In Nigeria, agriculture has long been known to hold great promise for Africa’s most populous country but its potentials have been largely untapped.
This is one of the major reasons the country has been unable to feed itself and make the sector a major source of revenue and foreign exchange earnings.
As Nigeria grapples with its current economic downturn, there is consensus across board, that there is no better time to leverage the potentials of the agricultural sector than now, to create jobs, attain food security and place it on the path of sustainable growth and development.
BusinessDay has identified the top five agro-commodities with huge export potentials that investors can tap into, and in no particular other, these are:
Cashew nuts
Cashew as an important nut is fast booming in the Nigerian market as exporters are shipping a larger percentage of the crop to Asia, Europe, and the United States of America.
Nigeria is a natural habitat for cashew and among the world’s largest producers and suppliers of the nuts. The country is currently rated as the fourth-largest producer of cashew nuts in Africa and sixth in the world, with 160,000 metric tons per annum, and is expected to reach 500,000 metric tons by 2025.
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It has become a top-notch cash crop in Nigeria that and is eaten and also serves as industrial raw materials in firms producing chemicals, paints, varnishes, insecticides and fungicides, electrical conductress, and several types of oil.
The adaptability of cashew trees to harsh climatic conditions and poor soils provides farmers the opportunities to establish new plantations while expanding the old ones.
Cashew exporters in Nigeria made $300 million in 2016 and $350 million in 2017, according to Tola Faseru, vice president of Africa Cashew Alliance.
Two good things about cashew are that its return on investment is as high as 55 percent and its payback time is just 12 months, say experts.
But despite the promises the cultivation of cashew holds, the country is yet to fully harness the potential of the crop owing to several factors.
The country still exports about 95 percent of its cashew nuts unprocessed despite the huge investment opportunity in value addition.
Similarly, inadequate storage facility for cashew fruits in the country has led to an estimated loss of eight million tons of the fresh fruits yearly.
According to Ojo Ajanaku, national president, Cashew Association of Nigeria, the biggest opportunity in the cashew industry is processing and the industry is waiting to be tapped.
“A ton of raw cashew premium grade is $1,250, while a ton of processed cashew is about $11,000. You can see the difference is massive,” Ojo said.
Going by Ojo’s statement, this means the bigger investment opportunity lies in processing the nuts before they are exported.
Investors can explore the opportunities in processing by establishing on-farm processing units as a value-added activity, which will, in turn, improve their earnings.
Exporters and marketers can explore the opportunities in the growing demand for raw cashew nuts in the international markets.
As a potential investor, it is very important that thorough research is carried out to have a clear understanding of the business, what it entails, and the targeted market.
If you wish to process for the local or international market, then be ready to procure machines such as boiler, sheller or cracker, dryer, and packaging.
Cashew nut kernels are produced by shelling the raw cashew nuts, which grow at the end of the cashew apples using a sheller or cracker. An average hand sheller machine can shell 900 cashew nuts per hour.
Cashew nut kernels are primarily judged by their sizes, colour, and moisture content. Ivory colour whole cashew kernels represent the highest quality grade while the broken kernels are seen as quality deterioration.
Apart from value addition, investors must embrace innovation and technology, while ensuring that their products can compete favourably in the international market.
Cashew crop can be grown in the entire South-West, South-South, and South-East region, with Enugu, Oyo, Anambra, Osun, and Kogi having the largest production areas.
Nigeria’s cashew is usually harvested between February-June, though farmers stock the crop and export it all year round.
Nigeria is rated as the fourth-largest producer of cashew nuts in Africa and sixth in the world, with 160 thousand metric tons per annum, and is expected to reach 500,000 metric tons by 2025, according to the Nigeria Cashew Farmers Association.
It is mainly exported to Vietnam and India. The country exported N10.5 billion worth of shelled cashew in the first quarter of 2021 and N3.24billion un-shelled cashew.
Sesame seeds
Sesame seeds could play a vital role in the country’s quest to earn substantial dollars as global demand for the crop continues to rise.
Data from the National Bureau of Statistics shows that sesame was the most exported agricultural commodity in the first quarter of 2021 with N42 billion worth of the crop exported and N3.4billion worth of oil extracted from the crop. It is mainly exported to Japan, China, Turkey, and Europe.
“Sesame has a lot of potentials. It has both commercial and medicinal value and oil extracted from the seeds is better than every other seed oil,” Mutairu Mamudu, national president, Sesame Farmers Association of Nigeria told BusinessDay in a phone interview.
