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Across a range of agricultural commodities, the Nigerian government aims to reduce dependence on imports or even to achieve total self-sufficiency Although this will increase private and public sector investment in an agricultural sector in desperate need of an injection of capital, the country will remain an importer of targeted commodoties such as rice and sugar for the duration of the forecast period For a sector which employs around 70% of the population and generates 44% of GDP, agriculture has been neglected for too long for the situation to be turned around so quickly Nevertheless, there are promising signs of investment from local and foreign firms, and regardless of these limitations growth is expected in most of the commodities surveyed

- Cocoa production growth to 2016: 33 5% to 320,000 tonnes Increased government and private investment should lead to significant improvements in output

- Corn production growth to 2015/16: 23 3% to 10 9mn tonnes Government investment in new crop varieties have improved yields, but a growing population will prevent Nigeria from becoming a net exporter

- Poultry consumption growth to 2015/16: 35 1% to 354,000 tonnes Growth in GDP per capita will lead to increased demand especially among lower income groups

- Milk consumption growth to 2016: 69% to 2 7mn tonnes Underpinning our forecast for milk consumption will be rising living standards, together with substantial population growth and the country's oil revenues affording imports

- Sugar consumption growth to 2016: 27% to 1 7mn tonnes Sugar consumption growth will be driven by the expectation of strong population growth, the lack of available substitutes and increasing industrial demand

- Rice production growth to 2015/16: 14% to 3 0mn tonnes The government is seeking rice selfsufficiency and zero imports by 2015, but our forecast puts local rice demand as remaining nearly double domestic output

- Real GDP growth 2012: 7 6% (up from 7 3% in 2011) - Unemployment rate 2012: 17 9% (up from 17 1% in 2011) - Inflation (annual average, % chg y-o-y) 2012: 10 5% (down from 10 9% in 2011) Industry Developments

Minister of Agriculture and Natural Resources Dr Akinwunmi Adesina said in February that he expects Nigerian rice consumption to increase to 35mn tonnes annually by 2050, largely as a result of population growth He also highlighted the government's intentions to reduce imports to zero by 2015 as part of the Agricultural Transformation Action plan (ATAP) While we see such goals as a sign that the sector could receive strong investment and see striding developments in output efficiencies, we do not see Nigeria being self-sufficient in rice in the time frame set out by the government

In January, Dr Herb Ajayi, president of the National Association of Chambers of Commerce, Industry, Mines and Agriculture, said that Nigeria could save NGN1 5trn on agricultural imports if the sector was well funded, according to the Daily Trust He went on to say that the Bank of Agriculture should be restructured and guaranteed minimum prices should be sustained for agricultural products, with government operating as a buyer of last resort He also called for agricultural subsidies to be based on production performance levels in order to directly benefit farmers and enable the government to play a more direct role in industry performance; commodity exchange and price protection mechanisms should also be put in place to ensure national food security and affordability of farm produce Such calls chime with announcements made by the Ministry of Agriculture, which is being vocal about the need to reduce imports and boost local production to ensure food security, all of which is easier said than done and requires a great deal of combinded government and private spending and cooperation, which is yet to happen at a level reflective of the country's requirements

Although BMI predicts strong long-term production growth for the majority of Nigeria's agricultural subsectors, we emphasise the presence of 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 Disease continues to be one of the biggest downside risks to poultry production

Meanwhile, in the grains and dairy sectors, the production, storage and distribution of produce is hampered by inadequate infrastructure and erratic 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

The increasing violence of attacks attributed to the Islamic extremist terrorist group Boko Haram threatens to drive away investment and disrupt trade, especially in the north of the country where the militants have their powerbase

Click for Report details:Nigeria Agribusiness Report Q3 2012