Commodities | |
Commodities | |
523 VIEWS | |
![]() | |
PROSHARE | |
PROSHARE |
Monday, January 11, 2021 / 01:30 PM / By AFEX / Header Image Credit: Farms Friend
In Q4 2020, it's hard to keep up with the demand for maize in Nigeria.
The price of the grain has seen a steady uptick resulting from a low base of
production. Thankfully, commodities market disruptors are seeking better
endings for farmers and buyers at large. Before you make your conclusions on
the maize market, there is a lot to know about what drives the market for maize
in Nigeria and its outlook beyond the bowl of cereal on your breakfast table.
Maize (Zea
mays L.) is a significant staple crop, widely cultivated in Nigeria and
throughout the world. Grown to serve as a major source of food, feed, and an industrial
ingredient for human and animal consumption; maize is a versatile grain that
adds economic and nutritional value globally. Of the 1.4 billion MT of maize
farmed worldwide, 65% of maize demand is for livestock feed production while it
stands around 56% in sub-Saharan Africa according to reports by the Food and
Agriculture Organization (FAO).
Currently,
Nigeria is the largest producer of maize in sub-Saharan Africa with 5.2MT
hectares of estimated land dedicated to the cultivation of over 10 million MT
of maize as of 2018. However, it is a different situation now. The COVID-19
pandemic bludgeoned smallholder's productivity resulting in low yields that
were unable to match demands. The market is also volatile due to the interstate
restrictions across Nigeria which affected trading dynamics, including farmers' access to input companies ahead of the planting season.
Demand and Supply of Maize in Nigeria
Today,
the Northwestern part of Nigeria accounts for a significant number of maize cultivations,
although Agro-ecological regions in other producing states show high potential for
growing varieties of maize. Despite the large volumes of maize produced in
these regions, the supply of the commodity nationwide is inadequate.
The prices of maize in Nigeria generally respond to
the quantity supplied from farmers, aggregators and traders and the quantity
demanded by processors like industrial firms and livestock companies. The
supply deficit experienced in 2019 (134,000 MT) was quite minimal when compared
to the deficit experienced in 2018(1,145,000MT). However, the decline in yields
due to the pandemic's adverse effects have affected the quantity and price
resulting in high demand and importation.
Sometimes, farmers do not have total control of how
much maize is produced in the absence of a stable value chain system that
ensures the aggregation, processing, moisture quality, storage, and market
supply of the crop. This is where AFEX plays a fundamental role.
A Levelling Field for Production
To
strike the balance between local production capabilities and market supply,
AFEX Commodities Exchange is providing a roadmap to high yield growth
opportunities in the aggregation, storage, and marketing of maize in Nigeria.
AFEX provides storage warehouses with a warehouse receipt system to enable the
market viability of the crops and a fair price share for farmers. AFEX
warehouse in Saminaka, located in the capital city of maize production has
contributed significantly to the steady supply of maize in Nigeria - it has
traded and stored the highest volume (8,660 MT) amongst all warehouses
operating under AFEX.
This
approach sets a roadmap for the efficient trading of this commodity. Maize
accounts for 74% of all commodities traded at AFEX Commodities Exchange from
2016 till date. This speaks to the high demand and liquidity of the commodity
amongst other agricultural commodities of comparative value in the value chain.
Maize by turnover value has contributed to over 11 billion Naira in trades on
the Exchange.
In the face of COVID-19 and other uncertainties, the
market has exhibited a high demand for maize, especially for animal feed,
leading to high importation of the crop.
However, the Nigerian government had directed all
authorized dealers to immediately discontinue the processing of Forms
Mc(mandatory statutory document to be completed by all importers for the
importation of goods into Nigeria) for maize importation into the country in
July.
Maize remains an indispensable staple role in the
food processing and feeds industry in Nigeria. To read the full report on maize
production, value, and consumption in Nigeria, click here.
Related
News
1. Will Gold Prices Rally in 2021?
Here are Its Ebbs and Flows
2. House Committee On Capital
Markets Lauds Management of LCFE As Trading Begins Soon
3. Supply Shortages from India to
Keep Sugar Prices Up
4. Depletion of Global Stocks
Causes Price Hikes in the International Market
5. Coronavirus Vaccine: Tailwind
for Oil, Headwind for Gold
6. No Respite for Food Prices
Amidst Onion Scarcity
7. Cocoa Supply Challenges to
Persist on Lingering Political Tensions in Ivory Coast
8. ACI Experienced a Positive
Performance - AFEX Commodities Weekly Report 291020
9. ACI Experienced a Positive
Performance - AFEX Commodities Weekly Report 231020
10. October 2020 Commodity Markets
Outlook: Lower Oil Demand Likely to Persist Beyond 2021