What Does 2025 Hold for Nigerian Agriculture?

Agriculture is central to the Nigerian economy, and as 2025 unfolds, I thought we should look at some of the changes we can expect in the sector that employs 45% of Nigeria’s workforce and contributes 26% to the GDP. I recently moderated a session at the launch of an outlook report by Vestance on Nigerian agribusiness, where I learnt quite a bit about what’s going on with agriculture and food system in the country and what 2025 hold for that sector that feeds us all.

 

Let’s start with the positives. The outlook report projects that Nigeria’s agribusiness sector is set for a year of cautious optimism. Agro-entrepreneurs can anticipate some relief following a year of rampant inflation, as inflation is expected to ease, interest rates are projected to be reduced, and the economy is likely to expand modestly. Stability is key, and with naira projected to be stable and inflation dipping, agribusinesses can better plan.

 

Global economy is also expected to expand, albeit marginally. Export crops such as sesame and sorghum are well-positioned for growth, driven by strong global demand, increasing applications of sorghum in brewing and feed industries, and a more market-valued naira that makes exports attractive. Furthermore, growing European demand and increased foreign direct investment, supported by anticipated lower interest rates, are expected to benefit export-focused agribusinesses.

 

However, the report also identifies significant risks. Trade uncertainties, including potential US-China trade tensions (say hello to President Trump) and geopolitical challenges in the Middle East and Eastern Europe, could lead to higher costs for imported inputs, triggering inflationary pressures. Things like the anticipated renewed US efforts to bolster local oil production, may suppress global oil prices, impacting Nigeria’s economy and, by extension, its agricultural sector.

 

Stricter global compliance regulations, such as the EU’s deforestation rule, pose additional challenges for Nigerian exporters. Domestically, the sector faces numerous hurdles, including ineffective agricultural policies, insufficient budgetary allocations (with agriculture receiving less than 1.3% of Nigeria’s total budget), high fuel prices, unreliable electricity, inflation, high lending rates, and limited credit access for agribusinesses. Unpredictable weather patterns, including flooding and dry spells, insecurity in key farming regions, rising costs of seeds and fertilisers, and fluctuating exchange rates further exacerbate the challenges.

 

The report notes that feed producers and poultry farmers might not find relief as maize prices are projected to rise, despite a slight increase in production. The report recommends that agribusinesses impacted by these price hikes could consider alternatives such as sorghum or millet, invest in processing, and stabilise supply chains through forward contracts.

 

Rice production is also expected to decline due to insecurity and flooding, while soybean production faces hurdles from fertiliser shortages and an increased reliance on imports.

 

Meanwhile, cocoa production, despite facing higher compliance costs, is expected to remain profitable. Cocoa price reached a record high of $12,646 per tonne last year but it’s not a crop one can dabble in and expect return immediately.

 

 

Speaking with me at the launch of the outlook report, Emem Essien, Chief Operating Officer at Crop2Cash, highlighted the importance of climate-smart technologies, such as early maturing seeds and efficient irrigation systems, which can offer a promising pathway to mitigate weather-related risks and enhance resilient agricultural production. With lending rates expected to see some cut, agribusinesses may find it easier to access the credit needed to adopt these technologies and secure essential inputs.

 

One key takeaway from the report is the role of the export market and foreign investment in shaping the future of agribusiness in Nigeria. At the report launch discussion, Esther Adegunle, Associate Director of New Business and Economic Growth at DAI, emphasised that projected global rate cuts could position Nigerian agribusinesses for increased foreign direct investment. However, she cautioned that businesses targeting export markets must prioritise sustainability and adhere to global standards to remain competitive.

 

Adegunle also spoke about the importance of policy implementation, noting that “policy implementation, not just creation, is critical.” Streamlining export processes and focusing on local value addition which could substantially boost the sector both depend on improved policy implementation.

 

All in all, as Nigeria’s agribusiness sector navigates the challenges of 2025, players must demonstrate resilience, innovation, and strategic planning to seize opportunities and mitigate risks. A thriving agricultural sector is not only beneficial for its participants but also important for Nigeria’s economic growth.

 

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