This is a best prospect industry sector for this country. Includes a market overview and trade data.
Last Published: 6/20/2016

Overview

Agriculture in the past was the biggest sector, and still accounts for 23 percent of GDP.  The country’s Central Bank of Nigeria (CBN) on June 23 issued a circular excluding importers of 41 selected goods and services from accessing foreign exchange (forex) at the Nigerian official forex markets.  Food and agricultural items affected include rice, margarine, palm kernel/palm oil products, vegetable oils, meat and processed meat products, vegetables and processed vegetable products, poultry-chicken, eggs, turkey, fish and tinned fish in as well as tomatoes/tomato pastes.  While these items are not banned from importation, importers would need to acquire the needed foreign currency to purchase these items from an autonomous market at a higher exchange rate. 
 
Nigeria’s total food and agricultural imports are growing and estimated at more than $10 billion in 2015.   Wheat, rice, brown sugar, frozen fish, dairy products, vegetable oil, intermediate and consumer-oriented products are the largest imports.   By continent, Nigeria imported goods mostly from Asia (44.6 percent), EU (33.6 percent), Americas (14.1), Africa (6.5 percent), and others (1.2 percent).  By country, Nigeria’s most significant suppliers include China (23 percent), United States (10 percent), India (8 percent), Belgium (6 percent), Netherlands (6 percent), and others countries across the world.

U.S. Agricultural Trade Summary

CY 2015 U.S. Exports:   $715 million (approximately 20% of decrease over 2014). Major U.S. exports include wheat, soybean oil, animal fats, feeds and fodders, beverages bases, consumer-oriented foods, non-beverage ethanol, frozen fish, etc.  Wheat accounts for 73 percent of the total U.S. food and agricultural exports.  U.S. wheat exports to Nigeria have been declining over the last 4 years.  U.S. wheat exports have dropped from approximately $1.2 billion in 2011 to about $525 in 2015.  This is mostly due to GON’s 15 percent levy imposition on imported wheat resulting in high prices of wheat flour whereas the market is price sensitive.  Consequently, more Nigerian flour millers continue to opt to blending the higher quality, more expensive U.S. wheat with lower quality and less expensive wheat from third-country suppliers to stay competitive.  However, formal exports of other U.S. food and agricultural products such as tallow, dairy, wine, beverage bases, feed and fodder as well as consumer-ready products are growing. 
 
CY 2015 U.S. Imports:   $50 million (about 38 percent of decrease over 2014).  Major U.S. imports are cocoa beans, cocoa paste and butter, shrimp, spices, tea, and others.  AGOA has not been of major benefit for Nigeria.  This is especially as Nigeria’s food safety system remains largely inefficient and most of its agricultural exports are unacceptable in the international market. 

Major Issues

Nigeria is a long standing member of the World Trade Organization (WTO) and an active participant in Codex and WTO Committees.   Despite this, Nigeria continues to employ trade restrictions such as high tariffs, levies, import ban and other measures to protect its domestic agriculture.  Poultry meat, beef, pork, and others are banned for import.
 
Nigeria is also a member of the Economic Community of West African States (ECOWAS).  ECOWAS promotes trade liberalization and member country’s tariff structure should be based on the ECOWAS Common External Tariff (CET) structure of 5-tariff bands.   This would be the uniform tariff band among all countries in the West African region.  Despite this, Nigeria’s agricultural policies continue to apply trade-focused policies that utilize punitive taxes and import bans to stimulate an import substitution agenda.  Trade on essential foods such as rice, wheat, fish, sugar, etc. are being threatened by these measures. 
 
Nigeria has no Free Trade Agreement or bilateral investment treaty with the United States.  However, Nigeria signed a Trade and Investment Framework Agreement (TIFA) with the United States in 2004.
 
Addressing security issues remains a key challenge.  Insurgency in the north-east and other parts of the country has negative implications for investment; it also may hamper the fight against poverty as well as increase crime.  An increased number of both internally displaced persons and refugees in neighboring Cameroon and Niger have created a grave humanitarian situation.  The current regional coalition force against Boko Haram appears to be making headway in subduing the insurgency.

