Required Report - public distribution

**Date:** 4/15/2005

**GAIN Report Number:** NI5005

NI5005

**Nigeria**

**Grain and Feed**

**Annual**

**2005**

**Approved by:**

![](media/image1.wmf)Jamie Rothschild

U.S. Consulate, Lagos

**Prepared by:**

Ali Michael David

**Report Highlights:**

The U.S. has a 90 percent share of Nigeria\'s 2.5 million ton market.
Wheat is the leading U.S. agricultural export commodity to Nigeria.
Consumption continues to expand due to increase demand for wheat flour
for bread, pasta and biscuit production. In January 2005, the GON
directed wheat millers to add ten percent cassava in wheat flour.
Implementation is delayed because industry grade cassava is not
available in commercial quantities. The poultry industry has been using
wheat as a substitute for corn in feed production since the average
price of corn has skyrocketed this year. Currently, wheat can be
purchased for \$275 per ton while corn is about \$400 per ton.
Nigeria\'s demand for rice is roughly four million tons. Rice imports
remain at one third of consumption. Although unlikely, the press
continues to report that the GON will ban rice imports in 2006.

Includes PSD Changes: Yes

Includes Trade Matrix: No

Annual Report

Lagos \[NI1\]

\[NI\]

Table of Contents

[Executive Summary 3](#executive-summary)

[WHEAT 4](#wheat)

[PSD Table: Wheat 4](#psd-table-wheat)

[Production 4](#production)

[Consumption 4](#consumption)

[Trade 5](#trade)

[Stocks 5](#stocks)

[Policy 5](#policy)

[CORN 6](#corn)

[PSD Table: Corn 6](#psd-table-corn)

[Production 6](#production-1)

[Consumption 6](#consumption-1)

[Trade 7](#trade-1)

[Marketing 7](#marketing)

[SORGHUM 8](#sorghum)

[PSD Table: Sorghum 8](#psd-table-sorghum)

[Production 8](#production-2)

[Consumption 8](#consumption-2)

[Trade 8](#trade-2)

[Rice 9](#rice)

[PSD Table: Rice 9](#psd-table-rice)

[Production 9](#production-3)

[Consumption 9](#consumption-3)

[Trade 10](#trade-3)

[Marketing 10](#marketing-1)

# Executive Summary

Nigeria's imports of U.S. wheat in MY2005/06 are forecast at 2.4 million
tons, up from 2.2 million tons this year. The Nigerian market has grown
from six kilograms per capita in 1995 to 17 kilograms per capita in
2004. The industry as a whole has continued to expand due to increased
demand for flour-based products as well as import bans on pasta and
biscuits. Bakery operations in the country are being modernized and
expanded to satisfy growing demand especially for bread. Nigeria's wheat
imports are forecast to increase 13 percent in 2005/06 despite the
recent GON directive that millers include ten percent cassava in flour.
Nigeria is maintaining its position as the leading export destination
for U.S. hard red winter wheat.

Currently, Nigeria is experiencing corn shortages. The poultry industry
is using wheat as a substitute for corn in feed. Corn is not imported as
it is basically banned in Nigeria. Government sources attribute the
shortage in corn supply to increased domestic demand and exports.

Nigeria's domestic grain production in MY2005/06 is forecast to increase
five percent. The forecast is based on the timely arrival of rains in
the grain belt. President Obasanjo is promoting increased food
production in the country through a new initiative called the "National
Special Program for Food Security". The program aims at improving
farmers' productivity and income. Field visits to northern grain
production zones revealed that farmers are responding favorably to the
new initiative.

Despite some benefits from these new initiatives, on average, Nigerian
farmers' productivity is low due to lack of technology and organic
fertilizer. The fertilizer subsidy continues to create scarcity and high
prices. The retail price of a 50-kilogram bag of NPK increased to a
record level of 4,500 Naira in 2004, up from an average of 3,000 Naira a
year earlier. In addition, the absence of a buyer of last resort in
Nigeria often leaves the farmers at the mercy of market forces. In 2003,
corn farmers had a bumper harvest and corn prices crashed. Farmers
incurred heavy losses as they were forced to sell below production cost.

