Post by Trade facilitator on Jan 12, 2022 13:11:20 GMT 1
According to Wikipedia, "Grain is a small, hard, dry seed – with or without an attached hull or fruit layer – harvested for human or animal consumption. A grain crop is a grain-producing plant. The two main types of commercial grain crops are cereals and legumes."
Furthermore, grains are a staple food for people all over the world. When compared to other staple foods, grains are more durable and can be stored for long periods of time. They can also be milled into flour or pressed into oil. Moreover, grains are used to make different varieties of food including bread, noodles, pasta, flatbreads, cakes, and pastries.
What are Cereals?
Cereals are members of the grass family (Poaceae or Gramineae family) that are grown for their grain. These plants provide food to feed people all over the world and provide food energy more than any other type of crop. We usually call cereals staple crops because they are essential to the diet and are grown in huge quantities. The word cereal originates from “Ceres”, referring to the Roman Goddess of farming.
Wheat is the most common cereal plant grown in the Western world. Rice and millet are also very popular cereal grains, popular in developing countries. These are eaten by millions of people.
Difference/Relationship Between Grains and Cereals
We often use the words cereals and grains interchangeably. Sometimes, we use the word cereal to refer to the plant and grain to refer to the seeds.
Grains can be seeds of either legumes or cereals. The main difference between grains and cereals is that grains are edible seeds of cereals or legumes, while cereals are plants belonging to the grass family. Cereal grains are a staple food all over the world.
Wheat, rice, corn, oats, barley, and millet are examples of true cereals. Whole grains can also include legumes like peas, beans, soybeans, etc.
Of the four major grains produced in Nigeria, corn is most commonly produced with volumes of 10.7 million metric tonnes in 2018/2019, according to data from the US Department of Agriculture (USDA). Production levels for that year were down almost 3% from 2017/2018 due to pest infestation which led farmers to switch focus to other crops. Domestic production of corn fell short of satisfying demand, with 11.3 million metric tonnes consumed in 2018/2019, approximately 60% of which is consumed as processed maize flour for animal feeds. Maize flour is also used to make a variety of staple local dishes and confectionary products. Corn is also consumed in its unprocessed form as a snack.
Rice, which is a staple food in Nigeria consumed by most households on a daily basis, is the second most produced grain in the country. Production in 2018/2019 reached 7.6 million metric tonnes, 2.7% higher than the previous year and above the consumption level of 7.2 million metric tonnes. Sorghum follows rice with 6.8 million metric tonnes harvested in 2018/19, a 7.9% increase from the previous year. Consumption for the year ending 2019 was fully met by local supply at 6.7 million metric tonnes. End users are predominantly industrial companies producing beverages, cereals and confectionery. A percentage of the grain is also used for animal feed.
Local wheat farming is undertaken on a much smaller scale, with production of 60,000 metric tonnes in 2018/19, unchanged from the previous year. Consumption however, increased by 7.2% between 2018 and 2019 to 5 million metric tonnes, widening the already significant domestic supply gap. Millers thus rely heavily on imports as do producers of wheat-based foods such as bread, pasta and semolina, which are consumed regularly by Nigerians.
According to USDA, wheat is Nigeria’s top grain import, with 5.4 million metric tonnes imported in 2018/19 as a result of insufficient production in the country. The import bill for wheat was $1.1 billion, with 79% sourced from Russia, Canada and the United States, according to ITC trade map data. Data from Trade Map also shows that wheat worth $159,000 was exported to the Netherlands in 2018, which might explain some of the difference between import and local consumption totals.
Nigeria alone grows about 50% of the grain crops produced in West Africa; i.e., 69% of millet, 53% of maize, and 48% of rice. Production has doubled over the past twenty years. As is the case in nearly all West African countries, the rise in grain production is due more to the extension of cultivated land than to any significant improvement in yields.
