Despite the rapid growth of the oil industry over the years, agriculture still accounts for 40% of GDP and provides employment, both formal and informal, for about 60% of Nigerian’s more than 150 million people. Nigeria’s agriculture remains largely subsistence-based, with about 80% of agricultural output coming from farmers who live on less than a dollar per day and farm less than one hectare. Major agricultural commodities produced in the country are cocoa, peanuts, palm oil, corn, rice, sorghum, millet, cassava (tapioca), yams, rubber, cattle, fish and timber.
Nigeria is a huge net importer of agricultural products, with imports of approximately $3.5 billion and exports of less than $500 million in 2009. Imports are dominated by bulk/intermediate commodities such as wheat, rice and sugar. The United States is a substantial exporter of agricultural products to Nigeria, with exports exceeding $800 million. Although U.S. exports are primarily wheat, exports of U.S. value-added and consumer-ready products have also risen in recent years. Major competitors for the Nigerian market are Europe, Asia, and South Africa. Nigeria’s traditional trade links with Europe remain strong, and EU agricultural exports to Nigeria account for about 50 percent of the total. Imports from Asia, especially China, have grown markedly in recent years and investment from China in all sectors of the economy has experienced very rapid growth.
Nigeria’s agricultural exports to the United States in 2009 fell slightly to $62 million thru November, down from $76 million at the same time last year. This decrease was mainly due to smaller rubber exports.
On September 25, 2008, the GON released to the public the new 2008-2012 tariff book, almost two years after the last one expired. The new tariff structure significantly liberalized imports, in partial conformity with the ECOWAS Common External Tariff. Import bans on several key products such as corn were removed while the high tariffs on a few other products such as rice were reduced significantly. A number of products, however, remain banned for import, particularly poultry products, pork and beef.
Nigeria is the largest wheat importer in Sub-Saharan Africa. U.S. wheat continues to dominate this market, and in 2009/10, Nigeria currently is the largest market in the world for U.S. wheat. U.S. wheat exports typically account for 80-90% of total Nigerian wheat imports. Consumption in Nigeria has continued to expand, and consumption of instant noodle products has seen rapid growth. Imports are expected to continue to increase, as additional milling capacity is utilized.
Nigeria is a huge market for dairy products but domestic production is grossly underdeveloped. Of Nigeria’s total domestic fluid milk production (estimated 1.5 billion liters), the amount entering formal marketing channels is far less than one percent. Dairy imports are large but industry sources indicate that imports dropped by nearly 20 percent to an estimated $290 in 2009 compared to import figure in 2008. Drop is due partly to a lowering local consumer income and partly due to the instability and restructuring of Nigeria’s financial sector in 2009 which adversely affected commercial lending by local banks. Most of Nigeria’s dairy imports are however, lower-grade milk powder. Nigeria’s dairy processors (including ice cream, chocolate milk, yoghurt, and long-life milk producers) rely on combining and reconstituting milk powder imported mostly from the European Union (Netherlands, Denmark). Despite a huge market, U.S.market share for dairy products remains small as freight costs from the U.S. are well above those from the European Union.
Rice is a basic staple in Nigeria and rice production is increasing but continues to lag behind demand by about 2 million tons. As a result Nigeria is one of the world’s largest rice importers and in 2010 is estimated to be the third largest after the Philippines and Iran. In September 2008, duty on rice was reduced from 109 percent to 5 percent for seed, paddy and brown rice and 30 percent for semi and wholly milled rice. Nearly all of the country’s rice imports come from Thailand and India. Previously, American milled parboiled rice exports to Nigeria could only compete for a share of the top niche segment of the Nigerian market. However, with the reduction in duties, U.S. brown and milled rice exporters are encouraged to collaborate with leading Nigerian importers to boost sales. Nigeria last year was the largest marketing in the world for U.S. long-grain brown rice.
Seafood is the cheapest form of animal protein in Nigeria and consumption has been increasing. However, due to insufficient domestic catches and aquaculture production, Nigeria depends on large volumes of imports to satisfy demand. According to industry sources, imports significantly dropped more than 31 percent in 2009 due to the impact of global financial crises and increasing costs. The restructuring of Nigeria’s banking sector in 2009 also impacted negatively on lending for seafood imports into the country. Due to the scarcity and rising price of Atlantic species from the major suppliers (the Netherlands), Nigerian buyers are beginning to shift to other supply sources for mackerel (including the United States). High energy cost translating to higher U.S. freight charges as well as the dominant one-way seafood trade contributing to low U.S. market share. In 2007, the U.S. recertified Nigeria for shrimp exports to the United States. As a result, it is possible that reefer containers used to transport shrimp to the United States could be available for shipping seafood and other perishable foods back to Nigeria at reduced freight costs.