Agriculture exports in Nigeria increase

The federal government of Nigeria has prioritised agricultural development under its Economic Recovery and Growth Plan, which seeks to create new jobs in labour-intensive sectors including agriculture, boost agriculture’s GDP contribution to more than 8% by 2020, up from current levels of between 3% and 4% annually, and make the country a net exporter of key crops including rice, cashew, groundnuts, vegetable oil and cassava (see overview). The government is moving to build on steady recent growth in both crop production and agricultural exports through a number of policies, including the development of staple crop processing zones (SCPZs) and reforms to the quality control process. Cassava and sugarcane have particularly high potential for export growth, as evidenced by major private investments, one of which will see a new biofuel plant established in Kogi State, potentially linking to one of 14 planned SCPZs.

Maintaining Momentum

In November 2017 the authorities released a report stating that agricultural export receipts stood at N212.7bn ($687.7m) in 2016, representing 4% of total trade. In January 2018 the federal government reported that Tin Can Island at Lagos’ Apapa Port recorded a 160% increase in agricultural exports in 2017, with the government now hoping to focus on improved fertiliser blending and plantation crop mechanisms in an effort to further improve agricultural output. Nigeria produced 367,000 tonnes of cocoa beans in 2017, according to the Federal Ministry of Agriculture and Rural Development (FMARD).

Exports have maintained a steady upwards trajectory, and the National Bureau of Statistics (NBS) reports that agricultural goods exports rose quarter-on-quarter by 54.9% in the fourth quarter of 2017 to N44.7bn ($144.5m), and year-on-year by 170.9%. Full-year agricultural exports rose by 180.7% over 2016 levels to hit N170.4bn ($550.9m). Export performance indicators remained positive into 2018, and in May the Nigeria Customs Service (NCS) reported that the free on board value of agricultural commodities shipped from Tin Can Island soared by 402.2% in the first quarter of 2018 to N29.2bn ($94.4m), with the total volume of exports jumping by 558.5% over the same period to 45,462 tonnes. Musa Abdulahi, area controller of the NCS Tin Can Island command, reported that major exports during the first quarter of 2018 included rubber, hibiscus flower, cocoa butter, sesame seeds and frozen shrimp. The NBS reports that agricultural exports rose by 63.8% quarter-on-quarter in the first quarter of 2018 to N73.24bn ($236.8m), representing a 24% increase year-on-year. Top agricultural exports included sesame seeds, at N26.7bn ($86.2m), fermented cocoa beans at N23.3bn ($75.3m) and raw cocoa beans at N6bn ($19.5m).

Although food manufacturing and agricultural exports have both shown strong recent growth, the UN Food and Agricultural Organisation of the United Nations (FAO) reports that production hurdles have negatively impacted agricultural and macroeconomic growth, with value added per capita in the sector rising by less than 1% annually in recent decades. According to the FAO, it has been estimated that due to declining productivity Nigeria loses $10bn annually in export opportunities for major crops including cocoa, cotton, palm oil and groundnut, while increases in food crop production have been outpaced by population growth, leading to a surge in food imports (see overview). The FAO identified rice and cassava as crops with high potential for increased production and processing, noting that, with 50m tonnes harvested annually across 3.7m ha, Nigeria is the world’s largest cassava producer, accounting for 20% of global supply, 34% of African supply and 46% of West African supply.

Quality Control

Improving quality control standards will assist Nigeria in expanding its export markets in coming years. In a report released in November 2017, FMARD outlined its work on the Single Quality Control Management Plan. This five-year action plan, running to 2021, aims to bring Nigerian agricultural exports up to international standards. As it was requested by the EU, FMARD and EU officials met twice in early 2017 to discuss food safety and the “zero reject” goal for Nigeria’s products. FMARD officials have stated that standards and quality control measures are now being developed to improve compliance with EU regulations.

