By AMIRA DAOUI edited for use
The fact that the Nigerian economy had for a long-time placed agribusiness on the back burner makes it seem like a completely new venture. As with all new business ideas, the growth potential for the sector is currently very high.
Agriculture is Lucrative in Nigeria on these terms and conditions
There was a time when the African continent was known as the agrarian hub of the entire world. In Nigeria for instance, before crude oil was discovered agriculture accounted for more than three-quarters of the country’s export income and almost half of its GDP. The country fed its populace with ease and had surpluses in rubber, cocoa, groundnuts and palm oil for export.
But urbanization and industrialization turned the tide on this and made the country one of the top food importers globally. Nigeria has from the 1960s become dependent on imports to sustain its people. However, in the recent past, this African economic giant has started taking steps to rectify this misnomer.
The journey to revive agricultural development in Nigeria has seen its fair share of challenges and rewards. In this article, we would like to take a look at why there is no turning back from this revolution process. We will consider why the sector is particularly promising for the country’s economy as well as the challenges that farmers in the county are facing. We will also look at possible ways to surmount these challenges and how investors can make the most out of this opportunity.
Striking Opportunities of Agribusiness in Nigeria
There are many compelling reasons why the business of agriculture in Nigeria is a lucrative opportunity. Take a look at some of these:
Nigeria is famed for being the most populous nation in Africa and the seventh most populous in the world. It has a population of over 180 million people and this offers two major advantages. First, getting affordable labor to help with agricultural production is quite easy. This will in turn ensure low production capital for agricultural investors and translate to lower prices for the end product. This is an essential factor in ensuring that farmers in the country have a competitive edge.
The second advantage that comes with the high population is that there will always be a ready market for farm produce. This is an especially important factor considering the perishable nature of these products. The high market demand thus reduces on waste and ensures maximum profitability from the venture.
Even though the Nigerian economy has for a long time been dependent on crude oil, this past year has been one of change. Oil prices have dropped on the international market and this has greatly contributed to economic recession.
The government has put measures in place to support economic diversification. To this end, it is incentivizing farmers and helping them get access to government as well as non-government agencies that deal in agricultural production. This has created a huge opportunity for existing farmers and also serves to boost new investor morale in the sector.
Nigeria measures more than 900,000 km² and 70% of this is fertile land viable for agriculture farming. This expanse of land is among the biggest in the entire continent. And most of it is in fact black cotton soil, greatly renowned for high productivity.
This makes farming a highly attractive venture since a great portion of this land is still available for agriculture.
The fact that the Nigerian economy had for a long-time placed agribusiness on the back burner makes it seem almost like a completely new venture. As with all new business ideas, the growth potential for the sector is currently very high. This would make it a great time to take advantage of it as it grows.
The full potential of farming in Nigeria and other agricultural pursuits is still a long way from reaching full capacity. Early risers are therefore set to reap the most from the anticipated boom.
The publicity level that the agricultural sector is currently enjoying has led to another major advantage. More institutions are at the ready to avail financing for potential and existing investors in the industry. Government support in this regard has also made it quite easy to secure loans and grants and provided favorable repayment options.
There is high competition among financiers and varying terms to accommodate the interests of different investors. The amount of money available for the sector is also at an all-time high.
Outstanding Agricultural Opportunities in Nigeria
1. Rice Farming
Nigeria is one of the biggest rice importers in the world. It only comes second to Asian countries since rice is the most popular staple on the Nigerian table. Local rice production only accounts for a fraction of what the population requires for sustenance. This is in spite of the fact that Nigeria is one of the top African producers of rice with an annual output of over 3 million tons.
Local demand stands at 5 million tons annually and grows by more than 5% every year. This means that investing in rice farming in Nigeria is guaranteed to yield handsomely since the demand surpasses supply by far. It also implies that a farmer will not have to invest so much into marketing as the product will fly off the shelves.
Another advantage of rice farming in Nigeria is the fact that the crop only takes around four months to mature from the time it is planted. This makes it possible to harvest up to three times annually making the rewards pretty inviting. It is easy to learn the art of the business and it is not as capital intensive as many other agricultural ventures.
The government is also keen on supporting rice farmers in order to reduce the import burden currently experienced. This makes it very easy to set up rice farming as a business and build it to success.
Different varieties of rice can grow in virtually all the geographical areas of the country. But at the moment, only 2 million hectares hold rice plantations even though there is potential for more than 5 million hectares for cultivation in the country.
Even though it is common knowledge that poultry business is highly viable in Nigeria and Africa as a whole, the sector still remains largely untapped. Chicken, turkey and eggs are all-time favorites in the country and the local supply can only scratch the surface of demand. This is why millions of tons of poultry and poultry products are imported into the country every year.
Apart from the overwhelming demand, another factor that makes this a viable opportunity is the reproduction and growth rate of the birds. Chickens for instance take only 28 weeks to mature and make their debut into the market. Eggs ordinarily take 3 weeks to hatch. But with modern incubation facilities they take even shorter. Additionally, layers produce at least one egg every two days making them highly profitable.
Yet another reason that makes poultry farming in Nigeria appealing for potential investors is the general price range for the products. The profit margin is more than what farmers are accustomed to for as long as one is willing to put in the work.
The poultry industry is not only limited to raising birds for sale or for egg production. It also involves such aspects as poultry feed, medicine and equipment production. This makes it possible for investors to identify a suitable niche and turn a profit from it. The business is however relatively capital intensive and requires some skill to keep the birds disease-free and productive.
Nigeria imports tomato paste worth more than $500 million annually. This is once again the result of the fact that the demand for tomatoes far exceeds the local supply. Interestingly, not so many farmers are into tomato farming. Some shy away from the opportunity because of the sensitive nature of the crop that requires extra care.
This presents the rare advantage of low competition for any investor who is willing to go against the grain. The biggest challenge after the sensitive growth period is proper handling, keeping the produce fresh for as long as possible and transporting it to the selected market. Figuring these details out is crucial to success in tomato farming.
Cassava is yet another staple for Nigerian families. Popular foods like bread, fufu and garri all require cassava as the key ingredient and are consumed in most homes on a daily basis. It is also used to prepare some traditional alcoholic beverages.
The limitless uses of the product coupled with its limited supply are sufficient reason for a potential investor to consider cassava farming.
This is one of the biggest challenges facing farmers in Nigeria and Africa as a whole. It is the result of a combination of factors. Foremost is the poor infrastructure that marks most of the rural region of the country where most of its farming takes place. There are few good road networks, limited electricity supply and poor transport facilities. In addition, the post harvesting infrastructure is also very limited meaning that a huge percentage of produce gets spoilt when in storage and holding.
A majority of the country’s population still undermines agriculture and remains blind to its true potential. The sector has therefore been left for the peasant farmer who not only has limited access to resources, but also has not kept pace with the industry’s evolution.
This presents major problems in terms of limiting the extent to which farming techniques can take advantage of developments in the field. It also means that the true potential can never be realized unless there is a change in this respect.
This is one of the biggest problems that have limited agricultural development in Nigeria and the continent as a whole. Research has shown that Africa has been the most vulnerable continent to the impact of climate change. This is because the continent is almost wholly reliant on rain-controlled farming. The yield from this type of farming has been consistently reducing and is expected to fall to 50% by 2020.