Millet and sorghum (59% of total grain production by volume) yields have either stagnated (sorghum) or progressed at a very slow pace, putting the average yield for these two crops at 1-1.5 t/ha over the 2000-2006 period. Production increased by a factor of 3.8 (millet) and 3.4 (sorghum) between 1980 and 2008, and now stands at approximately 9 million tonnes for each of these two crops.
Rice and maize stand out, attaining yields of close to 2 t/ha. However, while maize yields have risen from about 1 t/ ha in the early 1990s to about 2 t/ha in 2006, rice yields have stagnated at around 2 t/ha since 1990. Maize has performed well in Nigeria, and its production volume has risen from around 1 million tonnes in 1980 to over 7.5 million tonnes in 2008. The volume of rice produced increased by a factor of 3.4 between 1980 and 2008, reaching 4.2 million tonnes of rice in 2010.
Wheat production remains low, at roughly 60,000 tonnes per year in recent times, despite large investments by the federal government to promote this crop and lower wheat and flour imports.
Legumes and Oilseed Plants. Nigeria is the world’s largest producer of cowpeas (niebe), with about 3 million tonnes grown in 2008 (58% of regional production). The country also produces 3.9 million tonnes of groundnuts, or 57% of all groundnuts grown in West Africa.
Demand for grains is dominated by human consumption, followed by the food processing industry and biofuel production. The remainder goes to neighbouring countries. Proportions vary according to economic circumstances. Millet and sorghum crops largely exceed domestic demand, providing exports. The situation is less clear-cut for maize, depending to a great extent on the level of domestic demand which has been rising steadily, driven by the food processing industry and demand for poultry feed (1.3 million tonnes in 2009). Urban growth has steadily pushed up annual rice consumption, which has risen from 8 kg per person in 1960, to 15 kg in 1980, and then to more than 20 kg per person in 2007.
Imports Needed, Particularly Rice and Wheat. Although local products provide most of the food for cities in Nigeria, the country has a structural deficit for two grains, rice and wheat. Domestic rice demand has been about 5 million tonnes a year since 2008, and Nigeria imports more than one million tonnes annually, making it one of the largest rice importers in the world. It also imports more than two million tonnes of wheat (flour) every year.
Nigeria therefore continues to be a very substantial net importer of grains.
Oil and gas exports account for about 11 percent of the national GDP, 95 percent of its total export earnings, and about 85 percent of the country’s total revenue. Gross domestic product (GDP) averaged about $440 billion over the last 5 years. In 2020, the economy shrank by -8.9 percent because the country’s budget was 90 percent funded by revenue from oil and gas exports. Low oil prices and the continuing COVID-19 economic fallout are increasing the country’s government debt and the country’s economic recession since November 2020. 2021 was ushered in with the second wave of COVID-19, implementation of the African Continental Free Trade Area (AfCFTA), a rise in oil prices, an upsurge in insecurity (terrorism, kidnapping, and banditry) and an increase in clashes between herdsmen and farmers. The pandemic worsened inflation, which has been over ten percent since 2016. Given the low-growth and high-inflation backdrop, the Central Bank of Nigeria (CBN) is implementing a policy to reverse galloping food inflation by purchasing grains produced by farmers financed under the 2020 wet season Anchor Borrowers Program (ABP). Currently, the CBN is sitting on thousands of metric tons of grains in strategic grain silos and warehouses. The CBN is also trying to resuscitate the moribund Nigeria Commodity Exchange (NCX) to facilitate price stability for grains.
Nigeria's agricultural sector is not well organized and developed. Over the decades, the Government of Nigeria’s policies and measures including the current Agricultural Transformation Agenda (ATA) and Agricultural Promotion Policy (APP), the Anchor Borrower Scheme; etc. remain unsuccessful for improving and protecting domestic agriculture and food processing. The government also adopted various types of trade protectionist measures including hindering importers of many food and agricultural commodities access to foreign exchange despite membership of pro-free-trade bodies. Land borders with neighboring countries, which are major sources of food supply to Nigeria through gray channels, were closed in August 2019 to prevent the entry of food and agricultural products were re-opened in the middle of December 2020.