Wheat

Unit:  USD thousands

 

2014

 
2015
(estimated)

 
2016
(estimated)

 
2017
(projected)

Total Market Size

1,565,000

1,410,000

1,210,000

1,379,000

Total Local Production

15,000

25,000

10,000

9,000

Total Exports

0

0

0

0

Total Imports

1,550,000

1,385,000

1,200,000

1,370,000

Imports from the U.S.

746,000

600,000

550,000

620,000

Exchange Rate:   1 USD

160

200

250*

270**

Total Market Size = (Total Local Production + Total Imports) – (Total Exports)
 
Data Sources:   BICO reports, Nigeria’s Wheat Millers Association and Master Bakers’ Association, Federal Ministry of Agriculture, Nigerian Customs Service, etc.  (*) estimate of unofficial but prevailing average rate; (**) projected unofficial average forex rate.
 
Nigeria imports about $1 billion worth of wheat annually.  The country remains a growth market for wheat imports because of its huge population.  Demand for wheat flour utilized for the production of bread, noodles, pasta and biscuits (cookies) have also continued to increase.  
 
Many Nigerians depend on bread as a daily staple and unlike rice (a restricted item), wheat cannot be easily replaced by yam or cassava.  The country’s consumption of wheat remained high at about 4 million tons in 2015.  Local wheat production is insignificant and domestic supplies of other substitute staples within Nigeria and neighboring countries are also not keeping pace with population growth.  The market gap is filled by wheat imports.
 
It is believed that up to 600,000 mt hectare of land is suited to wheat production, with only 10 percent currently cropped on a regular basis.  Insurgency activities have adversely impacted on Nigeria’s wheat production.  Nigerian wheat milling capacity is estimated at about 8mmt, with 21 milling operations stretched across country.  Of those 21, six companies hold about 80 percent of the market share. Flour Mills of Nigeria (FMN) have around 38 percent market share and have the largest milling capacity.  Dangote, Honeywell and Standard Flour Mills, and Crown Flour Mill and BUAs, are the other main industry stakeholders.
 
U.S. Census trade data shows that Nigeria buys nearly ten percent of total U.S. wheat exports, and that wheat is the third largest U.S. export to Nigeria, with nearly $960 million worth of wheat exported to Nigeria in 2013 and nearly $700 million in 2014 (out of total U.S. wheat exports of $10 billion in 2013 and $8 billion in 2014).  Post estimates U.S. 2015/16 wheat exports to Nigeria at 2.3 million tons, a 17 percent decrease largely due to existing import levies.  The U.S. market share for Nigeria’s wheat imports currently stands at about 55 percent.  Farmers are expected to shift from corn production largely due to unprofitable market prices and lack of storage facilities.
 
To reduce wheat imports, stimulate local wheat and cassava production and also conserve foreign exchange, the GON in 2012 introduced a policy compelling cassava flour inclusion in wheat flour and also imposed import tax (levy) of 15 percent on wheat grain (which has increased the effective duty from 5 percent to 20 percent).   The tariff increase caused many local millers to purchase inexpensive and lower quality wheat from other sources which they blend with the more expensive and higher quality U.S. wheat in order to make their products competitive in Nigeria’s price-sensitive market.  With the current GON’s monetary policy aiming at conserving foreign exchange, the U.S. market share has continued to drop.    
 
Since the fall of 2016 the Central Bank of Nigeria’s (CBN) foreign exchange restrictions has caused at least one leading agro-processing firm of Nigeria to halt its wheat import shipments for three weeks due to its inability to obtain foreign exchange.   That firm indicated that even though wheat was not covered by any of the 41 product categories that are restricted from obtaining foreign exchange, at times there was no foreign exchange available on the interbank market with demand being higher than the supply. 
 
Food franchise businesses that require bread products have similar issues with wheat supplies and are forced to apply for waivers with the Ministry of Finance and Nigeria Customs Service to bring in import restricted food inputs from other countries. 

Sub-Sector Best Prospects

Wheat flour utilized for the production of bread, noodles, pasta, biscuits (cookies), semolina, etc.  Nigeria's flour market is in excess of $2 billion a year and growing at 3.5 percent per annum.  The pasta market is growing at 8 percent a year.

Opportunities

Local wheat production is small and high-cost.  Domestic supplies of other substitute staples are not in tandem with population growth.  Nigeria’s wheat milling capacity utilization stands at 50%.  Consumers continue to request for higher quality wheat flour-based products.  Local wheat importers also still consider U.S. wheat suppliers as consistent and reliable supplier.  