Exchange Rate: US\$1 = 130.5 Naira

# WHEAT

## PSD Table: Wheat

+--------------------+------+------+------+------+------+------+------+
| Nigeria            |      |      |      |      |      |      |      |
|                    |      |      |      |      |      |      |      |
| Wheat              |      |      |      |      |      |      |      |
+--------------------+------+------+------+------+------+------+------+
|                    | **20 | **R  | **20 | **Es | **20 | **Fo | **U  |
|                    | 03** | evis | 04** | tima | 05** | reca | OM** |
|                    |      | ed** |      | te** |      | st** |      |
+--------------------+------+------+------+------+------+------+------+
|                    | **   | **   | **   | **   | **   | **   |      |
|                    | USDA | Post | USDA | Post | USDA | Post |      |
|                    | Offi | Esti | Offi | Esti | Offi | Esti |      |
|                    | cial | mate | cial | mate | cial | mate |      |
|                    | \    | \    | \    | \    | \    | \    |      |
|                    | [Old | [New | [Old | [New | [Old | [New |      |
|                    | \]** | \]** | \]** | \]** | \]** | \]** |      |
+--------------------+------+------+------+------+------+------+------+
| #######            |      | 07/  |      | 07/  |      | 07/  | MM/  |
|  Market Year Begin |      | 2003 |      | 2004 |      | 2005 | YYYY |
+--------------------+------+------+------+------+------+------+------+
| **Area Harvested** | 35   | 35   | 35   | 35   | 0    | 35   | (    |
|                    |      |      |      |      |      |      | 1000 |
|                    |      |      |      |      |      |      | HA)  |
+--------------------+------+------+------+------+------+------+------+
| **Beginning        | 200  | 200  | 200  | 200  | 200  | 200  | (    |
| Stocks**           |      |      |      |      |      |      | 1000 |
|                    |      |      |      |      |      |      | MT)  |
+--------------------+------+------+------+------+------+------+------+
| **Production**     | 55   | 55   | 55   | 60   | 0    | 65   | (    |
|                    |      |      |      |      |      |      | 1000 |
|                    |      |      |      |      |      |      | MT)  |
+--------------------+------+------+------+------+------+------+------+
| **TOTAL Mkt. Yr.   | 2383 | 2383 | 2400 | 2400 | 0    | 2600 | (    |
| Imports**          |      |      |      |      |      |      | 1000 |
|                    |      |      |      |      |      |      | MT)  |
+--------------------+------+------+------+------+------+------+------+
| **Jul-Jun          | 2383 | 2383 | 2400 | 2400 | 0    | 2600 | (    |
| Imports**          |      |      |      |      |      |      | 1000 |
|                    |      |      |      |      |      |      | MT)  |
+--------------------+------+------+------+------+------+------+------+
| **Jul-Jun Import   | 2164 | 2164 | 0    | 2285 | 0    | 2400 | (    |
| U.S.**             |      |      |      |      |      |      | 1000 |
|                    |      |      |      |      |      |      | MT)  |
+--------------------+------+------+------+------+------+------+------+
| **TOTAL SUPPLY**   | 2638 | 2638 | 2655 | 2660 | 200  | 2865 | (    |
|                    |      |      |      |      |      |      | 1000 |
|                    |      |      |      |      |      |      | MT)  |
+--------------------+------+------+------+------+------+------+------+
| **TOTAL Mkt. Yr.   | 0    | 0    | 0    | 0    | 0    | 0    | (    |
| Exports**          |      |      |      |      |      |      | 1000 |
|                    |      |      |      |      |      |      | MT)  |
+--------------------+------+------+------+------+------+------+------+
| **Jul-Jun          | 0    | 0    | 0    | 0    | 0    | 0    | (    |
| Exports**          |      |      |      |      |      |      | 1000 |
|                    |      |      |      |      |      |      | MT)  |
+--------------------+------+------+------+------+------+------+------+
| **Feed Dom.        | 0    | 0    | 0    | 0    | 0    | 40   | (    |
| Consumption**      |      |      |      |      |      |      | 1000 |
|                    |      |      |      |      |      |      | MT)  |
+--------------------+------+------+------+------+------+------+------+
| **TOTAL Dom.       | 2438 | 2438 | 2455 | 2460 | 0    | 2665 | (    |
| Consumption**      |      |      |      |      |      |      | 1000 |
|                    |      |      |      |      |      |      | MT)  |
+--------------------+------+------+------+------+------+------+------+
| **Ending Stocks**  | 200  | 200  | 200  | 200  | 0    | 200  | (    |
|                    |      |      |      |      |      |      | 1000 |
|                    |      |      |      |      |      |      | MT)  |
+--------------------+------+------+------+------+------+------+------+
| **TOTAL            | 2638 | 2638 | 2655 | 2660 | 0    | 2865 | (    |
| DISTRIBUTION**     |      |      |      |      |      |      | 1000 |
|                    |      |      |      |      |      |      | MT)  |
+--------------------+------+------+------+------+------+------+------+

