Overview

Units: $ millions

Total Market Size for Agricultural Machinery

	2019	2020	2021	2022 (Estimated)
Total Local Production	0.3	0.3	0.3	0.4
Total Exports	0	0	0	0
Total Imports	33	28	32	34
Imports from the U.S.	7	8	9	10
Total Market Size	33.3	28.3	32.3	34.4
Exchange Rate: 1 USD	360	380	410	420

Total Market Size = (Total Local Production + Total Imports) – (Total Exports)

Data Sources: 

Total Local Production: Industry Contacts

Total Exports: UN Comtrade

Total Imports: UN Comtrade

Imports from U.S.: U.N. Comtrade

In pursuit of its economic diversification agenda, the government of Nigeria has continued to prioritize agricultural development in its policy and budgetary plans. The target is to build a strong agribusiness economy capable of meeting domestic food demand goals, generating export revenues, and creating jobs. The increased national focus on the sector has generated opportunities in the whole agricultural value chain, many parts in need of investment. The Nigerian government has framed various policies to push for mechanization, leading to increased adoption of equipment, specifically tractors, in agricultural production.

The Nigerian government has also introduced and implemented several initiatives, key amongst which is the Anchor Borrowers Program (ABP) managed by the Central Bank of Nigeria (CBN) to support small holder farmers with funding and farm inputs. Under the ABP, state governments and private sector organizations, including food-processing companies, acting as “the anchor,” can access funds at single digit rates from the CBN to provide inputs to farmers.

The program saw early success but faces challenges due to loan default by borrowers. The dire security issues in the country have significantly hampered farmers’ ability to work on their farms, affecting food production. Food shortages persist and have worsened rising inflation.

The government imposed forex restriction on importers of 43 items, including several key food products, has incentivized private sector investments in the agricultural value chain.

The market for tractors and implements is expected to grow steadily and maintain a year-over-year increase of 4.4% during 2019-2024 according to a report by Businesswire. In reality, total imports have not met this mark and have actually declined since 2019. This is in part due to the COVID slowdown, but also attributable to the overall economic struggles of the country.

In 2018, the Federal Ministry of Agriculture signed an MOU with John Deere for the supply of 10,000 units of farm tractors over a five-year period. The tractors are expected to be assembled in Nigeria, In January 2019, the Nigerian government launched its Green Imperative Program in partnership with the More Food International Program of the Brazilian government to support small farmers with mechanization. Under this partnership, Brazil will fund the project with a loan of $1.1 billion over a period of 15 years to supply 10,000 tractors to Nigeria. None of these tractor assembly and supply programs have fully taken off due to budget constraints. However, several state governments purchase new tractors to encourage adoption by small farmers in their regions.

Private sector investors are developing their outgrower network of farmers, enabling them with mechanization, technology, and farm extension assistance. These buyers tend to purchase used equipment. The government remains the biggest purchaser of new farm machinery. It is advisable for U.S. suppliers to retain local distributors or representatives with market development capabilities and experience selling to the public sector. Nigerian buyers are price sensitive and tend to favor cheaper and basic machinery that is easy to fix and use. Credit and good local aftersales support are selling points U.S. exporters can utilize to gain market share and increase competitiveness. Agricultural tractors imported as complete knock-down (CKD) or semi-knock down (SKD) units for local assembly attract zero duties and zero value-added tax (VAT). Although no duties are imposed on new fully built (FB) units, 7.5% VAT does apply. Used tractors are surcharged 35% import duty and 7.5% VAT.

Leading Subsectors

According to the CBN, the poultry industry is the country’s biggest agricultural subsector, with a market size of about $4 billion. The chicken population is estimated to be 165 million birds, producing approximately 650,000 and 300,000 metric tons of eggs and meat annually (respectively). This falls short of the market demand for over 200 million birds, 790,000 metric tons of eggs, and 1,500,000 metric tons of meat. Despite the Nigerian government’s ban on imported poultry, smugglers have continued to take advantage of the supply gap to bring in products through land borders. Opportunities exist for poultry production and feed milling machinery, incubators, extruders, feed additives, livestock drugs and vaccines, and chicken processing equipment. In recent years, demand for egg powder making machines has spiked due to cyclical egg gluts.

Post-harvest losses remain a perennial challenge to Nigeria. Farmers lose more than 50% of their produce due to lack of refrigeration and storage equipment. Farms, processing companies, food suppliers, and vendors are looking for affordable storage and preservation technologies suited to local conditions. The nascent cold chain industry offers enormous opportunities.

Nigeria has a large fertilizer market and has suffered severe shortages of imported fertilizer components due to Russia’s war in Ukraine. The Nigerian government has imposed foreign exchange restrictions on imported inorganic fertilizers to protect local manufacturers. Nevertheless, there has been an increase in the demand for soil organic matter and crop growth improvement products in the past three years.

Opportunities

The Nigerian Investment Promotion Commission (NIPC) outlines the following opportunities for trade and investments in the agricultural value chain.

• Mechanized crop production such as rice, maize, millet, cassava, sugar cane, tomato, cocoa, palm kernel, rubber
• Food processing and preservation across the value chains of the sector
• Beef processing and packaging
• Fruit juice and canned fruits
• Beverages and confectionary
• Crop processing including cocoa, palm kernel, and rubber
• Timber and wood processing activities
• Livestock cultivation including dairy and aquaculture development
• Horticulture development
• Agricultural input supplies and machinery
• Water resources development, especially for irrigation and flood control infrastructure
• Commodity trading and transportation
• Development and fabrication of appropriate small-scale mechanized technologies for on-farm processing and secondary processing of agricultural produce
• Development of private irrigation facilities
• Production of improved seeds and agrochemicals
• Production of veterinary drug, vaccine, chemical, feeds, and feeds ingredients

Local Trade Shows

AgrikExpo West Africa

September 7-9, 2022

International Conference Center

Abuja, Nigeria

 

Agra Innovate West Africa

December 6-7, 2022

Landmark Center

Lagos, Nigeria

Resources

Ministry of Agriculture and Rural Development (FMARD)

 

For more sector information, e-mail: Chamberlain Eke, Commercial Specialist: Chamberlain.Eke@trade.gov