This document discusses opportunities in the global agricultural sector, with a focus on opportunities in Nigeria. It notes that global demand for agricultural produce is increasing due to population growth, urbanization, rising incomes, and other factors. This is putting pressure on grains and cassava production. It also discusses the increasing global demand for protein as middle classes and incomes rise. Specific opportunities mentioned for Nigeria include investing in arable land, cassava production, fisheries, poultry, and animal husbandry. The document provides statistics and analysis to support these points.

1. AGRICULTURE
A Global Perspective!
Covenant Capital &
Microfinance
Michael Olorunninwo
July 2013

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Outline
Global Demand for Agricultural Produce
Pressure on Grains, Cassava, etc.
Impact of Growing Middle Class on Protein Demands
Opportunities in Nigeria

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Credits
• United Nations Food & Agriculture Organisation (UNFAO)
• World Bank
• United States Department of Agriculture (USDA)
• World Health Organisation (WHO)

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2007
2030
4
Introduction
World Sub-Saharan Africa
Food Consumption per Capita (kcal), 2007 to 2030
13%
22%
• Buoyed by increasingly income
and sophistication
• Sub-Saharan Africa has highest
incidence of food insecurity
• By 2050 it will also witness highest
proportion of population growth and
account for 20% of population
2540
3050
3,050 kCal x
6.5 billion
people!!!

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Introduction
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Jun-13
Trend shows increases in the
average price index of food items
45%+
Global Food Price Index 2008 to 2013
Index rebounded after
2008 financial crisis

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Introduction
Trend shows increases in the average
price index of food items
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Meat
Dairy
Cereals
Indices for Cereals &
Diary products follow
general Food Index
Global Price Index for Meat, Dairy & Cereals (2008 to 2013)

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Drivers of Global Agricultural
Demand

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World Population will increase by 35% to 9.3bn by 2050
21%
35%
58%
130%
0%
20%
40%
60%
80%
100%
120%
140%
160%
2030 2050
World
Sub-Saharan Africa
Nigeria
Expon. (Nigeria)
NIG: Additional
231 million
• By 2050, Nigeria’s population will increase to 389 Million
63%
146%
Base Year: 2010

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Significant Number of People Now Live in Urban Areas
• Today, about 70% of world
population, live in urban areas
• This shift happened in 2008
• Compared to 1960, almost the
same number of people live in
rural areas

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High Proportion of Dependent /Consuming population
• World population is ageing with 65%
between ages 16 and 64 years
− Increased Longevity
− Low Fertility
• Africa has the highest proportion of
dependent (consuming) population

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Increasing Income Levels
• Global GDP per Capita grew by almost 100% between 2002 and 2012, from less
USD5,338 to USD10,170
0
2000
4000
6000
8000
10000
12000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
91%
• By 2030 the world will be 80%
richer
• More money means increased
demand for more food, most
importantly protein and diet-
variety
GDP per Capita, 2002 - 2012

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Reasons for Pressure on Grains
& Cassava

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 Grain production is land intensive
 Adverse weather conditions is wiping out harvestable crops
 Discovery of novel uses of grains as biofuels
Contributing Factors to Grain Demand Pressures
 Increased use of grains as animal feed to meet protein demands
 More pressure on arable lands as yield growth declines

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Composite Use Increasing Demand Pressures
Humans
Grains,
Cassava,
etc.
Livestock
Biofuels
Production
Energy Consumption

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Food, 1000
Animal Feed,
750
Industrial
Use, 500
Others, 50
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Tonnes (millions)
• Only about 40% of production is used
as food
• Industrial use such as biofuels is taken
increasing proportion
Production and Uses of Grain in 2012
43%
33%
22%
2%

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Ethanol Production from grains has increased by 300%
Ethanol Production, mostly from grains
• 25billon gallons of
ethanol will be produced,
mostly from grains, in 2016
• Major source of biofuels & biodiesels include corn, soybean, sugarcane, wheat, etc.

