Overview
Nigeria relies on $10 billion of imports to meet its food and agricultural production shortfalls (mostly wheat, rice, poultry, fish, food services, and consumer-oriented foods). Europe, Asia, the United States, South America, and South Africa are major sources for agricultural imports.
The government of Nigeria has initiated agricultural programs such as the Anchor Borrowers Program (ABP) to diversify its economy away from oil. In October 2021, the government at the Council on Agriculture and Rural Development Regular meeting, approved the implementation of new agricultural policy named “National Agricultural Technology and Innovation Plan” (NATIP) in 2022. The four-year blueprint designed to help Nigeria’s COVID-19 economic recovery. This policy will replace the Agriculture Promotion Policy (APP) that was launched in 2016 but terminated in December 2020.
Nigeria’s agricultural sector has been hurt by several shocks: regular flooding, desertification of crop and grazing land, extremist insurgencies, and conflicts between herdsmen and local farmers. Food processing continues to suffer from a lack of financing and infrastructure. These challenges have exacerbated food inflation. Food inflation rose to 23.75% in December 2022. There were wide-ranging price increases across items such as cereals, yam, meat, fish, and fruits. Additional upward pressure is caused by devaluation of the local currency (naira) which has been devalued multiple times since 2021. Also, higher fuel prices and insecurity have also contributed to rising food prices as transportation costs increase.
In December 2021, the government of Nigeria launched the National Development Plan (2021-2025). The plan was formulated specifically to tackle existing development challenges confronting the country – especially addressing farmers’ needs. The plan sets targets and identifies priority areas, addressing gaps in infrastructure, macroeconomic stability, social investment, and adaptation to climate change. The plan recognizes lessons learned and builds on the foundation developed in previous plans (e.g., Vision 20:2020, the Economic Recovery and Growth Plan, and the Economic Sustainability Plan).
The plan also outlines the central role that food security plays in the country’s growth and development. The government and various stakeholders have identified food insecurity as a major challenge – especially the fragile state of cereal production. Food security is a prerequisite for development, but the global experience confirms that sufficient food supply alone is not enough. Dietary diversity, food quality, prenatal and pediatric dietary education, access to health services, water, sanitation, and other public health measures are indispensable development needs.
The agriculture sector grew merely 1.3% in the third quarter of 2022. The agriculture sector’s stunted growth is due to low productivity, inaccessible or expensive inputs, and increasing post-harvest loss due to poor logistics and insecurity across the country. As of 2022, the security situation is improving in the North-East part of the country, with declining cases of violence against farmers. A network of militias and local famers continue to limit the insurgents to the fringe of Lake Chad and attacks on soft targets. The improvement in security is revitalizing food production, especially grains. The state governors are clearing lands for the farmers to increase production - especially households that are returning to their communities from camps for internally displaced people (IDP).
On the international front, Russia’s invasion of Ukraine could threaten Nigeria’s food security situation. Nigeria imports low quality wheat from Russia and surrounding Black Sea countries. The escalation of the crisis could lead to increase in imported wheat prices, which will likely have a multiplier effect on the price of wheat-based products (e.g., breads, noodles, and biscuits).
U.S. imports of Nigerian food and agricultural products totaled $92 million in 2021, up by about 50% from $58 million recorded in 2020. Major U.S. imports of Nigeria-origin food and agricultural products include cocoa, tea/herbal products, feeds and fodder, cashew/tree nuts, spices, and seafood. Nigeria is a beneficiary of the African Growth and Opportunity Act (AGOA) but has struggled to take full advantage of the trade preference benefits. The weakness of the country’s sanitary and phytosanitary (SPS) and food safety system means that food exports have difficulty meeting international standards.
Wheat
Overview
Units: $ millions
|
|
2019 |
2020 |
2021 |
2022 (Projected) |
|---|---|---|---|---|
|
Total Market Size |
1810 |
2444 |
2333 |
2473 |
|
Total Local Production |
22 |
20 |
37 |
66 |
|
Total Exports |
145 |
243 |
246 |
291 |
|
Total Imports |
1933 |
2667 |
2542 |
2698 |
|
Imports from the U.S. |
500 |
597 |
656 |
913 |
|
Exchange Rate: 1 USD |
362 |
405 |
410 |
415 |
Total Market Size = (Total Local Production + Total Imports) – (Total Exports)
Data Sources: USDA/BICO; Nigeria’s Wheat Millers Association; Master Bakers’ Association, Federal Ministry of Agriculture, and Nigerian Customs Service
Local wheat production meets an insignificant portion of Nigeria’s wheat consumption demand. Overall demand is significantly met through imports, which are estimated at $2.1 billion in 2020, and $2.5 billion in 2021. With the country’s wheat milling capacity at more than 8.2 million metric tons (MMT), Nigeria is the fifth largest U.S. wheat importer in the world. Bread, semolina, and pasta are staples in Nigeria and the demand for these products continues to increase. Currently, the share of the total wheat consumption market in Nigeria is dominated by bread (60%), followed by semolina (20%), and pasta (10%).