“It is 100 percent free of cholesterol and that is why the demand for it is very huge both locally and internationally,” said Mamudu.
He noted that the country is still not exploiting the full potentials of sesame, urging the government to encourage more investments in the value chain of the crop.
Sesame seed has numerous health and industrial benefits and is widely used for baking, medicine, cosmetics, and animal feeds. It also has a high oil content of between 44 and 60 percent.
Considering its numerous health benefits and the growing preference for organic foods, the demand for the commodity has continued to grow and this is positive for Nigeria.
It remains in high demand abroad by pharmaceuticals and industries that produce soap, shampoo, lubricant, paints, cosmetics, and vegetable oil. A popular women’s body lotion Neutrogena’ is made from sesame oil.
Credit rating giant, Agusto & Co. in a report highlighted the export potential of the crop to reach N120 billion per annum if the country can boost local production.
Sesame seed is Nigeria’s biggest agricultural produce exported to Japan. It is considered one of the world’s oldest oilseed crops that has the highest oil content of any other seed.
Currently, Nigeria is the largest producer of sesame seeds in Africa, and the third-largest in the world, with about 480,000 tons produced in 2019, according to the Food and Agricultural Organisation.
The oil extracted from the seed is used in making vegetable oil and for medicinal purposes for the treatment of ulcers and burns. The stem as well as the oil is used by the cosmetic industry in the production of soaps and other beauty products.
Mamudu who was earlier quoted stated that a kilo of sesame is sold for N470 while a metric ton is sold for N470,000 at the farm gate. Sesame is mainly grown in the northern region of the country.
While sesame remains a key agricultural export commodity in Nigeria, like other agri-commodities, it is traditionally exported in an unprocessed form, which creates a loss in value addition.
Therefore, there is a need to increase private sector investments in sesame processing and this will require investment in processing facilities.
Currently, the country has only three functional processing plants for sesame seeds – two in Kano and one in Lagos with a combined estimated processing capacity put at 300 tons.
The poor number of functional processing plants has affected the quality of the seeds, as most seeds are processed manually and exported raw, attracting poor pricing from the international market. But with adequate processing and good quality, the country’s sesame seeds can begin to attract a premium price.
In addition, the country needs to boost its production of the crop by increasing its average yield per hectare that is currently put at 0.8MT compared to China’s 1.5MT per hectare.
Sesame is usually ready for harvesting between 90 to 130 days after planting.
Shea butter
From chocolate, ice cream, and margarine, to face cream, lipstick, medicines, and soap, shea butter is increasingly in demand as a luxury ingredient for edible and personal care products globally.
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It is a product found in most homes across the world, either in its raw butter form or in cosmetics products as women heavily rely on it because of its emollient properties that help solve skin problems such as wrinkles and dryness among others.
Africa’s largest economy literarily sits on a shea butter goldmine as the crop is grown in the wild in 20 of Nigeria’s 36 states, with Niger, Kwara, and Oyo states having the largest production areas, according to Nigeria Institute for Oil Palm Research (NIFOR).
“The opportunity to create wealth in the shea industry is enormous in Nigeria and Africa at large,” says Jubril Bokani, national president National Shea Producers Association of Nigeria (NASPAN).
“The conversion of 100,000 metric tons of shea nuts into about 48,000 metric tons of shea butter for export can generate about $72 million and economically sustain about 600,000 rural women,” Bokani explains.
“This shows that there exists a clear opportunity for Nigeria to create to wealth and employment to be driven by value addition and export of shea butter and cake,” he further says.
According to the Nigerian Export Promotion Council (NEPC), global demand for shea butter is estimated at $10 billion and projected to surpass $30billion by 2020.
Currently, Nigeria is the world’s largest producer of shea butter, producing 302,955 MT, according to the Food and Agricultural Organisation (FOA)’s 2019 figures.
Ghana is the largest exporter in Africa, although most of the country’s exports are from Nigeria, experts say. They also say Nigeria can double its shea butter production to 650,000MT for export with the domestication of the crop.
In 2016, the Nigeria Institute for Oil Palm Research (NIFOR) said it had been able to reduce the long gestation period of the Karite tree from 20 to between five and seven years. But Nigeria is yet to develop a technology that will enable the domestication of the crop to further boost production.
“Nigeria can now boast of having shea trees that are flowering and fruiting after five years. What we need now is to focus on domesticating the crop,” Loius Inabule, a researcher at NIFOR, tells BusinessDay.
Nigeria’s shea butter market is largely untapped and can yield about $2billion annually, according to a Global Shea Alliance (GSA) briefing at the 6th International Shea Industry Conference in Abuja.
