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Nigerian Demand for Wheat-based Foods Large, Growing

Nigerian Demand for Wheat-based Foods Large, Growing

11 April 2014
USDA Foreign Agricultural Service

NIGERIA - Nigeria plays a pivotal role in the regional economy from being the largest market in West Africa.

Policies implemented in the country also have far-reaching effects on the economic positions of countries throughout the region. The country is also of significant strategic importance for the United States in the non-oil trade as it is among the world’s largest importers of US wheat, with purchases valued at $959 million in CY2013.

In 2012, the Government of Nigeria (GON) initiated the Agriculture Transformation Agenda (ATA) programme designed to significantly reduce food imports by increasing production of five key crops: rice, cassava, sorghum, cocoa and cotton. The overall objective was to increase agricultural production in order to increase domestic food production and generate employment.

Under ATA, agriculture is treated as a business and not as a development project. It is intended to develop strategic partnerships with the private sector to stimulate investment in agriculture and repair the value chains in those agricultural sub-sectors where Nigeria perceives to possess a comparative advantage.

To pursue the ATA programme, the GON introduced a number of import-substitution measures. It initiated a policy mandating cassava flour inclusion in wheat flour, starting with a 10 per cent cassava flour inclusion rate in 2012, to increase steadily to reach 40 per cent by 2015.

Another policy goal was to increase domestic rice production to make the country self-sufficient in rice production by 2015, when rice imports will be banned. Attempts have been made to reach farmers with required inputs of fertilizers and improved seeds. However, implementation has been spotty and all supporting infrastructure is grossly inadequate. Many farmers continue to state that the GON policies and efforts have had little or no impact on their production.

Nigeria therefore remains a food deficit country and domestic agriculture is still underdeveloped. The country continues to depend on imports to meet domestic demand for food to feed its 170 million people. GON sources indicate that the country grew its national strategic grain reserve capacity from 200,000 tons in 2008 to one million tons in 2012. However, it could only hold less than 100,000 tons in 2012 out of which it released 40,000 tons during the 2012 flood, and another 20,000 tons to three states in Northwest Nigeria where the BH insurgency brought a state of emergency in 2013.

This leaves the national balance of the country’s food and grain reserve at 35,500 tons in 2014, representing less than 4 per cent of the installed capacity. Many analysts describe that level of installed capacity for the country at this time as wasteful and a misplacement of priority as the country lacks the infrastructure and funding to produce enough food requiring storage at that level. Currently, commodities in the national strategic grain reserves are corn (8,735 tons), sorghum (7,227 tons), millet (2,299 tons), soyabean (9,800 tons), paddy rice (6,000 tons) and garri (1,476 tons).

The BH threat poses major security concerns and has adversely impacted social and economic activities across northern Nigeria. It shows no signs of abating. Other security challenges such as kidnapping in the south-east of Nigeria and militancy in the Niger Delta region also limit large-scale farming of grains and other food and agricultural products within these regions. These problems hamper food production and distribution and have continued to generate concerns regarding Nigeria’s food security.

Nigeria’s demand for wheat based foods is large and growing. The GON cassava flour import-substitution initiative has impacted US wheat market share negatively but market share is expected to rebound as Nigeria and its neighboring countries continue to demand high quality wheat based foods.

Pressured by grossly insufficient domestic production and increasing demand by the poultry sector, larger imports of corn began in mid-2013. The ban on corn imports was lifted in 2008 but large-scale commercial shipments of corn had not occurred until recently due to uncertainties over custom enforcement activities.

Overall, agricultural and industrial analysts commend Nigeria’s ATA programmes for stimulating awareness about the existing potential of Nigeria’s food and agricultural value chains. But the set targets and policy directions for accomplishing the ATA objectives as pronounced are seen as totally unrealistic.

Nigeria requires major sustained investment and a longer period to fix its infrastructure and to drastically modify its agricultural policies and improve policy implementation in order to grow its agricultural sector to desired levels.

Livestock feed has remained a major growth challenge. Generally, feed constitutes about 70 per cent of the cost of production for poultry, fish and other animals. Grains are the major component of feed and their high cost has continued to stymie growth in livestock supplies. Inadequate manpower, facilities and ingredients to constitute high quality feed as well as very weak GON oversight of feed production and imports are also among the major challenges in front of Nigeria’s agribusinesses.

In recognition of the importance of improving the animal feed situation, Nigeria’s NAFDAC (FDA’s equivalent) has initiated the creation of Veterinary Medicine And Allied Products (VMAP) Directorate for regulating feed import/distribution and marketing in Nigeria. It is developing the document that will establish the requirements for feed regulation.

An early view of the draft document shows feed will be regulated in the same manner as the agency had done with regulating processed food products, with almost no focus on anything but the administrative process for registering product for sale in Nigeria. According NAFDAC’s VMAP draft, “no Animal feeds, pet food, premixes and animal feed grade shall be manufactured, imported, exported, sold or distributed in Nigeria unless it has been registered in accordance with provision of NAFDAC ACT CAP N1 LFN 2004. Nigeria’s NAFDAC, FDA’s equivalent, (http://www.nafdac.gov.ng/) has the administrative control for regulating feed production, importation and distribution.

The Standards Organization of Nigeria sets the standards for all products (including feed, food and agricultural products) manufactured, imported and distributed into the country. Additionally, industry sources indicate that the GON’s Nigerian Institute of Animal Science Act, 2007 (http://www.placng.org/lawsofnigeria/node/358) confers the power to regulate feed production, import and distribution to the Nigerian Institute of Animal Science (NIAS). Because of this apparent conflict among these institutions, it is unclear how this process will develop in the future. Post believes that there is a need to begin early to clarify and harmonize the feed regulation functions between these GON agencies for an efficient food regulation system in Nigeria.

Exchange Rate: US$1 = 170 Naira

Further Reading

You can view the USDA GAIN: Nigeria Grain and Feed Annual 2014 report by clicking here.

 

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