Prior to the discovery of crude oil in Nigeria, Agro-export was the main commercial export, serving as a source of foreign exchange earnings and the backbone of government revenues. The discovery of crude oil shifted attention away from the agricultural sector, which eventually led to a massive decline in the sector and hence, its contribution to the economy.
However, in recent years, especially because of the fall in the price of crude oil in the global market as well as increasing global commitment to clean and renewable energy, the government has recommitted to the development of the agricultural sector. With an emphasis on Agro-exports, the government has devised policies and curated development plans to encourage and sustain local production, processing, and export. Some of those policies include the establishment of Export Processing Terminals, the Lekki deep-sea port, and the ratification of the African Continental Free Trade Agreement among others.
A recent report released by the National Bureau of Statistics reveals the total agricultural exports between January and September 2022 stood at N427.6 billion, while a sum of N504.9 billion was earned for the full year of 2021.
According to the Nigeria Export Commission Council, cocoa, sesame seeds, and cashew nuts are the top agro-export in Nigeria in 2022, contributing significantly to foreign exchange inflow. Other products like cassava, yam, rice, sorghum, and palm oil also contribute, but less significantly to foreign exchange income.
Despite the abundance of arable lands, optimal weather conditions, and a youthful demographic advantage, agricultural imports still outweigh exports. According to the National Bureau of Statistics, agricultural imports stood at N443.36 billion in the first quarter of 2022 (Q1’22), exceeding agricultural exports (N201.59 billion) by 120 per cent. This trade imbalance can largely be attributed to a lack of local production, the bottleneck in supply chain management, insecurity and quality concerns over Nigeria’s export.
Opportunities for Agro-Exports in Nigeria
To fully harness Nigeria’s agricultural export potential, the government and relevant stakeholders must commit to policies that address the standardisation of Nigeria’s agro-produce in the international market, increase local production, and resolve the logistic bottleneck in accessing the ports.
Value Addition
For a very long time, Nigeria has consistently exported raw agricultural produce with little or no value added. This in turn has lowered the value of these exports in the international market. There remains an untapped revenue potential in processed agro-export that Nigeria is yet to key into.
For instance, in 2021, Germany’s cocoa bean imports stood at $759.51m while its export of chocolate (made from cocoa) was valued at $5.5b within the same period under review. As a major exporter of agricultural produce like cocoa, sesame seeds, and cashew nuts, the government and relevant stakeholders must begin to empower industries through adequate investment in infrastructure and technical know-how to add value to raw agro-produce for local consumption and export.
According to the Managing Director and CEO of Fidelity Bank, Mrs. Nneka Onyeali-Ikpe, Nigeria can increase its cocoa and cashew earnings from $1b to $3b and $200m to $600m annually by increasing capacity and processing.
Recently, the Federal Government of Nigeria through the Nigerian Port Authority licensed five Export Processing Terminals to commence the operation of handling cargoes and processing exports. This is a welcome development in the quest to add value to exports, especially agricultural products originating from Nigeria.
Addressing Quality Concerns
In the past, Nigerian agro-exports were often rejected at destination ports over quality concerns. Due to bottlenecks in logistics, exports stay too long before accessing the port and on sea-going vessels. Consequently, some of these exports halved their shelf-life or expired before arrival at the destination port. Also, the European Union rejects about 76% of agricultural products from Nigeria for not meeting required standards.
Succinctly addressing the quality of agro-export from Nigeria will open up new markets and lead to the removal of restrictions on some of Nigeria’s agricultural produce blacklisted in the international market. Concerned regulatory agencies like NAFDAC, SON, Nigeria Customs Service(NCS), and others must begin to intensify efforts to ensure all agricultural products either for local consumption or export meet up with international required standards.
Boost Local Production
Without enough production to cater to local consumption, Nigeria will never meet its desired export goals. Despite different administrations’ policies to reduce food imports, Nigeria still spends substantially to import food products like wheat, rice, and sugar to supplement local production. The National Bureau of Statistics reports that the value of agricultural imports in Nigeria increased to N512.91bn in Q3 from N464.45bn recorded in Q2 2022.
By boosting local production, Nigeria will be on verge of achieving food security and increased agro-export. Government must look inward to develop and support policies that will increase local production and support farmers through programs like tax incentives, agricultural loans, and the provision of machines to boost mechanised farming.
Despite the challenges facing the agricultural sector in Nigeria, especially the lack of decent infrastructure and the herders-farmer crisis, the sector’s present and projected contribution to the economy cannot be ignored.
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