Opportunities exist for fish feed, poultry feed milling machinery, incubators, extruders, feed additives, livestock drugs, and vaccines.

Post-harvest losses, which the Nigerian Government currently estimates to be about 60%, remains a major setback to food availability. 
Therefore, farms, processing companies and food vendors will continue to seek preservation technologies.  The cold chain industry is at its infancy and presents enormous opportunities for investors and machinery suppliers. American exporters of agriculture and food equipment should note that machinery used in Nigeria are generally very basic.  High-tech systems are not well received due to the country’s low level of agricultural advancement and power supply problems.
 

Opportunities

Investment opportunities exist in all areas of the Nigerian agricultural value chain. Governments at all levels (federal and state) have opened their doors to foreign direct investments promising attractive incentives and support. There is significant demand for new and used agricultural tractors (55-75HP); agricultural chemicals (fertilizers, herbicides and pesticides), irrigation systems; food (grain and fruit) processing; and storage systems. The government’s renewed campaign to boost agricultural production has led to an uptick in investments. Providing farm development services to new investors might be a good way of selling a broad range of farm machinery and inputs.
 

Web Resources

Federal Ministry of Agriculture and Rural Development
NIRSAL
Nigerian Agricultural Statistics
Local Trade Shows
AgrikExpo West Africa
September 17-20, 2019
International Conference Center
Abuja, Nigeria
Agra Innovate West Africa
November 25-26, 2019
Landmark Center
Lagos, Nigeria