must refocus their policies on agriculture to reshape their
interventions to mitigate the negative impact of the recent devaluation
of the Naira on the sector growth, a study by two development groups
The Foundation for Partnership Initiatives in the Niger Delta, PIND,
and the UK Department for International Development, DFID Market
Development, MADE Programme, said on Thursday a study they sponsored
found the Naira devaluation policy impacted the agricultural value
chains in the Niger Delta region.
The Executive Secretary of PIND, Dara Akala, said at the presentation
of the findings in Abuja that the study was to examine effects of
devaluation and related government trade restriction policies on four
key agricultural value chains in the Niger Delta region, namely cassava,
palm oil, aquaculture, and poultry.
Mr. Akala said the study also looked at the impact on agricultural
inputs and leather goods as well as market responses across the value
chains to the income and substitution effects that arose from the price
shocks as a result of the devaluation and depreciation policies.
Presenting his findings, the consultant, who conducted the study,
Ogho Okiti, said there was need for the government and its partners to
restructure its interventions to reflect the economic realities of a
dynamic situation, especially relating to the four key commodities in
the agricultural value chain.”
“As the global crude oil price fell from above $100 per barrel in
early 2014 to below $30 per barrel by the beginning of 2016, Nigeria’s
oil revenues and foreign exchange reserves dropped. The decline in
reserves exerted pressure on the Naira against the dollar, and the
Central Bank of Nigeria, CBN, was unable to defend the Naira’s peg to
the dollar,” the report noted.
“To reduce imports and conserve its diminishing foreign exchange
reserves, the CBN devalued the Naira twice between November 2014 and
February 2015 and implemented a ban on access to foreign exchange at the
CBN official window for a list of 41 items, including rice, poultry and
palm oil products.
“The Federal Government increased import levies on these goods and
other agricultural products, and even banned imports of some entirely.
The impact of this devaluation and the subsequent ban on importation
differ from one agricultural value chain to another,” it added.
Mr. Okiti said one of the findings from the study was the impact of
the devaluation on aquaculture, which resulted in the rise in the price
of catfish, as consumers turned to it as alternative to more expensive
imported fish and poultry, meaning increased revenues to farmers.
Besides, he said Naira devaluation made foreign feeds more expensive,
creating opportunity for local producers to strive to meet demand,
while demand from the food sector more than doubled the price of
imported rice between 2015 and the beginning of 2017.
“The drop in rice import by about two million tons since the
devaluation led to higher demand of cassava food products and cassava
The palm oil sub-sector also saw increased demand for both Technical
Palm oil, TPO, and Special Palm Oil, SPO, as imports of refined palm oil
were banned, while crude palm oil imports were subjected to combined
import tariffs of 35%, and exclusion from access to official foreign
exchange,” the report said.
The report said the increase in demand resulted in increased prices
for palm oil, with producers and processors of fresh palm fruit facing
higher prices than when purchasing inputs.
More details of finding from the study showed that the devaluation
led to significant increases in costs of major inputs over the last two
years, which influenced costs across all the value chains.
High energy prices, including power and diesel, it noted, were
largely driven by foreign exchange costs, which were significant cost
components for processors of the four commodities in the value chain.
The report said the cost of credit also increased sharply since the
Naira’s devaluation, as the CBN increased interest rates to curb rising
This constrained actors in the agricultural sector, as they found it
increasingly difficult to obtain credit to expand their operations.
Again, prices of agricultural inputs, such as fertilizers and crop
protection products, also increased, while farmers experienced
difficulties accessing these products, as local production capacity is
Specifically, it said farmers in the aquaculture value chain faced
large increases in prices of both imported and locally produced fish
In the cassava value chain, increases in the price of fertilizers and
other crop protection products increased input costs for farmers, while
processors faced increased energy costs.
In addition to the increase in production costs, devaluation also led to an increase in cassava demand, and therefore prices.
The devaluation caused significant price increases in the poultry
value chain, with a drop in the demand for preventive vaccines, as
poultry farms adjusted to the increased cost of production.
Consequently, PIND and MADE urged government to adopt mechanized and
commercialized agriculture methods, to maximize the country’s
agricultural potentials, to earn foreign exchange from exports, produce
raw materials for the industries and create jobs for unemployed youth.