Home Agriculture Farmers shun fertiliser over price hike as AFEX forecasts bleak harvest

Farmers shun fertiliser over price hike as AFEX forecasts bleak harvest

by Business News Report

The outlook for Nigeria’s agriculture sector looks bleak because farmers were unable to purchase fertilisers which have more than doubled in price in 2022 according to AFEX, Nigeria’s leading commodities market player.  This is part of findings released in AFEX’s 2022 Wet Season Crop Production Report today in Abuja. The report, which seeks to provide accurate and reliable data to aid the understanding of the national food system through farmer surveys and measurement of transaction level data, tracks six key commodities and their performance in the preceding season. According to Ayodeji Balogun, the Chief Executive Officer of AFEX, “Nigeria must develop resilience to lessen the impact of global shocks given the uncertainties around the global shocks that might occur in 2023 and years beyond. To do this, the government must increase budgetary support for agribusiness at the national and sub-national levels to the minimum requirement of 10% set during the Maputo Declaration on Agriculture and Food Security, increase investment in Research & Development aimed at increasing yields, investment in infrastructural capacity such as transportation, storage, power, and so on, and increase and extend the capacity of current food reserves.” 

Balogun added that there “Must be a synchronised effort between the government and the private sec-tor to boost Nigeria’s food systems. AFEX remains committed to fixing identified challenges across the commodity value chain. Our input financing programme has helped several farmers improve yield while delivering adequate return to them. We have also fostered access to the market through ComX which facilitates trading activities between farmers and buyers with over 64,000 users, storage facilities to farmers and improvement to food quality through the newly launched 100,000MT Grain Quality Enhancement Centre. Our survey also revealed that combined with farmers’ reduced ability to access and afford fertiliser during the planting season, most farmers were unable to increase the number of hectares compared to the previous year. However, farmers resulted in using more herbicides and more local seed varieties to compensate for low fertiliser usage to protect their yields. 

“We expect to see some level of sustained rally in the prices of commodities in the new season especially in Maize, Sorghum and Paddy on the back of key factors like slump in production level, in-creased international demand, weakening of the Naira and higher energy prices with impact on logistics. For policymakers, a short-term priority could be to provide targeted support to poorer households facing higher food and energy prices. Also, there must be a dual approach to be able to moderate prices across commodities while stemming inflationary pressure on food in the coming season by ad-dressing overall production levels as well as seasonality of supply. While there is need to intensify efforts to spur production levels, reserves could be held across all grain commodities and released strategically during the season. On the back of lower production output this year, investors could be well positioned to take advantage of possible price appreciation in the new season across commodities. We believe investment in commodities in the new season remains a better hedge against looming inflationary pressures compared to other asset classes. Against the commodities market, investors could be exposed to downside risks amid the CBN’s hawkish monetary stance in the battle of inflation and pre-election bearish effects on equities performances. Also, the Nigerian fixed income space is still largely characterised by a negative return environment,” the Balogun said. 

As reflected in the report, price and market changes across maize, paddy rice, sorghum, soybean, cocoa, and sesame have been affected due to predictable seasonality effects, activities in the agricultural value chain and larger macroeconomic global events. The 2022 Wet Season Crop Production Report forecasts an average decline in production levels of up to 11.5% across commodities like maize, paddy rice, sorghum, and cocoa, while soybean and sesame will experience a close to 6.5% increase in production levels. Nigeria’s most consumed grains are currently faced with declining food balance sheets as consumption levels rise faster than production levels, worsening food insecurity. AFEX’s Head of Market Data and Research, David Ibidapo, who presented the report findings at the launch event, indicated that “AFEX’s annual crop production report seeks to provide robust market intelligence for agriculture value chain players in Nigeria. We have more than doubled the count of farmers surveyed for this research, up from 9117 farmers indicators measured through the survey, stating that “Factors such as land usage, inputs(quality of seeds and fertiliser usage), weather conditions, and the farmers’ output expectations were put into primary consideration.  Higher prices were forecasted across all commodities in the report. Maize which faces a projected decline in production levels of up to 14%, is subsequently projected to reach a higher average price point ranging between (486.72USD) NGN214,980/MT and(498.09USD) NGN220,000/MT by the end of Q4 2022, compared to an average price of(475.97USD) NGN210,229/MT in Q4 2021. 

Also, soybean price is projected to rise by 6%by May 2023.The projected price hikes across commodities in the report were also tied majorly to incidences of flooding resulting from incessant rainfall in key producing regions. This is indicated to further heighten the gap between production and output levels by farmers.The effects of the Russia-Ukraine crisis continue to be felt in the local agricultural commodity markets, especially because of the hike in the price of fertiliser. This negative impact was also highlighted in the report as affecting the output level of most commodities. The report forecasts paddy rice as being the most susceptible to production and output pressures, facing close to a 22.47% decline in production volumes this year in the wake of the crisis-induced fertiliser price hike.  Access to reliable data is a recurring limitation for agriculture on the continent. AFEX has consistently advocated for a food balance sheet for the continent that will strengthen productivity improvement efforts, subsequently enhancing food security.

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