Web Resources

Regional Agricultural Affairs Office
U.S. Department of Agriculture (USDA)
Office of Agricultural Affairs
U.S. Consulate, Lagos-Nigeria
Email:  aglagos@usda.gov
Website:  http://gain.fas.usda.gov/Lists/Advanced%20Search/AllItems.aspx; http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Grain%20and%20Feed%20Annual_Lagos_Nigeria_4-20-2015.pdf


Rice

Unit:   USD thousands

 

2014

2015
(estimated)

2016
(estimated)

2017
(projected)

Total Market Size

3,180,000

2,700,000

2,400,000

2,200,000

Total Local Production

880,000

900,000

980,000

1,000,000

Total Exports

0

0

0

0

Total Imports

2,300,000

1,800,000

1,420,000

1,200,000

Imports from the U.S.

10,000

18,000

5,000

3,000

Exchange Rate:   1 USD

160

200

250*

270**

 
Total Market Size = (Total Local Production + Total Imports) – (Total Exports).
Data Sources:   Nigeria’s major rice importers, Rice Farmers Association of Nigeria (RIFAN), National   Bureau of Statistics, Federal Ministry of Agriculture, Nigerian Customs Service, etc.).   (*) estimate of unofficial but prevailing average rate; (**) projected unofficial average forex rate.
 
Nigeria's 180 million people are estimated to consume nearly 6 million tons of rice per year.  Just over half, or about 3.1 million tons, is imported.  Nigeria consumes parboiled rice exclusively. GON targets 2017 for rice self-sufficiency and may ban all imports.  This is a-20 percent levy to the 10 percent duty (total 30 percent duty) for imported husked brown and semi-milled or wholly milled rice for investors with rice-milling capacity and verifiable backward integration program in Nigeria.  Rice importers without local production programs/projects were classified as “pure rice traders”.   They pay a-60 percent levy in addition to the 10 percent duty rate for the same type of rice (totaling 70 percent import duty). 

Two different tariffs (30 percent and 70 percent) apply to two categories of importers (importers with backward integration and those without who are only rice traders).   The higher tariffs were designed to dramatically increase the cost of imported rice and direct Nigerian consumers to lower-cost local rice.  But domestic rice costs about 20-30 percent higher than imported parboiled rice production. 

The new GON also lifted the import ban on rice entering through land borders as more rice was destined for Nigerian market and were entering without import duty payment.  The aim was to increase customs revenues collections and block loss of revenue to informal rice traders. 

Sub-Sector Best Prospects

Brown rice and polished and milled rice (parboiled).

Opportunities

Increasing population/urbanization and higher cost of local paddy production and processing, but investors in local rice production can offset their losses from domestic operation costs and investments by taking advantage of the import quotas and import duty differential policies.
Nigeria’s rice production target is also very far from reality due mainly to a lack of infrastructure, poor policy implementation, as well as an increasing state of insecurity caused by Boko Haram in the major rice-producing region in Northern Nigeria.  

Web Resources 

Regional Agricultural Affairs Office
U.S. Department of Agriculture (USDA)
Office of Agricultural Affairs
U.S. Consulate, Lagos-Nigeria
Email:  aglagos@usda.gov
Website:  http://nigeria.usembassy.gov/foreign_agric_service.html; http://gain.fas.usda.gov/Lists/Advanced%20Search/AllItems.aspx


Dairy

Unit:   USD thousands

 

2014

2015
(estimated)

2016
(estimated)

2017

Total Market Size

900,000

770,000

660,000

695,000

Total Local Production

80,000

50,000

60,000

65,000

Total Exports

0

0

0

0

Total Imports

820,000

700,000

600,000

630,000

Imports from the U.S.

15,000

10,000

8,000

12,000

Exchange Rate:   1 USD

162

200

250*

270**

 
Total Market Size = (Total Local Production + Total Imports) – (Total Exports)
Data Sources:   Milk Powder Importers, AFBTE, supermarket operators’ association (NASON), Wholesale Distributors, BICO reports, etc;)(*) estimate of unofficial but prevailing average rate; (**) projected unofficial average forex rate.
 