One major intervention will be to improve food packaging through reforms to local plastic bag manufacturing processes, which were identified as a priority after the EU rejected 24 categories of Nigerian food imports in 2016. Another important pillar for improved exports will be the development of the new SCPZs, creating a network of agro-manufacturing hubs that aim to play to the country’s regional agricultural strengths, in addition to boosting private sector investment in Nigeria’s agriculture value chain.

Export Zone Development

In January 2014, under its Green Alternative Policy (see overview), FMARD announced plans to establish this network of SCPZs with the aim of attracting private agricultural investment for processing plants across various high-production areas located around the country.

The ministry has outlined fiscal, investment and infrastructure incentives to encourage SCPZ development, with the government planning to offer tax breaks for imports of agricultural processing equipment, tax holidays for food processors located in an SCPZ, and government-funded infrastructure such as quality roads, logistics, storage facilities, utilities, flood control, rail and air connectivity. Under FMARD’s plan, each zone will link farmers to food manufacturing plants, with public funding anticipated at the state and federal levels. Some 14 SCPZs will be developed in phases, with the first phase covering six zones. In February 2014 the UN Industrial Development Organisation (UNIDO) estimated that the first phase of SCPZ development will cost $1.06bn, with zones expected to be established in the states of Kogi, Kano, Rivers, Niger, Enugu and Anambra. According to UNIDO, funding requirements would cover specialised support facilities including improved road, rail, air and seaport connectivity, with the SCPZ in Kogi State expected to be the most expensive at $314.7m, followed by that in Anambra ($186.6m), then Niger ($181.4m), Kano ($151.1m), Enugu ($149.7m) and Rivers ($79.6m). Each SCPZ will focus on the production of major regional staple crops. Kogi State’s SCPZ in Agbadu-Alape will concentrate on cassava production; the Omor, Badeggi and Adani SCPZs in Anambra, Niger and Enugu states, respectively, will specialise in rice production; the Bunkure SCPZ in Kano State will offer rice, tomato and sorghum processing; and the Okorolo SCPZ in Rivers State will focus on fisheries and agriculture.

Private Sector Investment

UNIDO reported that private investors had already been secured for three SCPZs as of February 2014, including Cargill USA in Kogi, Nigeria Flour Mills in Niger and Dangote Group in Kano. More recent investment announcements have also bolstered the outlook for SCPZ growth. In November 2017 it was reported that the government had partnered with Turkish investors to establish the $1bn Badeggi SCPZ in Niger State, with operations expected to begin in 2019. The unnamed Turkish investors will provide an initial investment of $250m, with $800m of new capital to follow.

Sugarcane processing and export is also slated for significant expansion, after the Nigerian National Petroleum Corporation (NNPC) and Kogi State Government signed a memorandum of understanding in February 2018 to establish a fuel-ethanol processing plant, which could link to the Kogi State SCPZ. Authorities are also examining the possibility of constructing biofuel plants using cassava as a feedstock, according to an NNPC press release. The authorities report the sugarcane biofuel project will include a cane mill and a raw and refined sugar plant that processes 126,000 tonnes annually; the Bagasse co-generation plant, which will generate 64 MW annually; and a carbon dioxide recovery unit and bottling plant, which will be capable of processing 2000 tonnes of CO annually. Sugarcane feedstock will be sourced from a nearby 19,000-ha plantation, which will also produce 63,000 tonnes of animal feed annually.

Cassava Potential

Next up, the authorities plan to create a special-purpose vehicle to develop the project, with the NNPC reporting that its renewable energy division will assist with the project’s CO recov- ery element. The division was created following the release of a federal government directive to industrialise agriculture, the goal of which is the commercialisation of biofuel production from selected crops, including cassava. Cassava also holds significant export potential in light of the EU’s decision, taken in January 2018, to phase out palm oil imports by 2021. Asian palm oil exports to the EU can thus be expected to decline considerably in the coming years, and Nigerian farmers could benefit from new European export opportunities. A recent cap on crop-based biofuel imports to the EU has dampened the outlook, however.