The rural economy of Nigeria is increasingly being redefined by macroeconomic forces rather than agronomic cycles, as policy shifts in fuel pricing, exchange rates and trade dynamics reshape production incentives across key agricultural zones, forcing farmers to reassess the financial viability of staple crop cultivation.
Three years into President Bola Ahmed Tinubu’s administration, the agricultural sector of Africa’s most populous nation, finds itself undergoing what many stakeholders describe as a structural rupture rather than a cyclical downturn. Fuel subsidy removal, currency devaluation, rising input costs, import waivers, and persistent insecurity have converged into a complex set of shocks that are reshaping production incentives, collapsing price signals, and forcing a rethink among farmers and traders alike. The result is an agricultural economy caught between two competing realities. One consists of government intervention aimed at stabilising food prices, while the other involves market forces that are increasingly discouraging domestic production.
The turning point, according to stakeholders, came early in the administration with the removal of fuel subsidies. While it is considered a fiscal reform to correct long-standing distortions, the immediate transmission mechanism into agriculture was swift and severe.
Transportation costs witnessed a hike,as moving farm produce from rural production zones to urban consumption centres became significantly more expensive, and mechanised farming inputs became costlier almost overnight. Fertiliser prices, agrochemicals, and logistics expenses rose in tandem with fuel costs, amplifying production risks for both smallholder and commercial farmers.
That shock was followed by the naira devaluation, which proved to be a more systemic disruption. For a sector heavily dependent on imported inputs (fertilisers, hybrid seeds, machinery, and chemicals), the weaker currency functioned as a multiplier of existing cost pressures. Farmers who had previously operated on thin margins suddenly faced input inflation that outpaced commodity prices.
In effect, agriculture became simultaneously more expensive to produce and less predictable to monetise.
In response to rising food inflation, the federal government introduced import waivers for essential commodities including rice, maize, sorghum and wheat. The policy was designed to stabilise prices, improve supply and cushion consumers against escalating food costs.
But in practice, stakeholders say it introduced a second-order shock into the production system.
By allowing large-scale importation of staples, domestic grain prices began to decline sharply just as production costs were peaking. The result was a collapse in farmgate prices across multiple commodities.
For many farmers, particularly those operating on credit or seasonal loans, the timing proved devastating. Revenues failed to cover input costs, and in some cases, farmers were unable to recover even half of their production capital.
Since then, grain markets have remained subdued, creating what analysts describe as a “price-cost inversion”; a situation where producing locally is more expensive than importing.
Nowhere is the cost pressure more visible than in fertiliser markets.
In parts of northern Nigeria, fertiliser prices have reached levels that are increasingly incompatible with smallholder economics. Urea reportedly sells for as high as N55,000 per bag, while NPK fertiliser is priced around N65,000.
For farmers like Dan Asibi Funtua, a Kaduna based farmer, the arithmetic is unforgiving. “A farmer now needs to sell two or three bags of grain just to buy one bag of fertiliser,” he lamented.
The consequence has been a gradual retreat to traditional inputs. Across farming communities, the use of animal manure is resurging as a cost-saving substitute for synthetic fertiliser, particularly among smallholders unable to absorb input inflation.
While agronomically viable in some contexts, the shift signals a regression in productivity-enhancing input adoption at a time when food demand continues to rise.
Credit stress and the retreat of commercial farming
The financial system has also tightened its grip on agriculture.
With declining returns and increased volatility, banks and lenders have become more cautious in agricultural lending, while farmers themselves are increasingly reluctant to expand exposure to debt-financed production.
Garba Ahmed Bichi, secretary of the All Farmers Association of Nigeria (AFAN) in Kano State, described the environment as one of deep uncertainty.
“Farmers are finding it increasingly difficult to continue investing in agriculture due to instability in prices and policy direction,” he said.
Tanko Andami, the Taraba State Rice Farmers Association chairman echoed similar concerns, noting that repeated importation of staples has undermined domestic production incentives.
“When imported maize and rice enter the market at lower prices, it collapses farmgate value and discourages production,” he said.
The outcome is a widening gap between national food demand and domestic production confidence, a gap increasingly filled by imports.
Beyond macroeconomics, security challenges remain one of the most destabilising forces in Nigeria’s agricultural system.
Across the North West, North Central and North East, persistent banditry, kidnappings and farmer-herder conflicts have forced displacement from farmlands, reduced cultivated acreage and disrupted rural markets.
In many affected areas, farming has become not just economically risky but physically dangerous.
Reports of armed groups imposing informal levies on farmers or demanding a share of harvests have further distorted production incentives. In extreme cases, farmers are abandoning commercial-scale agriculture entirely in favour of subsistence production closer to safer settlements.
Trade routes have also become increasingly unsafe, contributing to post-harvest losses and restricting access to markets. The result is a dual shock of reduced supply and increased retail prices in urban centres.
According to Austine Maduka, founder of the Community Allied Farmers Association of Nigeria, insecurity remains one of the most significant structural constraints.
“Banditry, kidnapping and farmer-herder conflicts have affected farming activities in several states, limiting access to farmlands and reducing productivity,” he said.
Amid mounting pressures, the federal government has introduced a new intervention framework through the National Agricultural Development Fund, including plans to distribute free fertiliser to farmers nationwide.
The initiative is intended to offset rising input costs and support smallholder productivity, particularly in regions most affected by price shocks and insecurity.
Stakeholders recently convened to review implementation mechanisms for the programme. According to Bashir Sulaiman Garkuwa, personal assistant to the national president of AFAN, the distribution framework involves collaboration between the Ministry of Agriculture, security agencies and farmer representatives.
“The goal is to ensure fertiliser reaches smallholder farmers for free as directed by the President, to support production and stabilise agriculture,” he said.
However, questions remain over scale, funding adequacy, distribution efficiency and long-term sustainability.
While interventions such as fertiliser distribution may provide short-term relief, analysts argue that Nigeria’s agricultural challenges are increasingly structural rather than cyclical.
Three interlocking constraints define the sector’s current trajectory:
Notably, input dependency on foreign exchange exposes farmers to currency volatility.
Moreso, import waivers distort domestic pricing signals and discourage local production.
In addition, insecurity reduces effective farmland access and increases operational risk.
Together, these factors create a system in which incentives for large-scale commercial agriculture are weakening at the same time that population-driven food demand is rising.
Across farming communities, a behavioural shift is already visible. Many farmers are becoming more cautious, reducing farm sizes, scaling back input usage, or exiting high-risk crops altogether.
Some commercial operators are reportedly leaving agriculture entirely after consecutive seasons of losses, particularly in grain production.
This retreat raises longer-term concerns for food security. If current trends persist, Nigeria could become increasingly dependent on imported staples at a time when global food markets are themselves becoming more volatile due to climate shocks, geopolitical tensions and supply chain disruptions.