Nigeria’s dairy market is estimated at 440,000 MT and contributing about 61 percent to the total food processing revenues.  However, local dairy processors rely on combining and reconstituting milk powder imported mostly from the EU (Netherlands, Denmark, etc).   Manufacturers have continued to be more innovative to increase market share by increasing product varieties and packaging.  However, squeezed consumer incomes resulting from Nigeria’s declining revenue is retarding market growth.  U.S. export of dairy products to Nigeria had continued to the rise since 2011.  However, Nigeria’s declining revenue since 2015 is expected to affect market growth adversely.
 
At the moment, domestic production remains insufficient due to increasing production/processing costs, non-competitiveness of the industry, and the failure to incorporate more advanced technologies.
 
Manufacturers reconstitute and sell milk powder in three categories—powdered, evaporated and condensed milk; packaged in metal cans and sachets of different weights.  Ice cream, chocolate milk, yoghurt, and long life milk are produced locally from the reconstituted imported milk powder.  Infant formula, cheese, butter, as well as ice cream, are imported.   Imported skimmed milk powder is also an input for the food drink manufacturers, biscuits, etc.   Consumption of flavored milk drinks with fruit juice also continues to grow and will assist in the growth of demand over the forecast period. 
 
WAMCO, an affiliate of Royal Friesland Foods of Netherlands, is Nigeria’s leading milk manufacturer and its ‘Peak’ brand controls more than 60 percent market share.  Promasido, PZ Industries, CHI, FAN, etc., are also significant in the sub-sector.  

Sub-Sector Best Prospects  

Powdered, evaporated and condensed milk, packaged in metal cans and sachets of different weights.  Ice cream, chocolate milk, yoghurt, and long life milk.  Reconstituted imported milk powder, infant formula, cheese, butter, and skimmed milk powder.  Flavored milk drinks with fruit juice.

Opportunities

Nigeria’s dairy processors rely on combining and reconstituting imported milk.  Nigerian dairy market is forecast to continue to grow at more than 7% per year;
Growing population; Increasing urbanization; Rising demand for dairy based products etc. 

Web Resources

Regional Agricultural Affairs Office
U.S. Department of Agriculture (USDA)
Office of Agricultural Affairs
U.S. Consulate, Lagos-Nigeria
Email:  aglagos@usda.gov
Websites:  http://nigeria.usembassy.gov/foreign_agric_service.html; http://gain.fas.usda.gov/Lists/Advanced%20Search/AllItems.aspx


Seafood 

Unit:   USD thousands

 

2014
(estimated)

2015
(estimated)

2016

2017

Total Market Size

1,680,000

1,600,000

1,770,000

1,810,000

Total Local Production

1,000,000

970,000

1,150,000

1,135,000

Total Exports

20,000

20,000

20,000

25,000

Total Imports

700,000

650,000

640,000

700,000

Imports from the U.S.

5,000

14,000

20,000

29,000

Exchange Rate:   1 USD

162

200

250*

270**

 
Total Market Size = (Total Local Production + Total Imports) – (Total Exports).
Data Sources:   Association of Fish Suppliers of Nigeria (AFISUN), Frozen Fish Wholesale Distributors, Catfish Farmers Association of Nigeria (CAFAN), BICO reports, Federal Fisheries Department—Nigeria, etc., (*) estimate of unofficial but prevailing average rate; (**) projected unofficial average forex rate. 
 
Frozen seafood is the cheapest form of animal protein in Nigeria and consumption has been increasing. The country is a potential market for approximately 2.5 million MT of fish valued about $3 billion.  Domestic catches and aquaculture production have been underdeveloped and the country relies on large volumes of imports to meet local demand.  Atlantic mackerel, horse mackerel, herring and croakers are the major species.   The Netherlands, China, Chile, etc., are also the major suppliers of frozen seafood to Nigeria. U.S. fish exports to Nigeria reached about $14 million in 2015. 
 
Nigeria began the implementation of import quota regime for fish in 2014.  The aim was to stimulate the country to become self-sufficient in fish production over the next four years through a 25 percent annual fish import cut.  An annual baseline fish import figure has been set at 700,000 tons for 2014 which reduces the allowable quantity of imported fish to 500,000 tons for the year.   Except for fish species farmed in the country (catfish and tilapia) which are now under prohibition from being imported without control, major fish species consumed in the country are listed as free for entry within set quotas.  GoN’s foreign exchange restrictions and the scarcity of foreign currency for importers has prevented U.S. Pacific Hake from entering the Nigerian market.  The GON sources indicate the quota system also aims to sanitize the country’s fish importing trade from identified malpractices in the marketplace. 
 
