Overview
Nigeria is recognised as the second largest producer of soybeans in Africa; Soybean is largely grown in Kaduna, Kano, Plateau, Benue, Nasarawa, Katsina, Kwara, Kogi, Oyo, Jigawa, FCT and Bauchi State. The yields are higher around the middle belt (Benue, Plateau, Kogi, Nasarawa, Niger and Kwara) accounting for 65% – 75% of the total production.
Soybean is considered an ideal crop with its meal as a vital and preferred source of protein in compound feed and accounts for 20% – 30% in poultry feed and 20% of fish feed consumption.
Gaps in the Value Chain
The demand for soybeans in Nigeria is currently estimated at 2.2 million metric tons (MTs) while the annual local production is only at 600,000 MT (FAOSTAT, 2020). The root cause of the gaps across the soybean value chain is attributed to the use of low yielding seed varieties, poor knowledge of good agronomic practices, high costs of inputs, poor linkage to processors and market, lack of access to finance and poor infrastructure.
According to the Global Agricultural Information Network report from the US Department of Agriculture (USDA), it is forecasted that the Nigeria soybean production for the year 2021-2022 is estimated to reach almost 1,000,000 MTs, due to a growing shift by farmers in the south increasing their production levels of soybeans (WorldGrain.com, 2021). However, it is approximately stated that the nation’s national demand for soybeans is estimated to increase to 2.7million MT and the current average national yield is estimated to be 0.97MT per hectare. Production figures may likely improve as the segment has the potential to achieve 3.0MT – 4.0MT per hectare.
Figure 1 SOURCE: FAOSTAT 2011 – 2020
Opportunities
Despite the major gaps identified in the soybean value chain, these gaps present business opportunities; and, if harnessed could support the upgrade of the Nigerian soybean value chain.
The key business opportunities across the value chain includes:
• Seed companies: to develop high yield, low shattering, and drought resistant variety
• Structuring small holder farmers and farmlands into an optimized production model
• Establishing efficient and adequate primary processing and storage facilities, transportation, and road network.
• Finance and Investment opportunities for Financial Institutions and investors
Solutions
Across diverse fora, Managing Director/CEO of NIRSAL Plc, Mr. Aliyu Abdulhameed, has communicated the company’s disposition to work with first movers in commodity value chains to create structures that would be sustainably attractive to finance.
According to Abdulhameed, “several commodity value chains, including that of soybean, have been extensively analysed by NIRSAL as a necessary pathway for developing bespoke solutions.”
After a careful study of the soybean value chain, therefore, NIRSAL proposes the following solutions:
• Facilitation of funds into the Nigeria Agriculture sector by deploying its risk mitigating tools such as the NIRSAL’s Credit Risk Guarantee (CRG) which is a risk sharing structure that protects financiers and investors from losses which may occur on financial transactions
• Promoting the use of improved seeds for primary production and ensuring these varieties are sourced from research institutes/certified seed companies
• Development of primary production structuring models such as the NIRSAL Farming Agro Geo-Cooperative (AGC) and the Agricultural Commodity Ecological Areas (ACEA) concept which helps in structuring both the primary producers and the farmlands into clusters.
• Ensuring the provision and use of Extension, Monitoring and Evaluation services to achieve global standards in soybean production by application of NIRSAL’s Agribusiness Risk Management Solution (ARMS)
Conclusion
Although, soybeans are a delicate crop to cultivate in Nigeria, fixing the identified gaps in the value chain could improve the yield and reduce post-harvest losses thereby reducing the nation’s dependence on importation.