Nigeria has seen prices of all locally grown staple foods spike in 2021, when compounded with weakening consumer purchasing power, consumers are forced to resort to cheaper commodities. The first quarter of 2021 experienced a 47% increase in wheat importation. The increment was because of a spike in the price of rice and cassava flour that are Nigeria’s staple foods, making consumption of semolina, pasta, and noodles more predominant. U.S. wheat market share in Nigeria was over 90% in 2012. This has declined to less than 40% in 2020 due to competition from wheat exports from the Black Sea region (primarily Russia).
Russia’s invasion of Ukraine has resulted in surging global wheat prices, which senior executives at several Nigerian wheat milling companies report have hit Nigeria. The country imports more than 50% of its wheat requirement from Russia and other Black Sea countries. To reduce the domestic price of wheat flour and sustain profitability, most Nigerian flour mills buy cheaper wheat from Russia, Latvia, and Lithuania. Mills are enhancing their practices of blending cheaper, low-quality wheat with more expensive high-quality varieties, such as Hard Red Winter variety from the United States.
The Nigerian government is pushing the self-sufficiency narrative amid the current global wheat situation, stating that the country faces two choices: invest in domestic production or find alternative sources to the Black Sea sources. Increasing production will take time as population growth and consumption outpaces production. Alternative sources are feasible, but it will lead to higher costs of wheat derivatives, especially bread, which is an important staple food in Nigeria.
Leading Sub-Sectors
Wheat flour utilized for bread, noodles, pasta, biscuits (cookies), and semolina.
Opportunities
Local wheat production is insufficient to meet domestic demand and is relatively expensive. Consumers demand higher quality wheat flour-based products. Local importers consider U.S. wheat as a high-quality product and suppliers are viewed as consistent and reliable suppliers.
Resources
Regional Agricultural Affairs Office
U.S. Department of Agriculture (USDA)
Office of Agricultural Affairs
U.S. Consulate General, Lagos, Nigeria
Email: aglagos@usda.gov
Rice
Overview
Units: $ millions
|
2019 |
2020 |
2021 |
2022 (Projected) |
|
|---|---|---|---|---|
|
Total Local Production |
2481 |
2110 |
2300 |
2282 |
|
Total Exports |
0 |
0 |
0 |
0 |
|
Total Imports |
1,150 |
980 |
1,230 |
1038 |
|
Imports from the U.S. |
2.37 |
1.63 |
2.52 |
0 |
|
Total Market Size |
3631 |
3090 |
3530 |
3320 |
|
Exchange Rate: 1 USD |
360 |
405 |
410 |
415 |
Total Market Size = (Total Local Production + Total Imports) – (Total Exports)
Data Sources: Nigeria’s Rice Importers; Rice Farmers Association of Nigeria (RIFAN); National Bureau of Statistics; Federal Ministry of Agriculture; Nigerian Customs Service.
Nigeria is Africa’s largest producer of rice and is among the top 15 producers globally. The government of Nigeria announced that the country would be self-sufficient in rice production by 2018, but the target was not attained. The high cost of rough paddy rice and high operational costs continue to hamper integrated large-scale rice mills from producing at competitive prices. Imports continue to meet approximately half of the country’s rice demand. Parboiled rice (also known as converted rice and easy-cook rice) account for the bulk of imports. Thai and Indian rice (long-grain varieties) dominate imports. Nigeria remains one of the world’s largest markets for parboiled rice — consuming on average $4.0 billion worth of parboiled rice each year. The Nigerian government’s Anchor Borrowers Program introduced in 2015, has contributed to increased domestic production. However, paddy production and milling costs remain high. Rice is one of the products listed by the Central Bank of Nigeria (CBN) as ineligible for foreign exchange at the bank’s foreign exchange window.
Nigerian rice milling capacity increased from 350,000 metric tons per year (mtpy) in 2015 to more than 3 million mtpy in 2021. The number of integrated rice mills jumped up from 10 to above 60 mills during the same period. Dangote Rice industries began the construction of its flagship rice mill plant in Jigawa State in 2021. The rice mill has a capacity to produce 70,000 mtpy. In addition, Dangote Rice is also installing processing mills in several states, including Kebbi, Sokoto, Zamfara, Kano and Niger States. These mills are forecasted to produce 700,000 mtpy. In 2022 Lagos completed the construction of the millon dollar Imota rice mill expected to produce 32 metric tons of grains per hour and a gross capacity to produce 2.8 million 50 kg bags of rice annually. The scarcity of rice paddy is a major challenge for rice milling companies across the country as most of these mills operate below 50% milling capacity. Another challenge for Nigeria rice milling industry is the large number of small-scale rice mills that are scattered throughout the rice growing regions.