Nigeria relies on imports to meet its food and agricultural product needs (mostly wheat, rice, poultry, fish, food services, consumer-oriented foods, etc.) worth about $10 billion. This makes trade in food and agricultural products an important component in achieving the country’s food security needs. Europe, Asia, USA, South America, and South Africa are the major competitors.
Major grain staples in Nigeria comprises maize, wheat, sorghum and rice, which are consumed either in their raw form or as more processed goods. Grain farming is predominantly undertaken by smallholder farmers who face challenges regarding access to funds and availability of quality inputs to improve yield.
Nigeria’s agricultural policy prioritizes domestic food and agricultural production through protective trade policies amid low productivity. In September 2020, President Muhammadu Buhari called for a ban on dollars for food imports and added fertilizers to the restricted items list. Currently, this action is forcing wheat and soybean importers to source dollars at higher rates through the parallel markets. The high foreign exchange rates are increasing the cost of flour and leading to rising prices and declining consumption of bread and other wheat flour-based products during the out-year.
In 2021, Nigeria is expected to face decreases in grain supplies due to conflict and economic factors exacerbated by the secondary effects of COVID-19. Internal security across the country is a serious challenge to food production, especially in the corn belt. Insecurity is rife across the country’s leading agricultural states. Corn and sorghum production are forecast to decline while rough rice production is forecast to grow by 17% higher than in 2020/2021 due to farmers now cultivating two crops per year. Consumption of wheat and corn is forecast to increase - especially corn being a critically important source of feedstock.
WHEAT PRODUCTION
Nigeria only managed to produce just about 2% of all the wheat it consumed. Its wheat production has been hampered by a lack of modern agronomic practices and the unavailability of improved seeds. The national average yield for wheat is 1MT/Ha.
According to USDA, Nigeria is again heading toward another year of low wheat production. USDA forecasts Nigeria’s wheat production in the marketing year 2021/2022 to reach 55,000 metric tons (MT). Banditry and kidnapping activities have reached high levels in Northwest Nigeria, which is the primary wheat cultivation region. Wheat is grown mostly in Borno, Bauchi, Yobe, Kano, Jigawa, and Zamfara States. Currently, these states are under intense military operations to expel terrorists and bandits. These restrictions make it highly difficult for farmers to access their farms.
Nigeria is struggling to meet rising wheat demand. Consumption is forecast at 4.9 million metric tons (MMT). Wheat consumption is expected to grow, but the recent foreign exchange restriction is impeding growing domestic demand. The government through the central bank is implementing measures to increase foreign exchange (forex) availability. Importers are forced to source forex outside official CBN sources. Many of the milling companies have started looking at partners like subsidiaries or parent companies outside of Nigeria for help in getting dollars.
This situation is negatively impacting the price of wheat products like bread. The prices of bread and other wheat derivatives increased due to the high costs of production by the millers and bakers. Many households are already using yams, plantain, sweet potato, and garri (cassava products) as substitutes for bread.
The government’s foreign exchange restrictions on imported agricultural commodities, such as wheat, continue to add extra cost to flour, bread, and other wheat flour-based products. The price of wheat influences the market share of major suppliers. Russia, U.S., Black Sea countries, Canada and Australia are the major wheat suppliers to Nigeria for flour milling. Black Sea wheat exports to Nigeria have increased over the past years due to lower prices. To reduce the domestic price of wheat flour and sustain profitability, most Nigerian flour mills have shifted to buying cheaper wheat from Latvia and Lithuania. Mills are blending cheaper, low-quality wheat with more expensive high-quality Hard Red Winter from the United States.
Nigeria does not export wheat. However, there are informal sale outflows of Nigerian wheat flour through major trade centers in northern Nigeria into landlocked neighboring Sahel countries. This practice has been increasing mostly amid Nigeria’s currency devaluation that is resulting in attractive prices.
