Nigeria’s Q1 2022 foreign trade surplus spotlights urea production

BY ONOME AMUGE

Nigeria’s foreign trade balance recorded a bullish performance for the first time since the second quarter of 2021, as total exports stood at N7.1 trillion of which re-exports were valued at N115.80 billion, while total imports stood at N5.90 trillion, resulting in a trade surplus worth N1.2 trillion against N173.96 billion deficit recorded in the previous quarter.

This was disclosed in the recently released Q1 2022 foreign trade report, titled “Foreign trade in goods statistics (Q1 2022)”, published by the National Bureau of Statistics (NBS).

According to the report, exported merchandise rose 23.13 percent quarter-on-quarter from N5.77 trillion to N7.1 trillion in the first quarter of 2022. The figure also marked the country’s highest export figure since the third quarter of 2019.

The improvement in Nigeria’s merchandise trade was attributed to increases in crude oil export receipts which showed that Nigeria’s crude oil earnings rose by 31.66 percent quarter-on-quarter to N5.62 trillion in Q1 2022.

Notably, Nigeria’s non-oil export also witnessed a significant advancement, with raw materials exports rising 504.17 percent year-on-year from N42.95 billion in the first quarter of 2021 to N259.48 billion in the second quarter of 2022.

Urea leads the pack of non-oil commodities export

During the quarter under review, Nigeria’s urea export rose 170.21 percent year-on-year from N16.77 billion to N208.39 billion, making it the third-highest earning export product with a total of 2.93 percent share of total exports.

It also represented the country’s biggest non-oil export commodity, followed by superior quality cocoa beans with an export value of N72.59 billion, while Sesamum seeds, previously Nigeria’s highest earning non-oil export, slipped into third position at N56.45 billion.

Economic relevance of urea

Urea is a white crystalline organic chemical compound that is considered by agronomists as one of the most important nitrogenous fertilizers globally, due to its high nitrogen content (about 46 percent) and neutral potential hydrogen (pH) that is adaptable to almost all kinds of soils and a wide range of crops. Urea as a fertilizer provides plants with nitrogen to promote green leafy growth and also aids the photosynthesis process and offers higher crop yield in lesser time. Asides its utilisation in the manufacturing of fertilisers, urea also serves as a valuable component in the production of livestock feed supplements, adhesives, pharmaceuticals, dyes, disinfectants, textile finishes, amongst other uses.

According IMARC Group, a leading market research company that provides market and business research intelligence across the globe, the global urea market reached a value of $49.7 billion in 2021 and is expected to reach $581 billion by 2027, at a compound annual growth rate (CAGR) of 2.69 percent.

IMAC noted that the widespread usage of urea as a fertiliser in the agricultural industry will propel market growth in the coming years, adding that the growing industrial usage will further drive the demand for urea in the global market.

Where does Nigeria stand in global production?

Data gathered from the United Nations Food and Agriculture Organisation (FAO) showed that in 2019, India was the highest producer of urea with an annual output of 24.2 million tonnes or 33.77 percent of the world’s urea production. The South Asian country was followed by Russia (8.17 million tonnes), Indonesia (7.3 million tonnes), Pakistan (5.8 million tonnes), US (5.7 million tonnes), who made up the five largest global producers.

In the same period, data from Statista, a leading statistics portal, showed that Russia was the largest exporter of urea at 6.98 million metric tonnes, followed by Qatar, with 5.6 million tonnes. Other top urea exporters included Egypt (4.6 million tonnes), China (4.6 million tonnes), Saudi Arabia (4.5 million tonnes), Oman (3.3 million tonnes), Algeria (2.8 million tonnes), Iran (2.4 million tonnes), United Arab Emirates (2.1 million tonnes) and Indonesia (1.8 million tonnes).

In 2019, Nigeria was ranked by the FAO as the 12th largest urea fertilizer producer globally at a production capacity of 1.622,958 million tonnes and the 16th largest exporter with a volume of 722,479 tonnes.

However, the commencement of operations in the Dangote Fertiliser Plant located in the Lekki Free Trade Zone in Lagos is projected to boost Nigeria’s production and export capacity and elevate the country’s competitive power in the global market. The $2.5 billion plant, which is also Africa’s largest granulated urea fertilizer complex, is expected to produce 3 million tonnes of urea fertiliser per annum in its first phase.

Speaking on the production capacity of the plant during a working tour with Lai Mohammed, minister of information, Devakumar Edwin, executive director, strategy, capital projects and portfolio development, Dangote Group, said the plant had the capacity to meet the country’s current 1.5 million tonnes per annum fertiliser consumption, and also export a substantial amount of the product to Argentina, Brazil, India, Mexico, US, and other export destinations.

According to Edwin, the Dangote urea, processed from natural gas, is an export quality product with global standards, hence its high demand in the global market.

The Dangote executive director further assured that the plant would continue to meet local demand at an affordable price in order to make Nigeria self-reliant in urea production, and consequently, food production.

With production in motion and the addition of Indorama Eleme fertiliser plant capacity of 1.4 million metric tonnes annually and Notore urea fertilizer plant capacity of 500,000 tonnes annually, Nigeria’s production capacity is estimated to surpass 4.37 million tonnes by the end of 2022, further strengthening the country’s revenue potential.

Settling the exportation and local consumption rift

Though Nigeria’s urea expansion has resulted in a remarkable progress in the global market, the same cannot be said of the local consumption as many farmers have continuously lamented the frequent scarcity and hike of the commodity in the retail markets.

A survey across some major markets in the country found that a bag of urea fertiliser which at the last quarter of 2021 sold for an average of N10,000 to N12,000, had surged to the current level of N16,000 to N18,000.

This, according to analysts and stakeholders in the agriculture sector, is a situational irony considering that Nigeria is a net exporter of the commodity, with the major local producers having substantial capacity to supply the local market at affordable rates and sufficient quantity.

They also raised concerns that the hike in price would hinder productivity of major staples such as maize, rice, among others, leading to an inevitable food crisis if measures are not taken.

Commenting on the issue, the Nigeria Agro Input Dealers Association (NAIDA) called on fertiliser companies in Nigeria to sell at least 35 percent of the urea in the local market to reduce the cost of food in the market, rather than concentrating solely on the export market.

Kabiru Fara, national president of the association, in an interview blamed Dangote, Notore and Indorama, the country’s leading urea producers, for the increase in the local market.

According to Fara, the urea companies in Nigeria mostly export their products instead of satisfying the Nigerian market because the export gives them foreign exchange and at higher price, not minding that these companies are based in Nigeria and no raw material is imported for production.

“The raw materials are sourced from Nigeria, so they should not be looking at the cost in the international market, but even at that, why can’t they release products in Nigeria?” he queried.

On the way forward, the NAIDA president said a meeting was held between the agro-dealers and fertiliser companies at the Office of the National Security Adviser (NSA), noting that the companies were asked to allocate 35 percent of their production to the Nigerian market, and also agree on an affordable price to sell.