Thailand-origin rice accounts for 65% of all rice imports, followed by India at 20%. Other origins include Brazil and China. Imported rice enters the market informally through Nigeria’s porous borders. Usually, shipments are destined for seaports located in neighboring countries and transported to Nigerian markets through land border routes.
Leading Sub-Sectors
Polished and milled rice (exclusively parboiled)
Opportunities
Nigeria still depends on approximately 1.7 million metric tons of imported parboiled rice to meet its domestic rice consumption demand.
Resources
Regional Agricultural Affairs Office
U.S. Department of Agriculture (USDA)
Office of Agricultural Affairs
U.S. Consulate General, Lagos-Nigeria
Email: aglagos@usda.gov
Dairy
Overview
Units: $ millions
|
2019 |
2020 |
2021 |
2022 Projected |
|
|---|---|---|---|---|
|
Total Local Production |
220 |
179 |
415 |
500 |
|
Total Exports |
0 |
0 |
0 |
0 |
|
Total Imports |
1414 |
915 |
1225 |
1470 |
|
Total Market Size |
1634 |
1094 |
1755 |
1970 |
|
Imports from the U.S. |
5 |
6 |
5 |
15 |
|
Exchange Rate: 1 USD |
360 |
405 |
410 |
415 |
Total Market Size = (Total Local Production + Total Imports) – (Total Exports)
Data Sources: Milk Powder Importers; AFBTE; Supermarket Operators Association (NASON); Wholesale Distributors; USDA/BICO.
The size of Nigeria’s 2019 dairy market was $1.6 billion, with over 87% of demand met through imports. The country’s dairy market is potentially as large as $6.5 billion. Nigeria has the 4th largest cattle population in Africa, with an estimated at 20 million cattle, including 2.35 million cows used for dairy production.
Despite its size, the Nigerian dairy sector is largely fragmented, unproductive, and inefficient. Smallholder dairy households (i.e., pastoralists) produce most of the raw milk in Nigeria, but the end market is controlled by large multinationals. These companies use imported milk in over 97% of products consumed. Local dairy processors rely on combining and reconstituting milk powder imported mostly from the European Union. The reconstituted milk is mostly packaged and sold as powdered, evaporated, and condensed milk and packaged in metal cans and sachets.
Shelf-stable milk and yogurt production is mostly from reconstituted imported milk powder. Infant formula, cheese, butter, and ice cream are mostly imported. Demand for these products continues to grow, with the consumption of flavored milk drinks (mostly consumed by school age children) increasing in demand.
In February 2020, the Central Bank of Nigeria (CBN) launched a program to conserve foreign exchange and encourage local production of milk and dairy products. The program introduced foreign exchange restrictions on the importation of milk and milk derivatives into the country. Following this policy, the CBN exempted and approved six Nigerian companies, allowing them to import milk and dairy products that had supported into Nigeria’s backward integration program as the solution to increase dairy productivity. These companies are: FrieslandCampina WAMCO Nigeria, Chi Limited, TG Arla Dairy Products Limited, Promasidor Nigeria Limited, Nestle Nigeria Plc, and Integrated Dairies Limited.
Dairy and other livestock-based industries are affected by insecurity. To curtail the recurrent clashes between herders and farmers in Nigeria, the National Economic Council approved the National Livestock Transformation Plan (NLTP) in 2019. The program aims to improve the performance and sustainability of the livestock sector, including meat and dairy production, through partnerships with state governments and the private sector.
Promasidor and Ekiti state government jointly collaborated to resuscitate the Ikun Dairy Farm in Ekiti State. Ikun Dairy Farm sourced about 300 jersey cows from the U.S. early in the year and the cow performance is encouraging. The lactating cows produce an average of 25 liters of milk per day per cow. The farm is supplying about 600 liters of fresh milk daily to Promasidor factory for further processing into different products.
Leading Sub-Sectors
Powdered, evaporated, and condensed milk; packaged in metal cans and sachets; ice cream, chocolate milk, yogurt, and long-life milk; reconstituted imported milk powder; infant formula; cheese; butter; skimmed milk powder; flavored milk drinks.