Nigeria is a net importer of wheat. The country imposes a 5% tariff on wheat imports, plus an additional 15% levy for a total 20% duty. Despite the preference of Nigerian millers for imported wheat, there is a constant government focus on reducing wheat imports by 50%. To reduce imports, the government is requiring millers to purchase local wheat at a fixed price of $400 per ton. However, farmers of the Wheat Farmers Association of Nigeria (WFAN) prefer to sell their limited output to the more attractive markets in Sahel countries, including NGOs for internally displaced persons in the crisis-torn northern regions. Meanwhile, the government is collaborating with milling companies to enhance wheat self-sufficiency – especially strengthening backward integration projects. Backward integration refers to an arrangement in which a company acquires or merges with other businesses to improve supply chain efficiencies. Olam, one of the county’s main flour milling companies, indicated its commitment to partner with the Ministry of Agriculture to expand wheat production. Furthermore, the Flour Milling Association of Nigeria (FMAN) and WFAN continue to express their solidarity with the government’s backward integration project.
The government’s policy on composite flour (i.e., the substitution of cassava flour for wheat flour for use in bread making and other flour-based products) remains in place. The policy offers a 12% tax rebate to bakers willing to blend cassava flour with wheat flour for bread making. Full enforcement of the composite flour policy is unlikely until flour millers, bakers, and other stakeholders overcome technical challenges in developing an appropriate mix of wheat and cassava flours.
CORN PRODUCTION
Corn accounts for the majority share of Nigeria’s coarse grain production. It constitutes the staple meal for a significant number of Nigerians and is the most critical ingredient in the production of animal and aquaculture feed.
The corn belt spanning from Nasarawa, Kaduna, and Katsina States is under persistent localized conflict. Currently, farming communities are under intense fear. Many Farmers are not going to farm because of fear of kidnapping for ransom.
Household corn consumption accounts for 10-15% of total consumption, while the remainder goes towards food manufacturing. Over 40% of Nigeria’s corn production goes into animal feed, especially poultry feed. Nigeria’s expanding poultry sector is expected to boost corn production and consumption.
USDA forecasts corn imports at 1 Million Metric Tons, an estimated 100% increase compared to 500,000 Metric Tons recorded last marketing year. Supply shortfalls due to growing insecurity across all farming regions, currency devaluations, and climatic changes are expected to compel the Nigerian government to approve corn imports during the marketing year. The poultry industry had indicated it would need to import about 1.5 Million Metric Tons of corn to satisfy domestic feed demand during the year. However, the lack of storage capacity and the suspension of importers from accessing foreign exchange at CBN rate would likely limit the import volume.
RICE PRODUCTION
Rice is another staple food in Nigeria consumed by most households daily. It is the second most-produced grain in the country. It can be grown anywhere in the country. The crop grows well both in upland and lowland regions. In recent years, the government and several state governments have promoted increased rice production
Nigerian farmers are increasingly moving from singular seasonal rice farming to multiple seasons. Dry season farming thrives better than wet season because production variables can easily be controlled unlike wet season where flood or protracted drought can wreak havoc on production. The prospects of multiple cropping rice seasons are contributing to increased national production.
The major drivers include the presence of medium-to-large scale and financially stable integrated rice farming/milling operations in the private sector that continue to support many rice farmers with funds and inputs under out-grower arrangements. Amid increasing production costs and lowering demand, out-grower programs provide opportunities for smallholder farmers. Attractive prices of Nigerian rice in the Sahel region are spurring Nigerian rice farmers and millers to increase production for informal exports to neighboring countries. Consumption is projected to reach 6.6 million metric tons. Market sources indicate that the drop in consumption would largely originate from increasing prices amid lowering consumer purchasing power, job losses, and declining household incomes. These factors are already causing more Nigerian households to reduce their rice consumption and shift to foods that are more affordable such as millet, sorghum, yam, cassava, plantain, and other less expensive staples grown within their communities.
