Key highlights
- Nigeria spent N6.7 trillion on agricultural imports in the last five years, accounting for 7.6% of total imports.
- The country’s reliance on agricultural imports has doubled since 2019 despite government efforts to promote local agriculture.
- The trade deficit in the agricultural sector could have adverse effects on Nigeria’s economy, including decreased foreign exchange reserves, inflation, and vulnerability to external shocks.
Nigeria spent a total of N6.7 trillion on importing agricultural products in 5 years, data from the National Bureau of Statistics shows.
This represents 7.6 % of total imports of N89.2 trillion recorded over the last 5 years. Despite years of shifts in government policy towards agriculture, the country still relies heavily on imports to meet its local food demand.
The data reveals that rather than drop, reliance on agricultural imports has more than doubled since 2019.
Some of the top traded agricultural products include drum wheat and palm oil. Drum Wheat imports topped N792 billion in 2022 alone or 42% of total agricultural imports. Durum wheat is a spring wheat variety that is often ground into semolina and used to produce pasta, couscous, bulgur, noodles, and bread, all of which are popular Nigerian foods.
What the data shows
Imports – A cursory review of the data indicates a consistent increase in the value of agricultural imports during the period under review.
In 2018, the value of agricultural imports was N851.6 billion. This figure increased to N959.5 billion in 2019, representing a 12.6% increase. In 2020, there was a further increase in agricultural imports to N1.145 trillion, representing a 19.4% increase from the previous year.
In 2021, there was a significant increase in agricultural imports to N1.96 trillion representing a 71.6% increase from the previous year.
Total imports in 2022 were N1.86 trillion representing 7.9% of total imports a slight drop from an average of 9% reported in 2021 and 2020. The N1.86 trillion recorded during the year also represents a slight decrease or a 5.1% decrease from the previous year.
Exports – Contrasting the agricultural export data with the agricultural import data stated above, the export figures indicate a less consistent pattern of change over the same period.
In 2018, the value of agricultural exports was N302.2 billion, which decreased to N269.8 billion in 2019, representing a 10.7% decrease. In 2020, there was an increase in agricultural exports to N321.5 billion, representing an 18.3% increase from the previous year.
In 2021, there was a significant increase in agricultural exports to N504.89 billion, representing a 56.8% increase from the previous year. This significant increase may be attributed to various factors, such as increased demand for Nigerian agricultural products in the international market, favorable exchange rates, or improved government policies.
Furthermore, in 2022, there was a further increase in agricultural exports to N598.1 billion, representing an 18.4% increase from the previous year.
The trade deficit with Agric
Comparing the agricultural import and export data, it can be seen that Nigeria imported more agricultural products than it exported in all the years under review.
This implies that there is a trade deficit in the agricultural sector, which could have an adverse effect on the country’s balance of payments.
When there is a trade deficit, it means that there is a net outflow of currency from Nigeria to other countries, as Nigeria is paying more for imports than it is earning from exports. This can have several adverse effects on the country’s economy.
For instance, it can lead to a decrease in foreign exchange reserves, as more currency is leaving the country than coming in. This can make it difficult for Nigeria to finance its imports and pay its foreign debts. Nigeria is already experiencing this with severe currency depreciation occurring over the last 5 years. The exchange rate has depreciated to N750/$1 on the black market from N360/$1 5 years ago
A trade deficit can also lead to inflation, as the increase in demand for imported goods drives up prices. This can lead to a decrease in the purchasing power of the Naira, which can hurt the country’s consumers and businesses. Nigeria’s inflation rate is currently at a 17-year high of 21.9%. Comparing the CPI of 2017 and 2022 reveal a whopping 100% rise in prices.
Furthermore, a trade deficit can also make Nigeria’s economy vulnerable to external shocks, such as changes in global commodity prices or currency fluctuations.
For instance, if there is a sudden increase in the price of agricultural products in the international market, Nigeria would have to spend more money to import those products, which could worsen the trade deficit. This is currently the case today, with imported inflation rising by as much as 120% between December 2017 and December 2022.
CBN Policies fail to reduce imports
The data also suggest years of central bank policies aimed at stimulating local production of agricultural products have not significantly reduced the country’s reliance on imports.
Over the years, the apex bank under Godwin Emefiele has introduced schemes such as the Commercial Agric Credit Scheme (CACS) as well as banning access to forex to a 41 list of imported items. Some of these policies have been in place since 2015.
The war between Russia and Ukraine, covid-19 pandemic has also exacerbated agriculture prices such as wheat and may have also contributed to the spike in import cost.
Thus, while Nigeria has significantly cut down on imports, especially rice, the country still imports a heavy amount of Wheat. Available data indicates Nigeria’s annual wheat demand is an estimated 5-6 million MT but it produces just 420k MT per annum. CBN data suggest we produce about 62k MT per annum (see page 6).
This indicates why the central bank has pumped billions of naira just to cut down Nigeria’s wheat imports over the years.
Emefiele’s comment on Nigeria’s Wheat demand in early 2022.
“Wheat is the 3rd mostly consumed grain in Nigeria after maize and rice. It is estimated that we only produce about 1 per cent (63,000 mt) of the 5-6 million mt of wheat consumed annually in Nigeria. This enormous demand-supply gap is bridged with over $2 billion annual importation of wheat. As a result, wheat accounts for the second highest food import bill in Nigeria, thereby putting pressure on the nation’s foreign exchange reserves. We have concluded the 1st major wet season wheat farming in Plateau State and planted over 100,000 hectares of wheat across 15 States in the 2021 dry season. This strategic intervention will herald progressive reduction in our wheat import bills over the coming years.”
Global wheat prices
Meanwhile, wheat prices have more than doubled from about $4 per bushel to over $9. It has since fallen this year to about $7. The price of wheat has been surging to multi-year highs since Russia invaded Ukraine a year ago.
The rally in the price of wheat is a result of investors’ worry about a potential supply disruption, being that Russia is the top wheat exporter in the world, accounting for 24% of the total wheat exports in the world.
Wheat, the third most widely consumed grain in Nigeria has been a major factor in the exchange rate imbalance, according to the Central Bank of Nigeria
