09, 2021 / 03:03 PM / by CSL Research / Header Image
Credit: Emergency Digest
Data from the Nigerian Bureau of Statistics revealed that Nigeria spent N258.3bn on wheat importation in the first three months of 2021. According to a Business Day report, efforts at boosting local wheat production in recent years have been undermined by the Boko Haram insurgency in the North-Eastern region of the country, as wheat farmers in Borno, the country's major producing state have abandoned their farmlands and fled to other regions for safety. The president of the Wheat Growers Association of Nigeria noted that the insurgency in the North-Eastern region has been a major setback to efforts at increasing wheat production, noting that Borno alone contributed 30% to the country's total output before the insurgency but now contributes nothing.
We acknowledge that farming activities were significantly affected in 2020 due to covid-19 movement restrictions during the planting season as well as abnormal rainfall patterns which led to flooding of farmlands. That said, we note that the farmers/herder's clashes and in recent times, banditry and kidnapping are a significant threat to agricultural productivity. Banditry and kidnapping activities are at an alarming rate in Northwest Nigeria, which is the primary wheat cultivation region. Borno, Bauchi, Yobe, Kano, Jigawa, and Zamfara States are the major wheat producers and these states are currently undergoing military operations in the fight against terrorists and bandits. These restrictions make it highly difficult for farmers to access their farms. These unfortunate events have led to a spike in food prices reflected in the food inflation rate of 22.7% in April according to the National Bureau of Statistics (NBS).
According to the United States Department for Agriculture (USDA), 2021 will be another year of low wheat production. FAS forecasts Nigeria's wheat production in 2021/2022 to reach 55,000 metric tons (MT) compared with consumption forecast of 4.9 million metric tons (MMT). In September 2020, President Buhari called for a ban on dollars for food imports and added fertilizers to the restricted items list. Based on a USDA report, this action is forcing wheat and soybean importers to source dollars at higher rates through the parallel markets, consequently increasing the cost of flour and leading to rising prices of bread and other wheat flour-based products.
Nigeria remains a net importer of wheat, though there exists a a 5% tariff on wheat imports, plus an additional 15% levy for the national wheat development program. The Ministry of Agriculture has been making commitments to reduce wheat imports, but this does not appear feasible in the near term. Besides, the current insecurity issues, the agriculture sector remains plagued with long-standing structural challenges which if not ameliorated, would continue to result in low output level.