Furthermore, grains are a staple food for people all over the world. When compared to other staple foods, grains are more durable and can be stored for long periods of time. They can also be milled into flour or pressed into oil. Moreover, grains are used to make different varieties of food including bread, noodles, pasta, flatbreads, cakes, and pastries.
What are Cereals?
Cereals are members of the grass family (Poaceae or Gramineae family) that are grown for their grain. These plants provide food to feed people all over the world and provide food energy more than any other type of crop. We usually call cereals staple crops because they are essential to the diet and are grown in huge quantities. The word cereal originates from “Ceres”, referring to the Roman Goddess of farming.
Wheat is the most common cereal plant grown in the Western world. Rice and millet are also very popular cereal grains, popular in developing countries. These are eaten by millions of people.
Difference/Relationship Between Grains and Cereals
We often use the words cereals and grains interchangeably. Sometimes, we use the word cereal to refer to the plant and grain to refer to the seeds.
Grains can be seeds of either legumes or cereals. The main difference between grains and cereals is that grains are edible seeds of cereals or legumes, while cereals are plants belonging to the grass family. Cereal grains are a staple food all over the world.
Wheat, rice, corn, oats, barley, and millet are examples of true cereals. Whole grains can also include legumes like peas, beans, soybeans, etc.
Of the four major grains produced in Nigeria, corn is most commonly produced with volumes of 10.7 million metric tonnes in 2018/2019, according to data from the US Department of Agriculture (USDA). Production levels for that year were down almost 3% from 2017/2018 due to pest infestation which led farmers to switch focus to other crops. Domestic production of corn fell short of satisfying demand, with 11.3 million metric tonnes consumed in 2018/2019, approximately 60% of which is consumed as processed maize flour for animal feeds. Maize flour is also used to make a variety of staple local dishes and confectionary products. Corn is also consumed in its unprocessed form as a snack.
Rice, which is a staple food in Nigeria consumed by most households on a daily basis, is the second most produced grain in the country. Production in 2018/2019 reached 7.6 million metric tonnes, 2.7% higher than the previous year and above the consumption level of 7.2 million metric tonnes. Sorghum follows rice with 6.8 million metric tonnes harvested in 2018/19, a 7.9% increase from the previous year. Consumption for the year ending 2019 was fully met by local supply at 6.7 million metric tonnes. End users are predominantly industrial companies producing beverages, cereals and confectionery. A percentage of the grain is also used for animal feed.
Local wheat farming is undertaken on a much smaller scale, with production of 60,000 metric tonnes in 2018/19, unchanged from the previous year. Consumption however, increased by 7.2% between 2018 and 2019 to 5 million metric tonnes, widening the already significant domestic supply gap. Millers thus rely heavily on imports as do producers of wheat-based foods such as bread, pasta and semolina, which are consumed regularly by Nigerians.
According to USDA, wheat is Nigeria’s top grain import, with 5.4 million metric tonnes imported in 2018/19 as a result of insufficient production in the country. The import bill for wheat was $1.1 billion, with 79% sourced from Russia, Canada and the United States, according to ITC trade map data. Data from Trade Map also shows that wheat worth $159,000 was exported to the Netherlands in 2018, which might explain some of the difference between import and local consumption totals.
Nigeria alone grows about 50% of the grain crops produced in West Africa; i.e., 69% of millet, 53% of maize, and 48% of rice. Production has doubled over the past twenty years. As is the case in nearly all West African countries, the rise in grain production is due more to the extension of cultivated land than to any significant improvement in yields.
Millet and sorghum (59% of total grain production by volume) yields have either stagnated (sorghum) or progressed at a very slow pace, putting the average yield for these two crops at 1-1.5 t/ha over the 2000-2006 period. Production increased by a factor of 3.8 (millet) and 3.4 (sorghum) between 1980 and 2008, and now stands at approximately 9 million tonnes for each of these two crops.
