• Sunday, July 21, 2024
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How border closure creates investment opportunities in agribusiness

border closure

The ongoing border closure by the Federal Government has created investment opportunities for potential investors across the value chains of various agricultural commodities.

Since the government’s shutdown of the country’s land borders in August, Nigerians have been compelled to shift their consumption preferences to local commodities.

This has spurred demand in crop and livestock products across the country and created investment opportunities for potential investors in rice – a key staple in the Nigerian market, and poultry production, among others.

“The demand for how local chicken has increased tremendously since the border closure. Buyers are visiting our farms daily to make orders which we have not experienced before,” said Onallo Akpan, director-general of Poultry Association of Nigeria (PAN).

“There is so much room for anybody that wants to invest in poultry business right now. We currently cannot meet the demand so we need more investments in the sector to increase production” Akpan said.

He stated that local production has increased to about 7,000metric tons while stressing that if the border closure persists, the country could cascade its production to 1.5metric tons in six months.

Prices of frozen chicken and life birds have also surged since August because of the huge demand-supply gap, making headline inflation accelerate to 11.61percent in October from 11.24 in September.

Similarly, food inflation accelerated to 14.09 from 13.51percent over the same period.

Experts say the country will further experience price increases in poultry products as the festive season approaches, noting that the country cannot currently meet demand in chicken and turkey production despite expansion programmes being embarked upon by farmers and millers.

The 2016 Agriculture Promotion Policy document released by the Federal Ministry of Agriculture put Nigeria’s annual chicken consumption at 200 million birds and supply at 140 million birds, indicating a gap of 60 million birds.

To bridge this gap and drive down cost, investors can take advantage in the production of chicken and turkey.

Also, in rice production, there is an ever-increasing demand for the staple, especially during the festive season.

Read Also:  Border closure, local rice production and safety

The United States Department of Agriculture (USDA) put Nigeria’s milled rice 2018/2019 production at 4.78 MMT, up over 2.5 percent from 2017/18 figure of 4.66 MMT.

However, the 4.7 million MT milled rice in 2018 is still 2.3 million MT below Nigeria’s 7 million MT annual demand as stated by the country’s Agricultural Ministry.

This shows a huge opportunity for investors across the rice value chain.

“We are making so much profit in the sale of rice right now. I am buying paddy and milling it in the north to supply markets in the south,” a trader who is currently taking advantage of the border closure and does not want his name mentioned on print told BusinessDay.

“This is the best time to invest in the rice value chain,” he advised.

Muhammed Augie, chairman, Rice Farmers Association, Kebbi chapter said: “Since the surge in prices, farmers who have abandoned growing rice have returned and even other farmers are shifting to rice cultivation because the market is there.”

“A bag of paddy rice now cost N8,500 as against N10,000 sold two weeks ago. This is because we are growing more and the harvesting season just commenced,” Augie said.