Generally, many industry watchers indicate that Nigeria’s fish quota regime will increase food prices, open up channels for profiteering by the politically-connected, and fuel smuggling.

Sub-Sector Best Prospects

Atlantic mackerel, horse mackerel, herring, blue whiting, and croaker.

Opportunities

Frozen seafood is the cheapest form of animal protein in Nigeria.  Consumption of frozen seafood has been increasing.  Nigeria remains a potential market for approximately 2.5 million MT of fish valued about $3 billion; Under-developed domestic catches and aquaculture production promotes reliance on large volumes of imports to meet local demand.

Web Resources

Regional Agricultural Affairs Office
U.S. Department of Agriculture (USDA)
Office of Agricultural Affairs
U.S. Consulate, Lagos-Nigeria
Email:  aglagos@usda.gov
Websites:  http://nigeria.usembassy.gov/foreign_agric_service.html; http://gain.fas.usda.gov/Lists/Advanced%20Search/AllItems.aspx


Wine

Unit:   USD thousands

 

2014

2015
(estimated)

2016
(projected)

2017
(projected)

Total Market Size

470,000

430,000

443,000

473,000

Total Local Production

70,000

55,000

73,000

85,000

Total Exports

0

0

0

0

Total Imports

400,000

375,000

370,000

388,000

Imports from the U.S.

20,000

40,000

56,000

65,000

Exchange Rate:   1 USD

162

200

250*

270**

 
Total Market Size = (Total Local Production + Total Imports) – (Total Exports)
Data Sources:  Wine importers, BICO reports, AFBTE, supermarket owners and Operators (NASON); (*) estimate of unofficial but prevailing average rate; (**) projected unofficial average forex rate, etc.
 
In Nigeria alcohol consumption is mostly a social activity.  Nigeria is a large market for alcoholic beverages valued nearly $5.0 billion.  Reportedly, Nigeria’s average wine consumption per capita jumped from 0.1 liters to more than 16 liters between 2004 and 2015.  Still wine (red and white) category led the market—accounting for a share of more than 80 percent—red wine, accounts for over 73% of total volumes sold.  Local wine processing is also growing but still underdeveloped and high-cost.
 
Nigeria’s large and increasing population and underdeveloped/high-cost local wine create strong growth prospects for wine exports to Nigeria.  The country’s middle-class and income have also continued to increase over the last one and half decade.   Nigerian consumers are also increasingly becoming health-conscious and accepting wine products as healthier than competing beverages such as, beer, soda, etc. served at homes, bars and social activities.  The number of young, rich and educated Nigerians with strong desire to move up the social ladder is also rising and assisting growth in Nigeria’s wine market.  New brands and the entry of new players are beginning to result in increased competition and fueling growth in sales.
 
The EU, South Africa and other suppliers offering low quality and inexpensive wine products are the leading suppliers.  Formal export of U.S. wine to Nigeria started in 2010, and U.S. wine exports to Nigeria have grown steadily.  U.S. exporters are encouraged to exploit opportunities provided by the increasingly large wine demand to boost exports of U.S. food and agricultural to Nigeria. 

Sub-Sector Best Prospects

Alcoholic wines and spirits; Still wine (red and white) category accounting for a share of more than 80%; Recent increasing demand for upscale/premium wine and spirits labels. 

Opport​unities

Local wine processing is underdeveloped and high-cost.  Alcoholic wines and spirits are imported at 30% tariff in addition to a 20% levy which brings real duty to 50%.  Customs and port clearance of wine is high cost as the importer pays above $1.20 as local duty and port levies for every $1 cost of wine.

Web Resources  

Regional Agricultural Affairs Office
U.S. Department of Agriculture (USDA)
Office of Agricultural Affairs
U.S. Consulate, Lagos-Nigeria
Email:  aglagos@usda.gov
Websites:  http://nigeria.usembassy.gov/foreign_agric_service.html.

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More Information

Nigeria Agribusiness Trade Development and Promotion