Production levels and prices across major grain commodities in Nigeria’s agricultural space are set for an upward trend, says AFEX, Nigeria’s leading commodities market player, in its 2021 crop production report.
According to the country’s first licensed private commodities exchange, the 2021 crop production report was developed by surveying over 10,000 farmers and tracking market prices across over 200 markets in the country, focusing majorly on the impact of land usage, inputs, weather, and subsequently, the output expectations of farmers on production levels.
Sharing its optimistic production outlook across the major agro-commodities in an online event monitored by Business A.M., AFEX stated that maize production is anticipated to rise by 3 percent, while soybean is expected to grow by 8 percent as against 2020 figures.
On a similar trend, ginger is predicted to see a 4 percent growth in production levels, sesame output is expected to increase significantly by 12 percent, while sorghum and paddy rice were likewise projected to grow by 2 percent and 10 percent, respectively.
Despite recording an upward production trend, the report considered production levels for the commodities surveyed to be small-scale in comparison with rising demand pressures. Maize was reported to be one of the most vulnerable crops to demand pressures.
Demand for the most widely planted cereal crop in the world was signaled in the report to exceed supply levels in the season, a factor AFEX said could result in increased prices.
The report predicted a higher base price of N170,000 against N156,000 in 2020 for maize. It further stated that maize prices are likely to settle between N170,000/MT to N180,000/MT by December 2021.
Maize prices were also expected to climb during the May/June 2021 season as prices are likely to jump between N210,000 per metric tonne to N230,000 per metric tonne, the report revealed, adding that the Central Bank of Nigeria’s intervention in the industry should weigh on price pressure this season.
For cocoa, the report said there would also be a significant pressure on prices due to low supply, driven by prolonged rains in Nigeria.
“We forecast cocoa prices to settle around N1.3 million per tonne to N1.350 million per tonne by Q4 2021,” the report stated on the back of a stable exchange rate.
Similarly, the price forecasts for most commodities that were featured in the report were shown to be on the rise with analysts, who discussed the findings at the unveiling event, revealing a myriad of factors for the increase.
The key factor considered was the difference in aggregate demand and supply for the commodities as well as key macro events likely to drive prices.
Speaking at the online event, Akinyinka Akintunde, AFEX’s chief operating officer (COO), said the crop production estimates provide crucial insights for people in the Nigerian agricultural sector, enabling them to make strategic marketing and investment decisions for the year ahead.
Akintunde noted that this year’s report shows real optimism among farmers which is great for the industry. He also pointed at a marginal increase in production volumes across all commodities surveyed despite a higher-than-average price of key inputs.
The COO, however, observed that the increase was not sufficient to topple the upward trend of commodities prices. As such, prices of commodities are expected to start from a higher base when compared to the previous year, he said.
Akintunde further commented that AFEX’s mission is to fill the data gap in the agriculture sector, enabling policymakers and producers, as well as stakeholders who benefit from the programmes, to take steps that will benefit users within the ecosystem.
“Without these insights, it would be much more difficult to predict future agricultural yields, output, and eventual pricing, which is a key driver of inflation,” he said.
