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Nigeria Agribusiness Report Q3 2009Published by: Business Monitor International Published: Jun. 19, 2009 - 53 Pages Table of Contents
AbstractWe believe that the government's recent attempts to stimulate agricultural production through a mix ofpublic-private partnerships have brought a reasonable degree of initial success, contributing to positivegrowth forecasts in all categories covered in BMI's latest Nigeria Agribusiness Report; barring beef, weforecast double-digit supply and demand growth across the board.The Nigerian Federal Government's efforts to revitalise the high potential of the domestic agriculturalindustry seems to be reaping positive developments. A recent World Bank funded US$150mn assistancepackage is stirring official sentiment that substantial levels of private-led investment can be attracted tothe industry, thus helping the major food-importing country become both self-sufficient and an exporterof dietary staples. The Commercial Agricultural Development Project (CADP) will be piloted in five states across thecountry enabling farmers to receive support in the production of staples such as corn and rice, in order tohelp alleviate the food crisis. It is also hoped that the domestic supply chain in goods like palm oil, cocoa,poultry and aquaculture can be developed with around US$50mn of the fund, which would stimulate localemployment opportunities, as well as reduce the amount of food purchased from overseas. The first part of the project will entail bolstering agricultural production systems to stimulate staple cropproduction. Following this, support to value-added goods will be implemented, before the final two stagesaimed at facilitating market access and building infrastructure. The government also plans to launch amarketing initiative, promoting the industry to graduates as a profitable alternative to city-basedemployment in the industrial and services sectors. As such we see strong potential for solid output growthin grains production which should, in turn, feed through into the livestock outlook. Indeed, poultry production is one of the areas where we are particularly optimistic for 2009; thegovernment recently invested 15% capital in a public private partnership (PPP) venture with AfricanChicken Farm, a renowned Syrian agribusiness specialist, to substantially expand poultry production inthe northern state of Kwara. The project will cover 700 hectares and around US$400mn will be used tobuild what will be the largest chicken farm in Africa. The initiative should get underway by the end of2009 with the aim of producing 3mn poultry per year at full capacity. This will not only enable Nigeria toeasily feed robust local demand but may also provide a chance for exporters to expand profit margins. With poultry demand solidly reliable among Nigeria's population, production is set to grow by nearly18% during the course of the outlook window. Meanwhile, sorghum will remain the most popular crop due to its versatility and hardiness, although highdomestic consumption leaves little scope for export revenues. The main caveats to Nigerian agriculture growth for 2009 (and possibly 2010) are presented in the formof domestic financial woes; oil revenues are substantially lower than in previous years, while the effectsof a depreciating naira have been exacerbated by lower levels of market capitalisation as some worriedinvestors have been quick to pull their money out of the economy. However, a string of Multi-National Companies are unfazed by such sentiment and seem intent on furtherrooting themselves in the local agricultural industry. If anything, the comparatively lower costs ofacquisitions may actually serve as incentives to take advantage and expand in advance of future pricerecovery. Africa's largest economy will undoubtedly benefit from their presence, particularly during aperiod of indefinite state austerity. Get Full Details About This Report >> |
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