Rice and maize stand out, attaining yields of close to 2 t/ha. However, while maize yields have risen from about 1 t/ ha in the early 1990s to about 2 t/ha in 2006, rice yields have stagnated at around 2 t/ha since 1990. Maize has performed well in Nigeria, and its production volume has risen from around 1 million tonnes in 1980 to over 7.5 million tonnes in 2008. The volume of rice produced increased by a factor of 3.4 between 1980 and 2008, reaching 4.2 million tonnes of rice in 2010.
Wheat production remains low, at roughly 60,000 tonnes per year in recent times, despite large investments by the federal government to promote this crop and lower wheat and flour imports.
Legumes and Oilseed Plants. Nigeria is the world’s largest producer of cowpeas (niebe), with about 3 million tonnes grown in 2008 (58% of regional production). The country also produces 3.9 million tonnes of groundnuts, or 57% of all groundnuts grown in West Africa.
Demand for grains is dominated by human consumption, followed by the food processing industry and biofuel production. The remainder goes to neighbouring countries. Proportions vary according to economic circumstances. Millet and sorghum crops largely exceed domestic demand, providing exports. The situation is less clear-cut for maize, depending to a great extent on the level of domestic demand which has been rising steadily, driven by the food processing industry and demand for poultry feed (1.3 million tonnes in 2009). Urban growth has steadily pushed up annual rice consumption, which has risen from 8 kg per person in 1960, to 15 kg in 1980, and then to more than 20 kg per person in 2007.
Imports Needed, Particularly Rice and Wheat. Although local products provide most of the food for cities in Nigeria, the country has a structural deficit for two grains, rice and wheat. Domestic rice demand has been about 5 million tonnes a year since 2008, and Nigeria imports more than one million tonnes annually, making it one of the largest rice importers in the world. It also imports more than two million tonnes of wheat (flour) every year.
Nigeria therefore continues to be a very substantial net importer of grains.
Oil and gas exports account for about 11 percent of the national GDP, 95 percent of its total export earnings, and about 85 percent of the country’s total revenue. Gross domestic product (GDP) averaged about $440 billion over the last 5 years. In 2020, the economy shrank by -8.9 percent because the country’s budget was 90 percent funded by revenue from oil and gas exports. Low oil prices and the continuing COVID-19 economic fallout are increasing the country’s government debt and the country’s economic recession since November 2020. 2021 was ushered in with the second wave of COVID-19, implementation of the African Continental Free Trade Area (AfCFTA), a rise in oil prices, an upsurge in insecurity (terrorism, kidnapping, and banditry) and an increase in clashes between herdsmen and farmers. The pandemic worsened inflation, which has been over ten percent since 2016. Given the low-growth and high-inflation backdrop, the Central Bank of Nigeria (CBN) is implementing a policy to reverse galloping food inflation by purchasing grains produced by farmers financed under the 2020 wet season Anchor Borrowers Program (ABP). Currently, the CBN is sitting on thousands of metric tons of grains in strategic grain silos and warehouses. The CBN is also trying to resuscitate the moribund Nigeria Commodity Exchange (NCX) to facilitate price stability for grains.
Nigeria's agricultural sector is not well organized and developed. Over the decades, the Government of Nigeria’s policies and measures including the current Agricultural Transformation Agenda (ATA) and Agricultural Promotion Policy (APP), the Anchor Borrower Scheme; etc. remain unsuccessful for improving and protecting domestic agriculture and food processing. The government also adopted various types of trade protectionist measures including hindering importers of many food and agricultural commodities access to foreign exchange despite membership of pro-free-trade bodies. Land borders with neighboring countries, which are major sources of food supply to Nigeria through gray channels, were closed in August 2019 to prevent the entry of food and agricultural products were re-opened in the middle of December 2020.