## Production

Nigeria's wheat production in 2005/06 is forecast to increase at 65,000
tons, up from 60,000 tons in 2004/04. Wheat production is not expected
to expand beyond this level due to local climatic conditions, which are
not suitable for wheat. Wheat is grown under irrigation in a few states
in northern Nigeria.

NOTE: Production estimates used throughout this report have been revised
to reflect more reliable data available from the Central Bank of Nigeria
(CBN).

## 

## Consumption

Nigeria's overall milling capacity is currently estimated at about 6.0
million tons, up from 4.0 million tons in 2002. Many millers are
expanding capacity to meet growing demand. In 2005, a new investor is
expected to commission two mills of 150,000 tons capacity each. Most of
the expansion is for the production of bread flour, but some is for the
growing domestic pasta industry and for crackers and biscuits. The GON's
import ban on pasta, spaghetti and biscuits introduced in 2004, has
spurred local producers to increase capacity.

Following the entrance of aggressive new millers in recent years, the
industry has become competitive with respect to price and quality. A
number of the mills now have their own in-house bakeries to provide
market support for their products. Millers give inducements to retain
customers' loyalty. Some of the mills are unable cope with the
competition and have scaled back their operations significantly.

The baking industry in Nigeria is expanding with new investments in
mechanized bakery equipment. One large bakery, recently commissioned a
new automated plant, the first of its kind in Nigeria. Medium to
large-scale bakeries are also expanding outside Lagos. Bread is a staple
item in the Nigerian breakfast and is eaten throughout the day as the
convenience food of choice by the general public.

## 

## Trade

Nigeria's overall wheat import volume in MY2005/06 is forecast at 2.6
million tons, up from 2.4 million tons in 2004/05. The higher volume
projected for 2005/06 is based upon the growth in bread consumption as
well as increased pasta and biscuit production. This is reflected in the
growth of U.S. soft and durum wheat imports from 12,000 tons in 2000 to
approximately 100,000 tons in 2005.

Nigeria is Africa's most populous country and is a growth market. In the
current MY2004/05, Nigeria is the third largest importer of all classes
of US wheat, up from the fourth position a year ago. It is also the
world's leading importer of U.S. HRW. U.S. wheat exports to Nigeria in
2004/05 increased by about eight percent over a year earlier. The rising
level of U.S. wheat exports to Nigeria has also been helped by a
relatively stable exchange rate, competitive wheat prices, high crude
oil prices and modest economic growth. Industry sources indicate that
U.S. wheat exports are likely to exceed 3.5 million tons within the next
five years. Canada and Argentina are the principal competitors in this
market.

## Stocks

Stock estimates in this report are residuals of production, imports and
consumption. Industry sources indicate that stock capacity can sustain
milling operations for about a month.

## Policy

Nigeria's wheat import tariff is five percent. Imported wheat also is
subject to port surcharges (equal to seven percent of the duty value),
and the GON's Combined Import Supervision Scheme fee, which is equal to
one percent of FOB value. The GON's five percent value added tax, also
is applicable to wheat flour. Millers are required to fortify flour with
vitamin A.

Effective January 1, 2005, the GON directed that all flourmills must
blend 10 percent cassava into the flour to support local production.
Industry sources indicate that the directive cannot be implemented at
this time because there are no commercial mills to process industry
grade cassava. Wheat millers have expressed concern that including
cassava in flour would induce undesirable changes in color and smell. It
would also reduce the shelf live of bread from five to two days. Cassava
flour is currently being sold at \$500 per ton.

