Nigerian agriculture is characterized by considerable regional and crop diversity. Analysis of this sector, particularly the food sub-sector, is fraught with serious data problems. However, the available statistics provide a broad overview of development in agriculture upon which we can make some broad generalizations about its role in economic development and structural change in Nigeria.
In the 1960s, the agricultural sector was the most important in terms of contributions to domestic production, employment and foreign exchange earnings. The situation remained almost the same four decades later with the exception that it is no longer the principal foreign exchange earner, a role now being played by oil.
The decline in agricultural production in Nigeria has lead to massive importation of food products in Nigeria. It is on record that Nigeria spends about $2 billion annually in importing food items. Recent reports show that each year, Nigeria spends $132 million on importation of milk; $400 million on wheat; $200 million on poultry, especially frozen chicken; and $756 million on rice. Nigeria also imports about 95 million metric tons of sugar annually.
In spite of its large areas of cultivatable land suitable for the growing of sugar cane and some recent investments in the sub-sector, Nigeria still imports 90% of its sugar. Sugar, a one of the product gotten from the processing of sugar cane, is one such consumer goods that is consumed by virtually everyone because it has little or no substitute. Although there are variants of sweeteners– honey, saccharine, and others, these are seldom used by the industrial consumers of sugar. Another product can be produced from sugar cane, ethanol, is a very useful biodiesel.
Sugar is consumed by households and particularly the industries where it serves as raw materials for companies in the foods and beverages industry i.e. confectioneries, soft drink and brewery and pharmaceuticals alike account for 35 percent of the total sugar consumption in Nigeria. Trends in industrial activities suggest that the demand for sugar will continue to rise. The demand for sugar today is put at between 2.5 and 3 million tonnes.
Some of the states where sugar cane can be produced in Nigeria include Sokoto, Taraba, Niger, Kogi, Kwara and most northern states.
With overall sugar consumption in the region of 1.5 million tons, Nigeria is the largest consumer of sugar in Africa apart from South Africa, and the industry is still dependent on raw sugar imports. 90% of Nigeria’s sugar is, however, refined in the country, opening the door to increased exports of refined sugar.
The Nigerian government encourages local value addition by maintaining a duty differential of 50% between imports of refined sugar and raw sugar and granting five year tax holidays to refineries. (The tariff differential between imports of refined sugar and raw sugar from the Economic Community of West African States (ECOWAS) and other countries is 15%). Other incentives include
•Companies in the agro-allied business do not have their capital allowance restricted. It is granted in full i.e. 100%.
•The payments of minimum tax by companies that make small or no profits at all do not apply to agro-allied businesses.
•Agro-allied plants and equipment enjoy enhanced capital allowances of up to 50%.
•Processing of agricultural produce is a pioneer industry, consequently there is 100% tax-free period for 5 years.
•All agricultural and agro-industrial machines and equipment enjoy 1% duty.
•The Agricultural Credit Guarantee Scheme Fund (ACGSF), administered by the Central Bank of Nigeria, guarantees up to 75% for all loans granted by commercial banks for agricultural production and processing.
•The Interest Drawback Program Fund provides a 60% repayment of interest paid by those who borrow from banks under the ACGS, for the purpose of cassava production and processing. To qualify for these repayments, borrowers need to repay their loans on schedule.
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