Nigeria relies on imports to meet its food and agricultural product needs (mostly wheat, rice, poultry, fish, food services, consumer-oriented foods, etc.) worth about $10 billion. This makes trade in food and agricultural products an important component in achieving the country’s food security needs. Europe, Asia, USA, South America, and South Africa are the major competitors.
Major grain staples in Nigeria comprises maize, wheat, sorghum and rice, which are consumed either in their raw form or as more processed goods. Grain farming is predominantly undertaken by smallholder farmers who face challenges regarding access to funds and availability of quality inputs to improve yield.
Nigeria’s agricultural policy prioritizes domestic food and agricultural production through protective trade policies amid low productivity. In September 2020, President Muhammadu Buhari called for a ban on dollars for food imports and added fertilizers to the restricted items list. Currently, this action is forcing wheat and soybean importers to source dollars at higher rates through the parallel markets. The high foreign exchange rates are increasing the cost of flour and leading to rising prices and declining consumption of bread and other wheat flour-based products during the out-year.
In 2021, Nigeria is expected to face decreases in grain supplies due to conflict and economic factors exacerbated by the secondary effects of COVID-19. Internal security across the country is a serious challenge to food production, especially in the corn belt. Insecurity is rife across the country’s leading agricultural states. Corn and sorghum production are forecast to decline while rough rice production is forecast to grow by 17% higher than in 2020/2021 due to farmers now cultivating two crops per year. Consumption of wheat and corn is forecast to increase - especially corn being a critically important source of feedstock.
WHEAT PRODUCTION
Nigeria only managed to produce just about 2% of all the wheat it consumed. Its wheat production has been hampered by a lack of modern agronomic practices and the unavailability of improved seeds. The national average yield for wheat is 1MT/Ha.
According to USDA, Nigeria is again heading toward another year of low wheat production. USDA forecasts Nigeria’s wheat production in the marketing year 2021/2022 to reach 55,000 metric tons (MT). Banditry and kidnapping activities have reached high levels in Northwest Nigeria, which is the primary wheat cultivation region. Wheat is grown mostly in Borno, Bauchi, Yobe, Kano, Jigawa, and Zamfara States. Currently, these states are under intense military operations to expel terrorists and bandits. These restrictions make it highly difficult for farmers to access their farms.
Nigeria is struggling to meet rising wheat demand. Consumption is forecast at 4.9 million metric tons (MMT). Wheat consumption is expected to grow, but the recent foreign exchange restriction is impeding growing domestic demand. The government through the central bank is implementing measures to increase foreign exchange (forex) availability. Importers are forced to source forex outside official CBN sources. Many of the milling companies have started looking at partners like subsidiaries or parent companies outside of Nigeria for help in getting dollars.
This situation is negatively impacting the price of wheat products like bread. The prices of bread and other wheat derivatives increased due to the high costs of production by the millers and bakers. Many households are already using yams, plantain, sweet potato, and garri (cassava products) as substitutes for bread.
The government’s foreign exchange restrictions on imported agricultural commodities, such as wheat, continue to add extra cost to flour, bread, and other wheat flour-based products. The price of wheat influences the market share of major suppliers. Russia, U.S., Black Sea countries, Canada and Australia are the major wheat suppliers to Nigeria for flour milling. Black Sea wheat exports to Nigeria have increased over the past years due to lower prices. To reduce the domestic price of wheat flour and sustain profitability, most Nigerian flour mills have shifted to buying cheaper wheat from Latvia and Lithuania. Mills are blending cheaper, low-quality wheat with more expensive high-quality Hard Red Winter from the United States.
Nigeria does not export wheat. However, there are informal sale outflows of Nigerian wheat flour through major trade centers in northern Nigeria into landlocked neighboring Sahel countries. This practice has been increasing mostly amid Nigeria’s currency devaluation that is resulting in attractive prices.