# CORN

## PSD Table: Corn

+-------------------+------+------+------+------+------+------+------+
| Nigeria           |      |      |      |      |      |      |      |
|                   |      |      |      |      |      |      |      |
| ###### Corn       |      |      |      |      |      |      |      |
+-------------------+------+------+------+------+------+------+------+
|                   | **20 | **R  | **20 | **Es | **20 | **Fo | **U  |
|                   | 03** | evis | 04** | tima | 05** | reca | OM** |
|                   |      | ed** |      | te** |      | st** |      |
+-------------------+------+------+------+------+------+------+------+
|                   | **   | **   | **   | **   | **   | **   |      |
|                   | USDA | Post | USDA | Post | USDA | Post |      |
|                   | Offi | Esti | Offi | Esti | Offi | Esti |      |
|                   | cial | mate | cial | mate | cial | mate |      |
|                   | \    | \    | \    | \    | \    | \    |      |
|                   | [Old | [New | [Old | [New | [Old | [New |      |
|                   | \]** | \]** | \]** | \]** | \]** | \]** |      |
+-------------------+------+------+------+------+------+------+------+
| #######           |      | 10/  |      | 10/  |      | 10/  | MM/  |
| Market Year Begin |      | 2003 |      | 2004 |      | 2005 | YYYY |
+-------------------+------+------+------+------+------+------+------+
| **Area            | 3700 | 3700 | 3700 | 3700 | 0    | 3800 | (    |
| Harvested**       |      |      |      |      |      |      | 1000 |
|                   |      |      |      |      |      |      | HA)  |
+-------------------+------+------+------+------+------+------+------+
| **Beginning       | 119  | 119  | 119  | 119  | 119  | 100  | (    |
| Stocks**          |      |      |      |      |      |      | 1000 |
|                   |      |      |      |      |      |      | MT)  |
+-------------------+------+------+------+------+------+------+------+
| **Production**    | 5150 | 5500 | 5200 | 6500 | 0    | 7500 | (    |
|                   |      |      |      |      |      |      | 1000 |
|                   |      |      |      |      |      |      | MT)  |
+-------------------+------+------+------+------+------+------+------+
| **TOTAL Mkt. Yr.  | 50   | 50   | 50   | 50   | 0    | 30   | (    |
| Imports**         |      |      |      |      |      |      | 1000 |
|                   |      |      |      |      |      |      | MT)  |
+-------------------+------+------+------+------+------+------+------+
| **Oct-Sep         | 50   | 50   | 50   | 50   | 0    | 30   | (    |
| Imports**         |      |      |      |      |      |      | 1000 |
|                   |      |      |      |      |      |      | MT)  |
+-------------------+------+------+------+------+------+------+------+
| **Oct-Sep Import  | 0    | 0    | 0    | 0    | 0    | 0    | (    |
| U.S.**            |      |      |      |      |      |      | 1000 |
|                   |      |      |      |      |      |      | MT)  |
+-------------------+------+------+------+------+------+------+------+
| **TOTAL SUPPLY**  | 5319 | 5669 | 5369 | 6669 | 119  | 7630 | (    |
|                   |      |      |      |      |      |      | 1000 |
|                   |      |      |      |      |      |      | MT)  |
+-------------------+------+------+------+------+------+------+------+
| **TOTAL Mkt. Yr.  | 0    | 0    | 0    | 40   | 0    | 30   | (    |
| Exports**         |      |      |      |      |      |      | 1000 |
|                   |      |      |      |      |      |      | MT)  |
+-------------------+------+------+------+------+------+------+------+
| **Oct-Sep         | 0    | 0    | 0    | 40   | 0    | 30   | (    |
| Exports**         |      |      |      |      |      |      | 1000 |
|                   |      |      |      |      |      |      | MT)  |
+-------------------+------+------+------+------+------+------+------+
| **Feed Dom.       | 300  | 400  | 325  | 650  | 0    | 800  | (    |
| Consumption**     |      |      |      |      |      |      | 1000 |
|                   |      |      |      |      |      |      | MT)  |
+-------------------+------+------+------+------+------+------+------+
| **TOTAL Dom.      | 5200 | 5550 | 5250 | 6529 | 0    | 7500 | (    |
| Consumption**     |      |      |      |      |      |      | 1000 |
|                   |      |      |      |      |      |      | MT)  |
+-------------------+------+------+------+------+------+------+------+
| **Ending Stocks** | 119  | 119  | 119  | 100  | 0    | 100  | (    |
|                   |      |      |      |      |      |      | 1000 |
|                   |      |      |      |      |      |      | MT)  |
+-------------------+------+------+------+------+------+------+------+
| **TOTAL           | 5319 | 5669 | 5369 | 6669 | 0    | 7630 | (    |
| DISTRIBUTION**    |      |      |      |      |      |      | 1000 |
|                   |      |      |      |      |      |      | MT)  |
+-------------------+------+------+------+------+------+------+------+

## Production

Post has revised corn production estimates upwards over the last three
years under review to reflect updated information from the Central Bank
of Nigeria (CBN). We also believe yields increased in 2004/2005 due to
sufficient and timely rainfall. Although private sources indicate that
domestic output in MY2004/05 may have actually declined, citing the
prevailing high prices, Post believes that the CBN estimates are the
most accurate. Government sources attribute the current scarcity of corn
to factors such as the food aid to Sudan, an increase in domestic
demand, and cross-border exports.

