Nigeria’s agriculture slides deeper into crisis as deficit hits N424bn in Q3’23

Despite the federal government’s efforts to boost agricultural production declaration of a state of emergency on food security amid promises to ramp up local production and improve food security, an analysis of data from the National Bureau of Statistics (NBS) shows that the country’s agricultural sector continues to run a significant trade deficit which reached N423.69 billion in Q3 2023, up from N376.46 billion in Q2 2023

According to the NBS data, Nigeria’s total agricultural trade for the third quarter of 2022 amounted to N863.67 billion. Of this, exports accounted for N219.99 billion which is about 25 per cent of the total, while imports made up the remaining N643.68 billion,about 75 per cent of the total.

A closer look at the data shows that imports are dominated by processed and finished products such as wheat, wheat flour, sugar, milk powder, and other processed products, which are mainly sourced from countries such as China, India, the Netherlands, among others. On the other hand, Nigeria’s agricultural exports are mainly raw and semi-processed commodities such as sesame seeds, cocoa beans, and cashew nuts, which are mostly exported to countries such as Turkey, the Netherlands,India etc.  This imbalance in the types of products being traded highlights the lack of value addition and processing capacity in the country’s agricultural sector.

The NBS report noted that the value of agricultural exports in Q3 2023 fell by 21.68 per cent compared to Q2 2023, and rose by 161.25 per cent compared to Q3 2022. This indicates that the sector’s exports have been volatile over the last year, with significant fluctuations in the value of exports.

The report also showed that agricultural imports increased by 22.36 per cent in Q3 2023 compared to Q2 2023, and by 25.64 per cent compared to Q3 2022.  The higher value of imports puts further pressure on the country’s foreign exchange reserves and the exchange rate of the naira.

The report attributes the increasing import and resultant agricultural trade deficit to a higher level of imports relative to exports, a worrisome situation which analysts  attribute to declining production.

According to data from the Food and Agricultural Organisation of the United Nations (FAO), Nigeria’s yield per hectare of agricultural land is among the lowest in Africa. Specifically, the country’s yield of maize, rice, and cassava is only one-third of the yields achieved in some other African countries.

When looking at the average yield per hectare of rice and maize across the globe, it is clear that Nigeria’s yield is far below the global average. In fact, the average yield of rice globally is 4.4 MT per hectare, which is more than double the average yield in Nigeria. Similarly, the average yield of maize is 7.1 MT per hectare globally, nearly four times the average yield in Nigeria.

This is a worrying trend, as it indicates that Nigeria is not producing enough food to meet the needs of its growing population not to talk of meeting a trade balance in the agricultural sector.

Analysts contend that the underperformance in terms of agricultural production has serious implications for Nigeria’s food security and its ability to trade agricultural products. It also indicates that the country is not making the most efficient use of its land and resources. They argue that if this trend continues, it could lead to increased food prices and potentially cause social unrest, noting that it is clear as crystal that there is a need for urgent action to improve the country’s agricultural productivity.

The comments from the analysts suggest that Nigeria is not self-sufficient in food production and relies heavily on imports to meet its food needs. This is a significant problem, as it makes the country vulnerable to fluctuations in global food prices and supply disruptions. Additionally, it means that a large portion of the country’s foreign exchange is being spent on food imports, rather than on other critical areas such as infrastructure and education.

Promise Amahah, chief executive officer, Mainstay Agro-Allied Services Ltd, points to several factors that have led to a significant decline in production levels in Nigeria’s agricultural sector.

Amahah noted that to begin with, the high inflation rate and increased cost of living have led to a reduction in the purchasing power of consumers, which in turn has impacted the profitability of farmers and led to a decline in production.

He added that the high cost of doing business in the country, including increased prices for fuel and other essential inputs, has further exacerbated the situation. The combination of these, he explained, has resulted in lower levels of agricultural production, and in turn, a decline in the supply of food and an increase in food prices.

Oyelaran-Oyeyinka, who is an expert on industrialization and economic development, presented his solutions for improving Nigeria’s food and agriculture system during a lecture at the Africa Social Impact Summit in Lagos.

Among the solutions he proposed were strengthening the country’s food and agriculture value chain through investment in infrastructure, technology, and human capital. He also emphasized the importance of addressing systemic issues such as market access and weak institutional capacity.

Oyelaran-Oyeyinka used the concept of the low-income trap to illustrate the challenges facing rural populations in Africa who depend on agriculture for subsistence. He noted that about 70% of Africa’s rural population rely solely on agriculture for their livelihoods, and that many are caught in a cycle of poverty due to factors such as limited access to markets, lack of infrastructure, and inadequate financing.

In his view, to address the low-income trap and improve the lives of rural populations, it is necessary to strengthen the food and agriculture sector through improved market access, enhanced infrastructure, and investment in rural communities.

During the lecture, Oyelaran-Oyeyinka identified several fundamental challenges facing the agricultural sector in Nigeria and Africa more broadly. He noted that the sector is characterized by small farms with low yields, a lack of irrigation systems, and limited use of modern farming inputs. The lack of irrigation, in particular, means that many farmers are at the mercy of the weather, which can lead to fluctuations in crop yields and food insecurity.

The senior special adviser on Industrialisation to the President of the African Development Bank (AfDB, )argued that to address these challenges, it is important to invest in modern irrigation systems, improve access to inputs such as fertilizers and seeds, and promote the doption of improved farming practices. In addition, he called for greater investment in research and development to support the development of more resilient and high-yielding crops.

Oyelaran-Oyeyinka also highlighted the need for policy reforms to improve the functioning of agricultural markets. He suggested that policies should focus on reducing barriers to trade, improving access to credit for farmers, and strengthening extension services to help farmers adopt new technologies and farming methods.