|
|
 |
|
Viewing report
|
|
|
|
Nigeria Agribusiness Report Q3 2011
Business Monitor International, May 2011, Pages: 57
BMI View: In the five years to 2015 we predict strong production growth for most agricultural sectors. The strongest growth is envisaged for corn, sorghum, wheat, rice and sugar. Meanwhile, our forecasts also anticipate positive consumption growth across all agricultural sectors. The strongest demand is envisaged for milk and sugar. Growth in the consumption of milk, sugar, pork and poultry will benefit from rising living standards and by an expanding population. Despite their high growth potential, Nigeria's agricultural industries continue to suffer from insufficient investment. As part of a drive to improve food security and diversify the economy, the government has committed itself to further agricultural development. However, actual investment levels have been low in a sector which contributes almost 42% to Nigeria's GDP and employs around 70% of its workforce. Nigeria's challenging business environment remains one of the biggest factors shaping private sector investment levels.
Key Industry Forecasts
- A downwardly revised production forecast for cocoa envisages 1.2% growth in 2010/11, rising to 4.4% the following year. In the five years to 2014/15, we now predict a 22% rise in output. The higher production from 2011/12 will reflect increased plantings as farmers move to capitalise on the higher price of cocoa beans. Although long-term growth will benefit from government and private-sector investment, there remain several serious downside risks to our production forecast. They include the possible introduction of an EU ban on Nigerian cocoa exports.
- Corn and sorghum will remain key staple foods. We continue to predict that corn output will rise by 6.5% in 2010/11 to reach 9.27mn tonnes. Meanwhile, a slightly revised forecast for sorghum envisages production of the grain rising by 4.3% to reach 12.2mn tonnes. Our five-year production forecasts anticipate a 24% increase in output for both grains. We expect Nigeria's grains industry to benefit from improved acreage, high prices (in the case of corn), investment in higher-yielding seed varieties and demand from subsectors such as brewing and poultry feed.
- Our forecasts for meat production remain unchanged. In the five years to 2014/15 we envisage a 23% rise in the production of poultry meat. Pork meat production is predicted to rise by 24% over the same period. Both sectors will benefit from increased government support, improved farming techniques and rising demand for meat. In consumption terms, pork will outperform poultry, expanding by 31% between 2010 and 2015. Our consumption forecasts for both pork and poultry will continue to be affected by the problems associated with product availability and affordability.
- Nigeria will produce almost 548,000 tonnes of fluid milk in 2010/11, up by 3.5% from the previous year. Growth to 2014/15 is predicted to exceed 19%. Despite benefiting from new forms of investment, the dairy industry will be unable to satisfy domestic demand for milk. Milk consumption is predicted to grow by 54% to 2.3mn tonnes in 2015.
- A revised sugar production forecast envisages slightly stronger growth of 8.2% in 2010/11 and 48% growth over the 2009/10-2014/15 period; strong subsector growth will be supported by government production incentives. Meanwhile, we anticipate a reduced 35% rise in sugar consumption to 2015; this is down from our previous prediction of 43%. We maintain our view that consumption growth will be underpinned by rising disposable incomes and increased demand for sugar as an ingredient for food processing sectors - predominantly soft drinks, alcoholic drinks and confectionery.
- Rice consumption is now predicted to grow by a higher rate of 23% in the five years to 2015. Rice has been emerging as a dietary staple for Nigerians. Despite steady output growth, total demand for rice is expected to remain well in excess of Nigeria's productive capacity; this will necessitate a continued reliance on imported grain.
Key Macroeconomic Forecasts
- Nigeria Real GDP Growth 2011: 7.8% (down from 7.9% in 2010)
- Nigeria Unemployment Rate 2011: 17.1% (down from 19.3% in 2010)
- Nigeria Inflation (annual average, % chg y-o-y) 2011: 11.1% (down from 13.8% in 2010)
Key Trends
Agribusiness offers Nigeria the best opportunity to diversify its economy and reduce its dependency on oil. Key industries currently receiving government support include cocoa processing, sugar refining and poultry production. Specific forms of government support are numerous and include the provision of subsidised agro-chemicals, the rehabilitation of old farms and efforts to help local production through limiting imports. Meanwhile, Nigeria's banks have been encouraged to increase their lending to the agricultural sector.
In addition to providing direct support, the Nigerian authorities will continue to encourage foreign investment in key sectors such as corn, rice, sugar, livestock and dairy production. Given the extent of Nigeria's growing demand for dairy produce, current output levels are highly inadequate. However, there is potential for private sector investors to capitalise on these inadequacies, as exemplified by the recently unveiled project to improve dairy farming by Dutch firm FrieslandCampina.
Although BMI predicts strong long-term production growth for the majority of Nigeria's agricultural subsectors, we identify numerous downside risks to our forecasts. In the cocoa sector, these include structural hurdles such as the need to negotiate improved access for its cocoa products to European markets. Meanwhile, Disease continues to be one of the biggest downside risks to poultry production and, in the grains and dairy sectors, the production, storage and distribution of produce is hampered by inadequate infrastructure and energy supplies.
With regard to Nigeria's agribusiness sector in general, there is a need for the government to ensure that food production standards are adequately enforced. In some sectors, clearer regulations and standards are required to govern food production; in other sectors, existing standards need better enforcement, as well as the provision of assurance guarantees to potential agribusiness investors
Product samples
A sample for this product is available. Please Login/Register to download this sample.
|
|
|
|