Post forecasts Nigeria's corn production in 2005/06 at 7.5 million tons,
up from the revised 6.5 million tons in MY2004/05. Private sources
indicate that the prevailing record high corn prices will likely
encourage farmers to switch from cotton to corn. The early arrival of
rain in the grain belt will also encourage growth in output. However,
only a modest increase in yield is expected because of the high cost of
fertilizer products. Planting is expected to commence in May 2005.

## Consumption

The bulk of Nigeria's corn crop is directed for human consumption.
Brewery demand for corn grits is growing in step with growth in the
sector. Feed utilization of corn is also increasing, thanks to the rapid
growth in the poultry sector witnessed in recent years. Approximately 98
percent of all feed produced in Nigeria is poultry feed. Total corn
usage for feed production in Nigeria is forecast at 800,000 tons, up
from revised estimate of 610,000 tons in MY2004/05. The upward revision
in corn use in feed reflects the more reliable data from the feed
industry, which is collaborated by the rapid growth in the poultry
sector. The surge in demand for corn has resulted in product shortages.
Although the industry would like its poultry feed to consist of nearly
60 percent corn, the high price of corn is making producers to
reformulate in favor of other grains such as sorghum, wheat, and millet.

## Trade

In January 2005, local newspapers reported that the GON had imposed an
import ban on corn to support local growers. However, when AgOffice
sought official confirmation, officials at the Federal Ministry of
Finance indicated that the ban has not yet been implemented. In the
past, imports were limited not necessarily by the high duty of 70
percent, but by the government unofficially discouraging poultry
producers from importing. Despite acute shortages and the prevailing
record high price of corn, there has not been any corn imports. In real
terms, the GON's import ban on corn largely serves the interest of
middlemen, not farmers. The middlemen buy corn from resource-poor
farmers during harvest when prices are low and speculate for high
returns during the off-season.

## Marketing

The Nigerian poultry industry has enormous capacity for growth in the
medium to long-term. Growth in the industry offers growing market
opportunities for U.S. exporters of poultry inputs. However, non-tariff
barriers currently limit access to the market.

