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AFEX Commodity Focus on Maize: The Goldmine of Feed Grains

Commodities	1582 VIEWS
Commodities
1582 VIEWS

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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.

The Outlook for Maize

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.