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Growth in Cereals Production from 2000-2010
• In terms of Production,
Harvested Area & Yield,
Africa is registering
significant improvements

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Demand for Protein

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Livestock is Major Source of Protein
Humans
Grains,
Cassava,
etc.
Livestock
Biofuels
Production
Energy Consumption
Milk

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Demand for Meat Increases with Income
• High income countries
consume more meat
• Per Capita meat
consumption and income
are positively correlated

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Meat Consumption is Higher in High Incomes Countries
• Meat consumption i.e. demand for protein
and diet diversification is expected to rise
• Low income countries have low meat
consumption per capita and vice versa

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Uses of Grains & Cassava – Meat Conversion Rates
• Feed-to-meat conversion rates, not favourable
• Chicken is most
feed-efficient

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• Only about 12% of world marine stock is
under/moderately exploited
Aquaculture will be a major source of fish protein

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Opportunities in Nigeria

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Agriculture is Land Intensive!
 Need to capture available arable land for agriculture purposes
−Livestock production is even more land intensive
−Focus on sub-Saharan Africa by European farmers seeking for Arable Land
−Opportunity exists for Lease and Capital Gains income
80% of land in
Nigeria is Arable

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How About CASSAVA!
 Reliable source of food in Nigeria, 90% of cassava production is processed into Food
 Significant demand exists
−Use of High Quality Cassava Flour (HQCF) as 10% replacement in bread flour, noodles,
adhesive, about 1.15 million tons in demand
−100% duty on flour imports
−Native and modified starches in food, paint and pharmaceutical industries
−Dried cassava chips had regional market and can be used for local animal feed
−Nigeria adopted 10% ethanol E-10 policy, representing 1 billion litres per annum
 Need to improve value-chain efficiency and quality control
 Investment in Farmer Education and Extension services

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Cassava Production – Nigeria and Thailand
Nigeria Thailand
Production ('000t) 36,804.00 30,088.00
Harvested area ('000ha) 3,126.00 1,326.00
Yields (t/ha) 11.70 22.70
Utilization
Garri (60%)
Native & Modified Starch
(40%)
Fufu (20%) Fuel Ethanol (20%)
Lafun (10%), Tapioca (5%),
Native Starch (3%),
Animal feed (2%)
Chips/pellets (40%)
Farm Size (ha/Farm) 1 to 2 4 to 5
Cassava area (Ha/farm) 0.5 to 1 2 to 3
Crop System - Monocrop
– Intercrop
10% 95%
90% 5%
Time of Planting Apr-June Apr-May
Land Preparation Manual/tractor Tractor
Weed control Manual Tractor/herbicide/manual
Fertilization - Organic
- Chemical
none medium
very little medium
Labor costs (US$/day) 3 to 4 4 to 5
Prod. costs (US$/ha)
(US$/t fresh roots)
450-900 650-800
37.99 28.68

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Fishery, Poultry and Animal Husbandry
 Meat consumption in Nigeria is expected to increase with income levels
−Increasing levels of middle class population and diet sophistication will drive demand
 Known protein sources such as fish, beef, chicken, goat, eggs will continue to be in
demand
Beef
41%
Fish
24%
Egg
12%
Goat Meat
12%
Chicken
6%
Mutton
3%
Pork
2%
Protein Consumption in Nigeria

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Other Opportunity Areas
Fertilizers
– Less government involvement
– Currently driving private participation in production, processing and marketing
– Use of subsidies to promote usage by Farmers and improve Yield
Marketing
– Government promoting independent marketing companies to expand supply pipeline
– Marketing companies to coordinate production, promote investment, establish standards
Financing
– Access to US$500m fund from CBN through incentive-based risk management system
under NIRSAL
– Banks are becoming more open towards agricultural-financing
Infrastructure – 30% of produce are lost annually
– Need for quality storage facilities
– Need to improve transport logistics
– Requires efficient supply-chain management services

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Other Opportunity Areas
Capacity Development
– Need to attract young Nigerians into the Sector
– Need for investments in training and development
– Advanced skills in animal husbandry, crop expertise or veterinary science is scarce
Grains – Wheat, Rice, Corn
– Imposition of Import Tariffs on major grains such as wheat and rice
– Demand for noodles, cereal meals, biscuits, bread, pasta, will keep demand up
– Provision of adequate storage facilities
– Use of grains for animal feed
– Investment in processing facilities
Importation & Assemblage of Implements

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The Nigerian Consumer
Analysis of Consumer Buying Patterns, 2015 est. (N’b)
Food & Bev.
59%
Clothing &
Footwear
11%
Health & Med.
Serv.
8%
Household
Goods & Serv.
6%
Alcoholic Bev.
& Tobacco
4%
Comm.
3%
Misc. Goods &
Serv.
9%

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