# SORGHUM

## PSD Table: Sorghum

+-------------------+------+------+------+------+------+------+------+
| Nigeria           |      |      |      |      |      |      |      |
|                   |      |      |      |      |      |      |      |
| Sorghum           |      |      |      |      |      |      |      |
+-------------------+------+------+------+------+------+------+------+
|                   | **20 | **R  | **20 | **Es | **20 | **Fo | **U  |
|                   | 03** | evis | 04** | tima | 05** | reca | OM** |
|                   |      | ed** |      | te** |      | st** |      |
+-------------------+------+------+------+------+------+------+------+
|                   | **   | **   | **   | **   | **   | **   |      |
|                   | USDA | Post | USDA | Post | USDA | Post |      |
|                   | Offi | Esti | Offi | Esti | Offi | Esti |      |
|                   | cial | mate | cial | mate | cial | mate |      |
|                   | \    | \    | \    | \    | \    | \    |      |
|                   | [Old | [New | [Old | [New | [Old | [New |      |
|                   | \]** | \]** | \]** | \]** | \]** | \]** |      |
+-------------------+------+------+------+------+------+------+------+
| #######           |      | 10/  |      | 10/  |      | 10/  | MM/  |
| Market Year Begin |      | 2003 |      | 2004 |      | 2005 | YYYY |
+-------------------+------+------+------+------+------+------+------+
| **Area            | 6800 | 6800 | 6800 | 7200 | 0    | 7300 | (    |
| Harvested**       |      |      |      |      |      |      | 1000 |
|                   |      |      |      |      |      |      | HA)  |
+-------------------+------+------+------+------+------+------+------+
| **Beginning       | 200  | 200  | 200  | 200  | 200  | 200  | (    |
| Stocks**          |      |      |      |      |      |      | 1000 |
|                   |      |      |      |      |      |      | MT)  |
+-------------------+------+------+------+------+------+------+------+
| **Production**    | 8000 | 9000 | 8050 | 1    | 0    | 1    | (    |
|                   |      |      |      | 0000 |      | 0800 | 1000 |
|                   |      |      |      |      |      |      | MT)  |
+-------------------+------+------+------+------+------+------+------+
| **TOTAL Mkt. Yr.  | 0    | 0    | 0    | 0    | 0    | 0    | (    |
| Imports**         |      |      |      |      |      |      | 1000 |
|                   |      |      |      |      |      |      | MT)  |
+-------------------+------+------+------+------+------+------+------+
| **Oct-Sep         | 0    | 0    | 0    | 0    | 0    | 0    | (    |
| Imports**         |      |      |      |      |      |      | 1000 |
|                   |      |      |      |      |      |      | MT)  |
+-------------------+------+------+------+------+------+------+------+
| **Oct-Sep Import  | 0    | 0    | 0    | 0    | 0    | 0    | (    |
| U.S.**            |      |      |      |      |      |      | 1000 |
|                   |      |      |      |      |      |      | MT)  |
+-------------------+------+------+------+------+------+------+------+
| **TOTAL SUPPLY**  | 8200 | 9200 | 8250 | 1    | 200  | 1    | (    |
|                   |      |      |      | 0200 |      | 1000 | 1000 |
|                   |      |      |      |      |      |      | MT)  |
+-------------------+------+------+------+------+------+------+------+
| **TOTAL Mkt. Yr.  | 50   | 50   | 50   | 50   | 0    | 60   | (    |
| Exports**         |      |      |      |      |      |      | 1000 |
|                   |      |      |      |      |      |      | MT)  |
+-------------------+------+------+------+------+------+------+------+
| **Oct-Sep         | 50   | 50   | 50   | 50   | 0    | 60   | (    |
| Exports**         |      |      |      |      |      |      | 1000 |
|                   |      |      |      |      |      |      | MT)  |
+-------------------+------+------+------+------+------+------+------+
| **Feed Dom.       | 150  | 150  | 150  | 150  | 0    | 160  | (    |
| Consumption**     |      |      |      |      |      |      | 1000 |
|                   |      |      |      |      |      |      | MT)  |
+-------------------+------+------+------+------+------+------+------+
| **TOTAL Dom.      | 7950 | 8950 | 8000 | 9950 | 0    | 1    | (    |
| Consumption**     |      |      |      |      |      | 0740 | 1000 |
|                   |      |      |      |      |      |      | MT)  |
+-------------------+------+------+------+------+------+------+------+
| **Ending Stocks** | 200  | 200  | 200  | 200  | 0    | 200  | (    |
|                   |      |      |      |      |      |      | 1000 |
|                   |      |      |      |      |      |      | MT)  |
+-------------------+------+------+------+------+------+------+------+
| **TOTAL           | 8200 | 9200 | 8250 | 1    | 0    | 1    | (    |
| DISTRIBUTION**    |      |      |      | 0200 |      | 1000 | 1000 |
|                   |      |      |      |      |      |      | MT)  |
+-------------------+------+------+------+------+------+------+------+

## Production

Sorghum production in 2005/06 is forecast at 10.8 million tons, up from
the revised 8.0 million tons this year, in line with CBN estimates. The
projected increase in output of ten percent is based largely on
anticipated improvement in crop yield, thanks to the growing acceptance
by farmers of improved varieties developed by local research institutes.
Sorghum is Nigeria's most widely cultivated grain, accounting for more
than 45 percent of total planted area. Sorghum production is attractive
to farmers because of favorable market prices and its relatively low
fertilizer usage requirements. Sorghum cultivation spans the North to
the Middle-belt zones of the country where precipitation and soil
moisture levels are low. The early maturing varieties are very suitable
to the semi-arid conditions in the extreme northern parts of Nigeria
with very short rainy season. Production conditions in 2004 were
generally normal.

## Consumption

Sorghum enjoys a large and growing domestic demand because of its
extensive use as food in virtually all parts of northern Nigeria.
Sorghum also is used extensively in brewing homemade local beer.
Industrial demand for sorghum by beer and feed manufacturers is rising
steadily, in step with growth in these sectors. Some brewing factories
in Nigeria produce beer exclusively from corn and sorghum. The use of
sorghum in animal feed is increasing due to the scarcity of corn.

