USSEC Transforms Nigerian Soybean Market
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FAS Lagos forecasts Nigeria’s Soybean production in MY 2023/24 (October-September) at 1.15 MMT, an 8 percent decrease from the USDA official MY 2022/23 estimate of 1.25 MMT. The reduction is due to armed violence against smallholder farmers and the adverse effects of climate change.
Rising insecurity restricts farmers’ access to fields in northwestern, northeastern, and northcentral Nigeria, the predominant Soybean growing areas. Increased restrictions on movement, kidnapping, and conflicts have disrupted farming activities in these areas, limiting the extent of the planted area. The area harvested is estimated at 1.15 million hectares (MHA), a 4 percent decrease compared to the USDA official MY 2022/23 estimate of 1.2 MHA. The post also attributes the reduction in area harvested to challenging macroeconomic conditions – no income to expand their fields.
Meanwhile, the Nigerian Meteorological Agency (NiMet) forecasted an erratic rainfall distribution and a high possibility of flash floods in some Soybean-producing states during the 2023/2024 cropping season. Some parts of the Soybean-producing belt will see severe dry spells, below-average annual rainfall, and an early cessation of the rainy season. Water stress beyond acceptable levels, and flooding, can cause significant yield decreases in Soybean. Yields are estimated at 1 MT/hectare.
To boost local production capacity, the US Soybean Export Council (USSEC), through its Soy Excellence Center located within the IITA premises, is supporting the development of Nigeria’s Soybean value chain by transforming Nigeria’s budding soy markets through building professionals in the supply chain. In addition, USSEC capacity-building efforts aim to improve Nigeria’s domestic production by encouraging the adoption of good agronomic practices in Soybean production. As of May 2023, USSEC has trained more than 600 farmers.
Soybean Meal in Nigeria
Soybean Meal production is forecast at 660,000 metric tons (MT) in MY 2023/24, a 3 percent decrease compared to the previous USDA official MY 2022/23 estimate of 680,000 metric tons (MT). This situation is due to the expected reduction in the domestic supply of Soybean due to low production in MY 2023/24. Nigeria’s domestic consumption is forecast at 550,000 MT in MY 2023/24. Soybean Meal is used primarily in livestock feed, especially for poultry, being a vital source of protein, fiber, and other essential nutrients in compound feed. Poultry farmers strongly prefer using Soybean Meal because of its high digestibility quality.
Nigeria’s feed milling industry is highly concentrated, comprising 5 to 7 large millers accounting for over 70 percent of total feed production. Despite the high demand for Soybean Meal as a significant high-protein animal feed input, the sector needs to improve its efficiency to tackle increased production costs. Overall, the feed milling sector faces high costs of local bulk materials such as corn and Soybean; furthermore, high duties adversely affect the imports of machines, specialty ingredients, and other additives. In general, high feed production costs translate to high feed prices. Meanwhile, feed costs account for 70 percent of the total costs in the poultry sector. The resulting untenable commercial environment causes poultry farmers to abandon their businesses.
FAS Lagos forecasts Nigeria’s Soybean Meal beginning and closing stocks in MY 2023/24 at 44,000 MT and 54,000 MT, respectively. FAS Lagos expects Soybean processors to retain higher stocks than in previous years amid reduced domestic consumption. FAS Lagos foresees no Soybean Meal import in MY 2023/24. This situation is due to the scarcity of foreign exchange, high import costs, and decreased local consumption potential. In addition, the import duty on Soybean Meal for animal feed is 20 percent.
According to market contacts, sourcing foreign exchange through unofficial means to import Soybean Meal for animal feed is not economically viable – importers will incur losses. Post forecast exports to reach 100,000 MT – to meet poultry and aquaculture sector demand in neighboring West African countries.
Other sources: USDA
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