BusinessDay
NigeriaDecides2023

Nigeria’s food trade deficit swells amid local production push

Nigeria’s agricultural trade deficits widened to a record in 2021, reflecting a surge in food imports as the country relied on foreign producers to meet its domestic demand, according to a recent report by Flour Mills of Nigeria.

The report presented by Boye Olusanya, group managing director and chief executive officer at the Lagos Business School Breakfast Session, stated that despite several efforts towards import substitution, the country still relies heavily on food importation to meet its existing gaps.

Nigeria recorded a N2.29 trillion food trade deficit in 2021, compared to N1.42 trillion in 2020, indicating a 61 percent increase. In 2019 the agricultural sector recorded a trade deficit of N1.3 trillion and N1.02 trillion in 2018, according to data from the report.

Africa’s most populous country has failed to grow more food for its fast-rising population who must be fed with staples ranging from rice, beans, tomatoes, and maize among others.

This has forced the country to spend millions of dollars yearly importing food, thereby putting pressure on Nigeria’s foreign exchange reserves and importing thousands of jobs it would have created if the products were grown locally.

The federal government has in the last seven years spent billions of dollars on various agricultural programmes to spur local food production.

Read also: Food inflation in some selected African countries

However, there is still no significant impact as the country still has a huge demand-supply gap in most of its staple foods, even as the population growth rate stands at 2.5 percent in 2020, according to the World Bank.

The report also stated that the country’s food production cost cannot effectively compete with its African peers despite having a bigger food industry.

“Nigeria has a much larger food production industrial base but is much less significantly cost competitive than the continent’s other big economies,” the report said.

The lack of price competitiveness of food production in Nigeria has continued to make the country an attractive destination for cheaper imports.

According to the report, the two major disruptions to the supply chain caused by the pandemic and the Russia-Ukraine war coupled with FX scarcity in the country have heightened the backward integration and local content development imperatives of the government.

“To ensure better outcomes than our national experience so far suggests, these programs must come with a healthy dose of realism, whilst having efficiency, productivity, and sustainability metrics at their forefront covid-19 and the Russia-Ukraine war,” the report added.

The report noted that backward integration programs (BIPs) in oil palm, wheat, and sugar production will play a role in helping the country address its huge job creation requirement as most of the developments in the industries are still at the upstream stage.

The report noted that with the current trends in the country’s agricultural sector, agro-industrial linkage remains Nigeria’s best bet to drive industrialization.

It added that a robust and stable supply chain is required to develop and sustain the agro-industrial linkage while calling for technology adoption across the value chain and the need to tackle the worsening security issue in the country.

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