Opportunities
Nigeria’s dairy processors rely on combining and reconstituting imported milk. The Nigerian dairy market is growing at 5% per year fueled by a growing, increasingly urbanized population demanding more dairy-based products. Domestic milk production is underdeveloped. On average, a cow in Nigeria produces one kilogram of milk per day (compared to an average U.S. dairy cow, which produces about 32-35 kilograms per day).
Resources
Regional Agricultural Affairs Office
U.S. Department of Agriculture (USDA)
Office of Agricultural Affairs
U.S. Consulate General, Lagos-Nigeria
Email: aglagos@usda.gov
Seafood
Overview
Units: $ millions
|
|
2019 |
2020 |
2021 |
2022 (Projected) |
|---|---|---|---|---|
|
Total Local Production |
400 |
280 |
450 |
500 |
|
Total Exports |
2 |
1 |
1.4 |
2 |
|
Total Imports |
1150 |
850 |
1054 |
1100 |
|
Imports from the U.S. |
26.3 |
21.4 |
15 |
20 |
|
Total Market Size |
1548 |
1129 |
1503 |
1600 |
|
Exchange Rate: 1 USD |
360 |
405 |
410 |
415 |
Total Market Size = (Total Local Production + Total Imports) – (Total Exports)
Data Sources: Association of Fish Suppliers of Nigeria (AFISUN); Frozen Fish Wholesale Distributors; Catfish Farmers Association of Nigeria (CAFAN); USDA/BICO; Nigeria Federal Fisheries Department.
Frozen seafood is Nigerians’ most affordable source of animal protein and consumption is increasing. The country is a potential market for approximately 2.5 million metric tons of fish valued at $3 billion. Mackerel, herring, and croakers are the main species consumed. Domestic catches and aquaculture production (mainly catfish and tilapia) remain underdeveloped due to high input costs. Catfish and tilapia are produced in Nigeria but are banned for U.S. import. In 2018, USDA’s Food Safety and Inspection Service suspended the import of catfish and other fish products from Nigeria. Nigeria’s Federal Fisheries Department failed to fully address information requested in the self-reporting tool (SRT) prior to the due date. Consequently, Nigerian catfish farmers and processors lost the market opportunity for smoked and packaged catfish which they export to the United States. The Foreign Agricultural Service in Lagos is actively involved with the Nigerian government to address the issue raised by U.S. Food Safety and Inspection Services on catfish export to the United States.
Leading Sub-Sectors
Atlantic mackerel, horse mackerel, herring, blue whiting, and croaker.
Opportunities
Frozen seafood is Nigerians’ most affordable source of animal protein. Consumption is increasing. Underdeveloped domestic catches and aquaculture production results in significant reliance on imports to meet local demand.
Resources
Regional Agricultural Affairs Office
U.S. Department of Agriculture (USDA)
Office of Agricultural Affairs
U.S. Consulate, Lagos-Nigeria
Email: aglagos@usda.gov
Wine
Overview
Units: $ millions
|
2019 |
2020 |
2021 |
2022 (Projected) |
|
|
Total Local Production |
105 |
75 |
90 |
100 |
|
Total Exports |
0 |
0 |
0 |
0 |
|
Total Imports |
436 |
280 |
325 |
350 |
|
Imports from the U.S. |
23.6 |
12.5 |
20 |
25 |
|
Total Market Size |
541 |
355 |
415 |
450 |
|
Exchange Rate: 1 USD |
360 |
405 |
410 |
415 |
Total Market Size = (Total Local Production + Total Imports) – (Total Exports)
Data Sources: Wine importers; USDA/BICO; Industry (AFBTE); Wine Distributors; Supermarket Owners and Operators (NASON)
Nigeria’s potential market for alcoholic beverages is valued at $2 billion. The still wines category leads the market — accounting for a market share of more than 80%. Red wine alone accounts for over 73% of the total volume sold. Local wine processing is underdeveloped. Middle class consumers are increasing their consumption of wine, perceiving it as a healthier option than other alcoholic beverages. Effective 2018, the 20% tax on wine was replaced by a tax of per centiliter over a three-year period. The Nigeria government indicated it wants to raise revenues and reduce health hazards associated with alcohol abuse.
Leading Sub-Sectors
Alcoholic wines and spirits; still wines (red and white); premium wine and spirits labels.
Opportunities
Local wine processing capacity remains underdeveloped, with the cost of production high. Middle class, young, educated and upwardly mobile Nigerians are the key demographics boosting wine consumption.
Resources
Regional Agricultural Affairs Office
U.S. Department of Agriculture (USDA)
Office of Agricultural Affairs
U.S. Consulate, Lagos-Nigeria
Email: aglagos@usda.gov