## Trade

Nigeria is nearly self-sufficient in sorghum. There are no official
statistics on exports, but drought conditions to the north of Nigeria
encouraged undocumented, cross-border exports of about 50,000 tons into
Niger and Chad in MY2004/05.

# Rice

## PSD Table: Rice

+--------------------+------+------+------+------+------+------+------+
| Nigeria            |      |      |      |      |      |      |      |
|                    |      |      |      |      |      |      |      |
| Rice, Milled       |      |      |      |      |      |      |      |
+--------------------+------+------+------+------+------+------+------+
|                    | **20 | **R  | **20 | **Es | **20 | **Fo | **U  |
|                    | 03** | evis | 04** | tima | 05** | reca | OM** |
|                    |      | ed** |      | te** |      | st** |      |
+--------------------+------+------+------+------+------+------+------+
|                    | **   | **   | **   | **   | **   | **   |      |
|                    | USDA | Post | USDA | Post | USDA | Post |      |
|                    | Offi | Esti | Offi | Esti | Offi | Esti |      |
|                    | cial | mate | cial | mate | cial | mate |      |
|                    | \    | \    | \    | \    | \    | \    |      |
|                    | [Old | [New | [Old | [New | [Old | [New |      |
|                    | \]** | \]** | \]** | \]** | \]** | \]** |      |
+--------------------+------+------+------+------+------+------+------+
| #######            |      | 01/  |      | 01/  |      | 01/  | MM/  |
|  Market Year Begin |      | 2003 |      | 2004 |      | 2005 | YYYY |
+--------------------+------+------+------+------+------+------+------+
| **Area Harvested** | 1800 | 1800 | 1850 | 1850 | 0    | 2000 | (    |
|                    |      |      |      |      |      |      | 1000 |
|                    |      |      |      |      |      |      | HA)  |
+--------------------+------+------+------+------+------+------+------+
| **Beginning        | 1353 | 1353 | 1153 | 1153 | 553  | 553  | (    |
| Stocks**           |      |      |      |      |      |      | 1000 |
|                    |      |      |      |      |      |      | MT)  |
+--------------------+------+------+------+------+------+------+------+
| **Milled           | 2200 | 2200 | 2300 | 2300 | 0    | 2700 | (    |
| Production**       |      |      |      |      |      |      | 1000 |
|                    |      |      |      |      |      |      | MT)  |
+--------------------+------+------+------+------+------+------+------+
| **Rough            | 3667 | 3667 | 3833 | 3833 | 0    | 4500 | (    |
| Production**       |      |      |      |      |      |      | 1000 |
|                    |      |      |      |      |      |      | MT)  |
+--------------------+------+------+------+------+------+------+------+
| **MILLING RATE     | 6000 | 6000 | 6000 | 6000 | 0    | 6000 | (    |
| (.9999)**          |      |      |      |      |      |      | 1000 |
|                    |      |      |      |      |      |      | MT)  |
+--------------------+------+------+------+------+------+------+------+
| **TOTAL Imports**  | 1600 | 1600 | 1350 | 1350 | 0    | 1500 | (    |
|                    |      |      |      |      |      |      | 1000 |
|                    |      |      |      |      |      |      | MT)  |
+--------------------+------+------+------+------+------+------+------+
| **Jan-Dec          | 1350 | 1350 | 1400 | 1400 | 0    | 1500 | (    |
| Imports**          |      |      |      |      |      |      | 1000 |
|                    |      |      |      |      |      |      | MT)  |
+--------------------+------+------+------+------+------+------+------+
| **Jan-Dec Import   | 0    | 0    | 0    | 15   | 0    | 10   | (    |
| U.S.**             |      |      |      |      |      |      | 1000 |
|                    |      |      |      |      |      |      | MT)  |
+--------------------+------+------+------+------+------+------+------+
| **TOTAL SUPPLY**   | 5153 | 5153 | 4803 | 4803 | 553  | 4753 | (    |
|                    |      |      |      |      |      |      | 1000 |
|                    |      |      |      |      |      |      | MT)  |
+--------------------+------+------+------+------+------+------+------+
| **TOTAL Exports**  | 0    | 0    | 0    | 0    | 0    | 0    | (    |
|                    |      |      |      |      |      |      | 1000 |
|                    |      |      |      |      |      |      | MT)  |
+--------------------+------+------+------+------+------+------+------+
| **Jan-Dec          | 0    | 0    | 0    | 0    | 0    | 0    | (    |
| Exports**          |      |      |      |      |      |      | 1000 |
|                    |      |      |      |      |      |      | MT)  |
+--------------------+------+------+------+------+------+------+------+
| **TOTAL Dom.       | 4000 | 4000 | 4250 | 4250 | 0    | 4350 | (    |
| Consumption**      |      |      |      |      |      |      | 1000 |
|                    |      |      |      |      |      |      | MT)  |
+--------------------+------+------+------+------+------+------+------+
| **Ending Stocks**  | 1153 | 1153 | 553  | 553  | 0    | 403  | (    |
|                    |      |      |      |      |      |      | 1000 |
|                    |      |      |      |      |      |      | MT)  |
+--------------------+------+------+------+------+------+------+------+
| **TOTAL            | 5153 | 5153 | 4803 | 4803 | 0    | 4753 | (    |
| DISTRIBUTION**     |      |      |      |      |      |      | 1000 |
|                    |      |      |      |      |      |      | MT)  |
+--------------------+------+------+------+------+------+------+------+

