Soya beans, one of Nigeria’s most cultivated crops took the shine off major export commodities, cocoa and ginger to become the biggest gainer in the opening month of trading on the AFEX Commodities Exchange.
The leguminous crop cherished for its richness in protein, carbohydrate, vitamins among other nutritional contents outstripped other commodities with a seven percent gain in price at N160, 000 per metric ton from N149, 000 as at January 2.
Even though they have remained the highest priced commodities on the exchange, Cocoa and Ginger’s performance were not as striking as soya beans as they steadied within a range of N700, 000 and N287, 000 respectively. Maize, Sorghum and Paddy Rice prices relaxed to around N88, 000, N78, 000 and N125, 000 respectively.
Analysts ascribed soybeans’ performance to the usual weakness in local production capacity to address ever growing market demand.
“Where there has been no increase in production, the demand for the commodity has been high,” said Obianuju Okafor, AFEX communications officer.
“Demand for soybeans currently stands at around 1.5 million metric tons, which is obviously unable to be satisfied by the around 600,000 metric ton supply. The market is simply responding to this gap,” Okafor added.
Ayodele Uwala, Nigerian Soyabeans Association President says production by current estimate and observation was now over 900,000 tons and perhaps heading towards 1.2 million but was still inadequate to meet current demand, suggesting that veering into production will still remain a lucrative venture in the future to come.
Nigeria, the largest consumer of soybeans in sub-Saharan Africa controls a share of international market worth $85 million. Majority of that consumption is dominated by usage in soy milk production and specially food formulation to tackle malnutrition in infants. As a cheaper source of protein compared to beef, poultry or eggs, the nutritional demand is projected to grow at par with population expansion. Also, Soya bean condiment called Dawadawa is exported to Cammeroon. And even when producers focus on the local market alone, they might not go wrong with soya beans.
Already, cultivation is found suitable in most northern states and recently in the south east, South-South and South-West regions of the country. It commences between May and June while harvests runs through October and November. Harvesting can begin for early-maturing types of the grain 70 days after planting 180 days after for late-maturing.
But there are other money-spinning aspects to soya beans than production which Uwala says are overlooked. He said areas of aggregation, input supply, equipment provision for farming operations were largely underserviced but investors can be certain of reasonable return.
The most rapidly growing aspect he emphasised is the market structuring, similar to mini model of a warehouse receipt system. “People now have locations where farmers that can’t travel can drop their crops. You give them a ticket which is as equal as having money,” he explained.
“In most of the areas where they are producing, farmers are very conscious that selling very highly would not be profitable. They can create centres where farmers who are not ready to sell can keep their harvest and be ticketed. If the price goes up and the farmer is ready to sell, the difference between the old price and the new price would be shared by the store keeper and the farmer. The farmer will even gain more. So there is still an opportunity for lucrative production.”
In terms of equipment provision, investors can also leverage on low capacity for mechanisation among soya beans farmers to provide tractors and threshers for commercial production. With a tractor capable of at least eight hectares per day, Uwala says a renter can make about N50, 000 a day. Leasing of threshers on the other hand can also hold a steady market as farmers still grapple with loss of harvests.
However, for Okafor, soya beans still holds prospect of price appreciation considering that production conditions might not change rapidly. That, by extension will ensure investments in forward contracts or spot contracts remain profitable, even if their market entry is with a metric tonne.