Nigeria is a net importer of wheat. The country imposes a 5% tariff on wheat imports, plus an additional 15% levy for a total 20% duty. Despite the preference of Nigerian millers for imported wheat, there is a constant government focus on reducing wheat imports by 50%. To reduce imports, the government is requiring millers to purchase local wheat at a fixed price of $400 per ton. However, farmers of the Wheat Farmers Association of Nigeria (WFAN) prefer to sell their limited output to the more attractive markets in Sahel countries, including NGOs for internally displaced persons in the crisis-torn northern regions. Meanwhile, the government is collaborating with milling companies to enhance wheat self-sufficiency – especially strengthening backward integration projects. Backward integration refers to an arrangement in which a company acquires or merges with other businesses to improve supply chain efficiencies. Olam, one of the county’s main flour milling companies, indicated its commitment to partner with the Ministry of Agriculture to expand wheat production. Furthermore, the Flour Milling Association of Nigeria (FMAN) and WFAN continue to express their solidarity with the government’s backward integration project.
The government’s policy on composite flour (i.e., the substitution of cassava flour for wheat flour for use in bread making and other flour-based products) remains in place. The policy offers a 12% tax rebate to bakers willing to blend cassava flour with wheat flour for bread making. Full enforcement of the composite flour policy is unlikely until flour millers, bakers, and other stakeholders overcome technical challenges in developing an appropriate mix of wheat and cassava flours.
CORN PRODUCTION
Corn accounts for the majority share of Nigeria’s coarse grain production. It constitutes the staple meal for a significant number of Nigerians and is the most critical ingredient in the production of animal and aquaculture feed.
The corn belt spanning from Nasarawa, Kaduna, and Katsina States is under persistent localized conflict. Currently, farming communities are under intense fear. Many Farmers are not going to farm because of fear of kidnapping for ransom.
Household corn consumption accounts for 10-15% of total consumption, while the remainder goes towards food manufacturing. Over 40% of Nigeria’s corn production goes into animal feed, especially poultry feed. Nigeria’s expanding poultry sector is expected to boost corn production and consumption.
USDA forecasts corn imports at 1 Million Metric Tons, an estimated 100% increase compared to 500,000 Metric Tons recorded last marketing year. Supply shortfalls due to growing insecurity across all farming regions, currency devaluations, and climatic changes are expected to compel the Nigerian government to approve corn imports during the marketing year. The poultry industry had indicated it would need to import about 1.5 Million Metric Tons of corn to satisfy domestic feed demand during the year. However, the lack of storage capacity and the suspension of importers from accessing foreign exchange at CBN rate would likely limit the import volume.
RICE PRODUCTION
Rice is another staple food in Nigeria consumed by most households daily. It is the second most-produced grain in the country. It can be grown anywhere in the country. The crop grows well both in upland and lowland regions. In recent years, the government and several state governments have promoted increased rice production
Nigerian farmers are increasingly moving from singular seasonal rice farming to multiple seasons. Dry season farming thrives better than wet season because production variables can easily be controlled unlike wet season where flood or protracted drought can wreak havoc on production. The prospects of multiple cropping rice seasons are contributing to increased national production.
The major drivers include the presence of medium-to-large scale and financially stable integrated rice farming/milling operations in the private sector that continue to support many rice farmers with funds and inputs under out-grower arrangements. Amid increasing production costs and lowering demand, out-grower programs provide opportunities for smallholder farmers. Attractive prices of Nigerian rice in the Sahel region are spurring Nigerian rice farmers and millers to increase production for informal exports to neighboring countries. Consumption is projected to reach 6.6 million metric tons. Market sources indicate that the drop in consumption would largely originate from increasing prices amid lowering consumer purchasing power, job losses, and declining household incomes. These factors are already causing more Nigerian households to reduce their rice consumption and shift to foods that are more affordable such as millet, sorghum, yam, cassava, plantain, and other less expensive staples grown within their communities.