## Production

Nigeria's rice production in MY2005/06 is forecast at 2.7 million tons,
up from 2.3 MMT in MY2004/05. The projected increase is based on a
combination of improved input supply and favorable weather outlook. Area
and yield are expected to increase. President Obasanjo has a new special
initiative to promote self-sufficiency in rice production. A key element
of the initiative is the GON's subsidy on basic farm inputs, especially
improved rice varieties. The government is promoting the adoption of the
new hybrid rice varieties to help boost rice production. These new
varieties are high yielding, early maturing, disease resistant, and high
in protein content. Despite this initiative, however, Nigeria will
continue to depend on imports to satisfy consumer demand.

## Consumption

Rice imports account for close to a third of Nigeria's total rice
supplies. Imported parboiled rice is directed at meeting consumer demand
in urban areas where incomes are highest. Locally milled rice is of poor
quality and is consumed mainly in the rural areas.

Over the past year, the retail price of rice increased by about 30
percent reflecting significantly higher international prices.
Accordingly, imports declined from 1.6 million in 2003/04 to 1.3 million
tons in 2004/05. Lower-income consumers switched to local staple foods.
However, rice remains a regular item in the diet of most Nigerians,
largely because of the convenience and the variety of ways it can be
prepared.

## Trade

Post forecast Nigeria's rice imports in MY2005 at 1.5 MMT, up from the
revised MY2004 estimate of 1.3 million tons. The projected increase is
due to limited supply of locally produced rice and other alternatives
such as yams and beans. Although the local press continues to report
that the GON will ban rice imports in 2006, Post believes that it is
unlikely because of the domestic supply shortfall. However, local
sources indicate that importers will stock rice in anticipation of the
ban.

Trade estimates of Nigeria's imports used in this report include all
parboiled rice destined for Niger, Chad and Benin Republics. Nigeria is
the only market for parboiled rice in the West African sub-region;
neighboring countries are markets for regular milled white rice.

The GON's prohibitive duty on rice imports is encouraging cross-border
smuggling of the product. The import duty on rice is 100 percent. When
port charges and other taxes are assessed, the effective duty on rice
entering Nigeria through Nigerian ports is 119 percent. On the other
hand, imports to Benin Republic attract only 35 percent duty,
representing a \$200 per ton price advantage over imports through
Nigerian ports. Nigerian importers simply land their imports in Benin
and then smuggle them into the country. Some importers ship to Cotonou
port (Benin) and declare them as transit goods destined to the
land-locked countries of Niger and Chad. Transit goods attract only five
percent duty in Benin. The rice is subsequently smuggled into Nigeria.

## Marketing

Currently, U.S. milled parboiled rice can only compete for a share of
the top niche segment of the Nigerian market. U.S. rice exporters are
encouraged to collaborate with leading Nigerian importers to boost sales
of their products. Promotional activities should target the growing
middle to high-income consumers. These segments of the market are
willing and able to pay for premium quality U.S. rice. Given appropriate
marketing support, this market segment can increase commercial import
purchases from the U.S. to 100,000 tons annually, up from the current
level of less than 5,000 tons within three years. In 2002, a rice trader
imported 5,000 tons of premium quality U.S. rice to test market.
Encouraged by the result, the company shipped another 5,000 tons of U.S.
rice in December 2004.