Nigeria exported a total of N1.8billion worth of shea cake in the first quarter of 2021.
Ginger production/processing
Ginger is one of the most widely used food seasonings in modern diets and global demand for the crop continues to rise as the population increases.
Exporters can take advantage to create wealth while earning FX in exporting dried and processed ginger. It is a crop that is largely grown in Kaduna, Nasarawa, Benue, Niger, Gombe, and Kano state. It serves as a by-product to numerous food and beverage industries and is used for the production of ginger wine and food seasoning in most Asian countries.
“There is a great export opportunity in ginger production for the country. Nigeria has one of the best-flavoured varieties globally,” said AfricanFarmer Mogaji, chief executive officer, Farm Credit Nigeria.
“The $4billion global market is an opportunity that farmers can tap into, especially now that the country needs to grow its export,” Mogaji said who is also the former agric head, Lagos Chamber of Commerce and Industry (LCCI).
Ginger is part of the plant family that includes turmeric and cardamom and has huge health benefits.
It can be consumed in different forms, which include in powder form or in fresh – peeling before consumption. The plant is used as a spice and a major ingredient in a wide array of dishes.
Powdered ginger is used in the production of flavour, which is utilised in a variety of recipes such as cakes, cookies, bread, crackers, ginger ale, and beer. Its root is used as a raw material in manufacturing health products, drinks, and by bakery industry.
Nigeria’s ginger production is put at 31 million metric tons while demand is put at 65 million MT, leaving a supply-demand gap of 34 million MT, according to data from the Ministry of Agriculture.
The country exports majority of its ginger grown, thus, making the country the third highest exporter of the crop globally.
Despite the potential in the production of the crop, the country is yet to fully harness the economic benefits from growing ginger, on account of low-quality seeds and low use of technology, say farmers.
“Most ginger farmers are not using tractors and other machines for land preparation. This is hindering our ability to increase our ginger production because farmers cannot increase their farming areas owing to the huge manual labour involved but with tractors, we can farm on a larger scale,” said Zackari Mohammed, a ginger farmer in Kastina.
“We are still using local knife to split harvested ginger rhizomes but in China and India, there is a machine for that. We lack modern processing machines for washing, peeling, splitting, and drying kilns.
“Getting quality seeds is also a major issue for us farmers. It is difficult to get quality ginger seeds and most of the seeds in the country are of low quality. These are some of the reasons why we are yet to increase our yield per hectare.
He stated that the demand for the country’s ginger is increasing yearly but the production to meet up with the huge demand has been stagnant.
This shows that there are opportunities for investors who would want to invest in seeds and in the provision of easily fabricated machines in splitting the harvested ginger rhizomes.
Cocoa production/processing
In the 1960s and 70s, Nigeria was a major cocoa producer and supplied most of the world’s demand for cocoa beans.
Cocoa was a major revenue and foreign exchange earner for Nigeria and provided millions of jobs for the people, especially those in the southwest region.
Several years down the line, the once major cocoa producer now lags behind Ivory Coast, Ghana, and Indonesia in cocoa production.
The reasons for this are not far-fetched; Nigeria abandoned the cultivation of the crop. Despite this, cocoa – Nigeria’s flagship crop remains the country’s major non-oil export.
This is because numerous opportunities abound in the production of the crop which ranges from growing the cocoa beans to processing to cake and butter and making chocolates among others.
According to the International Cocoa Organisation (ICCO), the total global value of exporting raw cocoa is approximately $10 billion a year; the total value from chocolates alone, all made from cocoa, is over $100 billion a year, while the total value of all finished goods made from cocoa is estimated to be as high as $200 billion a year, all drawing from the same $10 billion raw cocoa beans produced.
Sayina Rima, former national president, Cocoa Association of Nigeria (CAN) identify massive investment opportunities and the inherent potential of the tree crop for the Nigerian economy.
“There are numerous opportunities in cocoa production. The southwest region was able to build its economy from proceeds from cocoa in the 60s,” Rima said.
Nigeria has two cocoa harvest seasons which include the smaller midcrop from April to June, and the main crop from October to December.
The maincrop accounts for about 70 percent of Nigeria’s cocoa output while the midcrop accounts for the remaining percentage.
Africa’s most populous nation now ranks fourth with 255, 000 metric tons produced in the 2017/2018 cocoa season, recent data from ICCO states.
Data from NBS, show that the country exported N35.4billion worth of raw cocoa beans was exported, and N1.2billion worth of cocoa butter in the first quarter of 2021.
