January 6, 2004

 

 

Nigeria Tops US Wheat Export List

 

Nigeria is maintaining its position as the leading export destination for U.S. hard red winter wheat and the third overall largest importer of U.S. wheat, according to information from the U.S. Department of Agriculture's Foreign Agricultural Service web site, dated Dec. 31 and released Monday.

 

The harvest of most grains for MY2003/04 season has been completed except for sorghum, which is a late crop in Nigeria. Overall grain output increased 5% due to favorable weather conditions throughout the grains belt, the press release said. The volume of rainfall received during the cropping season was well above the 10-year average and was evenly distributed for a good crop. Post's field visits revealed that, the country could have achieved a bumper crop, if not for the heavy rainfall and flooding of some rice and cornfields.

 

Local sources also attribute the growth in output to President Obasanjo's new initiative of promoting increased food production through its "Agriculture and Rural Transformation Program." In March 2003, the government in collaboration with the Food and Agricultural Organization embarked on a new initiative called the "National Special Program for Food Security." The program focuses on new approaches to soil conservation and fertility improvement and water use for crop production, crop intensification and diversification to attain food security and alleviate poverty. Primarily, the program aims at improving farmers' productivity and income.

 

However, corn and rice output declined due to a severe shortage of organic fertilizer products and flooding in some areas. The shortage in fertilizer supplies was due to distortions caused by GON's subsidy program. Importers, unsure of the operational modalities of the subsidy program, suspended import operations, while supplies under the subsidy program were grossly inadequate. The retail price of a 50-kilogram bag of NPK increased to a record level of 4,000 naira, up from an average of 2,000 naira last year.

 

Wheat

 

Nigeria depends almost exclusively on wheat imports to satisfy local demand because local climatic conditions are not suitable for profitable commercial wheat production. Available trade data indicate that U.S. wheat exports to Nigeria in the first five months of MY2003/04 are up 20% over the corresponding period of MY2002/03. This largely reflects increasing milling capacity and steadily increasing consumer demand for wheat-based products. Nigeria remains a consistent buyer and leading export destination for U.S. wheat. Demand for soft wheat is increasing to satisfy a growing demand by biscuits, crackers, and spaghetti manufacturers.

 

Despite increases in freight cost and the devaluation in the local currency in recent months, the retail price of wheat flour has been stable at an average of 2,400 naira per 50-kilogram bag. This is due to intense competition among the millers. The larger mills are able to take advantage of economy of scale by reducing profit margins to the bare minimum to boost sales. Some of the smaller mills are finding it difficult to compete and have limited their production or are contract milling. Industry sources predict that flour prices will likely rise ten percent in early 2004. Based on industry estimates, Agoffice anticipates that the U.S. share of Nigeria's wheat imports will increase to 90%, up from 85% last year due to limited supplies from non-traditional exporters, the press release said.

 

Corn

 

Nigeria's corn output reportedly fell by about four percent reflecting the impact of the scarcity of fertilizer products. Most corn growers switched from corn to the less fertilizer- dependent soybean and sorghum. Agoffice has accordingly revised downwards the forecast of Nigeria's corn output for 2003/04 to 5.15 million tons, down from 5.2 tons last year.

 

The impact of the lower corn crop is already being felt. Corn is currently sold for $180 per ton compared to $140 per ton this time last year. Trade sources indicate that supply from the local crop may run out by March 2004, at which time Nigeria will have to turn to imports to satisfy a growing demand by the local poultry and beer brewing industries. The import duty on corn is 70%. The high duty was imposed largely to protect local corn growers.

 

Rice

 

Forecast of Nigeria's rice output in MY2003/04 has been revised downwards to 5.1 million tons, the press release said. The decline in output is attributed to the combined impact of fertilizer shortage and flooding of several rice fields. The GON is promoting self-sufficiency in rice production through a subsidy program of basic inputs to farmers, especially improved rice varieties. Despite this policy, however, Nigeria will likely not be able to attain self-sufficiency in rice production for at least six to 10 years. Nigeria will continue to depend on imports to satisfy consumer demand.

 

Over the past year, the retail price of rice increased on average by about 30% reflecting the increase in the import duty and a devaluation of the local currency. Consumption estimates have been revised slightly downwards. However, rice remains a regular item in the diet of most Nigerians, largely because of the convenience and the variety of ways it can be prepared. In Nigeria rice is served as the main dish, not as a side food as in most other countries. Nigeria's per capita rice consumption is estimated at 30 kilogram.

 

Sorghum

 

Sorghum production in 2003/04 is estimated at 8.0 MMT, up from 7.85 MMT last year. The increase in output is a result of favorable weather conditions and a two percent increase in area planted. As stated previously, farmers reportedly switched from fertilizer dependent crop such as corn to sorghum because of it low fertilizer requirement.

 

Sorghum enjoys a large and growing domestic demand because of its extensive use as food in virtually all parts of northern Nigeria. Sorghum also is used extensively in brewing homemade local beer. Industrial demand for sorghum by beer manufacturers is rising steadily, in step with rising demand for their products. Some brewing factories in Nigeria produce beer exclusively from corn and sorghum.